Why aren’t deposits included in the Utility Fee Survey?

The 2017 Utility Fee Survey is a tool for researching what fees different utilities charge and how much they charge for each fee. I was asked why the survey doesn’t include a question about security deposits.

Questioning

Beyond the obvious

Obviously a security deposit isn’t a fee because fees, by definition, are non-refundable and security deposits are refundable.

Rate increases are never popular, and the best alternative to increasing rates (which impacts all customers) is to charge equitable fees. Fees, such as an administrative fee for activating new customers or a disconnection fee for non-payment, are assessed only to those customers using the service covered by the fee.

Comparing what fees your utility charges, and how much you charge for each, to what other utilities charge is a useful exercise. Such comparisons provide a benchmark for determining if your utility is charging all available fees and if the amount of those fees is fair.

Security deposits, on the other hand, are a function of each utility’s rates, business practices, and customer usage patterns. I’ve written previously about why comparing your security deposit to other utilities is pointless. A better exercise would be to review your own business practices to find ways to reduce your days of exposure.

Complete the 2017 Utility Fee Survey

If you haven’t already completed the 2017 Utility Fee Survey, and would like to, 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.

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 8:30 am 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!

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?

Upcoming seminar

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.

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

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

Revisiting days of exposure

I’ve written previously about minimizing days of exposure, and it’s a topic that deserves revisiting.

Components of days of exposure

If you remember, the total days of exposure is comprised of six different components:

  • Days between meter readings
  • Days until bills are mailed
  • Days until due date
  • Days until bills are delinquent
  • Days until final notice is mailed
  • Days until cut-off

One of the areas you have the most control over is how many days elapse between reading meters and mailing bills.

An actual scenario

Recently, while visiting with a customer, I asked the manager how long it takes them after reading meters to review the meter readings, calculate bills and send the bill file to the outsource printer.

The answer, which took me totally by surprise, was three weeks. When I questioned this, the response was the billing staff says that’s how long it takes. I didn’t press the issue, although I strongly suspected this may be a case of the TTWWADI syndrome.

The conversation continued on to how a particular customer’s misread meter was handled. The manager went to get the paperwork for the specific case in question and it turns out two full weeks had passed between the date the meter reading edit list was printed and when the field technician reread the meter.

How long does it take you?

I can think of no good reason why it should take two full weeks to get a reread returned to the office.

How long does it take your office between reading meters and mailing bills? Please take a moment to take this quick poll and I’ll publish the results in the next issue.

Is your office guilty of this?

The billing clerks for this customer are new hires since the system was installed and could probably benefit from followup training. I wasn’t even conducting a business review and this customer benefited from free consulting. Just imagine what a complete business review might discover!

If you think the way you process rereads (or do anything else in your office, for that matter) takes longer than it should, 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 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