utility information pipeline

Keep reading for free consulting!

I’ve participated in lots of sales training over the years. In a consultative sales environment, where the seller makes an effort to learn about the buyer’s needs before recommending a solution, one of the things we’re taught to avoid is “free consulting”. Free consulting is considered to be giving away information and advice that a prospect would otherwise pay to receive.

Truth be told, a lot of what I write about in this newsletter could be considered free consulting, but I do it to educate my readers and establish both my and Logics’ credibility in the utility billing software marketplace.

Observations from 2017 Utility Fee Survey

Keep reading because I’m about to give away some “free consulting” based on the results of the 2017 Utility Fee Survey. The last Utility Information Pipeline, which was the third and final installment of the Fee Survey results, included returned check fees.

One of the surprising observations was how many utilities either charge more or less than the maximum allowable fee for their state. Of the 117 utilities completing the survey, 27 utilities (representing 23.1%) charge less than the maximum allowed for their state and 26 (or 22.2%) charge more.

The graph below illustrates the utilities that do not charge the maximum allowable for their state and how much their fee is below or above the maximum allowed (clicking on the chart will open a larger image in a new window):

Free consulting

Here’s the free consulting… Take a moment to verify if your returned check fee is the maximum allowed in your state and, if you are charging less than the maximum allowed, increase it at your first opportunity!

Why would you charge less than the maximum allowed for customers who intentionally write bad checks to your utility? (You can always waive the fee if your customer has a convincing explanation of why their check bounced.) If you’ve been reading the Utility Information Pipeline for a while, you know I am a proponent of charging user fees to generate revenue wherever possible and returned check fees are no exception.

If you’re charging more than is allowed

If your returned check fee is more than is allowed for your state, I recommend reviewing this with your attorney to determine if your customers have any legal recourse against your utility for overcharging them.

What is allowed in your state?

Here is a guide by state and here is a more in-depth analysis, including references to the statute that governs returned check fees in each state. If you have any doubts about what you are allowed to charge in your state, I suggest consulting with your attorney.

Is it time to review your fees?

If you haven’t reviewed your fees recently, there’s no time like the present! If you have questions about the fees you charge or would like assistance reviewing your fee structure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review might benefit your utility.

NRWA WaterPro Conference

Will you be attending the National Rural Water Association WaterPro Conference in Reno? If you will, or know someone who will be, please make plans to attend my presentation Improving Revenue Collections for Utilities at 4:00 pm on Monday, September 18.

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

© 2017 Gary Sanders

2017 Utility Fee Survey Results – Part III

This is the last of three consecutive Utility Information Pipeline issues reporting the results of the 2017 Utility Fee Survey, an update to the original Utility Fee Survey in 2012 and the 2015 Utility Fee Survey. The survey was designed to research what fees utilities charge, how much they charge for each fee, and to see what changes have taken place in the last two years.

118 utilities, representing 19 states, ranging in size from 88 to 75,000 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.

The Utility Fee Survey has become a biennial survey, alternating years with the Utility Staffing Survey.

As was the case in each of the previous surveys, the results include too much information for a single issue. If you’re interested, here are the results from the 2012 and 2015 Utility Fee Surveys:

 

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

 

2015 Utility Fee Survey Results – Part I

2015 Utility Fee Survey Results – Part II

2015 Utility Fee Survey Results – Part III

 

Returned check fees

Of the 118 participating utilities, only one does not charge a returned check fee. For the other 117 utilities, returned check fees range from $10.00 to $50.00, as this graph illustrates (clicking on any of the graphs will open a larger image in a new window):

Interestingly, of the 117 utilities who charge a returned check fee, only 64 (or 54.7%) charge the maximum fee allowed by their state. 27 utilities (representing 23.1%) charge less than the maximum allowed and 26 (or 22.2%) charge more than the maximum allowed.

If you’re interested in seeing how your fee compares to the maximum allowed for your state, here is a table with all 50 states.

