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5.5. ERMUSR 09-15-2010 Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 UTILITIES COMMISSION MEETING ~~ Phone: 763.441.2020 Fax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. - Director of Operations John Dietz, Chair Jerry Gumphrey, Vice Chair Dar 1 Thom son, Trustee MEETING DATE: AGENDA ITEM NUMBER: Se tember 15, 2010 5.5 SUBJECT: Meter Reading BACKGROUND: In 1988, Patrick McBrady entered into a meter reading agreement with Elk River Municipal Utilities (ERMU). This agreement automatically renews annually with the current contracted year ending on June 1, 2011. Over the years this contract has been modified due to improvements in technology and changes in costs. On August 2d`~', Patrick McBrady informed staff that September would be his last month reading meters from ERMU. The contract does allow for termination in mid term by mutual agreement. A Termination Agreement has been sent to Patrick for execution. DISCUSSION: Moving forward, there are a number of options to meet our meter reading needs. We could contract out the meter reading, or bring the meter reading in house using current staff, or we could bring the meter reading in house and hire additional staff. Contracting out the meter reading reduces our control on the process, quality, and scope of work. Starting over with a new meter reading company would introduce new challenges with teaming ERMU's system, policies, and procedures. Bringing meter reading in house also gives ERMU more control on controlling cost and efficiency. It would be favorable to bring the meter reading in house. Over the past years, ERMU has been changing the mechanical electric and water meters out and replacing with electronic Encoder-Receiver-Transmitter (ERT) meters. These meters can be read remotely. With the advancement in meter reading technology and the progress made in changing out meter to ERTed meters, ERMU has seen great improvements in meter reading efficiency that have kept up with our growth rate. A year ago, ERMU purchased an upgraded meter reading device, called a McLite, which is capable of cutting the meter reading time to a fraction of what it is currently. Staff has been working on an implementation plan for this new piece of equipment and had McBrady Meter Reading testing the equipment. With this piece of equipment it would not be inconceivable to bring the meter reading in house without hiring additional staff. This device does, however, have some limitations with the number of routes that can be loaded. Days afrer the meter reading agreement termination notice from McBrady, staff was contacted by the company that sold us the McLite with an opportunity to purchase anew-in-the- box second-hand device, a mobile collector. This device would be a significant upgrade in meter reading abiliTy to the McLite and would eliminate the limitations on the number of routes that can be loaded. This mobile collector would make the added meter reading associated with territory acquisition easier. The device would cost $26,000 with the possibility of trading in the McLite. This mobile collector had been priced at $38,000 new. Another factor to be considered with taking meter reading in house would be meter disconnects and reconnects associated with non-payment. There is a need for trained personnel to perform the high number of disconnects experienced in recent yeazs. Improvements in meter reading technology do not eliminate the need for an appropriate number of trained personnel. In addition to the disconnects and reconnects, there is a need for these trained personnel for physical inspection of metering facilities. It is required by the National Electrical Safety Code that metering facilities are inspected "as experience deems necessary". As more and more meters were converted to ERTed meters and being read remotely, the physical inspections that had been inherent to meter reading became less frequent. This is something that will need to be scheduled on an ongoing rotational basis and will require trained personnel. Because of these reasons there is a need for additional trained staff to bring meter reading in house. This additional work would justify the addition on 1 part time employee. With the increasing trend in disconnects and reconnects associated with non-payment, it may also be necessary to hire a seasonal employee. Based on the results from a 2010 salary survey done by Minnesota Municipal Utilities Association, a meter reader hourly wage would fall in the range of our current pay plan azound grade level 3. Calculating the points per our pay plan system, this position would fit into the grade level 3. At an average of 20 hours per week and including the applicable benefits, vehicle, and persona( protective equipment, the annual cost for this position would have an approximately range of $24,000 to $31,000. A seasonal employee hired to assist with disconnects and reconnects may be needed approximately 2 days a month for 7 months of the yeaz. At our current pay rate for seasonal employees and including personal protective equipment, the annual cost for this employee would be approximately $3000. There may be a need to also utilize the current meter technicians to assist with the meter rereads, disconnects, and reconnects. This reallocation of time would be minimal and the costs associated with that time aze already being realized by ERMU. This shift in cost wouldn't be more that $10,000 per yeaz. This would bring the approximate cost range to bring meter reading in house with the hiring of the additional staff to $37,000 to $44,000. Under the current meter reading agreement, the 2010 total yeaz estimate for meter reading is $111,072.05. ACTION REQUESTED: Staff recommends the authorization to hire an additional part time meter reader and a seasonal employee to facilitate taking meter reading in house. Staff recommends the authorization to purchase the unbudgeted mobile collector.