The last Utility Information Pipeline (you can read it here if you missed it) dealt with the difference between billing in thousands of gallons and gallons. After analyzing billing in both units, I concluded, “If you’re billing in thousands and considering changing to gallons, I would only recommend doing so if you have a reason other than pacifying an upset customer! The best reason I can think of is if you are moving from reading with handhelds to some form of automated meter reading, either drive-by or fixed base.”

The point I wanted to make with that article is that, based solely on the billing outcome, it’s not worth the effort involved to change from billing in thousands to billing in gallons.

What I didn’t address was the effect on individual accounts if you are trying to influence your customer base to conserve, as many utilities in drought stricken parts of the country are.

Comments from a customer

In response to the last issue, I received the following e-mail from the General Manager of one of Logics’ customers:

“I appreciate the information below. As you know, [our utility] bills in thousands instead of gallons. We have had many customers complain about what they feel is a possibility of a disparity in actual usage in gallons vs billing in thousands. As you have shown below, I don’t believe there is enough difference either way to make a change. However, we recently received new EPA guidelines that say we should be billing in gallons.

“[Our utility] is in the process of obtaining a US Army Corps. of Engineers permit to construct a reservoir to meet our customer’s needs in times of low flow and drought. In EPA’s comments to our permit application it states that billing in gallons better shows the customer exactly how much water they use and leads to better possibility of conservation of the resource. So it looks like going forward with more conservation awareness and efficiency of our water resource, there will be an effort to get everyone back to billing by the gallon.

“This is good information as we decide how we will respond to EPA’s comments. We either have to tell them that we will be moving back to billing by the gallon, or present information as you have shown that defends the fact that there is very little difference. Of course your case study does not really address the effect of individual customers usage when being billed in gallons vs thousands.”

I always appreciate feedback from subscribers and this was especially valuable given that this customer addressed a point of view that I overlooked. I agree completely with the EPA’s position that billing in gallons provides your customers with much more accurate information about their actual consumption.

Revisiting billing in gallons as compared to thousands of gallons

Let’s take the same two illustrations from the last issue to show the difference between billing in gallons and billing in thousands, except this time carry it one step further to show the average daily usage.

In the illustration below, the customer is only billed for 4000 gallons when the actual usage is almost 5000 gallons and the average daily usage, when billing in thousands, is understated by almost 20%:

Advantage Billing in Thousands

In this illustration, the customer is billed for 4000 gallons when the actual usage is just over 3000 gallons and the average daily usage, when billing in thousands, is overstated by more than 30%:

Advantage Billing in Gallons

Should you reconsider and switch to billing in gallons?

If your intent is to present your customers with the most accurate usage information possible, especially if you are trying to encourage them to conserve, then I wholeheartedly endorse making the change to billing in gallons.

If you have any questions about reading and billing units, or how they impact your customers, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2011 Gary Sanders