PART 2: Huge AMR system takes Philadelphia Water Utility's performance to a higher level
Concluding a two-part series, this installment discusses how the installation phase of the new system progressed, the benefits that are being achieved, and also looks at what may lie ahead for the Philadelphia Water Department in particular and the drinking water industry in general. Part 1 of the series discussed the core objective of the project, the troubles with estimating reads, and other value drivers that led to the decision to deploy a territory-wide AMR system.
By Michael Hogan, Deputy Water Commissioner, Philadelphia Water Department
Table of Contents
Outreach to the community was a critical element of the project
Mobile units are reading over 400,000 meters a month
AMR system has added value for the customer and the utility
New technology and procedures will keep the PWD competitive
After the automated meter reading contract between the Philadelphia Water Department (PWD) and Itron Inc. (Spokane, WA, USA) was signed in July of 1997, the contractor ramped up immediately to begin the work of installing the AMR-enabled water meters. This effort started two months later in September, and within another two months the contractor was carrying out more than 1,000 installations per day, a rate that led to the first installation milestone of 75,000 meters being reached one month ahead of schedule. And as soon as the meters were installed, the contractor began reading them with the DataCommand Units to utilize the capabilities of the automated system right away.
As the project moved forward the pace of installation surpassed 25,000 meters per month, and the 250,000-meter performance milestone was reached seven months early. When the final unit was piped in one April day in 1999, the contractor had completed the installation of more than 400,000 water meters five months ahead of schedule. The project timeline diagram shows these and other significant dates and events in the 30-month undertaking.
Outreach to the community was a critical element of the project
Working together, the PWD and the contractor set up a comprehensive outreach program to get the word out to customers about the coming benefits of the new technology, and to systematically communicate the need for authorized installers to access customers' homes.
In addition, Itron set up and maintained a dedicated call center throughout the entire installation phase of the project. Leaflets were distributed, notices were printed on bills, community meetings were organized and advertisements were placed in community newspapers. No effort was spared in keeping the water utility's customers up to date on the progress of the project to ensure maximum customer support. (Table of Contents)
Mobile units are reading over 400,000 meters a month
The contractor now is using three vans equipped with DataCommand Mobile AMR units to collect monthly consumption reads from some 420,000 water meters throughout the Philadelphia area. That number will gradually increase as PWD crews complete installation at meter sites that proved very difficult to access during the territory-wide installation phase. In addition, the contractor is exceeding the performance criteria specified in the AMR services contract by maintaining a "read success rate" in excess of 99%, and a read accuracy rate of 99.7% or higher.
For its part, the water utility and its customers are reaping the benefits of territory-wide automation. Operational costs have been reduced, mostly through the elimination of some 60 meter reader positions, along with associated savings in fleet vehicle expenses, overhead, workers' compensation costs, and some other functions. And an encouraging footnote is that the PWD was able to deploy the AMR technology with no staff layoffs. All displaced personnel have been re-assigned to other departments, or their positions were eliminated through attrition. Also, the Department is in the process of implementing the system's tamper detection capability to improve revenue collection assurance. (Table of Contents)
AMR system has added value for the customer and the utility
As anticipated the cost savings and operational improvements have extended throughout the PWD's customer service and revenue cycle service operations. But rather than cut staff, the Department is applying the newly acquired value to improve customer service by reducing its call waiting time and abandonment rate.
The work to assess the broad effect of AMR technology on customer service functions continues. To quote Deputy Commissioner Brunwasser, "There are still a lot of things going on out there in terms of remaining adjustments from underestimated and overestimated bills, turn-ons and shut-offs, and enforcement activity. We're still quantifying the precise number, but anecdotally our water revenue collection staff reports that overall call volume is down between 15 and 20%. This has helped us improve our response time dramatically and reduce our call abandonment rate from over 30% to less than 10%."
In assembling its AMR business case before the project was approved, the PWD's management team forecast a net present value savings of approximately $25 million over the 20-year life of the contract. This figure resulted almost entirely from workforce reduction (meter reading and back office positions), equipment budget cuts, and conservative assumptions about revenue growth and theft reduction. But in many cases the water utility is reinvesting the savings to achieve further improvements in customer service. Add to that the achievement of the project's core objective—the delivery of accurate billing information based on actual consumption to all customers—and it has become clear that the automated system is without question delivering increased value to the utility and its customers.
Records have indicated that pre-AMR, for every phone call that came into the city about water quality or potholes, five or six calls associated with water billing were received. Today, by ensuring that customers are sent an accurate monthly bill based on actual data, what has been one of the Department's most challenging areas of service has been transformed into a reliable operation. (Table of Contents)
New technology and procedures will keep the PWD competitive
The implementation of AMR technology is the second of three important operational and customer service improvements the Philadelphia water utility has been planning in recent years. The first came in 1993 when the billing operation was switched to a monthly cycle, a move that has evened out revenue collection and spares customers the jolt of a large quarterly bill. The third will be introduced this summer in the form of a new billing system. This will tie everything together, including significantly enhancing the Department's ability to detect leaks in the distribution system.
Together these technical improvements will provide new levels of accountability, which will help to keep water rates down in the future and put the water utility in a strong competitive position. Over the past few years, energy utilities across the U.S. have had to come to grips with the realities of deregulation, competition and customer choice. Though less apparent, competition and privatization in the water utility industry is an undeniable trend.
As Mike Nadol, the former deputy water commissioner who led the early effort to acquire the AMR system, pointed out, "This business is changing fast and the trend toward private operation under contract and investor-ownership of water utilities is accelerating." In fact, Philadelphia has received its share of proposals from private firms that would like to operate the water utility under contract. This trend is changing the way the drinking water industry does business, and a key ingredient of those changes is an increased imperative to be very responsive to customer needs.
Summing up, Nadol spoke of the PWD's long history and tradition. He said the utility "is well respected in the industry for its expertise in drinking water treatment and wastewater technology, as well as its record in environmental leadership. But a lot of the success stories have been masked by the mundane and sometimes unfortunate realities of getting an accurate bill out to the customer. AMR is changing that now." (Table of Contents)
About the author: Michael Hogan is deputy water commissioner at the Philadelphia Water Department and was heavily involved in the undertaking described in this article as AMR project manager.
Edited by Ian Lisk
Editor Emeritus, Water Online