Also, it appears city staff has failed to publicly update elected officials on this finding. A search of city commission meetings and workshops shows no update on the “Nights and Weekends” program since approximately 2014.

In addition, the fact that the smart meter thermostats – which were trumpeted as a major component of the program – are still not available, raises serious questions about the cost-effectiveness of the $40 million program.

The latest information obtained by TR from the City of Tallahassee shows that after seven years of promoting the “Nights and Weekends” program, 2,574 people are currently enrolled.

The city’s projection for cost-effectiveness was 25,000 subscribers.

This projection was clearly presented to the city commission on March 28, 2007:

Staff does not expect operational savings alone to exceed the capital investment within the first 15 years of deployment. However with good customer participation (25% or more) in load control and pricing programs, staff expects that operational savings coupled with future avoided capital costs (associated with building new power plants) will exceed total program costs.

City officials based their analysis on the participation of 25,000 households or roughly 25% of all residential customers in pricing and load control programs. Without this level of participation the analysis shows that the program will not be cost effective.

The “Nights and Weekends” program was introduced as a way to price electricity during peak times instead of the same price all day long.  The thought was people would change their electricity usage behavior for lower rates and with enough participation the city would avoid building additional power plants and justify the cost of the $40 million investment in smart meters.

However, the data provided to Tallahassee Reports shows that since 2010, 6,892 have signed up for the program, while 4,318 have cancelled. As of May 2018, there are 2,574 accounts participating in the program.

The average time on the program for those who cancelled was calculated to be approximately 1.5 years.

The table below shows that the “Nights & Weekends” program has had more cancellations than new subscribers for 2016, 2017 and 2018.

The program peaked with 2,810 subscribers in 2015.

The bottom line is the study indicates that, even though electric consumption is projected to be down, the COT electric utility needs $178 million more in revenue than existing rates will produce from 2012 to 2016.

The largest deficiency, $43 million, occurs in 2016 and is not addressed in the proposal by the city consultant, RW Beck.

Instead, the proposal calls for electric customers to pay approximately $134 million in higher rates from 2012 through 2015. In the short term, for fiscal year 2012, the plan means electric customers would pay $31 million more in rates followed by smaller increases in each of the next three years.

In the end, base rates would increase approximately 25% from fiscal year 2012 to 2015.

Base rates are the part of the electric bill that pays for operational expenses like salaries, benefits, system maintenance, debt service and the $22 million transfer to the general fund. The total electric rate is the combination of the base rate and the cost of fuel – which the COT has little control over.

The residential rate impact of the proposal on a $250 monthly electric bill would be 11% in fiscal year 2012 or $27.50. For a restaurant with a current monthly bill of $4000, the new bill would increase by approximately $440 or over $5000 per year.

The detailed study indicates that overall consumption will decrease by 1.5% over the period of the study and that approximately $10 million in rates will be used to pay down the loan taken out by COT to pay for smart meters.

It is important to point out that the study by RW Beck relies on information provide by the COT and their rate proposal is a starting point. Rate increases could be offset by deferring maintenance expenses and using revenues in the Electric Operating Reserve. This approach was used last year to avoid a rate increase to the tune of $20 million.

RW Beck also analyzed the COT water and wastewater functions and concluded that there is $28.7 million deficiency from 2012 through 2016. Their proposal calls for a 10.8% increase in water rates and a 4.3% increase wastewater rates in 2012. The combined increase would raise rate revenue by $4.6 million in 2012.

Tallahassee Reports has received numerous calls about the procurement procedures at City Hall. This report takes a look at the where the City is spending money on their mechanical and HVAC services for the approximately 23 City owned buildings.

On June 13, 2007 the Tallahassee City Commission “ approved the Selection committee’s ranking and recommendation of the following firms to provide industrial or commercial mechanical/HVAC services on an as-needed basis (RFQ 0040-07-ER-RC), and authorized staff to execute a three-year contract with each firm.”

The firms selected were Honeywell International, Keith Lawson Company, Johnson Controls, MED-HVAC, and Watts Mechanical. Of the five firms, three are locally owned. The locally owned firms are Keith Lawson Company, MED-HVAC, and Watts Mechanical.

Tallahassee Reports requested the expenditures for each vendor under the contract for mechanical/HVAC services. The City provided data is listed below.

