The upgrade will cost $1 million and will take about six months. The City Commission unanimously approved hiring Landis + Gyr to do the work at its August 27 meeting.
City Manager Morris Madrid said “experts” developed the city’s RFP or request for professional services. About half a dozen companies responded. An unnamed city-employee panel narrowed the candidates to three and then heard their presentations. The panel gave Landis + Gyr the highest grade.
No rate hike was discussed at the August 27 city commission meeting, nor was the source of payment. City Manager Morris Madrid told commissioners it will cost $1 million after he negotiated an 8.5-percent “discount” given by the company, which would otherwise have consisted of “gross receipts tax.” Since cities are not required to pay tax, it is no discount.
Asked how it will be paid for, Madrid said it will come out of the electric “enterprise fund.”
Asked if a cost analysis had been done, Madrid said “I can give you one right now verbally.” There are currently three meter readers costing about $60,000 a year, which includes their benefits, and one of them will be eliminated “for now,” he said. Fuel and some operating costs will also be saved, he said.
The main reason given for upgrading to smart meters is to make it unnecessary for meter readers to go onto private property. Bo Easley, electric department director, gave a presentation showing dogs, locked fences, weeds and other obstructions that must be braved to get to meters.
A law on city books requires customers to make their meters available, but it has not been enforced, City Commissioner George Szigeti pointed out. He said the city will still need access to the meters to ensure they are operating correctly and requested the code be enforced.
Mayor Pro-Tem Kathy Clark asked for assurance that commercial customers not be required to “bring their building up to code” in order to be “compatible” with the new meters. Easley said the “40 or 50” commercial customers will keep their old meters, which will still be read “by hand.”
No public comment was allowed at the meeting. The City Commission recently passed a new policy restricting it to the first meeting and disallowing it at the second meeting in the month.
After the meeting Mayor Sandra Whitehead said an ordinance would be coming up concerning the smart-meter purchase and the public may weigh in then. Asked in an email if the city would already be financially obligated to purchase the meters, making any comment moot, Whitehead did not respond within seven days. Whitehead did say she would provide answers to numerous questions by Sept. 10, the next meeting.
Related background
Will smart meters be required by Sierra Co. Co-op?
Madrid said during the August 27 meeting that the Sierra County Electric Cooperative, one of the two companies from which the city purchases electricity, may require smart meters in the future. If the company does, it would be going against the state’s Public Regulation Commission, which rejected another company’s bid to install smart meters.
According to the Santa Fe New Mexican’s April 2018 article, “Regulators reject PNM plan to install smart meters,” the PRC “unanimously rejected Public Service Company of New Mexico’s proposal for a new remote metering system that the electric utility claimed would save customers $20 million over the next two decades and give consumers the ability to monitor their power use online.
“PRC Chairman Sandy Jones issued a statement saying the regulatory body rejected so-called smart meters, “citing rate increases, an excessive opt-out fee, and layoffs as deal breakers.”
Although TorC’s self-owned utility and its relationship with Sierra County Electric Cooperative is beyond the PRC’s purview, the company’s relationship with other towns is overseen by PRC.
The electric utility fund is the city’s cash cow.
The city’s general fund expenditures were about $5 million a year since 2012, rising to $5.4 million this year, according to the 2019-2020 preliminary budget. For the last three years the city has transferred $1.65 million from the electric fund into the general fund to meet expenses. The July preliminary budget calls for a $1.4-million transfer, but the waste water fund will be tapped for $100,000 for the first time and the solid waste department will contribute $55,000 more than last year to nearly make up the difference.
Without the electric fund transfers the city would run budget deficits every year. Therefore how the city commission decides to spend the profit from its electric-bill charges affects city expenditures in general.
Whitehead offered to gather any documents and answer questions about the purchase by Sept. 10, a two-week wait. The Sierra County Sun has requested it be provided with any cost analysis the city may have done to determine $1 million should be spent on electric smart meters. The purchase was not part of the city’s Aug. 27 approval of its Infrastructure Capital Improvements Plan, nor is it mentioned in the 2014 Comprehensive Plan.
A copy of the electric department study on the state of its equipment and transmission lines, referred to in the 2014 Comprehensive Plan, has also been requested.
The Comprehensive Plan states, “The inherent inefficiencies and the age of the old transformers and distribution network cause excessive loss of energy. Approximately 15 to 20 percent of the city’s annual cost of electricity is due to losses from this older portion of the distribution system.”