8C
Date: February 10, 2026
To: Honorable Mayor and Members of the City Council
From: Craig Bilezerian, Public Works Director
By: Andy Darlak, Water Operations Manager | [email protected] Subject: Public Works – Appropriate Funds and Authorize Change Order #1 to Purchase Order #2025-00000121 to Furnish Advanced Metering Infrastructure Registers for Water Meters. Expenditure: $650,000 (Non-General Fund).
RECOMMENDATION
Recommendation of the Public Works Director that City Council:
1. Appropriate $650,000 from the Water’s Fund Balance to the Automated Meter Integration Upgrade project (OP83-EQ0001); and
2. Authorize change order #1 to purchase order #2025-00000121 with Ferguson Waterworks of Poway, CA (PO #2025-00000121), in the amount of $650,000 for 26,500 Neptune Advanced Metering Infrastructure water meter registers, for a new not-to-exceed total amount of $7,150,000.
FUNDING
Funding will be available in the Automated Meter Integration Upgrade project (OP83-EQ0001) – Non-General Fund.
DISCUSSION
On June 18, 2024, your Honorable Body approved Agenda item 9D authorizing a sole source purchase order for cellular water meter registers with Ferguson Waterworks in the amount of $6,500,000 (Attachment 1).
In March 2025, staff received notification from Ferguson Waterworks that Neptune (Attachment 2), the meter register manufacturer, was placing an 8% surcharge on all orders due to tariffs. Additionally, Ferguson notified staff that the cellular activation fee for each register was to be paid at the time of purchase on the original invoice. To date, the 8% surcharges have been approximately $120,000 and the activation fees have been $220,000 for the 25,000 registers purchased and delivered. The total number of registers needed for the project will exceed the originally projected 26,500 units due to ongoing and new housing developments that require additional meter installations. The additional $650,000 will cover the 8% surcharge and the cellular activation costs for the remaining 2,500 registers needed to complete the project. 1 City Council
February 10, 2026
Therefore, staff recommends that City Council authorize change order #1 to the purchase order with Ferguson Waterworks in the amount of $650,000 for the remaining 2,500 registers to allow Public Works to complete the register replacement program.
Project Benefits
This technology will allow customers to view their water usage on a daily basis from their home or mobile device without the need for staff interaction. Customers will be able to set usage alerts and identify potential leaks in a more timely manner, rather than waiting for their bi-monthly bill.
The ability to monitor daily water use and set alerts can result in cost savings for customers while also reducing water loss for the City.
ATTACHMENTS
1. June 18, 2024 Agenda Item 9D
2. Neptune Technology Group Notification
2 Council Meeting of
June 18, 2024
Honorable Mayor and Members
of the City Council
City Hall
Torrance, California
Members of the Council:
SUBJECT: Public Works - Authorize a Sole-Source Purchase Order for Neptune Advanced Metering’ Infrastructure Water Meter Registers.
Expenditure: Not-to-Exceed $6,500,000 (Non-General Fund).
RECOMMENDATION
Recommendation of the Public Works Director that City Council authorize a sole-source purchase order with Ferguson Waterworks of Poway, CA for an amount not-to-exceed $6,500,000 for 26,500 Neptune Advanced Metering Infrastructure water meter registers.
FUNDING
Funding is available from FEAP1183 — Automated Meter Integration Upgrade.
BACKGROUND
Torrance Municipal Water has approximately 27,000 water meters within its service area.
Approximately 500 large commercial meters are read monthly, while the remaining 26,500 residential and smaller business meters are read bi-monthly. This amounts to 165,000 meter reads annually. In an effort to increase efficiency in meter reading, the City Council approved on March 5, 2013 an upgrade of all meters and registers to a Neptune- based automated meter reading (AMR) device. The upgrade to AMR registers eliminated the need for staff to walk over 90-meter routes, and modified the meter read effort into 12 drivable routes. The reduced meter reading effort allowed the allocation of staff to other assignments, such as preventative maintenance, new installations, and emergency repairs.
The current AMR system has proven to be a successful upgrade for Torrance Municipal Water in both its efficiency and the ability to store up to three months of water usage that can be shared with the customer. Staff can download the data from the register and provide daily usage feedback to the customer including hourly consumption for leak detection purposes. Staff receives approximately 60 data log requests monthly, which requires staff to drive to the address to download the data. The number of data log requests continues to grow as a form of water conservation for residents. 9D
ATTACHMENT 1
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Since 2013, new technology, Advanced Metering Infrastructure (AMI), has been developed for meter reading purposes. This involves a register that transmits the meter read and water usage data through a cellular signal to City staff, eliminating the need to drive meter routes and respond for data log requests. This technology will also allow the customer to view their own water usage on a daily basis from an application on their mobile device without interaction with staff members. Customers will be able to set alarms and identify leaks in a timelier manner, rather than waiting for their bi-monthly bill.
