JCI Energy Savings Performance Contract (ESPC) Services AMI System & Water Meter Replacements Water System SCADA Upgrades Acoustic Leak Survey August

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1 JCI Energy Savings Performance Contract (ESPC) Services AMI System & Water Meter Replacements Water System SCADA Upgrades Acoustic Leak Survey August 7, 2018

2 2 What is ESPC? Energy Savings Performance Contracts (ESPC) are a procurement vehicle that allows you to make improvements today and pay for those improvements over a term using the savings or revenue generated from the upgrades. It is called performance contracting because the results are guaranteed.

3 3 Investment Grade Audit Results Annual Water & Wastewater Revenues 2017 Annual Water Revenues Annual Sewer Revenues Total Annual Water & Sewer Revenues $2,403,000 $1,941,000 $4,344,000

4 4 Investment Grade Audit Results Small & Intermediate Water Meters Accuracy Test Results Meter Size Quantity Tested Tested Overall Weighted Average Accuracy x % % 2.0 PD % Total 60

5 5 Recommended Scope of Work Water Meter Upgrades Replace Upgrade Meters & to AMI Meter Type Upgrade Totals Meters to AMI Only Meters x 0.75 Water Meters 3, ,385 1 Water Meters Water Meters Positive Displacement Meters Large Water Meters Totals 3, ,594

6 6 Recommended Scope of Work AMI System Installation of an Itron ChoiceConnect AMI system across the entire water distribution system (existing AMR system is over 15 years old & manufacturer has discontinued support) Itron hosted network software and WaterSmart hosted data analytics software GPS coordinates of water meter locations that is accurate to within a 3 meter radius Itron 100W+ ERT endpoints 20 year total warranty, including batteries (10 years full warranty, prorated years 11 20)

7 7 Recommended Scope of Work Small & Intermediate Water Meters Replace all existing water meters 1.5 and smaller along with existing 2 positive displacement meters with new Kamstrup flowiq ultrasonic ( static ) water meters (most of the existing meters are over 15 years old) Static water meters hold their accuracy over time Meter is virtually impervious to iron, scale deposits, tuberculation, and sand Kamstrup warranty is not dependent upon water quality Superior accuracy at low flow rates translates into increased billable water & sewer revenues 20 year accuracy & battery warranty (10 years full and prorated years 11-20)

8 8 Recommended Scope of Work Large Water Meters Replace seven (7) existing turbo meter and compound water meters with new Honeywell-Elster evoq4 mag water meters Mag water meters hold their accuracy over time. The evoq4 meter is virtually impervious to iron, scale deposits, sand and tuberculation 5 year warranty: Longest large meter warranty in the industry

9 9 Recommended Scope of Work Remote Disconnect Valves Smart Earth Technologies Water Disconnect Valve 3-Position Valve: On, Off, & Trickle Available in 0.75 and 1 sizes Valve has a 10-Year battery warranty at 2-cycles per month; Water meter has the same 20 year warranty Requires the Itron Security Manager software package Remote disconnect at 200 of the x 0.75 services

10 10 Recommended Scope of Work Water Utility (Other Improvements) Replace some existing lids to improve Radio Frequency communications Meter typing improvements at several locations Provide an Itron ChoiceConnect mobile AMR system to read the meters that cannot be read via the ChoiceConnect fixed-base AMI system network and to provide system redundancy

11 11 Recommended Scope of Work Customer Web Portal Real-time consumption and comparisons to both historical data and to other, similar properties Consumption analysis (history & trends) Alerts & notifications (leaks, burst pipes, approaching user-defined consumption thresholds, etc ) Printed reports for customers who request them Reduces volume of calls to customer service Consider using the web portal to post delinquent bill notices and shut-off notices

12 12 Recommended Scope of Work Acoustic Leak Survey Acoustic leak noise survey of the entire distribution system Survey will include leak noise correlation to locate the leak or break site to within a 3 foot diameter circle City will repair the leaks

