2015 Utility Fee Survey Results – Part III

This is the last of three consecutive Utility Information Pipelines reporting the results of the 2015 Utility Fee Survey, an update to the original Utility Fee Survey I conducted in 2012. 106 utilities, representing 19 states, ranging in size from 83 to 90,000 active accounts participated in the survey.

The first issue summarized the demographics of the survey respondents as well as water and sewer tap and impact fees. The last issue dealt with delinquent fees and policies. Today’s issue explores the remaining fees.

If you’re interested, here are the results from the 2012 Utility Fee Survey:

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

Clicking on any of the graphs will open a larger image in a new window.

Returned check fees

Of the 106 participating utilities, 105 charge a returned check fee. Returned check fees range from $6.00 to $50.00, as this graph illustrates:

Returned Check Fees

Application fees

In Utility Information Pipeline #10, I wrote about application for service best practices. One of my recommendations was to charge a non-refundable application fee, in addition to any security deposit, to all new accounts. I’m pleased to report that 55 of the 106 utilities (representing 51.9%) responding to the survey charge such an application or administrative fee. This is down slightly from the 52.3% reported in the 2012 Utility Fee Survey. These application fees range from $5.00 to $100.00 as shown below:

Application Fees

Meter reread fees

25 of the 106 utilities (or 23.6%) charge a meter reread fee if the customer requests their meter be reread. This is up from the 18.2% charging a meter reread fee in 2012. In many cases, this fee is waived if it turns out the customer was correct and the utility misread the meter. Of the utilities that charge a meter reread fee, the fee ranges from $5.00 to $50.00 as this graph shows:

Meter Reread Fees

Meter tampering fees

78 of the 106 utilities (or 73.6%) charge a meter tampering fee. This is up from 60.2% charging a meter tampering fee in 2012. Nine utilities charge the actual cost of repairs or cost plus an administrative fee. Four more utilities recover their costs through the judicial system. The remaining 65 utilities charge a flat fee ranging from $15.00 to $1000.00 as shown below:

Meter Tampering Fees

Convenience fees

One of my earliest issues explained why I believe utilities should accept credit cards. Of the 106 utilities responding to the survey, 86 of them (or 81.1%) accept credit cards. I’m pleased to report that this is an increase from 62.5% three years ago. Of the 86 that do accept credit cards, 40 of these charge a convenience fee on at least one form of credit card payments as shown below:

Convenience Fees

The convenience fees charged by these utilities are too diverse in how they are assessed to be graphed, so they are presented here in a table.

Other fees

In addition to the fees that have been described in the three results issues, the survey asked what other fees utilities charge. Below I’ve listed a few of the more creative fees that were reported:

Meter test fee

A number of utilities charge a fee if the customer requests that their meter be tested. The survey didn’t specifically ask about meter test fees, however one utility volunteered that they only charge the fee if test determines the meter is registering correctly. Hopefully all utilities follow this policy because the customer is probably doing you a favor if the meter test reveals the meter is registering incorrectly.

Return trip fee

When turning a meter on, most utilities will not leave the water on if the meter indicates water is running inside the house and no one is home. This requires the utility to make a return trip when the customer is home to turn the meter on again. Several utilities charge a return trip fee to cover the time and expenses involved in returning to the customer’s home.

Same day connection fee

A number of utilities routinely provide next day service for activating new accounts. A few of these utilities charge an additional fee for providing same day service.

Field collection fee

Most utilities have adopted the best practice of not collecting money in the field on cut-off day. At least one utility still allows customers to pay the field technician to avoid being cut off and they charge an additional $25.00 to provide that service.

A special offer

I still have a couple slots left for the special offer I’m offering to the first five Utility Information Pipeline readers who respond. If you are one of the first five to respond, I will conduct a personalized fee consultation for for one-third off the regular price! That’s $1,000 rather than the usual $1,500 price for this service.

I will review your utility’s current fee schedule and conduct an in-depth phone assessment to learn more about your fees. You will receive a presentation quality document illustrating how your fees compare with other utilities. Also included will be my recommendations for revising any existing fees and suggestions of new fees you should consider charging. An on-site presentation of the report can also be arranged for an additional fee, plus travel expenses.

If you are interested in this special offer, please contact me by calling 919-232-2320 or e-mailing me at gsanders@logicssolutions.com. Remember, the discounted special offer is only available to the first five people who respond.

