Should you hire a contractor to upgrade your meters?

So, your utility has decided to upgrade to an automated meter reading system? You know all your meters must be replaced, but should your staff replace them or should you hire an outside contractor?

Let’s examine some of the pros and cons of both options…

Replacing meters using existing staff

The primary advantage of having your own field staff replace meters is the cost savings. If your existing field staff is able to replace the meters without working overtime, you won’t incur any additional labor cost.

However, if you are using existing staff, chances are they have other job responsibilities besides changing out meters. This means they won’t be able to dedicate all their time to replacing meters, making the project take longer to complete. If you have a major leak and need extra help to repair it, the technicians tasked with changing meters are often the first to be called.

Using an outside contractor

An outside contractor is dedicated to the task of replacing meters, regardless of what else is happening in your utility. If you have a water main break, contractors don’t get pulled off the job to repair the leak and meters continue to be changed out.

You won’t realize the full return on investment for your new automated meter reading system until all of your meters have been replaced with radio read meters.

You won’t realize the full return on investment for your new automated meter reading system until all of your meters have been replaced with radio read meters. If there is a deadline for the project to be fully implemented, it might be wise to consider hiring a contractor.

Another advantage to hiring a contractor is many contractors are able to provide a data file with meter change-out information. If your billing system can import and update a meter change-out file, this can greatly reduce the data entry time required for your billing staff to enter all the meter change-outs.

The obvious disadvantage to hiring an outside contractor is cost. The contractor is going to have to be paid and this cost needs to be factored into the overall cost of the project.

Need help deciding?

Trying to decide if an automated meter reading system would be cost effective? Or, if you’ve determined it would be, are you still weighing whether to change the meters in house or hire a contractor? Either way, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

Final week for the 2015 Utility Fee Survey

I will be closing the 2015 Utility Fee Survey at 5:00pm on Tuesday, June 30, so if you haven’t yet participated, please take a few minutes to do so. Please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@logicssolutions.com or call me at 919-232-2320.

I’m looking for as much participation as possible in the survey, so please feel free to pass this on to your colleagues at other utilities.

Thank you in advance for your participation in the Utility Fee Survey.

Click here to subscribe to my free, bi-weekly e-mail newsletter...

© 2015 Gary Sanders

How does your security deposit compare?

In one of the listservs I subscribe to, a question was recently asked about what other utilities’ deposit policies are, including deposit amounts. While I think inquiring about other utilities’ policies is worthwhile, comparing the amount of their deposit without knowing their rates and business practices can be futile.

How much is an adequate deposit?

A sufficient deposit should protect your utility against bad debt customers who leave and never pay their final bill. How much that is depends on your average utility bill and your business practices.

Worst case scenario

The worst case scenario for a security deposit is that customer who ends up on the cut-off list and skips out without paying. Your utility is owed the original bill which caused the customer to be on the cut-off list, the next bill (if one has been issued) and any usage since the most recent bill. To illustrate this, let’s look at a hypothetical situation…

Days of exposure

I’ve written before about days of exposure, the total number of days of service you would be owed for by the worst case scenario customer described above. For our hypothetical customer, let’s assume:

  • meters are read on the 10th of the month
  • bills are mailed the last day of the month
  • bills are due on the 25th of the month
  • bills are considered delinquent 5 days after the due date
  • a final notice is mailed 5 days after the delinquent date
  • cut-off occurs 5 days after the final notice is mailed

Here is how that looks in a timeline (clicking on the graphic will open a larger image in a new window):

Days of Exposure Timeline

This adds up to 90 days of exposure (admittedly, this is a bit extreme, but it’s only for illustration purposes):

Assuming you bill each customer monthly, 90 days of exposure equates to three months of bills. You would then have to multiply your average monthly utility bill times three to determine how much an adequate deposit is.

If your deposit is less than this, then you are at risk for write-offs from bad debt customers.

Need assistance?

If your deposit policy needs updating or if you would like to explore ways to reduce your days of exposure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

Last call for the 2015 Utility Fee Survey

I will be concluding the 2015 Utility Fee Survey soon, so if you haven’t yet participated, please take a few minutes to do so. Please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@logicssolutions.com or call me at 919-232-2320.

I’m looking for as much participation as possible in the survey, so please feel free to pass this on to your colleagues at other utilities.

Thank you in advance for your participation in the Utility Fee Survey.

Click here to subscribe to my free e-mail newsletter...

© 2015 Gary Sanders