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Even when reading with handhelds (or still on paper, if you’re that outdated), meters can be read and billed in individual gallons.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.

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© 2019 Gary Sanders

Meter replacement tips

I’m in the midst of assisting several customers with the migration to an automated meter reading system. All of these customers are moving to AMI systems and, in so doing, are changing out all of their meters.

One topic that seems to come up with every meter replacement project, whether it’s done by outside contractors or the utility’s own staff, is how to manage the process so it doesn’t interfere with billing.

I’ve written about this previously as part of a post about several things to consider when transitioning to an automated meter reading system. However, it’s an important enough topic to dedicate an entire issue to it.

When to start

The ideal time to start changing meters in a route is as soon as that route has been read and any re-reads have been completed. The goal is to have the entire route (or as many meters as possible) changed out before it’s time to read the route for the next billing period.

If all the meters in a route haven’t been replaced before reading again, this means having to read parts of the route two ways – the replaced meters with the new technology and the existing meters with the old process. From an operational efficiency perspective, this is clearly not an efficient use of your meter readers’ time.

Move new meters to a new route

Even if you expect to replace all the meters in a route before reading that route again, I still recommend moving the meters to a new route as they are replaced. For example, if you have routes 1 through 20, consider adding 100 to the route number as the meters are replaced. This way, you can always tell meters in route 120 were originally in route 20.

By doing so, it’s as simple as running a report of the original route number to determine which meters still need to be changed out. And, if you do have to read the route using both old and new technology, the meters are easily identified for each reading process.

Once all of your meters have been replaced, you can change the route numbers back to the original route numbers.

Is it time for an automated meter reading system?

Are you trying to determine if an automated meter reading system will be cost effective for your utility? Or have you made the decision to move forward and need assistance managing the project? Either way, please give me a call at 919-232-2320 or e-mail me at to learn how a business review could help.

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© 2019 Gary Sanders

What’s it going to be…?

Over the course of the past few weeks, I’ve been involved with several customers moving to automated meter reading systems. One customer is migrating to an AMI system and currently reads in thousands of gallons and applies a multiplier to their readings to bill in gallons. Another is implementing an AMR system and reads and bills in hundreds of gallons.

Both are using a contractor to replace their meters, so I asked if either would be changing to reading and billing in gallons and explained this is the ideal time to make the switch.

Why read and bill in gallons?

I’ve written before about a compelling reason for changing to reading and billing in gallons, but with an AMI system, there is an even better reason. If you plan to offer an online portal so your customers can access their daily usage, as the customer moving to AMI does, do you want them to be able to reconcile their daily usage to their billed usage? If you do, then you will have to read and bill in gallons.

What does it take to make the change?

If, like the AMI customer, you are already billing in gallons, just reading in larger units, all you need to do is drop the multiplier on your readings and start reading meters to the gallon.

On the other hand, if you are like the AMR customer and reading and billing in the larger units, you will have to make some changes to your data. These data fields would need to be changed for each account in the system:

  • Previous reading
  • Current reading (if readings have been updated)
  • Usage (if readings have been updated)
  • Any usage history used to calculate the moving average
  • Moving average
  • Number of dials

What’s it going to be…?

If you’re making the change to an automated meter reading system and you’re not already reading and billing in gallons, you have two options – make the change or fall victim to the TTWWADI syndrome. What’s it going to be…?

Holiday spending money

If you missed it in a previous issue, I’m offering two $50.00 Visa gift cards, one to a new subscriber and one to a current subscriber who refers a new subscriber.If you refer a new subscriber between now and 11:59 pm on Thursday, November 15, you will be entered once for each referral. For referrals from outside your organization, you will be entered twice for each new subscriber. Be sure to remind the people you refer to enter your name on the Referred By line when they complete the subscription form.

Are you moving to automated meter reading?

Are you considering moving to an automated meter reading system and wondering how to get started? To find out, please give me a call at 919-232-2320 or e-mail me at to learn how you could benefit from a business review.

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© 2018 Gary Sanders

What are the potential downsides to an automated meter reading system?

The last Utility Information Pipeline dealt with factors to consider when conducting a Return on Investment (ROI) analysis for implementing an automated meter reading system. In that article, I asked readers who have implemented AMR or AMI systems to share their experiences.

