city of ann arbor cost of service model: meter data ......© 2009 all rights reserved wendy welser,...

© 2009 All rights reserved

Wendy Welser, ManagerCustomer Service Center, City of Ann Arbor

City of Ann Arbor Cost of Service Model: Meter Data Management (MDM) is the Enabler – Without You Have Nothing

© 2009 All rights reserved2

AMR/AMI Project Timeline

• 2002 – March 2004 business case development

• December 2003 – Contracted Water and Wastewater Cost of Service Study report published by Carter & Burgess. The intent of the study was to identify rates necessary to cover the projected costs over a five-year period and to assist the City in meeting its desire to make rate adjustments based on a cost of service approach.

• May 2004 – Preconstruction meeting between Aclara (formally Hexagram), AMCO Water, UMI, and Ann Arbor

• August 2004 – AMI Agreement signed between Aclara and Elster-AMCO Water for $3.2 million of Hexagram equipment (31 DCUs and 28,000 MTUs)

• October 2004 – Start of AMI deployment (meter and MTU installation)

• November 2005 – Core Mass completion of AMR/AMI technology• November 2005 to Present – Meter Data Management/Cost of Service Rates


Aclara STAR ® Network Meter Data


Also a tab on the “My Property”information screen

Managing Meter Data for Our Customers: Water Consumption Data Link

Must use 12-digit account number to access meter data

511289-111558


Customer Current vs. Prior Usage Comparisons


Viewing Daily Water Usage Records for Highs, Lows and Anomalies


5-Day Anomaly Identified


Graph Usage Trends and Download Data


Pre-MDM Cost of Service CalculationsCity of Ann Arbor Water System Allocations

(Carter & Burgess Report)

• The water services used for the Systems Allocations study included:• Volume of water used: all assets, functions, and tasks directly related to the

volume of water consumed• Maximum day demand: all assets, functions and tasks related to providing the

amount of water required to serve customers on the day with the maximum water demand

• Maximum hour demand: all assets, functions, and tasks related to providing the amount of water required to serve customers during the hour with maximum water demand

• Metering/Billing: includes the costs to maintain customer meters, produce bills and maintain customer billing records

• Metering, billing and collection costs are generally used to calculate the base monthly charge (customer charge)

• Remaining costs for water and wastewater are accumulated by customer class divided by the estimated volume of usage for each customer class to arrive at a rate per hundred cubic feet of usage (ccf)

Fire Functions: Volume Max Day Max Hour Meter Billing Services

Water System Asset Value ($Million) 230$ 27,520$ 29,981$ 856$ -$ 1,204$ Asset Allocation % 0.385% 46.027% 50.143% 1.432% 0.000% 2.014%Asset Allocation for Revenues 0.393% 46.973% 51.173% 1.461%Field Water Allocation % 0.000% 13.000% 85.000% 2.000% 0.000% 0.000%


City of Ann Arbor Water System Allocations(Carter & Burgess Report)

• The “report year” or FY 2004 unit costs for water were:

Types of Services Unit Costs Unit

� Volume of water used $0.0025 CCF� Maximum Day $0.7096 CCF� Maximum Hour $0.3857 CCF� Meter activities $0.6841 Meter Equivalent� Billing and collecting $14.7374 Account

• Rates were designed to cover these costs • Rate design objectives included:

� City Council and Staff Objectives� Revenue from rates must be sufficient to fund all service costs� Rates must comply with any service contract provisions and with Federal and State reg

requirements� Rates should be designed to support conservation of water resources

� Customer Input Objectives� Rate design should be understandable� Rates should be based on the cost to provide service� Water and wastewater service should be affordable� Revenue from rates should assure revenue stability


City of Ann Arbor Water System Allocations(Carter & Burgess Report)

• To accomplish the rate design objectives the following changes were proposed to the rate structure in place at that time (July, 2004):

� Consumption formerly included in the “minimum quarterly bills” (up to 7 units) was removed to achieve a better match of billing and collection costs with the minimum bill amount

