Looking back, looking ahead…

Being somewhat nostalgic, it’s only natural, as we bid 2013 farewell, to look back at the year…

Third anniversary

This issue marks the third anniversary of the Utility Information Pipeline. Readership continues to increase, by nearly 12% this year, as it surpassed 300 subscribers.

If you have co-workers or colleagues from other utilities who you feel would enjoy reading this newsletter, please take a minute and forward this to them.

And, on August 9 of this year, by blog reached a milestone with the 10,000th hit!

If you haven’t checked out my blog recently, I encourage you to do so. Each Utility Information Pipeline newsletter article is also posted to my blog as an archive. So if you’ve deleted an old newsletter e-mail that you wish you still had, try searching for it on my blog.

Most popular blog posts

For the second year in a row, convenience fees was the most popular blog post topic. This year, it was by a margin of more than two to one over the next most popular post. Here are the five most popular blog posts in terms of page views in 2013:

  1. Can we charge a convenience fee for credit card payments…?
  2. How much is your late fee?
  3. How is your general ledger reconciliation going…?
  4. Are you following these meter reading best practices?
  5. Intelligent Mail barcodes – are you ready…?

Looking ahead to 2014

It wouldn’t be the New Year without something to look forward to! For 2014, I’m planning to conduct an update to the Utility Fee Survey that was originally published in 2012.

I’m also contemplating a makeover to my blog, so be sure to check back to see if I’ve decided to get creative and try something new!

Ideas, anyone…?

After three years, topics to write about aren’t as easy to come up with as they were when I first started! If you have an idea or suggestion of a topic that you would like to learn more about, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

Happy New Year!

Wishing you and yours all the best for a healthy, happy, prosperous 2014!

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© 2013 Gary Sanders

How do you bill for multiple units?

In the two weeks since the last issue, I’ve seen a listserv post and had a subscriber e-mail me with similar questions.

Both dealt with billing multiple units (apartments or businesses) served by a master meter.

Best practice

Many utilities have policies that require newly constructed apartment complexes and shopping centers to meter each unit separately. However, many of these same utilities have master meters that have been grandfathered in.

If your utility doesn’t have a policy requiring individual meters for multiple unit buildings, I encourage you to adopt one.

Multiple unit billing methodologies

For those utilities that don’t have such a policy, or have grandfathered master meters, this issue discusses two common billing methodologies.

Assuming your rates have a base charge which includes a minimum usage level, below are the two most common ways I’ve seen multiple units calculated.

Average bill method

The first method is based on calculating the bill for a single unit with the average usage of all units.

To accomplish this, divide the total usage by the number of units and calculate a bill for the resulting usage. Then multiply the bill for a single unit by the number of units to arrive at the total bill.

Multiple minimums method

The second method involves multiplying both the base charge and included usage by the number of units.

To calculate a bill using this method, multiply the base charge by the number of units. Then multiply the usage included in the base charge by the number of units, and calculate a bill for the remaining usage. Finally, add the multiplied base charge to the usage charge for the total bill.

Which way is better?

The answer to this question depends on your rate structure.

When most utilities had decreasing block rates (the more you use, the less you pay per unit), the average bill method was very popular. The rationale behind this method being more usage is billed at higher rates, resulting in a larger bill and more revenue for the utility.

If your utility has shifted to increasing block rates but still uses the average bill method, you may want to reevaluate your policy because it may have unintended consequences.

Is it time to review your policies?

If you haven’t reviewed your policies recently, it may be time to do so. Give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you.

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© 2013 Gary Sanders

Is your utility this innovative?

A few months ago, I called my TV and internet provider to complain about a billing issue. After explaining the situation, the customer service representative resolved the problem and applied a credit to my account.

However, before I hung up, she informed me that she was also going to apply an additional credit to my account because of the problem I encountered. As you might imagine, I hung up the phone feeling very pleased!

Courtesy credits

More recently, I’ve been working with a utility where the office manager has the authority to issue a $25 courtesy credit to any customer to help resolve complaints.

We’ve all seen situations where a customer is charged a late fee in error or a payment was misapplied to the wrong account. What better way to diffuse the situation with an angry customer than to resolve the problem and issue an additional credit as a good will gesture?

How is this relevant to utilities?

Granted, in the situation with my TV and internet provider, I have choices and can take my business elsewhere. Your customers probably don’t have the option of switching to another utility, but that’s no reason not to try to provide excellent customer service.

We’re a monopoly – why does customer service matter?

Be sure to read my next newsletter which will discuss why providing excellent customer service is important, even though you don’t have any competition.

What does your utility do?

Does your utility have innovative or unique customer service policies or practices? E-mail me at gsanders@logicssolutions.com to let me know and you may be featured in a future newsletter!

Is it time to review your customer service policy?

If you haven’t reviewed your customer service policy recently, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you with the process.

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© 2013 Gary Sanders

Do you return deposits for good credit accounts?

In the past, I’ve written about requiring adequate security deposits. That issue touched on the subject of refunding deposits for good credit.

Generally, I’m not a proponent of returning security deposits until a customer closes their account. However, there are cases where adopting a policy of refunding good credit deposits makes sense.

Excessive interest on deposits

Some utilities are required to pay interest on deposits. In many cases, the interest rate they are required to pay exceeds what they are earning from investments.

