If you have a 1 inch service line there is no reason you can't have a 1 inch meter/backflow installed. The cost is a little more for the meter and backflow but it easier for the crew since all the parts are same size. They will have to install reducers and adapters to make the 3/4 meter, bf, and regulators work with the 1 inch service line. If you pay the extra cost for the 1 inch parts I'm sure somebody can make it happen. When you make the run from the meter to the house stay away from the 1.25 inch stuff if possible. It's not very common anymore and sometimes hard to get the parts when you need to fix it. 1.5 is way more common. Bury the pipe at least 18 inches deep (about 2ft is ideal) so it won't freeze or break when a vehicle drives over it. Once all this is swapped over and working there will be some air and discoloration in your plumbing. It's normal so just flush all your faucets and bathtubs for a while.

Obviously you can wrap the line with heat tape but water shouldn't stand in the line to begain with. So take your choice,heat tape or find why line doesn't drain dry and/or wasn't installed below frost line. If you care to go redneck low budget,build a small cold frame over the line from foundation to tank so that solar heat keeps ground warm in that area.

Thanks for the suggestion. It doesn't really need to be "pumped out." We will be calling someone to advise how to keep the rain water out of the tanks. It might take some digging which is best done in the spring. We will probably muddle through until then, The big rains cause the alarm to go off. So if I pumped it after every rain, I would just need the pump truck to hang out in the driveway, because it pretty much rains every day.

Austin, should be there a filter somewhere else in the air handler? If you look under the air handler it is probably open, you would be looking straight at the AC coil by looking up under the unit. You could put a filter in the filter rack of the unit in that slot under the pvc drain line that comes out lower right of the AH. Also, what are the ramifications of this poor setup? The evaporator gets dirty, which can freeze the coil or clog the condensate drain and water leak down all over the water heater and onto the floor. Potential IAQ problems as it's harder to keep coil clean. Excessive cleaning can lead to refrigerant leaks if not performed properly. Pain in the butt to work on, due to no room. Leads to corner cutting which in turn leads to further problems down road. Will I still get cool air with the AC turned down? Sure it will cool fine, as long as their are no outstanding problems. It can work, it is just not how I would install a system, because you are just begging for problems and having to deal with higher maintenance costs with this kind of set up. With that said, there may be no other better place to put it. Sometimes to cure something, you have to tear it down and start over.