Utility Information Pipeline #20 dealt with meter reading best practices (you can read it here if you missed it). So what if your utility can’t afford the move to automated meter reading and you’re trying to cut costs?

Every now and again I encounter a utility that is considering switching from reading monthly to reading one month and estimating the next month, or they want an easy way to transition from bimonthly billing to monthly billing. Usually the rationale for this is to reduce the expense associated with reading meters. But is it worth it…?

At first glance, this seems to make sense – you still get to bill monthly but only incur the costs associated with reading meters every other month. However, upon further investigation, there are reasons why this isn’t such a good idea.

Leaks go undetected longer

If you discontinue reading meters each month and opt for the read one month, estimate one month model, you run the risk of leaks going undetected for up to two months. Currently, if a customer has a leak that starts just after you read their meter; the leak will be detected by an unusually high reading the next month.

However, if that reading is estimated, the leak will continue for another full month before it is discovered. This leads to an exceptionally high bill for your customer – or an exceptionally large leak adjustment if you offer leak adjustments. But that’s another topic for another day.

Erratic usage patterns can cause extremely high and low bills

In addition to hoping that your customers don’t have leaks, the estimating every other month model requires that your customers have relatively stable usage patterns. If a customer’s usage suddenly increases early in the estimated month, the next bill based on an actual reading will be very high.

The reverse situation – when a customer’s usage suddenly tapers off, for example due to being gone for long periods of time – can be worse. Especially if the usage was so low that the estimated month’s reading was higher than the following month’s actual reading. Not only does this require giving your customer a refund, you also have to correct the errant estimated reading in your billing system.

Valid reasons to estimate readings

There are valid cases where mass estimating of readings is the only way to get your billing finished. Here in the south, an unexpected snowfall can make reading water meters nearly impossible. If you don’t have time to wait for the snow to melt, estimating the remaining readings may be the only way to get your bills out on time.

In the final analysis, if you are looking for ways to cut costs, there are better ways than estimating readings every other month. If you are looking for ways to reduce expenses, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn more about how a business review could help your utility.

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© 2011 Gary Sanders