AMI Hidden Costs and Hidden Values Feb 2017 AMI Hidden Costs and Hidden Values Travis Smith Director of NA Smart Water Strategy

Hidden Operating Costs Back Haul Maintenance Data Plans Coverage Issues Field Issues, Obsolescence, Replacement Costs

Back Haul Costs Sensus Less Collectors $120-600 per collector/yr Other RF 5-10X collectors $12,000-$120,000 more over the life

Base Station Maintenance Costs Issues Sensus Others Natural Disasters (10% once over the 20 years) ~$2500 ~$12,500-$25,000 Vandalism/Damage Rare due to harden sites ~$10,000-$100,000 Upgrades ~$1,500 ~$7,500-$15,000 Product Issues Significantly more labor to diagnose the issue

Sensus Cellular $0 / end point $720 / end point over 20 years Data Plans Sensus $0 / end point Cellular $720 / end point over 20 years Escalation?

Coverage Issues RF Installation of More Collectors $1,500 Power Supply $5,000 Site Rental ~$10,000 over 20 years Back Haul $2,400-$12,000 over 20 yrs Cellular Alternative Infrastructure for non coverage or labor

Field Issues, Obsolescence, 10 yr Life Obsolescence – 10 Year Life Install $30-$50 / endpoint Replacement $60-$100 / endpoint Total $90-$150 more per endpoint than FlexNet What if the user has to experience end of life and obsolescence? $180-$300 per endpoint more than FlexNet Field Issues Site Visit $30-$50 / endpoint Per Occurrence

Total Hidden Costs Items Cost Increase Over FlexNet over 20 years Back Haul $12,000 - $120,000 Maintenance $27,000 - $127,000 Data Plans $720 / end point Coverage $18,900 - $ 28,500 End of Life, Obsolescence $90-$300 per end point Sensus Other RF $57,900 - $275,500 Why the need for pilots? Do other RF AMI systems work? Costs of no reads, on demand reads – labor, trucks, back office Sensus Cellular $810-1,020 / end point

Enhance Customer Service Value Propositions Water Utility Charters Water Utility Objectives WaterView Clean Drinking Water for Public Health HydroView Flow of Water for Fire Safety SourceView Sustainability of the Supply Account View Customer Service Financial Management AssetView Manage the life of the assets Increase Revenue Lower Costs Optimize Assets Reduce Risks Enhance Customer Service Return on Investment

Why More Often

Use Patterns

Action 2 am, Node 72 Historical Trends 325 Ft of Water 35 Psig 20 Gals Water Withdrawl Population est Mgal/day Mgal/yr Price of water ($/Kgal) Total Revenue $ 20% Loss Value 10% Loss Value Value of a 2.5 year payback based upon 10% recovery Totals Domestic Public Supply 264,444,444.44 23,800 8,687,000 4 $ 34,748,000,000 $ 6,949,600,000 $ 3,474,800,000 $ 8,687,000,000 less PR and USVIS   23,566 8,601,710 $ 34,406,841,800 $ 6,881,368,360 $ 3,440,684,180 $ 8,601,710,450 23% market share 5,420 1,978,393 $ 7,913,573,614 $ 1,582,714,723 $ 791,357,361 $ 1,978,393,404 5 mgd 55,556 5 1825 3 $ 5,475,000 $ 1,095,000 $ 547,500 $ 1,368,750 10mgd 111,111 10 3650 $ 10,950,000 $ 2,190,000 $ 1,095,000 $ 2,737,500 20 mgd 222,222 20 7300 $ 21,900,000 $ 4,380,000 $ 2,190,000 $ 5,475,000 50 mgd 555,556 50 18250 $ 54,750,000 $ 10,950,000 $ 5,475,000 $ 13,687,500 100 mgd 1,111,111 100 36500 $ 109,500,000 $ 21,900,000 $ 10,950,000 $ 27,375,000 200 mgd 2,222,222 200 73000 $ 219,000,000 $ 43,800,000 $ 21,900,000 $ 54,750,000 Action Historical Trends 2 am, Node 72 325 Ft of Water 35 Psig 20 Gals

Value Propositions – Non Revenue Water Increase Revenue Improved accuracy with Low Flow Registration, 20 Year accuracy, and Field Adjustable Accuracy Revenue from Tamper Detection and Unauthorized Use Lower Pressure Loss for more Consumption Revenue from Dispute Resolution Billing Error Corrections Lower Costs Reduce Leaks (Production and Transport Costs) Reduce Bad Debt, and Collections Costs Lower Repair Costs Reduce Costs for Dispute Resolution Reduce Replacement Costs Optimize Assets Extend the Life of Production and Treatment Facilities Optimize Storage and Pumping Operations Extend the Life of Mains and Service Lines Reduce Risks Fewer Main Breaks Better Fire Fighting Capabilities with Hydrant Monitoring and Pressure Management Predictive Analysis Reduce Water Quality Risk from Breakage Enhance Customer Service Improve Service Pressure Less Billing Disputes 5-15% 5-15% Return on Investment