Application fees

In one of the earliest Utility Information Pipeline issues, 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. This year, 56 of the 118 utilities (representing 47.9%) responding to the survey charge such an application or administrative fee. This is down from 51.9% in 2015 and 52.3% in 2012. These application fees range from $5.00 to $150.00 as shown below:

Transfer fees

This year, for the first time, the Utility Fee Survey asked how much utilities charge as a transfer fee for transferring service from one account to another. 52 of the 118 utilities (representing 44.1%) charge a transfer fee ranging from $5.00 to $100 as shown in this graph:

Meter reread fees

28 of the 118 utilities (or 23.7%) charge a meter reread fee if the customer requests their meter be reread. This is virtually unchanged from 2015, where 23.6% of responding utilities charged a meter reread fee. 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 $45.00 as this graph shows:

Meter tampering fees

91 of the 118 utilities (or 77.1%) charge a meter tampering fee. This is up from 73.6% in 2015 and 60.2% in 2012. Eleven utilities charge the actual cost of repairs or cost plus an administrative fee. Three charge a fee that depends on the type of meter tampering or damage done to the meter. Four more utilities recover their costs through the judicial system. Ten utilities have an escalating fee that increases with each meter tampering offense. The remaining 63 utilities charge a flat fee ranging from $10.00 to $1000.00 as shown below:

Of the ten utilities that charge an escalating fee, here are the charges for the first, second and third offenses:

Convenience fees

One of my earliest issues explained why I believe utilities should accept credit cards. Of the 118 utilities responding to the survey, 105 of them (or 89.0%) accept credit cards. This is an increase from 81.1% in 2015 and 62.5% in 2012, so credit card acceptance is quickly becoming a standard practice for most utilities. Of the 105 that do accept credit cards, 62 of these charge a convenience fee on at least one form of credit card payments as shown below:

This year, for the first time, the survey asked if the convenience fee is charged by the utility or by a third party. By a large margin, most convenience fees are assessed by a third party as shown here:

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 most do not charge the fee if it turns out the meter is, in fact, 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 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 special discount offer is only available to the first five people who respond!

NRWA WaterPro Conference

Will you be attending the National Rural Water Association WaterPro Conference in Reno? If you will, or know someone who will be, please make plans to attend my presentation Improving Revenue Collections for Utilities at 4:00 pm on Monday, September 18.

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

© 2017 Gary Sanders

2017 Utility Fee Survey Results – Part II

For the past few months, I’ve been conducting the 2017 Utility Fee Survey. This is an update to the original Utility Fee Survey in 2012 and the 2015 Utility Fee Survey. The survey was designed to research what fees utilities charge, how much they charge for each fee, and to see what changes have taken place in the last two years.

This is the second of three consecutive Utility Information Pipelines reporting the results of the 2017 Utility Fee Survey. 118 utilities, representing 19 states, ranging in size from 88 to 75,000 active accounts participated in the survey.

The Utility Fee Survey has become a biennial survey, alternating years with the Utility Staffing Survey.

As was the case in each of the previous surveys, the results include too much information for a single issue. If you’re interested, here are the results from the 2012 and 2015 Utility Fee Surveys:

 

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

 

2015 Utility Fee Survey Results – Part I

2015 Utility Fee Survey Results – Part II

2015 Utility Fee Survey Results – Part III

 

The last 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. The next issue will be the third and final survey results issue and will recap all remaining fees.

Late fees

Of the 118 participating utilities, 115 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):

Compared to the 2015 Utility Fee Survey, utilities charging a percentage is up 2.4% (60.1% vs. 57.7%), while those charging a flat amount is down 6.6% (26.1% vs. 32.7%).

Utilities that assess the late fee as a percentage charge from 1% to 20%, with 10% again being by far the most popular, as this graph depicts:

Late fees range from $5.00 to $50.00 for utilities that charge a flat amount. (The utility that charges $50.00 does so in lieu of charging a reconnect fee.) This graph illustrates the late fee flat amounts:
 

Ten 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:

While not technically dealing with fees, this year’s survey asked how, other than the utility bill, each utility notifies customers that a late fee or penalty has been applied. Here are the responses to that question (the total of all responses is greater than the number of participating utilities because some utilities use multiple methods of contact):

Cut-off fees

Three of the 118 utilities do not cut off for non-payment. All of the 115 that do cut off for non-payment charge a cut-off or reconnect fee as a flat amount. Two of the responding utilities charge an escalating cut-off fee whereby the more times a customer is on the cut-off list, the higher the fee becomes. In those cases, the amount shown in the graph is for first offenders. Additionally, four of the utilities charge a separate disconnect fee and reconnect fee. In those cases, the graph represents the combined total of both fees. Finally, three utilities charge a cut-off fee per service. In those cases, the graph assumes all services are being disconnected.

