The Truth or Consequences City Commission agreed to City Manager Bruce Swingle’s request to hold off on taking any further action on a proposal to replace its analog water meters with smart meters after a public hearing was held on the proposed multimillion-dollar project at the Oct. 13 city commission meeting.
Swingle said he wanted to assess whether the city’s electric meter replacement project completed last year for more than 4,000 customers has resulted in increased electric utility revenues and whether other promised benefits of the new smart electric meters have taken effect.
Last Wednesday’s public hearing was held to provide the city commissioners with the information they need to decide whether the city should purchase and install smart water meters. The hearing’s main presentation was given by Yearout Energy Services, the same company the city had engaged in 2017 to do an “investment-grade audit” of the need to replace T or C’s water and electric meters. Swingle asked YESCO to revisit the concept of “capturing revenue” lost from too-low meter readings from existing water meters, according to the company’s Executive Vice President Alex Montaño, who spoke with the Sun on Monday.
Montaño gave what normally would have been described on the agenda as a vendor’s presentation, but which the city labeled a public hearing. Although the city commission did not follow its own rules for public hearings, the session nonetheless constituted an official record of testimony received from the public and the commission’s decision-making process regarding whether to spend millions of dollars on the water meter replacement project.
The “City Commission Rules of Procedure,” found on the municipal website, lays out a dialectical process for public hearings in Rule 17. The city commission is to act as a neutral judge, calling on proponents and opponents and allowing the parties to rebut each other to further a deeper understanding of the issues. The process also assumes city staff has investigated the proposed project and has an informed position to impart.
On the 13th, the city commission heard from no staff person, and it was not clear if Montaño was speaking as the city’s assigned proponent. Montaño was allowed rebuttal, but not so residents who rose to give testimony and ask questions. One resident was even instructed to seek answers to his questions privately, rather than continue to ask for public explanations.
PUBLIC TESTIMONY LARGELY UNFAVORABLE
Montaño gave his presentation first, stating it was “informational only.” The details of the presentation, a copy of which was included in the Oct. 13 meeting packet, were covered by the Sun in this article.
After Montaño spoke, Mayor Sandra Whitehead called for proponents to give their testimony. For the record, nine members of the public spoke, and none was in favor of the project, although some stated they were neither opponents nor proponents.
Resident Rick Dumiak, who described himself as an opponent, was nonetheless allowed to speak first. YESCO’s math didn’t add up, Dumiak said. The company estimated it would cost $3.5 million to replace the water meters, an amount that would take 13 years to pay off at $250,000 a year in captured revenue. The annual payoff would actually be more than $269,000, Dumiak insisted. He also asked how smart water meters could transmit readings via radio frequency waves since the city’s water meters are underground. Montano later answered that an “emitter “would be installed on the metal cap that covers the meter. “What if a person wants to turn off the water?” Dumiak asked, raising a question about possible injury to the emitter or the customer that went unanswered.
Resident Ariel Dougherty, also an opponent, spoke next. “I think the real issue is water leaks [from city water mains] . . . the meters can wait,” Dougherty said. Manager Swingle, after the public hearing closed, verified that the city is experiencing “15 to 20 water leaks a week.”
Dougherty questioned the high purchase price of the smart water meters, pointing out that the prorated cost of outfitting each of the city’s 3,294 water customers was more than $1,000. She requested the city consider purchasing new meters that do not emit radio frequencies, which she said are suspected to be carcinogenic, although that has not yet been definitively proven. The Federal Communication Commission’s standard for harmful radio frequency emissions, Dougherty said, was set more than 23 years ago.
Resident Ron Fenn, an opponent, asked: “Who invited YESCO?” His question about the appropriateness of the vendor’s inclusion in the public hearing went unanswered. Fenn contested YESCO’s claim the meters will provide “guaranteed savings.” “We, the people, will pay for it and will get nothing for it,” Fenn maintained. “$3.5 million could buy a lot of water,” he added. “Let’s fix water lines first.”
Resident Klaus Wittern, who said he was neither for or against smart water meters, called the comments of members of the public who had preceded him a “lot of nonsense.” He suggested the city form a committee of volunteers, himself among them, to “assess the need for water meters.” He estimated the city could pay back the cost of water meters in seven years. “We can do this [analysis] in house,” Wittern said.
Resident Chris Sisney, who serves on the T or C planning and zoning commission, asked if the analog meters had been properly maintained, a question that went unanswered. He suggested that all that might be needed was to replace a “simple” paddle-wheel mechanism inside the meter to ensure an accurate reading of water consumption, even if the measured water is running at low pressure. “It could be a $1 part,” Sisney said.
