Glendale to tighten up contract procedures

Invoices, change orders and other paperwork from Glendale Water & Power’s smart meter contract lacked certain cost details, a practice that could put the city at risk of overpaying for work, a city audit found.

The project, the original cost estimate for which was $29 million, has increased in cost by about $4 million since it was approved in 2009. But that was still within the $5.7 million set aside for contingencies.

Still, auditors found that the paper trail for managing the contract lacked adequate details about modifications, airfare costs and professional service rates.

Glendale Water & Power will have “better project management going forward,” City Auditor Michelle Flynn said at an Audit Committee meeting Monday morning.

The utility’s contract with smart meter provider Itron Inc. could have been “tidier,” but overall it was executed well, given that it consisted of “several moving parts,” Flynn said in a follow-up interview, adding that her team didn’t uncover anything “earth-shattering.”

However, following the Aug. 31 audit report, the city will tighten budget controls in a computer system that tracks payments.

Smart meter hardware, software and data storage are just part of a larger $70-million project to install technology that tracks energy and water use. Federal and state grants covered roughly $20 million of the project’s total costs.

Glendale was the first municipal utility to receive federal stimulus money to install the meters, which digitally transmit information about energy and water use in near real time.

Smart meters have been a point of contention at City Hall, with officials praising the technology for its ability to detect leaks and curb electricity use, and opponents criticizing their cost.

Interim Glendale Water & Power General Manager Steve Zurn said the audit provided the utility with suggestions on how to improve quality control.

“It did point out opportunities for us to tighten up our contract procedures,” Zurn said.

Among them, utility officials should regularly confirm the reasonableness of costs and report change orders to the city manager in a timely manner.

While all the smart meters have been installed, $10 million-worth of work on the overall smart grid project was put on hold after the city closed a $15.4-million budget gap this summer. Glendale Water & Power has postponed most capital improvements, in addition to a proposed electricity rate hike.
Follow Brittany Levine on Google+ or Twitter: @brittanylevine.