How do you handle temporarily inactive accounts?

I had a Town Manager who attended my recent presentation at the North Carolina Rural Water Association Annual Conference contact me with a question. He wanted to know what I recommended regarding billing for temporarily inactive accounts.

Snowbirds

If you have seasonal customers, you know the issue he was inquiring about – snowbirds from colder climates who go south for the winter (or, conversely, winter homes in warmer climates) or summer homes where your customer only wants the utilities on for the summer months.

The dilemma facing your utility is should you continue to bill the base charge each month, even if the customer has no usage?

Recovery of infrastructure costs

One clue as to how to handle this is understanding the rationale behind your base charge.

For many utilities, the base charge is designed to recover the investment you have in providing service to the property, regardless if there is usage. You must maintain the infrastructure and service lines year-round and you have an investment in a meter at the premises, even if no one is living there.

If this is the case for your utility’s base charge, you have every reason to continue to charge the base charge, even if the account is temporarily inactive.

Fees in lieu of monthly billing

An alternative to billing the customer each month is to charge a fee to turn the service off and another fee to turn it back on (based on the user fee concept that you are performing a service for this customer that wouldn’t otherwise be required).

The idea here is the two fees combined should cover your staff’s time and effort to disconnect and reconnect the service as well as recoup what your customer would have paid if they left the service on with no usage and paid the base charge only.

How does your utility handle this?

How does your utility handle temporarily inactive accounts? Please take this quick poll.


 
Once you’ve taken the poll, you will be able to see the results to see how other utilities responded. I’ll publish the final results in the next issue.

2017 Utility Fee Survey

The 2017 Utility Fee Survey is ongoing. If you haven’t already completed it, please click here to complete the survey. It should take less than five minutes to complete. For an idea of what to expect from the survey, here are the results of the 2015 Utility Fee Survey:

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 hoping 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 2017 Utility Fee Survey.

Reviewing your policies?

If you’re in the process of reviewing or updating your policies, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help you review your entire office operation.

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© 2017 Gary Sanders

Do you bill yourself?

Does your utility bill itself for usage in buildings you own?  At first, this may sound like an odd question, but let’s look a little closer.

Three possible scenarios

When it comes to your own usage, there are three possible billing scenarios:

  1. Don’t meter or bill yourself
  2. Meter the usage but calculate bills using a no charge rate
  3. Bill yourself at your normal rate for commercial customers

Clearly, the first option is not a good one. If you’re not metering your own usage, you have no way to look for usage trends or, for water utilities, check for leaks.

In my experience, the second choice is far and away the most common. Metering and tracking usage with a no charge rate provides a way to compare usage trends for your own accounts, just as you would with any other customer. Additionally, if you are a water utility and monitor your water loss, your own usage represents non-revenue water that should be tracked.

Why would you bill yourself?

The third option makes the most sense for local governments, especially those that operate their utilities as enterprise funds. Good accounting practice (and the law in some states) frowns on inter-fund transfers, such as the General Fund supporting the Water or Electric Fund.

Since many government buildings (think City Hall, Police Department, Fire Department, Parks and Recreation facilities) are part of the General Fund, “paying” yourself in the form of a utility bill is a perfectly legitimate way to transfer funds from the General Fund to a utility fund.

2017 Utility Fee Survey

The 2017 Utility Fee Survey is still open. If you haven’t already completed it, and would like to participate, 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 hoping 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 2017 Utility Fee Survey.

Last chance to register for aging workforce seminar

A major issue facing management of all utilities, large and small, is an aging workforce. As more key employees approach retirement age, utilities across the country are having to face the issue of replacing the loss of institutional and operational knowledge these long-time workers hold.

Does your utility have a plan in place to deal with the aging workforce?

The Utility Management Committee of the NC AWWA-WEA, of which I am a member, is sponsoring an Aging Workforce Issues – Best Practices Panel & Luncheon seminar. This seminar, originally scheduled for last October, has been rescheduled to Thursday, May 4 from 11:30 am to 1:30 pm.

If you are located within driving distance of the University of North Carolina at Chapel Hill, I encourage you to join us. If not, you can still participate in a live webcast of the seminar.

