City auditors are investigating billing problems at the city’s water department. Water officials have already acknowledged the city overcharged several hundred customers an average of $300 apiece.
The mess has put unwanted attention on a major plan to change the way the city collects information from water users.
If it were up to the city water department, auditors would definitely not look into the $60 million effort to install 280,000 new “smart meters” across the city – at least not right now.
The water department’s assistant director said recently an audit might make the project look bad.
“Even one potentially negative comment regarding [smart meters] could injure the project before we have full liftoff,” the official, Lee Ann Jones-Santos, said during a January meeting of the city’s Independent Rates Oversight Committee.
The oversight committee, which records its sparsely attended meetings, was talking about what it would like to see the city auditor investigate. A few committee members wanted an audit of the smart meter program, particularly how the city was paying for it.
One of the members of the committee, David Akin, agreed with Jones-Santos that an audit of the smart meter program was not yet called for. He suggested the time to do an audit was after all the money had been spent. That way everyone could go over the “lessons learned.”
Akin did not mention that he used to help run the city’s smart meter program. He was arguing against auditing his own work, in part.
When it came time to vote on whether to recommend the audit, Akin voted no. That caused a 3-3 tie, which meant the recommendation was dead.
The oversight committee’s chairman, Gordon Hess, said he didn’t know about Akin’s old job as head of the smart meter effort.
“If he was in charge of that program, he should recuse himself,” Hess said.
Akin said in an interview he thought he had made clear to the committee that he used to work on the smart meter program, from 2010 to 2012. He said he was charged with rescuing the project, which had been delayed because one company that was involved had financial problems and also because two different former city attorneys gave conflicting advice about how to proceed.
Akin said an audit now could slow things down even more.
“I just thought it was premature because [smart meter] projects are very complicated, because I didn’t want to slow the project down, but I had no problem with an audit,”he said.
After he left the smart meter program, Akin was the water department’s consumer advocate, a job that earned him the respect of the City Council, which made Dec. 10, 2013 David Akin Day. In 2016, after Akin left the water department, Mayor Kevin Faulconer appointed him to the rates oversight committee, which is known as IROC.
For smart meters, the “meter” part is actually a 100-year-old technology that measures water use. But these meters are now “smart” because they have hardware that sends measurements wirelessly to the water department. The communication spares the city the need to send a meter reading to each and every meter in the city.
The city has installed about 90,000 of these meters. Of those, only 15,000 are sending wireless signals to the water department.
Like all new meters, these meters are supposed to be more accurate. As meters age, they become less reliable and tend to undercount how much water customers are using. The new meters are also supposed to provide real-time data about water use.
Because of all this, the city is excited about the project.
“There’s a directive from the mayor’s office, ‘get this in and get this in as soon as we can because of the value to the customer,’” Jones-Santos told the oversight committee.
There’s no evidence that smart meters are contributing to billing errors. The city has blamed its billing problems on “human error” – the sort of errors that smart meters are meant to eliminate.
The Independent Rates Oversight Committee might sound like the right group to look into this, but it has not been much of a ratepayer watchdog in recent years.
City code requires the committee to recommend an audit each year. For at least the past few years, the committee has failed to do that.
Hess, who used to work for the San Diego County Water Authority and now does consulting work, said he’s trying to step up the committee’s work.
At the January meeting, he saw the pushback from the department.
At one point Jones-Santos seemed to welcome an audit but with a pretty major caveat: she told the oversight committee that she would talk with senior officials at the water department and come back with some ideas for an audit that would benefit the smart meter program.
Imagine if the IRS only audited what the subject of its audits wanted.
In an email, water department spokesman Jerry McCormick wrote Jones-Santos was just trying to help the oversight committee “better define any audit they may request.”
He said the water department “welcomes an audit.”
Hess and at least one other member of the committee are concerned about funding for the smart meter project. Right now, half the money comes from drinking water rates and the other half from sewer rates, which appear separately on a customer’s bill. Hess said he wonders if the city can justify that plan because it reads meters six times a year to determine people’s water bills but uses only two of those readings to calculate sewer rates.
Last April, the then-head of the water department, Halla Razak, told the City Council’s environment committee that the department had looked at the issue very carefully and the city attorney approved the arrangement.
Hess said he later learned the city never conducted a study of the matter, though.
McCormick confirmed there was “no formal study on the cost allocation” but said the department could defend its decision.
Even though the water department now has a new director, it can still be evasive at times. For months, water customers have complained  about abnormally and unjustifiably high bills. At first, the water department blamed these problems on leaks, citywide rate increases and even holiday guests who came over and used a lot of water. This week, it changed its tune and admitted at least 343 customers had been overcharged.
In the meantime, the city auditor launched an audit of the billing problems. But it’s still unclear what the auditor will focus on.