utility information pipeline

Calculate your days of exposure

If you’ve been a Utility Information Pipeline reader from the early days, you know I’ve written about days of exposure in one of the earliest issues and revisited itagain three years ago.

I feel like this is an important enough topic to not only write about it again, but to also create a tool so you can calculate your days of exposure. First, let’s review how days of exposure are calculated…

Components of days of exposure

Days of exposure is the total number of days of service a customer ends up owing for if they are cut off for non-payment and never reinstate service. It takes into account six specific time periods:

The sum of these six values results in days of exposure. Dividing days of exposure by the number of days in the billing period (days between meter readings) yields periods of exposure. Multiplying the periods of exposure by the average residential utility bill and then subtracting the security deposit arrives at the potential bad debt write-off (or deposit refund if the security deposit is adequate).

In my experience, taking steps to reduce days of exposure is an exercise that would benefit nearly all utilities, so I’ve developed an online tool to calculate days of exposure.

Calculate your days of exposure

If you’ve attended my Improving Revenue Collections for Utilities presentation at a utility conference, you’ve had the opportunity to complete a days of exposure worksheet. If not, or if you’ve forgotten what yours was, I’ve created an online, interactive days of exposure calculator.

You enter the number of days in each of the six stages, plus your average residential utility bill and residential security deposit, and the tool will calculate your days of exposure and potential bad debt write-off or deposit refund. To calculate your days of exposure, please click here.

Are you surprised by your days of exposure?

Are your days of exposure excessive or are you left with a potential bad debt write-off? If 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 help evaluate how to improve your days of exposure.

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© 2018 Gary Sanders

What are you missing with third party online bill pay?

One of the earliest Utility Information Pipeline issues (it was newsletter #12 and this issue is #187) dealt with the advantages of a fully integrated online bill pay system. Much has changed in the seven years since that issue was published and the topic is worth revisiting.

A good, fully integrated online bill pay system is like a Swiss Army knife – one tool that serves many purposes.

Do you offer online payments?

The most important question is are you offering online payments? If the answer is “no”, the obvious response is “why not?” Second only to bank drafts, online payments are the easiest way to accept payments. Especially if you charge a third-party convenience fee, because your customer pays the full price of processing the credit card transaction.

Even if your software vendor doesn’t offer online bill pay, there are many third-party options available. If a third party is your only option, I encourage you to consider it.

However, if your software vendor does offer a fully integrated online bill pay option, and you’re not taking advantage of it, here are some of the features you might be missing.

Real time integration

Third-party online bill pay vendors generally fall into one of two categories – companies whose primary line of business is payment processing and outsource print vendors. In the first case, an updated file with customer balances is usually provided to the third party once a day. Outsource bill print vendors who offer online bill pay generally rely upon the balance provided in the most recent bill print file.

The obvious weakness of either of these options is out-of-date information. In the first situation, payments made earlier in the day aren’t reflected in the balance. The classic case is a customer pays the bill in the morning and then, not knowing a payment has already been made, their spouse pays it again later in the day. The online bill pay vendor scenario is even worse – no adjustments or payments made all month are reflected in the balance.

A fully integrated online bill pay system solves this dilemma because payments are logged in real time and the customer’s balance is always up-to-date, eliminating the chance of overpayments on an account.

Additionally, third party systems require a file of payments to be imported the next day. This isn’t necessary with a fully integrated system because the payments are logged in the system as they happen.

History viewable online

Third-party providers generally provide little more than the customer’s balance and due date. A fully integrated online bill pay system should display billing history, payment history, and usage history.

The more information your customers can find online, the less they need to call your office for assistance, reducing the call burden on your customer service staff.

Customer portal

Over the years, fully integrated online bill pay systems have evolved into customer portals where customers can do much more than just pay bills and view history.

If you offer paperless billing, also called ebilling (and you should!), a fully integrated customer portal allows your customers to change their email addresses as desired, again reducing calls to your customer service staff.

Additional options provided by some customer portals include updating address and contact information, applying for service, initiating turn-off service orders, and sending messages to customer service.

Is your online bill pay system doing all it can 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 gsanders@logicssolutions.com to learn how a business review could help.

Water and Wastewater Utility Management Survey results webinar

The 2017-2018 North Carolina Water and Wastewater Utility Management Survey is now complete. This survey was conducted by the Environmental Finance Center (EFC) at the University of North Carolina’s School of Government and the North Carolina League of Municipalities (NCLM) and covered the management and long-term planning practices and policies of North Carolina drinking water and wastewater utilities.

The results will be presented in a webinar, this Thursday, August 30, at 11:00 am ET. You can register to participate in the webinar here.

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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 gsanders@logicssolutions.com. 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 gsanders@logicssolutions.com 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 insure 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 insure 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 gsanders@logicssolutions.com. 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 gsanders@logicssolutions.com to learn how a customized ROI analysis or business review could help.

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© 2018 Gary Sanders

The case for proactive leak detection

I know of utilities with AMI (Automated Metering Infrastructure) systems who aren’t doing proactive leak detection. My question is why wouldn’t they?

Certainly, an AMI system is the most convenient way to read meters. Unlike using handhelds, or even an AMR system, AMI systems require no labor to collect meter readings for billing. But to view an AMI system as simply a labor-saving meter reading tool is a huge mistake.

Review of AMI technology

AMI systems are preprogrammed to read each meter at set intervals – sometimes only once each day, other times as frequently as several times per hour. These frequent meter readings calculate incremental usages, which can be compared to historic usage patterns for the account. When a large increase in usage is detected and does not return to normal, this generally indicates a leak or other situation requiring the customer’s attention, such as a hung toilet.

What is proactive leak detection?

Using proactive leak detection, a utility with an AMI system monitors the system outputs each day and immediately contacts the customer to alert them to the prolonged excessive usage. This places the responsibility for finding and fixing a leak on the customer. Logically, it only follows, if the utility has immediately notified the customer of a potential leak, the utility now shoulders no responsibility for providing leak adjustments of any sort.

Advantages of proactive leak detection

When potential leaks are being monitored on a daily basis, and the customer rectifies the problem promptly, water is conserved. This is especially important in times of drought or if your utility purchases water for resale from another utility.

Another advantage of proactive leak detection is not having to deal with leak adjustments. For many utilities, leak adjustments can be a time consuming process, involving contacting the customer to provide documentation the leak has been fixed, researching normal usage patterns, performing the calculation to determine the amount of the leak adjustment, and, finally, applying the leak adjustment to the customer’s account. Imagine never having to do another leak adjustment!

Is your leak adjustment policy up-to-date?

Have you implemented an AMI system but still offer leak adjustments? Or has it been a while since you’ve reviewed your leak adjustment policy? If your utility falls into either of these cases, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help.

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

© 2018 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



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