CITY EXPENDITURES BY VENDOR

The above table shows that Honeywell International is getting 67% or $353,064 of the City’s expenditures and Keith Lawson Company, a locally owned company is a distant second with 21% of the expenditures.

This information raises a number of issues. First, why is Honeywell International getting so much of the work? It is no secret that Honeywell is a favorite vendor of the city. They currently have five separate contracts with the city.

Second, will this situation change with the new local preference ordinance? A review of the way the contract was written indicates that the local preference ordinance may have no effect. Why? Because the contract appears to give city staff the ability to basically call any vendor that is included in the contract. It would appear that the requests for proposal would have to be wriiten in a manner to accommodate the local preference ordinance.

Also, Tallahassee Reports has been told that the Honeywell is a registered foreign corporation. A contract with the City of Tallahassee was provided to Tallahassee Reports that listed Honeywell as “foreign profit corporation.”

Tallahassee Reports did obtain Honeywell invoices that indicated payments were being mailed to an address in New Jersey.

The findings indicate that there appears to be more the Tallahassee City Commission could do to help out the local economy and locally owned businesses.

As we enter the smart meter and time-of-use rates (TOU) era here in Tallahassee, and in fact, throughout the United States, the debate over who benefits more, consumers or the utilities, will be front and center for years to come.

Time-of-use rates are designed to make the delivery of electricity economically efficient by charging a different price for electricity during certain times of the day. The City of Tallahassee is testing a voluntary pilot program that charges more for electricity from 7 a.m. to 7 p.m. and less from 7 p.m. to 7 a.m.

Experts say that the current practice of one rate for all hours of the day for electricity does not capture the “true costs” of the resource. In other words, the City of Tallahassee –through time-of-use rates – strives to price electricity so that those who use more of the resource will pay more.

Beyond the question of who benefits from time-of-use rates, the City of Tallahassee is embarking down an “optimal efficiency” path that has very interesting implications for how government delivers services.

Usually, optimal efficiency in pricing is left to the free market because with government services, such as public transportation and public works, the connection between how much of a service someone uses and pricing, gives way to the benefit delivered to the public as a whole.

If government starts moving toward optimal efficiency in the delivery of services, does this mean that only those who use Star Metro will pay for the service? How about parks and schools? In the name of efficiency will there be a family services fee?

Now if you haven’t noticed yet, this is the same approach that insurance companies use to squeeze every bit of profit out of each dollar of premium paid. This leads insurance companies down the path of trying to find out as much as possible about your health so they can put you into a group. A group that is then charged based on how much health care you may use.

Now this approach comes to electricity. The City of Tallahassee, since the implementation of smart meters, has begun to track the usage patterns of each customer. Eventually, smart meters will be able to tell the City when your AC is on and when your washer and dryer are running. Based on your usage and the time of your usage, the city will determine various pricing structures to efficiently collect revenue.

What some policy makers fail to see with optimal efficiency is that such an approach clearly defines winners and losers. And there will be winners and losers with time-of-use rates. To say that everyone will win with these rates is a fallacy. Actual results from across the country have indicated that the losers will be businesses, stay-at-home parents, those with low incomes and senior citizens. Winners are those who can take advantage of not needing electricity during the day.

The City of Tallahassee has indicated that there will be programs to help out those that do not benefit from time-of-use rates. This means there will be financial assistance, which brings us back to the original question of costs and benefits. Why embark down the path of optimal efficiency if you are going to go back and help out those, who due to the increase in efficiency lose out on benefits?

The pursuit of time-of-use rates for electricity by the City of Tallahassee will surely provide fertile ground for the debate on when the strive for efficiency should give way to the benefits that serve the public good.

Green expenditures in the fiscal year 2009 budget include $10 million for smart meters, $7 million for energy conservation, and $300,000 for the creation of the green department. These 3 programs total $17,300,000 in spending in fiscal year 2009.

The immediate benefits of these expenditures to the citizens of Tallahassee are non-existent and our research indicates the long-term benefits are questionable. Remember, smart meter success depends on the level of participation 2 or 3 years from now and the conservation programs were found not to be cost-effective, but were adopted anyway.

While the benefits are not readily apparent, the costs of pursuing such policies are hidden deep within the City of Tallahassee budget. These costs are found in programs that touch many citizens but were cut due to “current financial pressures.”

