Do you separate your base charge…?

If your utility is like most, your rates include a base (fixed) charge in addition to the usage charge. The base charge, sometimes called an administrative fee, should generate enough revenue to cover the fixed costs associated with operating your utility. This includes things like the customer’s meter, the infrastructure necessary to provide service to the customer’s location, and reading the meter each billing period. Some water utilities charge different base charges according to the size of the meter under the premise that a larger meter costs the utility more to provide and maintain, both for the meter and the infrastructure to supply water to the meter.

Conversation with a customer

I’ve recently had a conversation with a customer who is considering separating the base charge from the usage component of his city’s water and sewer rates. There are pros and cons to doing this, so this issue will examine those.

Benefits of separating the base charge

The biggest advantage of breaking out the base charge from the usage charge is transparency for your customers. Showing each as a separate line on the bill more clearly communicates to your customers what they are being charged.

A second advantage of separating the base charge from the usage charge is it’s easier for your customers to see the impact of increased or decreased usage on their bill. This is especially true if you institute water conservation rates in times of drought and even more important if you have increasing block rates, so that your customers see the impact of their water consumption. If you’ve recently switched to increasing block rates and haven’t reevaluated how you bill for multiple units, you might want to read this.

The third advantage of splitting the charges is it’s now much easier to track the revenue generated from each component of your rate. Rather than seeing one combined total on billing registers and reports, you will now see separate totals for each.

Disadvantages of separating the base charge

The disadvantage to separating the base charge from the usage charge is customer education. This can be mitigated if you publicize the transition well enough but, in spite of your best efforts at educating your customers, some won’t realize the change is happening until they receive their first bill with the charges separated.

Several years ago, a customer that provides both water and sewer decided to break out the base charge from the usage charge for both services. This meant their customers went from receiving a bill with two line items – water and sewer – to a bill with four line items – water base charge, water usage, sewer base charge, and sewer usage. They didn’t publicize the change well and, needless to say, their phones rang off the hook. Customers, mistakenly thinking they were being charged for additional services, were irate. They ended up paying bonuses to their customer service representatives because of all the verbal abuse they took from customers!

So the moral of the story is, if you decide to do this, publicize it as much as you can well in advance!

Final week for the Utility Staffing Survey!

The 2018 Utility Staffing Survey will be closing on April 15 at midnight, so if you haven’t yet participated, this week is your last opportunity to do so. To complete the survey, please click here. This should take less than five minutes to complete. The results will be published in the next two Utility Information Pipelines.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

Are your policies up-to-date?

If you are considering changing your rates or otherwise need help deciding how to best present information to your customers, 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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© 2018 Gary Sanders

Are you tracking non-revenue water?

Does your utility track non-revenue water (NRW)? Non-revenue water is the term that replaces what was formerly called water loss reporting.

Graphic courtesy of Tata & Howard – www.tataandhoward.com

What is non-revenue water?

Non-revenue water is defined as your total system input volume (either water produced or purchased) less billed consumption.

From the chart below you can see that your system input volume falls into one of two categories – authorized consumption or water losses. Each of these are then further divided into two sub-categories – authorized consumption into billed and unbilled authorized consumption and water losses into apparent and real losses.

Non- revenue water is the total of unbilled authorized consumption, apparent losses, and real losses.

Let’s analyze each of these in more detail…

Billed authorized consumption

This is pretty straightforward – this is what your utility is in business to do! Billed authorized consumption can be either metered or unmetered, but it is accounted for and you (hopefully) get paid for it!

Unbilled authorized consumption

Unbilled authorized consumption can also be either metered or unmetered. Unbilled metered consumption would include your own facilities if you don’t bill yourself. Examples of unbilled unmetered consumption would be flushing lines or the fire department drawing water from hydrants in your system.

Apparent losses

Apparent losses are also broken down into two types – unauthorized consumption and customer meter inaccuracies and data handling errors. Unauthorized consumption is self-explanatory – it’s stolen water or any other consumption without the utility’s authorization.

Customer meter inaccuracies includes meters slowing down over time due to wear and tear. Remember, meters are like people – they slow down, not speed up, as they get older! Metering inaccuracies could also be due to failing to install a compound meter for a multi-unit apartment building and not registering low flows during off-peak times.