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© 2015 Gary Sanders

2015 Utility Fee Survey Results – Part II

This is the second of three consecutive Utility Information Pipelines reporting the results of the 2015 Utility Fee Survey. 106 utilities, representing 19 states, ranging in size from 83 to 90,000 active accounts participated in the survey.

Last week’s issue summarized the demographics of the survey respondents as well as water and sewer tap and impact fees. Today’s issue deals with delinquent fees and policies. Next week the third and final survey results issue will recap all remaining fees.

If you’re interested, here are the results from the 2012 Utility Fee Survey:

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

Late fees

Of the 106 participating utilities, 104 charge a late fee. As shown by this graph, charging a late fee as a percentage of the bill is the most popular method (clicking on the any of the graphics will open a larger image in a new window):

Type of Late Fee Charged

Surprisingly, compared to the 2012 Utility Fee Survey, utilities charging a percentage is down just over 10% (57.7% vs. 67.8%), while those charging a flat amount is up nearly 9% (32.7% vs. 24.1%).

Utilities that assess the late fee as a percentage charge from 1% to 10%, with 10% being by far the most popular, as this graph depicts:

Late Fees Percentage

Late fees range from $2.00 to $45.00 for utilities that charge a flat amount. (The utility that charges $45.00 does so in lieu of charging a reconnect fee.) This graph illustrates the late fee flat amounts:

Late Fees Flat Amount

Eight of the utilities charge a hybrid late fee – a combination of a percentage with a minimum amount. Here is a graph showing what they charge:

Late Fees Percentage with Minimum

Cut-off fees

Seven of the 106 utilities do not cut off for non-payment. All of the 99 that do cut off for non-payment charge a cut-off or reconnect fee as a flat amount, ranging from $10.00 to $150.00 as shown below:

Cut-Off Fee Amounts

Of the 99 utilities that cut off for non-payment, 71 of them (representing 71.9%) assess the cut-off fee as soon as the cut-off list leaves the office. I’m pleased to note that the percentage of utilities charging the cut-off fee immediately is up 10% from the 2012 Utility Fee Survey.

Cut-off fee terminology

As more utilities adopt this best practice of charging the cut-off fee as soon as the cut-off list leaves the office, many are finding that terms such as “cut-off fee”, “disconnect fee” or “reconnect fee” are becoming outdated. For that reason, the survey asked what each utility calls its cut-off fee. The results are displayed in the following chart:

Cut-off Fee Terminology

For the number of responses, including the 22 terms included in the “other” category, please click here.

As you can see, reconnect fee and cut-off fee are still the most popular terms, but many utilities have adopted terms that do not refer to cut-off or reconnection. Calling your cut-off fee “delinquent fee” or “non-payment fee” or any of the other terms that do not imply cut-off or reconnection helps to avoid the inevitable arguments with customers who must pay the fee but have not been cut off.

After hours reconnect fees

Of the 99 utilities that cut off for non-payment, 51 of them (representing 51.5%) will reconnect after hours and charge a fee for this service.  41 of the 51 utilities (or 82.4%) will reconnect anytime after regular office hours. The remaining 10 utilities will only reconnect during selected time periods as shown below:

After Hours Reconnect Times

After hours reconnect fee amounts range from $15.00 to $250.00 as shown by the following graph:

After Hours Reconnect Fees

Next week’s issue

Part III – August 18, 2015

Next week’s final survey results deal with any remaining fees, including application, returned check, meter reread, meter tampering and convenience fees.

A special offer

I’m offering a special offer to the first five Utility Information Pipeline readers who respond. If you are one of the first five to respond, I will conduct a personalized fee consultation for one-third off the regular price! That’s $1,000 rather than the usual $1,500 price for this service.

I will review your utility’s current fee schedule and conduct an in-depth phone assessment to learn more about your fees. You will receive a presentation quality document illustrating how your fees compare with other utilities. Also included will be my recommendations for revising any existing fees and suggestions of new fees you should consider charging.

If you are interested in this special offer, please contact me by calling 919-232-2320 or e-mailing me at gsanders@logicssolutions.com. Remember, the discounted special offer is only available to the first five people who respond.

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

© 2015 Gary Sanders

Could this happen to your utility…?

Recently, I received a call from the town manager of one of our customers who is also a subscriber to the Utility Information Pipeline. The town had experienced a number of customers with higher than usual usage in their most recent meter reading cycle and were trying to determine the cause.