Cut-off or reconnect fees charged by the 115 utilities range from $15.00 to $150.00 as shown below:

Of the 115 utilities that cut off for non-payment, 85 of them (representing 73.9%) assess the cut-off fee as soon as the cut-off list leaves the office. This percentage of utilities charging the cut-off fee immediately is up 2% from the 2015 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:

For the number of responses, including the 17 terms included in the “other” category, please click here.

As you can see, again this year, 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 “non-payment fee” or “service 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.

As with late fees, the survey also asked how, other than the utility bill, customers are notified that they are about to be cut off for non-payment. The responses are shown below (again, the total of all responses is greater than the number of participating utilities because some utilities use multiple methods of contact):

This year’s survey also asked how utilities notify customers after they have been disconnected for non-payment. The responses are shown below (again, a few of the participating utilities employ multiple methods of contact):

After hours reconnect fees

Of the 115 utilities that cut off for non-payment, 49 of them (representing 42.6%) will reconnect after hours and charge a fee for this service. This is down from 51.5% of responding utilities in the 2015 Utility Fee Survey. 39 of the 49 utilities (or 79.6%) will reconnect anytime after regular office hours. The remaining 10 utilities will only reconnect during selected time periods as shown below:

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

Next issue

Part III – August 15, 2015

The final survey results issue showcases 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.

NRWA WaterPro Conference

Will you be attending the National Rural Water Association WaterPro Conference in Reno? If you will, or know someone who will be, please make plans to attend my presentation Improving Revenue Collections for Utilities at 4:00 pm on Monday, September 18.

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

© 2017 Gary Sanders

2017 Utility Fee Survey Results – Part I

For the past few months, I’ve been conducting the 2017 Utility Fee Survey. This is an update to the original Utility Fee Survey in 2012 and the 2015 Utility Fee Survey. The survey was designed to research what fees utilities charge, how much they charge for each fee, and to see what changes have taken place in the last two years.

The Utility Fee Survey has become a biennial survey, alternating years with the Utility Staffing Survey.

As was the case in each of the previous surveys, the results include too much information for a single issue. If you’re interested, here are the results from the 2012 and 2015 Utility Fee Surveys:

 

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

 

2015 Utility Fee Survey Results – Part I

2015 Utility Fee Survey Results – Part II

2015 Utility Fee Survey Results – Part III

 

This is the first of three consecutive Utility Information Pipelines publishing the results of the 2017 Utility Fee Survey.

Demographics of survey respondents

118 utilities (an 11.3% increase from 2015), representing 19 states, ranging in size from 88 to 75,000 active accounts participated in the survey. Click on the links below to see charts of the various demographic data:

Number of responses by state

Size of utilities responding

Size of utilities under 20,000 accounts responding

Types of utilities responding

Services provided by responding utilities

Positions of individuals completing survey

Tap fees and impact fees

The survey started with water and sewer tap and impact fees. There are some key distinctions to bear in mind when comparing tap and impact fees.

Tap fees should recover the cost of making the actual water or sewer tap. This includes direct costs such as labor, materials and vehicle use as well as any indirect costs associated with completing the tap. Tap fees are classified as operating revenues.

Impact fees, sometimes called availability fees or system development charges, are designed to cover the incremental capital cost of adding an additional user to the water or sewer system. Impact fees are classified as non-operating revenues.

For utilities charging an impact fee based on number of bedrooms, monthly or daily usage, or square footage, I assumed three bedrooms or 3,000 gallons per month or 1700 square feet.

