Overview

Client: City of Regina

Location: Regina, Saskatchewan, Canada

Project: Preliminary Cost-Benefit Analysis for Upgrading City of Regina’s Automated Meter Reading (AMR) System to Fixed-Network Advanced Meter Infrastructure (AMI)

IDS was commissioned by the City of Regina to investigate and compare the costs and benefits of possible options to maintain the City’s current AMR system or to upgrade it to fixed-network advanced metering infrastructure (AMI). IDS has developed a rigorous cost-benefit analysis procedure and software tool to evaluate a range of possible scenarios, and furnished recommendations based on the economic merits of various scenarios.

Cost-Benefit Analysis for Upgrading Regina’s AMR System to Fixed-Network AMI

Challenge

The City of Regina’s water system provides water for residential, commercial, and industrial customers as well as water for irrigation and summer service. The City’s water system serves nearly 70,000 utility accounts for a population of approximately 207,000. In 2002, the City of Regina has initiated a utility-wide program to install a drive-by Automated Meter Reading (AMR) system and replace almost its entire water meter inventory. As this system is approaching the end of its design life of 20 years, the City needs to evaluate and compare the costs and benefits of possible options to maintain current AMR or upgrade to fixed-network advanced metering infrastructure (AMI).

Solution

IDS has developed a rigorous cost-benefit analysis procedure and software tool to evaluate a range of possible options and deployment scenarios for maintaining the City’s current AMR system or upgrading to AMI. The analysis was applied to assess economic merits of alternative scenarios and provide a quantitative evaluation of various scenarios in terms of their associated costs and quantifiable benefits. The defined scenarios considered a number of deployment decisions including: deployment period, possibility to coordinate meter replacement with AMI deployment, and use of vendor’s hosted software services (SaaS) versus in-house management of IT systems.

Working closely with City staff and a number of AMI vendors, information on various cost elements associated with current AMR system and possible AMI implementation scenarios have been collected and used to analyze whole life costs and economic merits of each scenario over 20-year planning horizon. In each scenario analysis, all yearly capital and operating cost and saving over the 20 year period were estimated and converted to present value using an appropriate discount rate. The analysis considered quantifiable economic benefits of AMI systems, namely, operating costs savings and the revenue recovery due to meter replacement associated with AMI deployment. Key economic measures, including net present value (NPV) and benefit cost ratio (BCR), of possible AMI deployment scenarios were assessed and compared. Analysis results and recommendations on a preferred option and deployment considerations will assist in preparing a business case using a rigorous economic analysis and objective evaluation of possible scenarios.