The general manager of a rural water utility, a long-time newsletter subscriber, emailed me and relayed some of the issues his utility has faced in implementing a drive-by automated meter reading system. This issue highlights some of the points he raised, along with issues I’ve heard from other utilities that could be considered potential weaknesses of an automated meter reading system.

Here are some of the potential downsides to implementing an automated meter reading system…

Damage to meters

The utility manager I mentioned above reports that, on average, between .7% and 1.0% of their meters are damaged each month. Damaged meters means incurring repair or replacement costs (which, for some utilities, may be charged to the customer if the customer’s negligence caused the damage). Damaged or malfunctioning meters won’t communicate with the radio receiver, requiring them to be read manually. Of course, this negates any labor savings achieved by automating the process for reading these meters.

Vegetative overgrowth

A frequent complaint of utilities using radio read meters is these meters can become overgrown by grass, weeds, or nearby bushes and shrubs. This poses a problem when the meter must be visited, either for a routine turn-on or turn-off or for disconnection for non-payment.

Faulty meters

Many utilities report receiving defective meters from the meter manufacturer. If this is a manufacturing defect, it can affect many meters received in a single shipment. Defective meters require troubleshooting and, once it has been determined the meter is at fault, replacement. This requires additional time from the utility’s field service personnel, mitigating some of the labor cost savings of not reading manually.

Not “lifting the lid” each month

One of the misgivings I hear most often from utilities about moving to either an AMR or AMI system is each meter is no longer visited each billing period. When reading meters manually or with handhelds, the meter reader must visit every meter (and lift the lid for water meters) each month. This allows the meter reader to visually inspect each meter on the route and note any issues or possible damage to the meter. To mitigate this impact, I know of utilities with a policy of reading a portion of their meters manually each billing period to insure each meter is visited once a year.

Resistance from customers

Some utilities have experienced pushback from customers who consider a meter that measures their usage at frequent intervals to be an invasion of privacy. Others have concerns about the potential health impact of being subjected to additional radio waves. Even though these concerns may be easily dismissed by those who are knowledgeable about radio read systems, they can be very real to your customers. So real that some states require utilities to allow reluctant customers to opt out of having a radio read meter installed at their home.

I’d love to hear your experience

If you’ve upgraded to an automated meter reading system, whether AMR or AMI, I’d love to hear your version of the pros and cons of implementing the system. Please give me a call at 919-232-2320 or email me at I’d like to schedule a time to talk with you about your experience.

Is an AMR or AMI system for you?

Are you trying to determine if moving to an automated meter reading system is the right decision for your utility? If so, please give me a call at 919-232-2320 or e-mail me at to learn how a customized ROI analysis or business review could help.

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© 2018 Gary Sanders

How do you justify an automated meter reading system?

Recently, a new newsletter subscriber emailed me and asked “We are searching for any information that would support (or not) investing in radio read meters. Our Board has already voiced the opinion they won’t pay for themselves. Can you offer any advice on various areas of savings/cost you have seen after purchasing and installing such a system?”

Having completed a business review and Return on Investment (ROI) analysis for a municipal water system, this reader’s question made me realize this is a great topic for a newsletter.

If you’ve already upgraded to an AMI or AMR system, please don’t stop reading. You can do me a favor as you’ll see below.

What is an ROI analysis?

An ROI analysis compares the expenses of implementing something new, in this case an automated meter reading system, to the increased revenue and cost savings achieved and derives a pay-back period for the system. Both one-time and recurring expenses and revenues are included in the analysis.

Costs of implementing an AMR/AMI system

The costs associated with implementing an automated meter reading system include:

Purchasing new radio read meters

The single largest cost associated with implementing a radio read metering system is, of course, the new radio read meters. Be sure to take a census of the meter sizes and types currently installed and ensure that you are using the proper cost associated with each size or type of meter.

Purchasing new meter boxes or meter box lids, if required

When dealing with water meters, existing meter boxes may be too small or, in some cases, metal meter boxes or lids may interfere with the radio signal.

Labor cost to install the new meters

The second-largest cost incurred with implementing radio read meters is the installation of the meters. Will you use an outside contractor or will your field service staff install them?

Purchasing the meter reading software

Don’t forget to include the cost of the new meter reading software. In addition, be sure to include the ongoing annual maintenance for the software as a recurring cost in your ROI analysis.

Upgrading your billing software upgrade, if necessary

Finally, if your billing software isn’t compatible with radio reading, or if you need to purchase an additional module, be sure to include that cost. As with the meter reading software, be sure to include any increase in annual maintenance as a recurring cost.