Meters are like people

They had taken all the steps you would expect and still hadn’t found a reason why so many readings were out of range. They:

  • reread the meters and verified the meter readings were indeed correct,
  • checked with the customers in question and none of them had experienced any abnormal usage or leaks,
  • consulted with the meter manufacturer and their local Rural Water Association.

In the process, they were told “meters are like people – they slow down, not speed up, as they get older”. That’s one I’ve not heard before, but it’s a great way to explain how meters operate in a way customers can understand!

Following best practices

As we discussed the town’s predicament, the manager casually mentioned the one thing all of these accounts have in common – the meter reader who usually reads this route was out sick when the meters were read.

Unfortunately, this town manager subscribed to the Utility Information Pipeline just a few weeks after this article dealing with meter reading best practices was published, and the town wasn’t following the very first recommendation.

In the end, the only reasonable explanation for why so many meters experienced exceptionally high usage was that they couldn’t have been being read accurately in the past. Whether this was due to dishonesty, laziness, or just plain stupidity on the part of the meter reader may never be known.

What I do know is this town now rotates meter reading routes between meter readers!

Are you following best practices?

Are you following all the best practices you could be? If you’re not sure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your utility.

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© 2014 Gary Sanders

Does your office suffer from TTWWADI syndrome?

If you’ve ever asked a question and gotten the dreaded answer of “that’s the way we’ve always done it,” then your organization could be suffering from what I call TTWWADI syndrome.

Thats The Way We've Always Done It

Is TTWWADI syndrome holding you back?

Back in the day, the 3 R’s referred to reading, writing and arithmetic.

In an office afflicted with TTWWADI syndrome, the 3 R’s refer to resistance, reluctance and refusal.

I’m surprised at how often I run into utilities that are resistant to change. Do any of these situations sound familiar to you?

Is the same old way always the best way?

The TTWWADI syndrome isn’t found only in the failure to take advantage of new technologies. Often, antiquated ways of doing things become institutionalized in organizations to the point they are never questioned.

Sometimes, doing things the same way for years makes sense. But other times, when we stop to think about it, many practices – especially informal processes that have developed over time – no longer serve a useful purpose.

In forward thinking organizations, questioning why things are done a certain way isn’t chastised, it’s welcomed!

In forward thinking organizations, questioning why things are done a certain way isn’t chastised, it’s welcomed! If you do something a particular way with no real reason for continuing to do it that way, it behooves you to question why you’re still doing it.

Many times, those closest to a process are oblivious to how redundant or useless it has become. A knowledgeable, objective outsider observing and asking why things are done a particular way can lead to constructive discussions and improvements in how things are done.

Is it time to consider a business review?

Do you ever wonder if your office could be run more efficiently? Or would you just like confirmation that you’re doing things the right way?

In either case, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your organization.

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© 2014 Gary Sanders

Are you charging an application fee?

Recently, I’ve done sales presentations for several utilities that don’t charge a fee for initiating service.

Excellent source of revenue

Many utilities try to keep rate increases that impact all customers to a minimum, but need to find additional sources of revenue. Charging an application fee is a great example of a fee that can generate additional revenue without impacting your entire customer base.

User fees

An application (or connection) fee is a prime example of the concept of user fees, whereby customers using a service are charged a fee for providing the service. A fair and equitable application fee should recoup the cost of initiating service for a new account.

A fair and equitable application fee should recoup the cost of initiating service for a new account.

 
 
 
 
Past Utility Information Pipeline issues have referenced the Government Finance Officers Association’s (GFOA) Committee on Governmental Budgeting and Fiscal Policy’s Best Practice for Measuring the Full Cost of Government Service. That policy states “The full cost of a service encompasses all direct and indirect costs related to that service. Direct costs include the salaries, wages, and benefits of employees while they are exclusively working on the delivery of the service, as well as the materials and supplies, and other associated operating costs such as utilities and rent, training and travel. Likewise, they include costs that may not be fully funded in the current period such as compensated absences, interest expense, depreciation or a use allowance, and pensions. Indirect costs include shared administrative expenses within the work unit and in one or more support functions outside the work unit (e.g., legal, finance, human resources, facilities, maintenance, technology).”

Costs associated with initiating service

Have you stopped to calculate the cost of initiating service for a new account? Here are some of the obvious direct and indirect costs:

  • Office staff salary and benefits to enter the application in the system
  • Cost of a credit check, if you perform one
  • Field staff salary and benefits to drive to the location and take the initial meter reading
  • Gas and maintenance expenses for the vehicle used by the field staff
  • Updating the turn-on service order and activating the account for billing

If you don’t charge an application fee, your entire customer base ends up paying for the costs associated with activating a new account through your rates. Is that fair to all the rest of your customers?

