In April, the Citizen pressed Charlotte-Mecklenburg Utilities (CMU) and the City of Charlotte to explain why the water-service provider for most of Mecklenburg County was paying $2.3 million to replace malfunctioning metering equipment, even though the devices were still under the manufacturer's warranty.
"These things are failing," Charlotte City Councilman Warren Cooksey declared at the time, referring to 120,000 encoder receiver transmitters (ERTs), which send meter readings wirelessly to passing utility vehicles, eliminating the need for house-to-house meter readers.
But then Cooksey and his colleagues did something curious. At least, it seemed like it at the time. At least, it seemed like it to the Citizen, which was the only media outlet to press CMU and the city on the matter.
Even though all 120,000 of the "failing" transmitters remained under warranty with their manufacturer, Spokane, Wash.-based Itron Corp., CMU and the city entered into an agreement requiring Itron to replace only half of them. In a separate deal, City Council tapped Badger Inc. — a chief competitor and sometimes partner of Itron's — as supplier for the remaining 60,000 transmitter replacements. Under the agreement, CMU is paying Badger $2.3 million to replace the still-under-warranty Itron devices. All of which is valuable context for this week's installment of Revenge of the ERTs.
But first, a description of the props involved:
• The Itron 50W transmitter, the oldest of CMU's transmitters and the ERTs to which Cooksey was referring when he declared, "These things are failing." In cooperation with Itron, it was Badger that sold CMU the meters and registers to which the Itron 50W transmitters were attached.
• The Itron 60W transmitter, the initial replacement ERT for the Itron 50W devices already attached to 250,000 CMU meters.
• The Itron 100W transmitter, the most advanced of Itron's ERTs, which has been installed as part of a CMU pilot program in The Peninsula in Cornelius and River Run in Davidson — the two hotspots for customer complaints about unexplained spikes in water bills.
On Monday, CMU announced that it had discovered a problem with the Itron 60W replacement transmitters, and that 68,000 60W ERTs — which had just replaced "failing" 50W devices — would now have to be replaced because they, too, were likely to malfunction. CMU officials say faulty diodes in Itron 60W ERTs manufactured in 2009 and 2010 are to blame, and 10 percent of the affected devices would likely send a signal with a reading either higher or lower than what the meter actually measures.
"For any customers impacted by a transmitter that failed and read their consumption (too) high," CMU spokeswoman Karen Whichard says, "we will contact them about a billing adjustment."
As CMU and Itron replace the faulty devices, the gauges — or registers — attached to the meters will display the correct readings, so technicians will know immediately if the transmitter has malfunctioned.
This time, though, Itron isn't charging CMU for the 68,000 replacements.
Itron did not respond to the Citizen's requests for information, including how many of the potentially faulty devices the company sold to other utilities. But, with a clientele that includes nearly 8,000 utilities in 130 countries, the diode deficiency is likely widespread, utility experts say.
All of which casts new light on CMU's decision in April to pay to replace 60,000 warranty-covered Itron devices with Badger models. CMU wouldn't be the first water system to throw up its hands and throw away Itron equipment still under warranty.
Jennifer McKnight says she understands CMU's situation. McKnight runs the Chisolm Trail Special Utility District, just north of Austin, Texas. Like CMU, CTSUD had used the Itron 50W as part of its metering system.
"We did have many problems with the Itron 50W ERTs," McKnight says. "Basically, they would not emit a reading, and each meter had to be manually read."
So last year, CTSUD entered into a warranty settlement under which Itron agreed to replace the 50W transmitters with the same, updated units it's installing for CMU.
"Unfortunately, we are still having problems with these devices as well, and we are now looking to move away from Itron altogether," McKnight says. "We currently have a pilot program with other automatic meter-reading companies and will hopefully no longer use Itron in the near future."
In 2010, warranty claims against Itron topped $24 million, according to company filings with the U.S. Securities and Exchange Commission. And the trade journal Warranty Week singled out Itron by putting it among the 10 U.S. companies with the highest increase in warranty costs (30 percent) from 2009 to 2010.
But, as McKnight notes, replacing warranty-covered equipment "free of charge" doesn't mean the process is free of cost or consternation. CMU has admitted as much by telling the Citizen it doesn't know the expenses in staff time and other areas related to the "at no cost to the utility" replacement of Itron equipment.
All of which means CMU's decision to pay to replace still-under-warranty Itron devices might be less about dollars and more about sense. How many other utilities will reach the same conclusion?
Stay tuned for another installment in the ERT saga: The Replacements.