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14 14 Recommended Scope of Work Water System SCADA Upgrades New master SCADA computer system & software at Water Maintenance building Fully automate & 24-hour monitoring of all active water wells, tanks, booster stations & chemical feed systems Early detection of system performance so that operators can respond to issues before they completely fail Reduction of daily inspections of each well & tank site Improved site security Reduced operating costs

15 15 Recommended Scope of Work Water System SCADA Upgrades

16 16 JCI ESPC Deliverables AMI System Performance After initial startup and commissioning, the AMI system shall meet the following performance requirements: Consistently obtain meter reads for a minimum of three (3) consecutive months and be able to produce one hundred percent (100%) accurate billing on a minimum of ninety-eight percent (98%) of all accounts on a monthly basis The maximum of two percent (2%) of reads not acquired initially must be available for billing within seventy-two (72) hours of the billing date and cannot occur at the same account for three (3) consecutive months Guarantee Performance Bond JCI will provide a performance bond on the annual guaranteed benefits

17 17 JCI ESPC Deliverables Pre-Retrofit Meter Accuracy Deration Table Year 0.625" x 0.75" 1" 2" % 76.9% 88.0% % 76.8% 87.9% % 76.7% 87.8% % 76.6% 87.7% % 76.5% 87.6% % 76.4% 87.5% % 76.3% 87.4% % 76.2% 87.3% % 76.1% 87.2% % 76.0% 87.1% % 75.9% 87.0% % 75.8% 86.9% % 75.7% 86.8% % 75.6% 86.7% % 75.5% 86.6% Annual Meter Deration is 0.1% starting in Year 2 Post-Retrofit Meter Accuracy Deration Table Year 0.625" x 0.75" 1" 2" % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 99.0% 99.0% % 98.9% 98.9% % 98.8% 98.8% % 98.7% 98.7% % 98.6% 98.6% % 98.5% 98.5% Annual Meter Deration is 0.1% starting in Year 11

18 18 JCI ESPC Deliverables Annual M&V Services Water meter accuracy testing & replacement (Years 4,7,10,13) System-wide acoustic leak survey (Construction, Years 5 & 11) Submit annual reports on measured project benefits vs. guaranteed project benefits Review of the water pumped and billable water and sewer usage with performance period comparison to that of target values derived from Baseline year performance Evaluation reports on billable data to maximize benefit of AMI system & maintain billable revenue: Track top users Flag anomalies Variance Zero read Zero consumption Non-Revenue Water Special requests Potential leaks Potential theft Inactive consumption

19 19 Project Cost & Savings Meter Accuracy Benefits Sewer Billing Benefits Leak Detection Benefits O&M Cost Benefits Total Project Benefits Item Cost AMI System & Meter Replacements $1,808,000 $224,174 $14,214 $78,568 $316,956 System-Wide Acoustic Leak Survey $49,200 $15,752 $15,752 Remote Disconnect Valves $56,500 $22,193 $22,193 Water System SCADA Upgrades $329,500 $43,913 $43,913 Contingency Allowance $40,000 Investment Grade Audit $42,500 Construction Management & Training $236,800 Final Engineering $50,900 Construction M&V $19,100 Warranty $12,900 Performance & Payment Bond $10,800 Subtotals $2,656,200 $224,174 $14,214 $15,752 $144,674 $398,814 GRT Tax (8.9375%) $237,400 Total $2,893,600 Simple Payback (Years) 7.3