The seminar moderator is J.D. Solomon, PE, CRE, CMRP; Vice President of CH2M. The panelists are:

  • Rod Dones, Organizational Development & Learning Specialist, Charlotte Water
  • Tamara Byers, Human Resources Manager, Charlotte Water
  • Ed Kerwin, PE, Executive Director, Orange Water & Sewer Authority
  • Matt Bernhardt, Director of Public Works and Utilities, City of Gastonia
  • Courtney Driver, PE, Utilities Director, City of Winston-Salem

For more information, or to register for the seminar, please click here.

North Carolina Rural Water Association presentation

If you or any of your co-workers or board members will be attending the North Carolina Rural Water Association Annual Conference, please be sure to attend my presentation on Improving Revenue Collections for Utilities at 8:30am on Thursday, May 18.

Part of this presentation includes an exercise for calculating how much your security deposit should be, based on your days of exposure.

If you or someone from your utility does attend, please be sure to introduce yourselves!

Need assistance?

If, after completing the 2017 Utility Fee Survey, you’re wondering if your fee schedule is up-to-date, or if you need to find ways to reduce your days of exposure, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help you review your entire office operation.

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© 2017 Gary Sanders

How to make your customers happier

For the last eight years, Fiserv, a global company in the financial services industry, publishes an Annual Billing Household Survey. This survey reports trends in how consumers receive and pay their bills.

Past Utility Information Pipeline articles referenced this survey in 2012 and 2014. The Eighth Annual Billing Household Survey is now available and this issue will highlight a few statistics from it.

Customers want choices

This graphic, from page 20 of the report, highlights how offering different billing and payment options impact customer satisfaction (clicking on any of the graphics will open a larger image in a new window):

Customer Satisfaction Factors
 

Multiple payment options

Almost as if it were written for the audience of this blog, consider this quote from the graphic on page 21 of the report:

“The expectation of multiple payment options does not vary depending on the type of biller. In fact, consumers expect a local utility to provide the same options as a national wireless carrier or cable provider.”

As the graphic shows, 79% of customers expect your utility to provide the same options as much larger national companies:

Expectation of Multiple Payment Options
 

Preferred payment options

According to the survey respondents, as shown in the graphic below from page 8 of the report, the majority of online households prefer to pay their bill at your website, ahead of paying by check:

Online Household Payment Methods
 
In third place is paying the bill online at the customer’s financial institution website. The text accompanying this graphic says:

“Between the Seventh and Eighth Annual Billing Household Surveys, there was a 72 percent increase in consumers making payments at both biller and financial institution websites. Paying bills at a financial institution’s site also grew significantly by 55 percent.”

Clearly, the trend is toward paying bills online, whether that is your website or the customer’s financial institution’s website. The next Utility Information Pipeline issue will deal with automating payments made by your customers using their bank’s online bill pay.

Paperless billing

The final statistic I want to highlight is how important paperless billing is becoming to customers. The graphic pictured below, from page 14 of the report, shows that 79% of households receive some of their bills electronically, and 25% receive all bills paperlessly.

Paperless Billing Preferences
 
In addition, only 22% have no interest in going paperless! Clearly, paperless billing is the way of the future.

Are you offering your customers the choices they want?

Are you offering your customers all the payment options they desire? Are you offering paperless billing? If the answer to either question is “no”, please give me a call at 919-232-2320 or email me at gsanders@logicssolutions.com to learn how a business review could help you learn how your office could better meet your customer’s needs.
 

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© 2016 Gary Sanders

Spring forward, fall back

As most of us entered daylight saving time slightly over a week ago, and the first day of spring was only two days ago, has your utility made preparations for spring?

Just as your local fire department encourages everyone to replace smoke detector batteries, the start and end of daylight saving time should bring about housekeeping chores in your office as well.

Seasonally adjusted high/low parameters

As temperatures warm in the spring and cool off in the fall, your customers’ usage patterns adjust according to the season. With this in mind, if your billing system determines out of range meter readings by applying high and low percentages to your customers’ average usage, you should seasonally adjust those high and low parameters.

Energy utilities

If your utility is an energy supplier (electricity or natural gas), spring marks the transition from winter heating season to more moderate temperatures, and less energy usage. Therefore, it makes sense to adjust the high and low limits down in the spring and back up in the fall.

