As the weather gets warmer and summertime approaches, many utilities face the annual dilemma of how to fairly deal with customers who fill pools or have irrigation systems. Clearly, the customer is responsible for any water used to fill pools or irrigate lawns and gardens. Sewer, on the other hand, is viewed differently by various utilities. In today’s issue, let’s take a look at some ways that utilities deal with this….
The hard-line approach
Some utilities take the position that their sewer rates are based on the water consumption and therefore make no allowance for sewer adjustments, either for leaks, filling pools or irrigation. This hard-line approach seems a little harsh to me.
The once a year adjustment policy
Other utilities will grant a sewer adjustment for the volume of water required to fill the customer’s pool once each year, based on the customer providing proper documentation of the pool’s size and volume. A policy such as this is a fair way to deal with filling pools, but does nothing to address irrigation usage.
Sewer cap based on non-summer average usage
A few utilities will cap their customer’s sewer usage based on the customer’s average non-summer water usage. For example, the maximum sewer usage for the months of May through August might be based on the average usage for the other eight months of the year. Some utilities with a policy like this offer the sewer cap to all customers, while other utilities offer it only to customers who specifically request a sewer cap. A policy such as this can actually work to the utility’s disadvantage if the customer’s household water usage increases over the summer.
Separate irrigation meters
Another approach to dealing with irrigation usage is to require the customer to install a separate irrigation meter. In this case, the customer is charged only for water that passes through the irrigation meter. However, all usage for the home water is subject to both water and sewer charges. The customer is responsible for any costs associated with installing the irrigation meter and pays two monthly minimum charges, but this is the most equitable way, for both the customer and the utility, to determine irrigation usage that is exempt from sewer.
If you have any questions about your dealing with summer sewer adjustments or would like assistance implementing a summer sewer cap, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org.
© 2011 Gary Sanders
In this issue let’s take a look at some best practices associated with the application for service process.
Require a copy of rental agreement or closing documents
Have you ever been faced with a new customer wanting to initiate service at an address where the service has been disconnected for non-payment and were pretty sure that the new applicant had been living there all along but you couldn’t prove it?
One way to avoid this predicament is to require a copy of the rental agreement (or closing documents when the customer is purchasing the property). If the customer who is applying for service can’t provide a new rental agreement, then most likely your suspicions are accurate and this person has been living there all along.
List all names on the rental agreement on the service application
A best practice is to include the names of everyone on the rental agreement as co-applicants for service in your billing system. This serves as an additional precaution to insure that you don’t find yourself in the situation described in the previous section. In the event that the account ends up with an unpaid final bill, it also provides additional individuals for you to try to collect from.
Require a photo ID for each applicant
Red flag rules require that you verify that an applicant for service is who they claim to be. The best way to accomplish this is to require that each applicant provide a photo ID. A best practice is to retain a copy of the photo ID, preferably a color scanned image rather than a black and white photocopy.
Perform a bad debt search for each applicant
Another best practice is to perform a bad debt search of closed accounts for each new applicant. Many times a previous customer who left and never paid their final bill will try to move back to your service area and apply for service using a different name. Retaining the applicant’s social security number, driver’s license number and date of birth that can be searched in the future is the best way to catch deadbeats that try to reapply for service from your utility.
Hopefully, your software does this search automatically as you process each application for service. However, if your software isn’t this sophisticated, it is still worth the time to manually perform the search multiple times, using the applicant’s name, social security number, driver’s license number and date of birth.
Charge an application fee
In my issue #3 dealing with cut-off policies (if you missed it, you can read it here), I referenced the Government Finance Officers Association’s (GFOA) Committee on Governmental Budgeting and Fiscal Policy’s Best Practice for Measuring the Cost of Government Service that 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).”
There are costs associated with processing an application for service and collecting the initial reading for the new account. In keeping with the GFOA policy, a best practice is to charge a non-refundable application fee, over and above any security deposit, to recover these costs.
Print an application form that the applicant(s) sign
As the last step in the application process, you should print an application form that includes all of the customer’s relevant information and a paragraph, or paragraphs, outlining your policies that the new customer is agreeing to. In some states there are few state laws defining the relationship between utility and customer. Absent state laws to the contrary, the signed service agreement forms the legal basis that governs your relationship with your customers. Having the customer sign an application form that includes their personal information and your terms and conditions insures that your utility is protected in the event of a lawsuit.
If you have any questions about your application for service process or would like assistance assessing your application policies and procedures, please give me a call at 919-232-2320or e-mail me at email@example.com.
© 2011 Gary Sanders