Residential water tap fees charged by utilities responding to the survey range from $50.00 to $10,925.00 as shown below (clicking on the any of the graphics will open a larger image in a new window):

Two other utilities charge based on the time and materials cost incurred for a residential water tap – one at actual cost and one at cost plus ten percent.

Utilities responding to the survey charge residential sewer tap fees ranging from $50.00 to $15,000.00 as depicted by this graph:

One additional utility charges the actual time and materials cost incurred plus ten percent for a residential sewer tap.

Residential water impact fees charged by utilities responding to the survey range from $200.00 to $3,900.00 as shown in this graph:

Two additional utilities charge water impact fees that vary based on construction.

Utilities responding to the survey charge residential sewer impact fees ranging from $200.00 to $5,100.00 as shown here:

Three additional utilities charge sewer impact fees that vary based on construction.

Upcoming issues

Part II – August 1, 2017

The next issue will deal with delinquent account fees and policies, including late fees, cut-off fees and after hours reconnect fees.

Part III – August 15, 2015

The final survey results issue showcases 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 special discount offer is only available to the first five people who respond!

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

© 2017 Gary Sanders

5 easy ways to get more bank draft customers

Recently, during a sales presentation, I came to the bank draft tab in Logics’ Utility Management application. I asked, as I always do, if they accepted bank drafts. The City Administrator spoke up and said he wished 99% of their customers were bank draft customers. When I asked why not 100%, he replied “There’s always that one percent that won’t do it, no matter how much sense it makes.”

After everyone stopped laughing, one of the office staff asked if I had any ideas how to increase bank draft participation. Interestingly enough, I had just finished the first draft of an ebook entitled 5 Surefire Ways to Save Time Processing Payments. The first of the five ways is bank drafts and the chapter goes on to list five ways to promote bank drafts.

Here they are…

1. Waive the first late fee in exchange for signing up for bank drafts

Whenever a customer calls to complain about being charged a late fee, offer to waive the penalty if they sign up for bank drafts. Once they are a bank draft account, they will never be late again!

2. Offer incentives to sign up

I know of utilities that offer a one-time $5.00 credit for signing up for bank drafts. Others give a $1.00 per month credit for the first year the customer is drafted.

3. Ask every new customer if they want to pay by bank draft

Have you applied for a life insurance policy recently? Insurers practically make issuing the policy contingent upon the insured agreeing to pay by direct debit. Why not deal with new customers applying for service the same way? There’s an age-old adage in sales, “assume the close”, and the same technique can work for signing new applicants up for bank drafts. Why not hand them a bank draft form along with the application to sign?

4. Include a signup form on your website

Ideally, your customers should be able to complete an online form with the bank draft information. But, if not, at least post a downloadable sign-up form on your website so your customers can complete and return it to your office.

5. Promote bank drafts on your utility bill

Does your utility bill have a section for comments you can enter each billing? Why not use this to publicize bank drafts along with whatever other announcements you have that month? If you print full-page bills, you can also include a bank draft sign-up form as an insert with the utility bill.

How do you promote bank drafts?

What does your utility do to promote bank drafts? Do you have a unique or innovative way of encouraging your customers to sign up for bank drafts? Please leave a comment at the bottom of this post for other readers to see.

2017 Utility Fee Survey results

The next Utility Information Pipeline, to be published on July 18, will include the first set of results for the 2017 Utility Fee Survey. The survey technically closed at the end of the day, June 30, but I haven’t started recapping the results yet.

If you haven’t participated and would still like to, you may click here to complete the survey. It should take less than five minutes to complete.

Trying to streamline payment processing?

If you’re looking to reduce the amount of time it takes to process payments, or streamline any other part of your operation, 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

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Gary Sanders

I am the Senior Consultant with Logics, LLC in Raleigh, North Carolina. I have over 35 years experience developing and implementing utility billing and financial software and consulting with utilities and municipalities. My bi-weekly email newsletter draws from my experience in working with over 200 utilities and local governments to offer insight into how utilities can improve operations and better serve their customers. If you have a comment or a suggestion for a future email, please contact me by calling 919-232-2320 or sending an email to gsanders@logicssolutions.com