McAllen Public Utility approves $18.7 million plan to upgrade water meters

The McAllen Public Utility plans to install nearly 47,000 new water meters during the next two years as part of a major infrastructure project.

Members of the Public Utility Board approved the $18.7 million project in May after more than four years of discussion.

“We did our due diligence to do it right,” said utility board Chairman Charles Amos.

The public utility purchased the water meters from Aqua-Metric Sales Company, which is based in Riverside, California, and financed the project with a low-interest loan from the Texas Water Development Board.

Aqua-Metric will remove old, mechanical water meters and replace them with modern, electromagnetic water meters.

McAllen started providing new customers with electromagnetic water meters about three years ago, said utility General Manager Mark Vega.

More than 4,000 customers already use electromagnetic meters, according to bid documents McAllen published in December. Another 42,700 still use mechanical water meters.

The oldest mechanical water meters in McAllen were installed during the 1980s, according to the bid documents. Many old meters don’t measure water accurately, which may allow a leaky toilet or dripping faucet to remain undetected for years.

When the old meters are replaced, some customers may receive higher bills.

“There might be a few that are going to be a little bit upset because they see their actual consumption,” Amos said.

Along with the water meters, Aqua-Metric will provide the public utility with software and wireless communications equipment. The system will automatically report water usage information, eliminating the need for employees to read meters.

Members of the Public Utility Board discussed the project for more than four years before deciding to buy water meters from Aqua-Metric and borrow money from the Texas Water Development Board.

In 2019, the utility board met with Performance Services Inc., an Indiana-based company.

Performance Services Inc. suggested McAllen pay for the project with an “energy savings performance contract.” Texas allows local governments to enter into energy savings contracts if a combination of reduced costs and higher revenue would pay for the project.

“By law, the contractor must guarantee that the savings will always be at least equal to the payments for the cost of the improvements,” according to information published by the Texas Comptroller of Public Accounts.

Jonathan Blackwell, a business development manager for Performance Services Inc., promised “zero upfront costs” and “guaranteed financial results” with “deferred payments for up to 24 months.”

The public utility didn’t buy it.

“We said: ‘No way, we can do this ourselves at a much lower cost,’” Vega said.

The public utility borrowed $18 million through the State Water Implementation Fund for Texas program, which offered a 20-year loan at just 1.5% interest. It also decided to buy water meters directly from the distributor, Aqua-Metric.

That decision proved prescient.

Performance Services Inc. became embroiled in a bribery scandal. The city of Mission and the Agua Special Utility District, which contracted with Performance Services Inc., ended up in litigation. And Blackwell was fired.

“I am glad that we took the time to step back from the initial push Valleywide that was ongoing by a number of different companies,” Amos said. “And that we evaluated it a little bit more than what was presented to us.”