Council approves $1.5M water meter replacement
ALPENA – In 2012 Alpena Municipal Council approved financing $1.5 million from United Water to replace residential water meters in the city.
The city’s reasoning to move forward with the project was many of the meters were more than two decades old and were not reading the customer’s consumption rates accurately. It was believed most of the meters were registering water use below what actually was being used and as a result, the customers were not paying for what they were using.
In a report to council United Water Operations Manager Mike Glowinski and City Engineer Rich Sullenger said they believed replacing the meters would result in an increase in water revenue by about 15-20 percent, which would cover the monthly payments for the meters as well as have a surplus to deposit into the water fund. Now that the meters have been in place for more than a year, it appears the projected revenue is coming in less than anticipated.
Alpena Clerk/Treasurer Karen Hebert said the city has seen only a slight increase in its billing for city residents. She said so far there has been only an additional 5-6 percent spike in water revenue, from usage. Further more, the additional revenue generated from the new meters is not enough to cover the $15,625 monthly payment owed United Water for the next eight years. Annually the city is obligated to pay $187,500 for the water meters.
The city has had three water studies done in the last 15 years and all showed the city needed new meters and the revenue would be significant. City Manager Greg Sundin, who was not in his current position at the time council voted to purchase the meters, said the new meters were needed regardless of how much revenue they generate. He said the old meters were not reliable and the new system provides better services to customers because the new system can flag high usage and allows United water to contact the customer and prevent high bills from leaks or busted pipes.
“The information we received was that the meters were under reading, which happens when they get old. They typically don’t over-read,” Sundin said. “This system is a big plus for the citizens, whether they bring in more revenue or not. It was worth the investment, because it brought us into the 21 century and allows us to monitor the system right from the United Water office.”
Sullenger, who worked with United Water on the water meter project, said since July more than 100 customers have been flagged and notified about a spike in use. He said it saved them a lot of money, even though it probably cost the city some revenue. Sullenger said on several occasions old meters were tested and showed significant under reading.
He said when Siemens did an energy study 50 meters were randomly pulled and sent to an independent firm for testing and that is where the 15-20 percent revenue increase figure came from. He said he believes many customers changed their water usage habits and as a result their bills are lower, thus costing the city money it had hoped to collect for the depleting water fund.
In 2008 there was $2,111,188 in unrestricted money in the water fund. It has slowly dropped to $1,206,590 at the end of 2013. Sullenger said he likes to keep about $1 million on reserve in case there is some some large emergency involving the water system.
Hebert said the 5 percent revenue increase from the new meters will not cover the cost of the payment and the balance will have to be taken from the water fund. She said paying the zero percent interest loan from United Water needs to be the top priority and because of it some capital improvement projects needed may have to be put on hold. She said a looming water rate hike will help add to the fund and help do water and sewer system improvements.
“We needed about a 15 percent increase from the city to cover the payment because we aren’t counting the township revenue,” Hebert said. “We would have to make up about $93,000 from the water and sewer fund. We will use the rest of the money to do what capital improvement projects we can, with increased rates we will be able to get to the capital we need to get to.”
Sullenger said there is some correlation between the water meter and the proposed price hikes. He said both are needed to continue to maintain and replace the system to the level citizens deserve and expect.
“We didn’t look at the installation of the new meters as a way to solve the water problems,” Sullenger said. “We have been looking at the need for new rates for a long time. This rate increase is not because of the meters and what the revenue it is bringing in. We needed them.”
Glowinski said the water production and the plant has dipped by 25 million gallons over an eight-month period in 2013, compared to 2012. He said the amount of water being wasted has been reduced significantly, however. He said the usage has dropped because the population has dipped and more homes are vacant. Glowinski said if the city moves forward with the rate increase, people could alter their water use even more and as a result revenue could shrink even more.
“Generally when rates go up people try to control their bills by using less water,” Glowinski said. “That is a known consequence of raising rates. It don’t make a difference if its water rates, electric rates or gas rates. If people have the ability to lower their consumption and they are going to benefit from that, you can expect there will be some of that.”