Typical 5 MGD Utility

Common Losses

Revenue Water Measurement Grouping Billed Water Exported Billed Metered Consumption Billed Unmetered Consumption Billed Not Collected Metered Use Unbilled Metered Consumption Unbilled Unmetered Consumption Unauthorized Consumption Customer Metering Inaccuracies Systematic Data Handling Errors Leakage on Mains Leakage on Service Lines Spills and Overflow

Non Revenue Water Measurement Grouping Billed Water Exported Billed Metered Consumption Billed Unmetered Consumption Billed Not Collected Metered Use Unbilled Metered Consumption Unbilled Unmetered Consumption Unauthorized Consumption Customer Metering Inaccuracies Systematic Data Handling Errors Leakage on Mains Leakage on Service Lines Spills and Overflow 1 2 3 9 4 2 7 1 7 5 4 6 5 8 7 3 6 8 9

Non Revenue Water Status Quo Costs Increase as Leaks Grow Revenue Decreases as Apparent Losses Grow

Solution Packages 93-97% Revenue Water Apparent Losses Real Losses 1 2 C & I accuracy improvements Improve Residential Accuracy and Reduce Billing Errors Reduce Unauthorized Use and bad debt Mass Balance Acoustic View Fluid Energy Advanced Leak Detection Apparent Losses Real Losses 1 2 3 4 5 6 7

Non Revenue Solutions 10% Cost Reduction 11% Revenue Gain Revenue Increases as Apparent Losses are Reduced Costs Reduced as Real Losses are Controlled Infrastructure Expansion is Deferred Customer Service Is Improved Labor is Optimized 11% Revenue Gain

Lost Opportunity Basis Sensus Water Balance Source Input Delivery Consumption/ Loss Type of Use or Loss Revenue/ Non-Revenue Measurement Grouping Examples Lost Opportunity Basis Surface Water Total System Input Water Exported Authorized Consumption Billed Authorized Consumption Revenue Water Billed Water Exported Municipal Transfer Water None Water Supplied Billed Metered Consumption Residential, Commercial, Industrial Use, Including Customer Leaks Billed Unmetered Consumption Flat Fee Structures for Accounts Non- Revenue Water Billed Not Collected Metered Use Residential, Commercial, Industrial Use, but payment not collected for leak adjustments, bad debt, or forgiveness. Revenue Lost Unbilled Authorized Consumption Unbilled Metered Consumption City Use, Other Authorized Non payment Applications, Flushing Unbilled Unmetered Consumption City Use, Other Authorized Non payment Applications, Flushing, Firefighting Water Losses Apparent Losses Unauthorized Consumption Unauthorized use, Tamper Customer Metering Inaccuracies Residential, Commercial, Industrial Meters accuracy errors Ground Water Systematic Data Handling Errors Billing errors, unit errors, resolution errors, estimated reads Real Losses Leakage on Mains Leaks on Transmission and/or Distribution Mains Production Costs Lost Purchased or Imported Water Leakage on Service Lines Leaks on Service Connections Up to Customer Meters Leakage & Overflows at Storage Storage Tank Leaks and Overflows

Asset Optimization

Main Break Costs REPAIR According to the American Society of Civil Engineers, the U.S. suffers from 240,000 water main breaks a year. That's roughly 700 water main breaks each day. 15 breaks per 100 miles (161 km) per year of water main is common. @ $3,205 (USD) per break of repair costs, = $48,075 / year / 100 miles of mains WATER COSTS 1-4 hours duration 10-1,000 GPM = 600-240,000 gallons @ $1.25/1000 gallons = $0.75 - $300 BUSINESS – SOCIAL COSTS Street closures and citizens quality of life ????? Lost business productivity ????

Replacement Costs $ 926,807 (US$) / Mile of Pipe $ 579,254 (US$) / km of Pipe

Value Propositions – Asset Management Increase Revenue Lower Pressure Loss for more Consumption Lower Costs Reduce Leaks (Production and Transport Costs) Lower Repair Costs Reduce Costs for Dispute Resolution Reduce Replacement Costs Optimize Assets Extend the Life of Production and Treatment Facilities Optimize Storage and Pumping Operations Extend the Life of Mains and Service Lines Reduce Risks Fewer Main Breaks Better Fire Fighting Capabilities with Hydrant Monitoring and Pressure Management Predictive Analysis Reduce Water Quality Risk from Breakage Enhance Customer Service Improve Service Pressure Avoid Lost Business Revenue Daily Disruptions 5-15% Return on Investment

Asset Values AWWA Benchmark is 11 breaks per 100 miles of water mains per year. What if we could reduce that by 36% - 80 fewer breaks over 20 yrs $6M in rehabilitation and replacement costs What if we could reduce that by 10% per year - $12M over 20 years

Thank You