It is time that the citizens of Tallahassee understand some of the budgeting priorities of the Tallahassee City Commission. We can find $17,300,000 for programs with questionable immediate or long term benefits during times of “financial stress” but we cut the following:

• The Youth Travel Team Program – the total annual cost $2,400 (Equal to one of Mayor Marks’ sister city trips).  Participants include approximately 250-300 children.
• The DARE Program – the total annual cost $15,071. Participants include elementary age school children.
• After School Drop-In Program– the total annual cost $90,000. Participants include hundreds of children from single parent families or families of working parents.
• Elimination of Crossing Guard Program – the annual cost $50,000. Affected citizens include worried parents and hundreds of elementary aged school children.
• Reduction in Adults Sports Programs – the total annual cost $72,000.
• Special Event Police Security– the total annual cost is approximately $100,000. Affected citizens include the thousands who attend events such as Springtime Tallahassee and Downtown GetDowns.

The total expenditures for the programs outlined above is approximately $330,000. The number of citizens affected has to be in the tens of thousands and mostly under the age of 18.

What is going on? Do the people in Tallahassee truly understand and endorse these priorities?

Not everyone thinks smart meters are such a smart use of money.

Utilities are spending billions of dollars outfitting homes and businesses with the devices, which wirelessly send information about electricity use to utility billing departments and could help consumers control energy use.

Proponents of smart meters say that when these meters are teamed up with an in-home display that shows current energy usage, as well as a communicating thermostat and software that harvest and analyze that information, consumers can see how much consumption drives cost — and will consume less as a result.

Such knowledge, however, doesn’t come cheap. Meters are expensive, often costing $250 to $500 each when all the bells and whistles are included, such as the expense of installing new utility billing systems. And utilities typically pass these costs directly on to consumers. CenterPoint Energy Inc. in Houston, for instance, recently began charging its customers an extra $3.24 a month for smart meters, sparking howls of protest since the charges will continue for a decade and eventually approach $1 billion.

Consumer advocates fear the costs could be greater than the savings for many households. They also worry that the meters will make it easier for utilities to terminate service — so easy that they will disconnect power for small arrearages that wouldn’t have caused a termination in the past.

What’s more, the cost to consumers could go beyond the extra charges imposed by utilities. That’s because consumers usually are left to their own devices (literally) when it comes to adding the in-home displays and home-area networks that use data from the meters to control appliances and other pieces of equipment.

“What we’re most concerned about is that consumers realize real benefits from the meters” from the start, says Michelle Furmanski, general counsel for the Texas House Committee on State Affairs, which is considering legislation that could establish more protections against disconnections.

Ms. Furmanski says that her committee is also looking into the lack of information on meter deployments that is available to the public. The utilities have claimed “trade secret” protections for important financial details about their meter programs, including contract terms with vendors. Such secrecy makes it impossible for consumers to analyze why costs for what appear to be similar services vary so much among utilities.

Texas law requires rapid smart-meter deployments, leaving consumer advocates little room to negotiate. But Don Ballard, the Texas consumer counsel, was able to negotiate an agreement with utilities in which CenterPoint and Oncor Electric Delivery, a unit of closely held Energy Future Holdings Corp., agreed to spend $20.6 million on consumer education and $17.5 million to purchase display units for low-income families.

Legislation is also pending in the state legislature that would force utilities to seek federal stimulus funds to partly pay for their meter programs and could limit the ability to levy surcharges. Instead, utilities would be required to undergo full rate reviews so that offsetting savings might be identified as a way to minimize the impact on bills.

Jack Oliphint, a retiree who lives 20 miles north of Houston in Spring, Texas, thinks the $444 he will pay CenterPoint in coming years for a smart meter is too much, considering what he sees as rather elusive benefits. “There’s no mystery about how you save energy,” says the 71-year-old retired furniture salesman. “You turn down the air conditioner and shut off some lights. I don’t need an expensive meter to do that.”

In other states, such concerns have led to the scaling back of smart-meter deployments.

Two years ago, Connecticut Light & Power Co. proposed to provide smart meters for all of its 1.2 million customers. “But then we heard from the Connecticut attorney general asking us, why don’t you walk before you run?” says Mitch Gross, a spokesman for the utility. “He was concerned about the cost.”