Many customers do not discover a leak until they receive their water bill, which could be up to 60 days after a leak started. Having the ability to set alarms and view daily water usage can result in cost savings for the customer while reducing water loss for the City.
ANALYSIS
Torrance Municipal Water previously converted both meter components, the water meter body and meter register, to Neptune-brand equipment during the previous upgrade that was approved by City Council in 2013. The original AMR registers installed during this upgrade have reached their useful life and are being replaced with AMI registers as the batteries expire after ten years. The new Neptune AMI registers are compatible with the current meter bodies, eliminating the need to purchase and change out 27,000 meter bodies at an additional cost of approximately $8,000,000. In addition, staff currently uses Neptune 360 software for meter reading purposes that is compatible with the AMI registers, allowing for a seamless billing transition during the upgrade.
Ferguson Waterworks, the sole distributor of Neptune brand meter devices, is providing discounted pricing for the AMI registers compared to Houston-Galveston Area Council (H-GAC) cooperative purchase pricing. H-GAC is a cooperative purchasing program that assists local governments in reducing costs through government-to-government procurement services. Ferguson Waterworks pricing is 45% below H-GAC, resulting in a savings of $5,225,800 for the project.
Ferguson Waterworks is the sole authorized distributor in the State of California for Neptune-brand water meters, registers, and parts. The Torrance Municipal Code (TMC) authorizes sole-source purchases under TMC Section 22.3.100 entitled “Exceptions to the Competitive Process” which states:
“The competitive selection processes Set forth in this Chapter do not apply in the following categories however purchases shail be made in accordance with procedures and regulations established by the City Manager.
b) Competition does not reasonably exist because only one vendor possesses the unique ability or capability to meet the particular requirements of the solicitation, such as when a good or service is copyrighted, patented or otherwise only available from one license holder, including, for example, proprietary goods of original equipment manufacturers and/or their authorized exclusive distributors. No sole- source purchases may be made where to do so would show favoritism, improvidence, extravagance, fraud or corruption, or result in the waste of public funds, but may be used fo only obtain the best economic result for the public.” 2 4
Accordingly, it is the recommendation of staff to move forward with upgrading of all registers in service to the new AMI system at this time. It is expected that in-house personnel can perform this change-out program within a 4-year period based on product availability. Public Works will continue to analyze operational needs once the register upgrade program is complete, but staffing levels will not be impacted at this time.
Respectfully submitted,
CRAIG BILEZERIAN
PUBLIC WORKS DIRECTOR
» ASO
AndrewDarlak
Water Operations Manager
i)
Matthew Krab
Deputy Public Works Director,
Operations
CONCUR:
Ch
Aram Chaparyan
City Manager
3 5
March 7, 2025
Dear Valued Neptune Customers,
At Neptune, we are committed to providing you with the highest quality products while maintaining fair and competitive pricing. Due to recent tariff increases, including a 25% tariff on materials from Mexico, we are experiencing substantial cost increases on certain materials essential to our production.
While the majority of our manufacturing takes place in the United States, we do rely on specific labor and materials from Mexico and China that are now subject to these tariffs. We have worked diligently to absorb as much of the increase as possible through operational efficiencies and cost controls. Unfortunately, despite our best efforts, we must implement a tariff-related surcharge on impacted materials.
What You Need to Know:
Effective Date: All invoices processed beginning April 2, 2025 will incur a surcharge, regardless of the order date.
Surcharge: 8% surcharge applies to all orders, for hardware products (meters, radios, data collectors, parts, etc), based on the current U.S. tariff rate of 25%. If tariff rates change, Neptune will adjust accordingly (e.g., a 12.5% tariff would result in a 4% surcharge).
Note: the 8% surcharge does not apply to Neptune 360 SaaS subscriptions or any professional services.
* Any orders for residential 5/8” T-10 or 5/8 thru 1” MACH 10 meters received by March 17, 2025, with shipping dates prior to April 2, 2025 will not be subject to this surcharge.
Duration: We will continue to monitor trade developments and adjust accordingly if conditions improve.
We understand that pricing stability is critical to your business, and we want to assure you that this surcharge is a direct response to external factors beyond our control. We remain committed to exploring alternative sourcing options, negotiating with suppliers, and improving efficiencies to minimize long-term impacts.
We appreciate your partnership and support during this challenging time. If you have any questions or would like to discuss how this may affect your orders, please do not hesitate to contact your local Neptune representative.
Thank you for your continued trust in Neptune Technology Group.
Best regards,
Jeff Olsen
Director of US - International Sales
Neptune Technology Group
ATTACHMENT 2
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