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Audit Reveals Major Lack of Planning on Multimillion-Dollar 'Smart Meter' Project

The city of San Diego’s plan to replace every water meter in the city is more than two years behind schedule, millions of dollars over budget and probably won’t be finished for at least another three years, according to a city audit released Thursday.

Some smart meters are known to be unreliable. / Image courtesy of NBC 7

The city of San Diego’s plan to replace every water meter in the city is more than two years behind schedule, millions of dollars over budget and probably won’t be finished for at least another three years, according to a city audit released Thursday.

The audit, prompted in part by a Voice of San Diego and NBC 7 Responds investigation, gives new insight into the city’s outrageous lack of planning for a multimillion-dollar project involving one of the most basic municipal services: water.

For years, the city has wanted to install over a quarter-million new “smart” water meters, which are supposed to increase billing accuracy, provide real-time data on water use and eliminate the need for city employees to go to homes and offices across the city to read each meter.

The program has been plagued with problems, which department officials initially tried to cover up.

Auditors found a new billing problem associated with the program. An untold number of customers – thousands, perhaps – received late bills from the city, resulting in multiple bills at once. That’s because of data entry errors and the way they are handled by a computer system and by department staff.

The city has said the new meters did not cause any of the at least 2,750 incorrect bills a previous audit found the city sent customers in 2017.

The distinction may be lost on city water customers who received multiple bills at once because of billing hold-ups that are related to the smart meter project. Auditors, for instance, found at least one customer who received four bills within two days. City customers should receive a bill every two months.

What’s unclear is how many customers were affected by that problem. At one point, over 10,000 customers’ bills were backed up by the problem, but the city isn’t sure for how long.

The city argues the new meters – when they are installed properly and when the computer system is working – are the solution to billing problems, since the meters will be able to help officials spot any problems as they happen. One third-party auditor last year recommended speeding up the installation of the meters.

Nothing in the audit or any recent audits have found any problems that would affect drinking water safety.

Some of the audit findings go through problems only an auditor or experienced bureaucrat would notice but that likely caused the project’s derailment. There wasn’t, for instance, a steering committee overseeing the project or a project manager with enough authority to effectively oversee the project.

All that boils down to city staff simply underestimating how complicated the project would be. What was the project? Replacing every single water meter in the city, installing radio transmitters on each, setting up a radio network to collect data from the meters and then feeding that data into a new computer system to send bills to over a quarter-million customers.

Perhaps the biggest misstep was underestimating what it would take to install the new meters. Water department staff went to the City Council and asked for $60 million to finish the project by the end of 2017. Why $60 million? A private contactor had said it could do the job for that much.

Instead, the city decided to the work itself, but it used the same numbers.

City managers apparently didn’t have enough qualified staff to do the work.

Instead of having 24 workers to install 12 to 15 meters per day, they had only about 15 workers who could only install about 10 meters a day. So, a project that the department said it could finish in two and a half years wasn’t able to come even close to that. There are still 165,824 meters left to install.

The meter program isn’t the only problem – the water department also had trouble fixing meter boxes, sent bad bills and actively worked to hinder examinations of internal dysfunction.

Who is to blame for the department’s cacophony of problems became a political hot potato.

Many senior water department officials have left – pushed out by an embarrassed mayor – or moved to other jobs within the city.

But last summer, Mayor Kevin Faulconer’s point person tasked with fixing the department blamed lazy workers for part of the department’s woes, citing findings of another audit. Others, like City Councilman Scott Sherman, seemed to take a more nuanced view. He suggested using a private contractor because city staff were overwhelmed.

This audit appears to ensure fumbles by management also get attention and that blame isn’t assigned just to the lowest-level staffers, some of whom claim they and their colleagues were thrown under the bus by their leaders.

The water department is understaffed and the workers are arguably underpaid, two things that management did little to fix.

Governments often have trouble hiring people quickly and for short-term projects. The department shot itself in the foot. Just as it should have been staffing up to handle a major project, it actually did a hiring freeze. The freeze was meant to deal with concerns that its hiring practices were flawed and nepotistic.

When hiring started up, the audit found, the department hired for “lesser-skilled employees” who may not have been able to handle crucial parts of the job. Turnover was high and some people who stayed with the city sought other jobs that were less demanding than replacing meters, some of which are buried underground in concrete vaults that are hard to find and open.

The audit also hints at systemic problems inside city government, like poor pay compared with neighboring cities.

The mayor put the smart meter program on hold last year, but it appears to be gearing up again, having hopefully learned from past mistakes.

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