Data handling errors would encompass such things as meters that are billed using the wrong billing units. For example, if a meter is read in thousands of gallons but billed in hundreds of gallons, the apparent loss is a factor of 10.

Real losses

Real losses are further defined as leakage in transmission and distribution mains, leaks and overflows from storage tanks, and service connection leaks up to the meter.

Leaks in transmission, distribution, and service lines are what first comes to mind for most people when they think of water loss, but leaks and overflows from storage tanks must also be considered.

AWWA resources

The American Water Works Association (AWWA) offers free water audit software to assist with accounting for non-revenue water. They also offer a concise, three page document describing water audits with definitions and performance indicators to help explain the process.

Need help getting started?

If you need help getting started with performing a water audit, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com and I can put you in touch with consultants who specialize in this area.

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© 2018 Gary Sanders

What’s a compound meter?

In the last Utility Information Pipeline, I wrote about the pros and cons of metering individual premises. That article went on to briefly mention the possibly needing a compound meter, if a master meter were to be installed. So, what exactly is a compound meter…?

Compound meters

Compound meters (sometimes referred to as high/low meters because they have high and low flow sides) are used in situations where large volumes of water need to be metered, but at other times slower flows must also be recorded.

Such a scenario could be a large, multi-unit apartment building or a hotel that must be able to meter high usage first thing in the morning, when many residents are showering at the same time, but also measure low flows in the middle of night to record the occasional toilet flush. A manufacturing plant that uses large volumes of water while the plant is in operation, and minimal usage at other times, is another example of a prime candidate for a compound meter.

The Alliance for Water Efficiency has a good, easy to understand description of compound meters in this article.

For billing purposes, with compound meters, two sets of meter readings are taken – a larger meter for the high flows (the “high side”) and another, smaller meter, for the low flows (the “low side”). The usages are then added together and the customer is billed for the combined usage.

Don’t be fooled

The “high side” of a compound meter may not always be the higher reading of the two. The high side could have already rolled over, and have a lower reading, or there could be relatively little high demand. In the latter case, most of the water used would be metered by the “low side”.

Does your billing system support compound meters?

Many older billing systems don’t properly support compound meters. Some require creating two accounts – one for the high side meter and another for the low side meter. Others require manipulating the readings before entering them as a single, combined meter.

If your billing system doesn’t easily handle compound meters, it may be time for a change. If you’re in this situation, 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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© 2017 Gary Sanders

Do you or don’t you…?

…meter individual premises?

Many of the ideas for Utility Information Pipeline articles come from personal experience working with utilities. My second best source of ideas is from listservs I subscribe to. This topic falls into the latter category.

Policy deviation question

About a year ago, a listserv question was posed asking about the pros and cons of deviating from the utility’s policy of metering all single family residences individually and allowing a townhouse development to install a master meter. The homeowner’s association would be responsible for the bill for the master meter.

Pros of master metering

Obviously, the big advantage to a single master meter over multiple individual meters is that the utility only has one meter to maintain, read, and bill. Depending on the number of residences in the development, it is also likely a single, larger meter would be less expensive to purchase and install than many individual, smaller meters.

Cons of master metering

The list of disadvantages is a much longer list…

First of all, if you have to turn the water off for non-payment, you don’t have just one angry person, you have many. Even though, in this scenario, the customer is the homeowner’s association, the reality is you have a public relations nightmare and, if you are a local government, many irate citizens.

If you ever have to enact water conservation measures in the event of a drought, a single master meter makes it impossible to determine who is and who isn’t abiding by the conservation restrictions.

Likewise, if there is a leak within a residence, there is no way to know which occupant is experiencing the leak. Similarly, if there is a leak in the piping on the customer’s side of the meter, there is no way to determine where the leak is.

Finally, depending on the number of units and the size of the master meter, a compound meter would most likely be required to accurately register low flows such as toilet flushes in the middle of the night.

Recommendation

My recommendation in this situation would be that the utility not deviate from their policy. After all, isn’t that why you have policies in the first place – to determine how to handle situations like this?

Is it time to update your policies?

If it’s been a while since you’ve updated your policies, 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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© 2017 Gary Sanders

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.

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

© 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