Is it time to consider an application fee?

If you’re not currently charging an application fee (or if you haven’t reviewed your existing fee in a while) and would like assistance establishing a connection fee, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2014 Gary Sanders

Could this happen in your office…?

A recent FBI press release described how a dishonest employee of a North Carolina municipality embezzled over $90,000. It seems she was issuing receipts for cash payments and pocketing the cash, then adjusting the accounts so customers wouldn’t notice the missing payments. She was caught when she failed to adjust a customer’s account for a payment she kept and the customer produced the payment receipt.

Could something like this happen in your office…?

Poor internal controls

Clearly this was a case of management not implementing effective internal controls and not maintaining proper separation of duties, as the last Utility Information Pipeline described.

Never, ever should the employee who receives payments be the same person who also approves adjustments to customer accounts. Something as basic as having a supervisor review and approve adjustments could have identified this fraud immediately.

My experience with fraud cases

Each of these cases involved dishonest employees pocketing cash payments.

In my career spanning 30 plus years, I’ve assisted in explaining or investigating a handful of utility embezzlement cases. Each of these cases involved dishonest employees pocketing cash payments. Some were more creative than others in attempting to cover it up.

One case involved a customer service clerk who embezzled security deposits paid in cash. This employee then used a supervisory override to enter the deposit in the system without receipting the cash. This way, the customer would still have a deposit applied to their final bill and wouldn’t complain. This practice went undetected for several years. Had this utility been reconciling deposits on a regular basis, this would have been detected the first month it happened.

Another case involved a cashier voiding every cash payment in a day’s work and pocketing the cash. Obviously, this wasn’t the smartest embezzler, as the fruad was caught the next month when multiple customers complained after receiving bills with no payments credited to their accounts. Even though the embezzlement was caught quickly and the employee was immediately fired and prosecuted, the entity involved still had to deal with the negative publicity and the ensuing investigation.

Adopt a cash handling policy

Every office should have a written cash handling policy that all employees are familiar with and abide by.

Here are some standard practices that should be included in a comprehensive cash handling policy:

  • Assign each cashier a separate cash drawer
  • Issue hand written receipts only in emergencies
  • Receipt payments as they happen
  • Account for cash overages and shortages
  • Monitor voided payments
  • Have a second employee double check each deposit

Let’s take a look at each of these in more depth…

Assign each cashier a separate cash drawer

Many smaller offices share a single cash drawer out of convenience. However, if you experience cash balancing problems, the only way to identify the responsible party is for each cashier to be accountable for their own cash drawer.

Issue hand written receipts only in emergencies

Hand written receipts should be avoided at all costs, unless the power is out or your system is down. Issuing hand written receipts and pocketing the cash is the most prevalent method of embezzling payments.

If your software isn’t capable of generating a receipt for all types of payments, including cash receipts that aren’t billed, it’s time to look for new software!

Receipt payments as they happen

Payments should be receipted as they take place. Many offices allow customers to drop off checks and enter them in the system later. This is not a good cash management policy and should be avoided. If employees see this as acceptable for check payments, will they also be tempted to do the same for cash payments?

Account for cash overages and shortages

Cash overages and shortages should be tracked by cashier. Even the best cashiers make mistakes counting change, so an occasional cash overage or shortage is to be expected. Not tracking overages and shortages makes it easier for employees to shortchange a customer and keep the cash. For utilities that base employee evaluations on performance measures, the number and amount of cash overages or shortages is an excellent performance measure for cashiers.

Monitor voided payments

All voided payments should be reviewed and accounted for, especially voided cash payments. An excessive number of voided payments, while not necessarily indicative of embezzlement, may often be the sign of a careless cashier.

Interestingly, Logics’ Central Cash Collections application includes a void payment edit list because, years ago, a very astute finance director had a feeling one of her cashiers was voiding too many payments and wanted a way for these to be monitored.

Have a second employee double check each deposit

Each cashier’s daily deposit should be double checked by another employee. This insures accuracy and accountability and sends a signal to your staff that honesty and integrity are essential.

Is it time to review your cash handling policy?

Have you reviewed your cash handling policy recently? If not, this might be a good time to do so.

If you don’t have one, I encourage you to develop and adopt one.

If you would like assistance developing or reviewing your cash handling policy, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2014 Gary Sanders