How to avoid billing “spikes”

Recently, one of my connections on LinkedIn, Glenn Barnes with Water Finance Assistance, shared this article about smart meters causing water bills to increase.

Meters are like people

It’s a well-documented fact that meters, like people, slow down with age. Therefore, installing new meters, whether they are smart meters or not, will likely result in increased water bills.

It is commendable that the town plans to conduct a public hearing to address the potential impact on customers’ utility bills. Anytime a utility can be transparent and forthcoming with their customer base about upcoming changes, particularly changes which will impact their customers financially, is a positive step.

Billing “spikes”

The article goes on to discuss citizen complaints about “intermittent spiking”. These spikes in monthly bills occur because bills are currently generated in thousands of gallons rather than in individual gallons. The article gives the false impression that it will take moving to smart meters to remedy this when, in actuality, these spikes are due to the TTWWADI syndrome – continuing to do something because it’s always been done that way.

Chances are, meters are still being read and billed in thousands of gallons because this is the way it was done decades ago. Back then, meters were read on paper and bills were produced manually, or with ledger card machines (if you don’t know what that is, thank your lucky stars!).

Even when reading with handhelds (or still on paper, if you’re that outdated), meters can be read and billed in individual gallons. It takes some changes to the existing database, but it’s not rocket science!

Revisiting an example

I originally wrote about this topic eight years ago, in this post where I showed examples of how truncating readings to the thousands place can impact billings.

The following issue discussed the impact of billing in thousands on conservation efforts, as compared to billing in gallons.

The examples in the original post were rates with a base rate of $25.00 for the first 2000 gallons and $4.00 per thousand gallons above the minimum. From their website, the town mentioned in the article has rates of $25.07 for the first 2000 gallons and $12.54 per thousand gallons above the minimum – quite a difference from the original example!

Let’s revisit those original examples using the rates for the town referenced in the article:

First, the account that was billed more by billing in gallons (clicking on either of the tables will open a larger image in a new window):

And here is the account that was billed more by billing in thousands of gallons:

The graph at the top of the article is based on the first table where the customer would be billed more by billing in gallons. Looking at the blue bars in the graph, it’s easy to see how a customer using just over the minimum can think their bill is higher than it should be once it “spikes” above the minimum.

For eight consecutive months (September to April) this customer would have received a minimum bill. Then, in May, when their accumulated usage rolls to the next thousand gallons, suddenly their bill is 50% higher! Imagine if they had used 110 gallons more in May – then their bill in thousands would have been for 4000 gallons, resulting in a bill double what they had been used to!

Clearly, billing in gallons provides your customer with a more accurate bill each month. Any fluctuations from one month to the next are based on actual usage, not the anomalies of whether their reading rolls to the next thousand gallons or not.

Need assistance?

If you are in the process of replacing meters and need assistance explaining this to your customers or if you are currently billing in units greater than individual gallons, such as hundreds or thousands of gallons, please give me a call at 919-673-4050, or email me at for more information about how a business review could help you.

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

© 2019 Gary Sanders

Is this something you should be concerned about?

In a recent conversation with a utility who doesn’t offer bank drafts, I learned the reason why is because of a concern about the security of their customers’ bank account information from hackers.

While this is commendable, is it really a valid reason not to offer your customers the most convenient way to pay while, at the same time, saving your staff time processing payments?

Is this a valid concern?

In my forty years of working with utilities and utility billing software (yes, I’ve really been in this business that long!), I’ve never heard of any customers’ bank account information being compromised by a data breach.

A much more common occurrence

What I have experienced first-hand during my career are five cases of fraud or embezzlement by utility employees, ranging from blatantly obvious to relatively cunning. One of the more elaborate schemes resulted in prosecution and made the news.

In fact, one of those cases is the reason why Logics’ Utility Billing software includes a Void Payment Edit List which reports all voided payments in a batch. All because an astute finance director recognized one cashier had a much higher volume of voided payments than the other cashiers. It turns out there was a reason why – this employee was pocketing cash from some of the voided payments!

While the actual number of cases of fraud represents only a fraction of the utilities I’ve worked with, it is still a much more valid concern than bank draft information being hacked.

Increase bank draft participation

If you’re not offering bank drafts (or if you are and don’t feel like you have as much participation as you’d like), check out my free ebook entitled 5 Surefire Ways to Save Time Processing Payments.

How can you guard against fraud?

Recapping the recommendations included in the above-referenced post, here are some best practices you should ensure your office is following:

  • Assign each cashier a separate cash drawer
  • Issue hand-written receipts only in emergencies
  • Receipt payments as they happen
  • Account for cash overages and shortages
  • Monitor voided payments
  • Have a second employee double check each deposit
  • Review all adjustments to customer accounts

There’s still time to complete the 2019 Utility Fee Survey

If you haven’t yet completed the 2019 Utility Fee Survey, 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 or call me at 919-673-4050.

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.

Unsure if your cash management practices are adequate?

If you’re unsure if your cash management practices are adequate, please give me a call at 919-673-4050, or email me at for more information about how a business review could help you find out.

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

© 2019 Gary Sanders