Full implementation of Laurinburg’s new water and electric metering system will be several months behind schedule, but city officials continue to express confidence in an agreement with Datamatic to get the meters working properly.
We hope that confidence is justified.
According to city records, the agreement with the Texas company did seem like a dilly of deal when it was proposed last year.
For $2.4 million, Laurinburg would get high tech meters that would save residents and the city money by being more efficient and cost effective.
In return, the city’s customer service department was supposed to save about $34,000 a year due to a reduction in reading errors thus reducing re-billing. And because the reading data is faster, cash flow would be improved, the company said.
There would be a savings of approximately $65,000 per year in outage management because there would be better control of outage on the electric side, city officials were told.
Because the system would also help curb the estimated 16 percent that the city loses each year due to theft, tampering and leakage, Laurinburg would save another $314,000.
According to city council minutes from May 9, Datamatic also promised to take back an earlier meter system that had been problematic and eat the $400,000 cost of the older meters.
The company was so sure of this new system, that it promised in writing that the city would make on average about $483,771.74 per year.
A company executive added that if the system “does not result in these savings over the first five years, Datamatic will compensate the city for any lack of savings it suffers.”
We can understand how and why the Laurinburg City Council took the deal. A team of experts from city staff gave it the thumbs up as did the folks with Electricities. And as you have seen, the figures provided by Datamatic looked impressive.
Maybe too impressive.
Some on the council may have realized that, because they expressed a number of nagging concerns before the agreement was finalized.
One was a concern over the old meters that the city already purchased from Datamatic. The company tried to explain away the issues, but the fact that there were problems at all should have been a red flag.
If the initial products were problematic, why would the city purchase supposedly better equipment from the same company?
We now know that the city of Santa Fe is suing Datamatic over similar high tech meters. That city’s complaint, filed in August, alleges that Datamatic failed to honor its warranty when nearly 13,000 of 36,000 units stopped working.
Were other towns seeing similar malfunctions? During negotiations last year, Laurinburg officials asked about the issues that Goldsboro was having with meters purchased from Datamatic. The company said the Goldsboro had hired a contractor who improperly installed the meters and that the company reinstalled the equipment properly.
Company officials went on to say that they have meter systems in at least 120 other cities.
We are not sure how many of those municipalities are satisfied with the work, but a quick search on the Internet found that in 2010, the town of New Century Fla. had expresed concerns with its Datamatic equipment after about five years. The company promised to sell the town new equipment and provide about $140,000 in discounts.
Laurinburg officials were also told that they only had days to decide on the deal or the negotiated price might balloon.
While city leaders contend that the agreement with Datamatic is a sound one with proper safeguards in place, it still feels like Laurinburg was taken for a ride by a fast-talking, high-pressure sales job.
Councilman Kenton Spencer, who is no slouch when it comes to asking tough questions, said at the time that he had never had any company guarantee a return on an investment. There may be a reason for that.
This deal has always sounded too good to be true.
We hope that it is good and true.