For example, I’m currently working with a utility that is required by state regulators to pay 4% interest. If you know of a bank where they can invest their deposits and earn that kind of return, I’m sure they would love to hear from you!

In cases such as this, if the expense of the interest paid to customers exceeds their annual bad debts, refunding good credit deposits might make sense.

A bargaining tool with your board

Many utilities still do not require deposits of homeowners. I don’t recommend this and am a strong advocate of the best practice of requiring a deposit of every new customer.

If the only way you can get your board to agree to everyone paying a deposit is to refund good credit deposits after a period of time, then it makes sense to do so. There is no guarantee that every account whose deposit is returned for good credit will pay their final bill. However, it is still a chance worth taking over not having deposits for any homeowners, some of whom are likely to become bad debt accounts.

If you do refund good credit deposits

There are several things to keep in mind if you do refund deposits for good credit:

Insure your refund requirements are stringent enough that you aren’t refunding deposits for eventual bad debt accounts. For example, require a minimum of 24 months of good payment history. Each time your customer pays late, restart the waiting period.

Apply the deposit as a credit to the customer’s account rather than sending a refund check. This way you keep the cash as your customer works off the credit and you save your accounting staff the added workload of writing additional checks.

Verify that the customer doesn’t owe you any other bills. This could be utility bills for other accounts in their name or, for municipalities, unpaid taxes or parking tickets. If the customer does owe another bill, apply the deposit to that debt first and only refund the balance.

Finally, if you do refund deposits for good credit accounts, be sure your policy requires that all accounts on the cut-off list maintain a current deposit.

Update your customer service policy

If you make changes in your deposit policies, be sure to update your customer service policy to reflect the changes.

Is it time to review your deposit policies?

If you haven’t reviewed your deposit policies recently, it might be time to do so. 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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© 2013 Gary Sanders

Does everyone on your cut-off list have a current deposit?

Nearly two years ago, I wrote about adequate security deposits. The last section of that article included some best practices for deposits. Today, let’s take a more in-depth look at one of them.

Reason for security deposits

The purpose of security deposits is to insure you don’t get stuck with unpaid final bills when your customers leave. Not having a security deposit, or having an insufficient one, leaves your utility vulnerable to bad debt and write-offs.

Cut-off list accounts are prime candidates to skip out

There is no guarantee, but common sense tells us that customers on the cut-off list pose a greater credit risk than good paying customers.

Customers who don’t pay until being cut off for non-payment while they have service with you stand a greater chance of not paying their final bill after they move away.

There are a number of reasons you might have customers without a security deposit, or with an insufficient one:

  • Some utilities don’t charge homeowners a deposit
  • The deposit may have been refunded for previous good payment history
  • A credit check at the time of application may have qualified the customer for a lesser deposit
  • The customer may have a longstanding account that began service when you charged a smaller deposit

Best practice for security deposits

A number of utilities have policies requiring all accounts on the cut-off list to pay a deposit if they don’t have one, or to bring an out-of-date deposit up to the current amount. This means a customer on the cut-off list needs to pay their outstanding balance, the cut-off fee and any additional deposit required to bring their deposit up to the current amount.

A policy such as this safeguards the utility against potential losses when the customer closes their account.

First time offenders

Perhaps you might forgive the first time on the cut-off list as an oversight, but certainly repeat offenders should be required to comply with this policy.

If you don’t have a policy requiring accounts on the cut-off list to post a current deposit, I strongly encourage you to adopt one.

When was the last time you reviewed your deposit policies?

If you have questions about your deposit policies or would like assistance in reviewing them, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2013 Gary Sanders

Looking back at 2012

Believe it or not, this issue marks the second anniversary of the Utility Information Pipeline! As 2012 draws to a close, it seems appropriate to take a look back at the year…

Newsletter subscribers

Over the course of 2012, subscribers to the Utility Information Pipeline increased by 25%. I’ve received several e-mails and phone calls from subscribers complimenting me on the content of various articles. It’s always good to know that people read (and appreciate) what I write!

With that in mind, if you have co-workers or colleagues who you feel would benefit from subscribing to my newsletter, please take a minute and forward this to them.

Most popular blog posts

If you aren’t aware, I post each Utility Information Pipeline issue to my blog as an archive of past issues. Instead of searching through old e-mails to look for previous issues, my blog is a great resource to find them.

Search engines also send traffic to my blog. Based on web searches, the three most popular blog posts this year have been those dealing with convenience fees, Intelligent Mail barcodes and meter reading best practices.

Speaking of Intelligent Mail barcodes, the deadline for implementing IMb is January 28, 2013. If you are currently receiving automation discounts from the Postal Service, and are still printing POSTNET bar codes, those discounts will expire on January 28.

New, mobile device friendly e-mail format

MailChimp, the e-mail service I use to send these e-mails, recently updated their e-mail templates to include more mobile device-friendly options. This e-mail is the first I’ve sent using the new template, so if you read the Utility Information Pipeline on your phone or tablet, please let me know if this issue looks different (aka better) than previous issues.

I’m always looking for ideas for articles

After two years, I’m not completely out of ideas for articles, but I don’t have a huge backlog of topics like I did when I started! If you have an idea or suggestion of a topic that you would like to learn more about, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

Happy New Year!

I wish you and yours all the best for a healthy, prosperous 2013!

Click here to subscribe to my free e-mail newsletter

© 2012 Gary Sanders