As a result, the utility will do a pilot program this summer to test customer acceptance of smart meters and variable pricing. Some 3,000 customers have volunteered, and the utility intends to see whether people cut energy use during times that prices rise. Some consumers will have “energy orbs” in their homes that change color, a visible indication of how prices are changing, as a way to stimulate behavior changes.

Instead of the estimated $255 million cost of a full meter deployment, the test will run $13 million.

Concerns have arisen in California, too, where the state’s three big investor-owned utilities are expected to spend at least $4.3 billion for millions of new meters by 2012. Utilities already are looking at variable-pricing programs designed to discourage heavy use of electricity during peak periods like hot summer days. The meters, they hope, will make variable pricing more effective by giving people clear incentives to decrease energy use when wholesale energy prices are highest.

But consumer advocates in California also complain about the cost. “There are cheaper ways to meet the goal of reducing energy use,” says Marcel Hawiger, an attorney for The Utility Reform Network, or TURN, in San Francisco, a consumer advocacy organization.

For instance, Mr. Hawiger favors expanding existing air conditioner-cycling programs, where utilities have the ability to control air conditioners so they take turns coming on and off, reducing the drag on the electric system. He says the air-conditioner controllers can provide much of the benefit at a fraction the cost of installing millions of smart meters. These programs control temperature settings and compressors to reduce overall energy use.

PG&E Corp., a San Francisco utility, estimated the cost of its meter program at $1.74 billion in July 2006, but recently got permission to spend an additional $467 million, pushing the cost to $2.2 billion for 5.4 million electric meters. It has installed 557,000 meters so far with the capability of letting consumers go online and read energy data. So far, however, only 12,000 consumers have taken advantage of it. PG&E says it hasn’t yet marketed the program and it hasn’t activated the home-area-network capability, which will allow people to take information and put it to work by setting up networks to control appliances, furnaces, air conditioners and other devices.

PG&E has 124,000 customers enrolled in an air-conditioning-cycling program and hopes to raise that number to 400,000 customers by the summer of 2011, but that will add $178 million in program expense. Each thermostat costs about $300.

It sees the two programs as complementary since the air-conditioning program reduces peak use but it requires meters to measure and time-date the reductions. Without both devices, air-conditioning use might drop, but a utility wouldn’t know whether it happened in a peak pricing period or not. Smart meters “allow us to quantify peak reductions due to smart AC devices,” says utility spokesman Paul Moreno, adding that both programs were “well examined” by the state Public Utilities Commission.

PG&E intends to educate customers about equipment that can be installed to form home networks, too, but won’t sell the products or support the devices for at least a year or two. Mr. Hawiger says this means that there will be millions of smart meters bolted to homes but full functionality won’t happen anytime soon, reducing the bang for the buck.

Southern California Gas Co. now is trying to get $1 billion for smart gas meters. TURN says the expenditure would be a waste of money because natural-gas pricing isn’t subject to the volatility of electricity pricing, since gas can be stored but electricity can’t. TURN is asking regulators at the Public Utilities Commission to turn down the request for funds.

The gas company says savings from reduced labor (1,000 meter-reader jobs would be eliminated) and transportation costs, among other things, would cover 80% of the estimated capital cost by 2015. Meter costs would push up monthly gas-service rates for residential customers by $2.50 a month, or 3%, in the initial years, but would be followed by reductions after 2017, once capital costs were recovered.

“There won’t be rate shock,” says Anne Shen Smith, senior vice president of customer service for Southern California Gas Co., a unit of Sempra Energy, San Diego.

Meanwhile, Pepco Holdings Inc. announced last month that it will buy more than 430,000 electric and gas meters for one utility unit, Delmarva Power, in what could be the first leg of a two million-meter rollout by 2013 for utilities it owns in Delaware, Maryland, New Jersey and the District of Columbia. The Delaware portion will cost about $100 million, or $235 per metered location, according to the company.

Pepco is starting with Delaware because “we offered more regulatory receptivity than other states,” says Michael Sheehy, deputy director of the Division of the Public Advocate for the state. “The others were less convinced of the benefits.”

Pepco says it hopes regulators in all states will want the meters once they see how useful they are.