� An “inclining three-block rate structure” was created for the residential customer class. Although it was not based on an average use to peak use model:� The more you use the more you pay per unit – more equitable recovery of costs� Encourages conservation of water resources� Provides for affordability at low consumption levels

� Water only meters used by customers for irrigation and/or cooling processes were assigned the same unit cost as the highest unit price block for residential customers to more equitably recover cost incurred, which incents water conservation

� Private fire protection accounts were assessed a minimum monthly/quarterly charge to recover a portion of infrastructure costs available to that service

� The customer charge was introduced at a lower rate with the intent to reach an equity position ($14.74) within 5 years (2010 = $11.25/qtr water; $10.57/qtr sewer)� This minimized the immediate impact on low volume users (“life-line” rate)� There was recognition of a reduced cost of service in this category because of the AMR

investment


Cost of Service: Inclining Block Rate Structure

The study’s calculations resulted in the following proposed rates, which were actually implemented July, 2004:

WATER0 9

Base Charge to to Over

8 28 28

RESIDENTIALRate per unit of service 9.00$ 0.97$ 1.92$ 2.92$

Base Charge

Volume Charge Per CCF

COMMERCIALRate per unit of service 9.00$ 1.92$

UNIVERSITYRate per unit of service 9.00$ 1.92$

PUBLIC SCHOOLSRate per unit of service 9.00$ 1.92$

WATER ONLYRate per unit of service 9.00$ 2.92$

FIRE SERVICERate per unit of service 18.00$

Volume Charge Per CCF


Cost of Service: Inclining Block Rate Structure

• First effort (pre-MDM) at developing Cost of Service rates• Implemented July 1, 2004 • Residential customers only• Designed to increase customer awareness and appreciation of the value of

water and encourage conservation/more informed choices about water use• Based on recovering the average cost per unit in “demand” blocks• Began with 3-tier structure – 4th tier added July 1, 2005• Model based on national load research data; graphed the number of bills at

each unit of commodity and found that it formed a perfect bell curve

# of

Bill

s

# of Units

Tier 1

Tier 2 Tier 3

Tier 4


Cost of Service: Residential Customer Class 4-Tier Inclining Block R ate Structure

Actual Rates for July 1, 2009 - June 30, 2010

Residential Residential 2 Commercial Water Only(add. of water only meter) (based on peaking factor) (Commercial)

1-7 Units $1.14 $1.14 $2.60 (<=5) $4.08

8-28 Units (21) $2.43 $2.43 $4.90 (>5,<8) $4.08

29-45 Units (17) $3.99 $2.43 $8.39 (>=8) $4.08

Over 45 Units $5.75 $2.43 $4.08


• Significant change is reflected in the system demand profile after the “Cost of Service” rate structure was introduced for the 20 largest commercial class customers in July 2008 and all commercial classcustomers in July 2009.

Peak Day vs. Average Day by Year

10

13

16

19

22

25

28

31

2003 2004 2005 2006 2007 2008 2009

Year

Milli

ons

of G

allo

ns

Avg Day

Peak Day


Cost of Service Rate StructureUsing City of A2 System AMI System Data

• Implemented July 1, 2008• Infrastructure must be built to meet peak demand • Initially and for the foreseeable future Commercial accounts only • The idea is to associate costs to the appropriate users• The City had to find ways to encourage changes in peak use patterns,

assign costs to customers fairly, avoid near term costs associated with water supply development, and to roll out investments in water infrastructure to water customers in an equitable way.