20 20 Project Cost Project Tax (8.9375%) Total Financed Amount Contract Term - Years Finance Term - Months Construction Term - Months Loan Payment Frequency Interest Rate Construction Interest Expense $ 2,656,200 $ 237,400 $ 2,893, Quarterly 3.50% $ 60,391 Business Case Analysis Performance Years Meter Accuracy Benefits Sewer Billing Benefits Leak Detection Benefits O&M Cost Benefits Total Project Benefits Loan Payments M&V Services Performance Bond AMI Maintenance Fees Year 1 $ 224,174 $ 14,214 $ 15,752 $ 144,674 $ 398,814 $ 257,397 $ 25,517 $ 700 $ 25,200 $ 90,000 Year 2 $ 224,174 $ 14,214 $ 14,964 $ 147,567 $ 400,920 $ 258,717 $ 26,282 $ 721 $ 25,200 $ 90,000 Year 3 $ 224,174 $ 14,214 $ 14,216 $ 150,519 $ 403,123 $ 260,110 $ 27,071 $ 743 $ 25,200 $ 90,000 Year 4 $ 224,174 $ 14,214 $ 13,505 $ 153,529 $ 405,423 $ 224,888 $ 64,570 $ 765 $ 25,200 $ 90,000 Year 5 $ 224,174 $ 14,214 $ 17,557 $ 156,600 $ 412,545 $ 208,429 $ 80,379 $ 788 $ 25,200 $ 97,749 Year 6 $ 224,174 $ 14,214 $ 16,679 $ 159,732 $ 414,799 $ 268,451 $ 29,581 $ 811 $ 25,956 $ 90,000 Year 7 $ 224,174 $ 14,214 $ 15,845 $ 162,926 $ 417,160 $ 229,811 $ 70,557 $ 836 $ 25,956 $ 90,000 Year 8 $ 224,174 $ 14,214 $ 15,053 $ 166,185 $ 419,626 $ 271,427 $ 31,382 $ 861 $ 25,956 $ 90,000 Year 9 $ 224,174 $ 14,214 $ 14,300 $ 169,509 $ 422,197 $ 273,030 $ 32,324 $ 887 $ 25,956 $ 90,000 Year 10 $ 224,174 $ 14,214 $ 13,585 $ 172,899 $ 424,872 $ 230,903 $ 77,099 $ 913 $ 25,956 $ 90,000 Year 11 $ 224,174 $ 14,214 $ 17,661 $ 176,357 $ 432,406 $ 218,058 $ 88,535 $ 941 $ 26,735 $ 98,137 Year 12 $ 224,174 $ 14,214 $ 16,778 $ 179,884 $ 435,050 $ 282,025 $ 35,321 $ 969 $ 26,735 $ 90,000 Year 13 $ 224,174 $ 14,214 $ 15,939 $ 183,482 $ 437,809 $ 235,827 $ 84,249 $ 998 $ 26,735 $ 90,000 Year 14 $ 224,174 $ 14,214 $ 15,142 $ 187,151 $ 440,681 $ 285,447 $ 37,472 $ 1,028 $ 26,735 $ 90,000 Year 15 $ 224,174 $ 14,214 $ 14,385 $ 190,894 $ 443,667 $ 286,951 $ 38,596 $ 1,059 $ 26,735 $ 90,326 Totals $ 3,362,610 $ 213,210 $ 231,362 $ 2,501,908 $ 6,309,090 $ 3,791,471 $ 748,934 $ 13,019 $ 389,454 $ 1,366,212 Balance

21 21 Project Benefits Quick replacement of the failing mobile AMR system with a new fixed-base AMI system Mobile AMR system provided as a back-up JCI national pricing agreements Reduce apparent water losses (customer metering inaccuracies, meter typing, estimated readings) Reduce real water losses with acoustic leak survey 20-year expected life (except for a few batteries) Reduce operation and maintenance expenditures Proactively maintain utility revenue streams with the data analytics software Increase levels of customer service, especially with the customer web portal

22 22 Project Benefits Restoration of equitable billing through the virtual elimination of estimated meter readings Reduce customer side water losses through AMI data analytics and web portal alerts & notifications Customer web portal may be used to send delinquent bill notices instead of mailers and door hangers Reduce volume of calls to customer service department Positive impact on the local community, economy & environment Guaranteed, self-funded infrastructure improvements Guaranteed project benefits greater than $33,000 per month