In a phone call with the Sun on Monday, Sisney said he had located a water meter rebuilding kit that can be purchased for $24. “You could hire a person to rebuild meters—they could easily do 10 a day—and in about a year all of them would be as good as new. It’s a very simple machine that could easily last 100 years. That’s a lot less expensive than $3.5 million.”
At the hearing Sisney asked how the smart water meters will be powered without access to electricity. Smart water meters run on batteries, Montaño stated later, which he claimed last 10 years.
Sisney asked whether there was a danger that the emitters atop meter covers positioned in alleys would routinely be run over by vehicles. This question went unanswered.
Sisney asked if his questions could be answered by city staff or YESCO and if he could then ask follow-up questions. “Isn’t this a fact-finding proceeding?” he asked. Mayor Sandra Whitehead ruled that no “back and forth” would be allowed.
Commissioner Luna went further, instructing Sisney to “ask questions in private.” “I don’t understand this,” Luna admitted, “and it won’t help me make a decision.”
“Anybody else interested?” Sisney asked of the members of the public in attendance. Several responded: “Yes.” Unmoved, Whitehead dismissed him from the speaker’s podium.
Resident Art Berger introduced himself as having “advised governments” on the “cost benefits” of various technical systems. He warned that one third of the “savings” estimated by YESCO would come from increased water utility fees. (The city raised water rates nearly 50 percent last year and another 5.4 percent this month.) Berger recommended that the city determine what portion of non-revenue water is lost because of broken pipes and faulty meter readings. “You need to know more,” he said.
Resident Susy Crow said the city’s smart electric meter replacement project was not “underwritten,” probably meaning the meters were not insured should they cause fire and health hazards (judging by comments made by Crow’s at previous city commission meetings). “I don’t want increased radiation in the community,” she said at the public hearing. “I don’t want the water supply radiated.”
Resident Bill Davidson and resident Bonnie Lovell, who both said they had personally witnessed frequent water leaks on the city’s streets, each advocated for addressing the issue of the city’s failing water lines before spending money on new meters.
Rule 17 allows the city commission to ask questions of any of the parties after all have spoken, but only one question was asked. Commissioner Frances Luna inquired about how much it would cost to have YESCO do an investment-grade audit of the city’s water meters. Between $22,000 and $25,000, Montaño responded, since it would be an update of the 2017 audit that cost the city about $60,000.
YESCO’S PROPOSED “PERFORMANCE CONTRACT”
Montaño clarified points about the nature of YESCO’s services left uncovered in his public presentation in a phone interview with the Sun on Monday.
Founded in 1964, YESCO is an “engineering and construction company” and an “energy services company,” with offices in Albuquerque, Littleton, Colorado, and Heath, Texas. The company proposes to offer the City of Truth or Consequences a “performance contract,” having met the requirements of a “qualified provider” set forth in the “Public Facility Energy Efficiency and Water Conservation Act” (state statutes 6-23-1 through 6-23-6).
YESCO’s investment-grade audit of the city’s water meters, as well as the contract it may be awarded should the city choose to go ahead with the replacement project, must be “certified” by the New Mexico Office of the State Engineer. Among other things, the certification process will ensure that the recommended “water conservation measures meet the experience requirements set by that office and the guaranteed water savings from the water conservation measures proposed appear to be accurately estimated and reasonable,” the law states.
Montaño further explained that company’s estimate that the meter replacement project would cost $3.5 million covers only YESCO’s expenses. “We don’t handle the financing,” he said, adding that that the city would likely borrow the money from an entity like the New Mexico Finance Authority. The debt payments would be made with revenue captured from presumably more accurate and higher readings of residents’ water consumption.
The maximum financing term allowed by state law is 25 years, Montaño said. State law also forbids a financing term longer than the life of the equipment sold.
Furthermore, the law requires that, as Montaño put it, the “city cannot be upside-down over the life of the loan or in any one year.” In other words, the annual loan payment “cannot be greater than the benefit.”
In its 2017 investment-grade audit for T or C, YESCO proposed that the city purchase smart water meters manufactured by Kamstrup, Montaño said. The project’s estimated $5.1 million cost included a 20-year warranty on the meters, matching the proposed 20-year financing term.
The State Engineer’s certification process requires all project expenses to be known in advance, Montaño said. In T or C’s case, the costs of the smart water meters, their batteries and replacement batteries, YESCO’s labor and project markup should be spelled out in YESCO’s investment-grade audit.
A well-conducted performance contract will involve ongoing communication between YESCO and the city over the course of the financing term, Montaño said. If, for example, the city were to add water customers beyond the original number included in the contract, “a non-routine adjustment” would need to be agreed upon and the contract’s guarantee terms changed. “You have to hire a company that is in it for the long term,” Montaño said.