Water utilities

Conversely, for water providers, spring brings about more watering of lawns and gardens and increased usage. Accordingly, you should adjust the high and low limits for water consumption up in the spring and back down in the fall.

Does your meter reading process need reviewing?

If your utility doesn’t seasonally adjust high and low meter reading parameters, or if you think any other internal process could be improved, 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.

Don’t miss your chance

In a recent issue, I introduced the Utility Staffing Survey. This survey is designed to determine what is adequate staffing for a utility office. If you haven’t already completed the survey and would like to participate, please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Thank you in advance for taking the time to complete the survey. Please feel free to share the survey with your peers at other utilities.

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© 2016 Gary Sanders

Poll results and vacant accounts

The last issue revisited how the number of days between meter readings and sending bills can adversely contribute to increased days of exposure.

Poll results

That issue included a poll asking how many days pass between reading meters and mailing bills. Twenty utilities responded, and here are the results of that poll:

If you missed the poll, you can click here to take it.

If your utility is one that mails bills within two or three days of reading meters, congratulations, you’ve figured out how to do it efficiently!

If your utility falls in the four to seven day range, this is what I would call normal – there’s room for improvement, but it’s not excessive.

However, if your utility takes eight or more days, as the majority of the responses, I consider this to be excessive. I would encourage you to evaluate why it takes so long and see if you can find room for improvement. If you can’t figure out how to reduce the time between reading and billing on your own, please give me a call to see how a business review could assist you.

Reading inactive meters

While we’re on the topic of meter readings, let’s revisit reading inactive meters for vacant accounts, a topic I touched on briefly while discussing meter reading best practices.

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome, dating back to when most utilities read meters on paper and entered them manually. Not reading inactive meters was thought to be a time saving tactic for both the meter readers and office staff.

With the advent of handhelds and automated meter reading systems, there is no reason not to read inactive meters. Reading inactive meters is your best tool for detecting customers who may have moved into a vacant home without properly initiating service. For water utilities, it’s also the best way to determine if there is a leak at a vacant property.

Do you read inactive meters?

Does your utility read inactive meters? Please take a moment to to take this quick poll and I’ll publish the results in the next issue.

Do you operate as efficiently as possible?

If you aren’t sure your utility is operating as efficiently as it could be, 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.

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© 2015 Gary Sanders

How effective are your internal controls?

I recently completed a business review for a small utility in which I recommended purchasing new billing software, among other internal changes. As I finished presenting my report to the management team, the general manager slid a page across the table and asked “Will implementing your recommendations take care of this?”

What he showed me was the exceptions page from their most recent annual audit in which the auditors had cited the utility for inadequate separation of duties.

Separation of duties

Separation of duties is a form of internal control based on having more than one person involved in a process to prevent errors and fraud.

For example, in a utility business office, the following combinations of tasks should be divided among two or more employees:

  • Issuing bills and accepting payments or adjusting accounts
  • Accepting payments and adjusting or writing off accounts
  • Accepting payments and preparing bank deposits
  • Approving and entering adjustments to accounts
  • Writing checks and reconciling bank statements

Limited staff

The reality in many small offices with limited staff is that it’s not possible to separate all of these responsibilities.

Such was the case with the utility described above. They have two customer service representatives who also function as cashiers and one billing clerk. The billing clerk fills in for the customer service reps during their lunch hours and this is what the auditors cited in their audit exception.

I explained to the general manager, as I suspect he already knew, that what he faces is a staffing issue, not something new software will remedy. Unless he is willing to hire another person or have only one person in customer service during the busy lunch hour, this will be a perennial issue.

Effective oversight

In cases like this, a strong set of checks and balances is vitally important to protect the organization against dishonest or fraudulent acts.

Have a supervisor or manager review all transactions before they are updated. This is especially important for adjustments, which are the easiest way to try to cover up payments that are pocketed.

I recommend periodically reviewing your internal control policies and procedures with an eye out for how they can be improved. And don’t stop at just reviewing your written policies – take time to insure and validate they are being followed as intended.

Is it time to review your internal control policies?

Do you need to take a look at your separation of duties or internal control policies? 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 assist with reviewing your policies and procedures.

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© 2014 Gary Sanders