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iTert, 7.14 • /.� c INDIAN RIVER COUNTY, FLORIDA �J � BOARD MEMORANDUM (W OR Date: July 15, 2013 UTILITIES: EMERGENCY ITEM To: From: Joseph A. Baird, County Administrator Vincent Burke, Director of Utility Services✓ Subject: Elster Meter Remedy Agreement BACKGROUND AND ANALYSIS: On June 27, 2011 the Board of County Commissioners authorized the Indian River County Utilities Department (IRCUD) to purchase over 200 battery -powered water meters two inches and larger for a total price of $252,279.00. 189 of the meters, installed late 2011 at Vista Gardens and Vista Royal, have been in service for approximately 18 months. About one year after the first meters were installed, staff noticed that some of the meters were showing signs of corrosion on the exterior and in some cases the meters had failed. In the meter industry, failures are not uncommon, but in this case a higher than normal number of meters were failing. The failures consisted of unusually high readings, continuous readings when water valves were closed (but the meter registered flow), loss of electronic (battery) power or condensation on the inside of the sealed meters. To date, fourteen meters originally purchased in 2011 have experienced one or more of the issues previously mentioned. (W In the meter industry, there are usually territories established for suppliers and distributors. In 2011, an Indian River County Purchase Order was issued to Ferguson, a utility distributor that IRCUD uses to source many of the products it uses today. Ferguson filled the IRC order through Avanti, a regional representative to the manufacturer. Elster is the actual meter manufacturer. IRCUD begin warranty discussions initially with Ferguson, Avanti and Elster but as the negotiations/ investigations progressed, IRCUD began dealing directly with Elster. Through the investigation process, more meters began to fail and it was determined that a standard warranty would not suffice. Elster, the meter manufacturer, began testing the meters that had failed and looked into soils conditions in an effort to find the cause of the meter corrosion and meter failures. The Utilities Department requested copies of such tests but was unsuccessful in initially receiving those results. IRCUD hired its own independent laboratory to conduct its own metallurgical analysis of the meters soil testing to determine if high chlorides or alkalinity existed in the soil which may have been a reason for the meter failures. Based on both Elster's and IRCUD's lab analyses, it was determined that the 304 stainless steel passivation process, designed to protect the metal, was compromised due to high heat generated as part of the meter fabrication & welding process. According to the experts, the welding process caused unseen metallurgical changes that allowed the metal to become susceptible to corrosion. This corrosion then allowed water to enter the meter externally, short circuiting the electronics/ battery powered boards. It must be noted that IRCUD's lab also verified that the passivation process had been compromised but that certain manufacturing defects internal to the meter may have caused some water (W intrusion from potable sources. That is, the meters may have failed from water running through the meter that had made its way past gaskets which then lead to meter failure. Elster, upon receipt of IRCUD's analysis, provided documentation asserting their quality control/ manufacturing process accounts for step by step verification that the meters will work as designed.