Cost of Service Calculations

• Usage for the year / # of days in the year = average daily demand• Find 3 highest reads between May and October (City’s Peak Period)• Eliminate top 2 reads• Divide remaining “high read” by average daily demand

� <5 Peaking Factor = Tier 1 – $2.60 (Fiscal Year 2010 Rates)� >5 Peaking Factor = Tier 2 – $4.90

� >8 Peaking Factor = Tier 3 – $8.39


7/1/2007 7/2/2007 7/3/2007 7/4/2007 7/5/2007 7/6/2007 7/7/2007 7/8/2007 7/9/2007

Hoover, LLC 0 524 90 24 81 85 39 41 19

2015 Washtenaw Ave.

Acct 522061-145709 7/20/2007 7/21/2007 7/22/2007 7/23/2007 7/24/2007 7/25/2007 7/26/2007 7/27/2007 7/28/2007

853 22 28 541 337 86 382 315 134

8/1/2007 8/2/2007 8/3/2007 8/4/2007 8/5/2007 8/6/2007 8/7/2007 8/8/2007 8/10/2007

1,937 830 2,697 821 1,064 1,540 498 110 169

9/20/2007 9/21/2007 9/22/2007 9/23/2007 9/24/2007 9/25/2007 9/26/2007 9/27/2007 9/28/2007

1,007 114 979 2,671 1,312 1,667 2,114 1,342 1,987

Total Consumption FY08 732.03/365 = 1.98Avg Daily Consumption 2.00

Highest Daily Consump

between May - October

(7/1/07-10/30/07 and

5/1/08 - 6/30/08)

8/3/2007 26.97 43 hours - Exclude9/23/2007 26.71 42 hours - Exclude9/26/2007 21.14 Top 1 - Eliminate9/28/2007 19.87 Top 2 - Eliminate8/1/2007 19.37 Top 3 - Use for Peaking Factor 19.37/2.00 = 9.685

Peaking Factor 9.68 Tier 3

Sample Cost of Service CalculationTier 3 Placement


Issues Associated with Current Cost of Service Calc ulation

• Since meter data is a “stream of consciousness,” we must develop a way to easily identify (for rate calculation purposes) when one customer moves out and another moves in.

• What tier do we use to bill “new” customers at an existing location, until we get at least a 12-month history. Do we use Tier 1 even if the prior customer at that location was in Tier 2 or Tier 3?

• If we change Tiers from one year to the next, how do we manage historical billing data? How is back billing managed?

• Decision was made to handle Condos and apartment buildings as a group of meters (entire complex) vs. each meter as a separate entity.

• Our biggest challenge is the integrity of our billing system. We don’t currently have a “clean” way to associate date ranges with particular billing classes or specific rates.


MDM Benefits for the Utility and its Customers

• Enhanced billing accuracy and timeliness of billing (no more estimates or “false” readings; meter data is available for billing purposes whenever we are)

• Customer self-service applications (i.e. near real-time consumption data on-line)

• Providing meter data to customers in a meaningful way helps them to better understand the “value” of water and manage their own water usage

• Customer perceptions of the value of water has resulted in “on-peak”reductions

• Daily reads allow the utility to look at daily demand and peak to average ratios • New commercial rate structures are based on peak to average ratio

calculations • The data and resulting rate plans allow the utility to distribute costs where the

costs are created instead of a flat rate across the entire customer base or customer class

• Improved business processes (i.e. more accurate cost recovery for water service; weekly “0” usage/negative usage reports; tamper detection)

• There is future applicability to leak detection and water loss management


For more details –www.a2gov.org

Water and Waste Digest – February 2009

Automated Meter Reading Supports Cost of Service Rates in Ann Arborhttp://www.wwdmag.com/Measuring-the-Value-of-Water-article10113

US Mayor Newspaper – April 2009

Advanced Metering Infrastructure Encourages Conservation Through Automation in Ann Arborhttp://usmayors.org/usmayornewspaper/documents/04_27_09/pg23_ann_arbor.asp

Metering International – Issue 4 2009

Leveraging Technology for Improved Water Resource Management, Asset Management, and Customer Service

Upcoming Article in “WaterWorld”


Contact Information

Wendy Welser, ManagerCustomer Service Center, City of Ann [email protected](734)794-6321

city of ann arbor cost of service model: meter data ......© 2009 all rights reserved wendy welser,...

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