– Ms. Smith a Wall Street Journal staff reporter in San Francisco. Write to Rebecca Smith at rebecca.smith@wsj.com

A public data request by Tallahassee Reports has verified the following:

1. The smart meter committee, organized in 2005 to evaluate the potential use of smart meters, was staffed with only city officials.
2. The City Commission voted to move forward with the program on March 28, 2007.
3. There were no press releases issued regarding the smart mart meter program until after April 9, 2008.
4. There were no utility bill inserts addressing smart meters before April 1, 2008.
5. There were no special public forums held to receive public input or to disseminate information about the $40 million program.
6. A search of the Tallahassee Democrat indicates that the first reference to smart meters in that newspaper was after the approval of the program by the City Commission.

A public data request by Tallahassee Reports has verified the following:

1. The smart meter committee, organized in 2005 to evaluate the potential use of smart meters, was staffed with only city officials.
2. The City Commission voted to move forward with the program on March 28, 2007.
3. There were no press releases issued regarding the smart mart meter program until after April 9, 2008.
4. There were no utility bill inserts addressing smart meters before April 1, 2008.
5. There were no special public forums held to receive public input or to disseminate information about the $40 million program.
6. A search of the Tallahassee Democrat indicates that the first reference to smart meters in that newspaper was after the approval of the program by the City Commission.

As we now know, the City of Tallahassee relied on a cost effective analysis provided by Honeywell Inc., – the vendor for the smart meters. The analysis indicated that over a 15 year period the smart meter program would be cost beneficial for residents of Tallahassee. This analysis was used as support for moving forward with the program.

Beyond the potential conflict of interest with a vendor providing a cost effective analysis for a program they are selling, there remains serious questions about the analysis.

The Honeywell analysis indicates that if 25,000 customers sign up for load control programs, the City of Tallahassee will spend $39.2 million over 15 years and save $40.6 million for a net savings over 15 years of $1.4 million.

Is this a good deal? Consider this… if you assume an average of 100,000 utility customers per year over the next 15 years, the net benefit per customer per month would be $.77.

This puts us ahead of the Texas utility Oncor and Southern California Edision  who are spending $690 million and $1.3 billion respectively to roll out smart meters by 2012.

What are smart meters? Smart meters replace the traditional electric meters we are all used to with a more advanced device that promises  a number of benefits. These benefits include remote meter reading, power theft detection, remote cut-off and turn-on capability, customer billing and usage data on-line and the potential for in-home usage displays.

However, if all of these ” information” benefits are realized, the $40 million smart meter program will still not be cost-effective. The City’s assessment of the fiscal impact of the smart meters was clearly presented to the City Commission on March 28, 2007:

Staff does not expect operational savings alone to exceed the capital investment within the first 15 years of deployment. However with good customer participation (25% or more) in load control and pricing programs, staff expects that operational savings coupled with future avoided capital costs (associated with building new power plants) will exceed total program costs.

Cost effectiveness of the program will be determined by the participation of the citizens of Tallahassee in “pricing” and “load control” programs not yet devised by officials or discussed on the City of Tallahassee’s website.

Simply put “pricing” program means that electricity will cost more during peak times instead of the same price all day long.  This program will allow the City to price electricity at a higher price during peak times and therefore “move” usage to off-peak times. With enough participation this will avoid building additional power plants.

“Load control” programs will be voluntary and will pay citizens to allow the City of Tallahassee electric utility to cut-off their air conditioner or some other power gulping appliances for a couple hours during the hottest days of the summer. Again, depending on participation, this program will avoid the need to build additional power plants.

City officials based their analysis on the participation of 25,000 households or roughly 25% of all residential customers in  pricing and load control programs. Without this level of participation the analysis shows that the program will not be cost effective.

City officials are confident that the progressive nature of Tallahassee and  the conservative estimates in the analysis will make smart meters a winner for Tallahassee.

There are additional factors that should be noted. First, city officials did point out to the Commission that there is not much of a track record for the type of programs required to make smart metering cost effective.

Second, the track record that does exist for variable pricing and load control programs is mixed. A California utility reported good results  in a pilot, but other utilities in the Northwest and Maine abandoned the programs after trials.

Third, the informational benefits will come before the pricing and load control benefits. City officials say that the pricing and load control programs are 2-3 years away.