Increased revenues and cost savings

Increased revenues and cost savings associated with implementing an automated meter reading system include:

Sale of scrap meters

The only one-time revenue source from implementing a radio read system is the sale of the old meters (and meter boxes, if applicable) as scrap.

Revenue gain from new meters

The area most utilities rely on to cost-justify a radio read meter system is the increased revenue from installing new meters. Especially with water meters, meters are known to register less usage as they get older. Remember, meters are like people – they slow down with age.

The revenue gain from new meters is also the area where your ROI analysis can be the most deceiving, if you assume revenue increases that don’t materialize. Two areas where your analysis can go wrong are:

  • unreasonable assumptions about how much your existing meters have slowed down
  • rate elasticity – as the price increases, usage decreases

One way to try to ensure your assumptions about the inefficiency of your current meters is to conduct a pilot meter replacement policy. This would involve replacing a sampling of meters of different ages and sizes and observing the increase in usage over several billing periods.

If you’ve upgraded to an automated meter reading system and tracked the increased usage from new meters, please give me a call at 919-232-2320 or email me at I’d like to schedule a time to talk with you about your experience.

Staff time savings from no longer reading meters

The biggest cost savings associated with implementing a radio read meter system is the reduced time involved in reading meters each month. If you are moving to an AMI system, you will save 100% of the current time, vehicle use, and gas. If you are moving to an AMR system, you will still incur some time and expense for meter readers to drive the routes, but it will be much less than walking the same routes.

Reducing time for re-reads

In theory, a radio read system will provide accurate readings, without the element of human error which is present when using handhelds or reading on paper. In reality, there will always be some meters that aren’t transmitting properly, which will require follow-up from your field service staff. Hopefully, the time to check these non-transmitting meters should be less than what is currently being spent re-reading meters with questionable readings.

Savings from not offering of leak adjustments

If you’re implementing an AMI system and plan to do proactive leak detection, I recommend adopting a policy of not offering leak adjustments. In this case, you will save the lost revenue associated with leak adjustments.

Completing the ROI analysis

Once you’ve arrived at all of your one-time and recurring costs, increased revenues and cost savings, you are ready to complete the ROI analysis. This involves calculating the net up-front cost (one-time expense less one-time revenues) and dividing it by the annual increased revenue and cost savings. The final number will be the payback period in years.

Are you contemplating implementing an AMI system?

Are you wrestling with trying to decide if you can justify moving to an automated meter reading system? If so, please give me a call at 919-232-2320 or e-mail me at to learn how a customized ROI analysis or business review could help.

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© 2018 Gary Sanders

What’s a compound meter?

In the last Utility Information Pipeline, I wrote about the pros and cons of metering individual premises. That article went on to briefly mention the possibly needing a compound meter, if a master meter were to be installed. So, what exactly is a compound meter…?

Compound meters

Compound meters (sometimes referred to as high/low meters because they have high and low flow sides) are used in situations where large volumes of water need to be metered, but at other times slower flows must also be recorded.

Such a scenario could be a large, multi-unit apartment building or a hotel that must be able to meter high usage first thing in the morning, when many residents are showering at the same time, but also measure low flows in the middle of night to record the occasional toilet flush. A manufacturing plant that uses large volumes of water while the plant is in operation, and minimal usage at other times, is another example of a prime candidate for a compound meter.

The Alliance for Water Efficiency has a good, easy to understand description of compound meters in this article.

For billing purposes, with compound meters, two sets of meter readings are taken – a larger meter for the high flows (the “high side”) and another, smaller meter, for the low flows (the “low side”). The usages are then added together and the customer is billed for the combined usage.

Don’t be fooled

The “high side” of a compound meter may not always be the higher reading of the two. The high side could have already rolled over, and have a lower reading, or there could be relatively little high demand. In the latter case, most of the water used would be metered by the “low side”.

Does your billing system support compound meters?

Many older billing systems don’t properly support compound meters. Some require creating two accounts – one for the high side meter and another for the low side meter. Others require manipulating the readings before entering them as a single, combined meter.

If your billing system doesn’t easily handle compound meters, it may be time for a change. If you’re in this situation, please give me a call at 919-232-2320 or e-mail me at to learn how a business review could benefit your utility.

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© 2017 Gary Sanders