5 Tips for Minimizing Billing Inaccuracies

 

Who is Stealing Your Water? discusses the role of water theft in non-revenue water (NRW), while The Cost of Water Meter Inaccuracy discusses how to minimize the impact of water meter inaccuracy on NRW. In this blog we look at billing inaccuracies that, within the water balance matrix shown below, are due primarily to unbilled metered consumption and data handling errors:

water-balance-table-billing

Accurate billing is a basic consumer right

Let’s start by putting billing inaccuracies in a larger context than NRW. Sometimes billing inaccuracy results in over-charging customers, thus enhancing rather than reducing a utility’s revenues. The European Union very recently (mid-July 2015) published a “manifesto” of 10 basic consumer rights – albeit relative to the electricity and gas market – including:

EU-consumer-right

In today’s world of empowered consumers, one of the costs of inaccurate billing is the undermining of the relationship between the utility and its customers. An extreme example: approximately three years ago in the City of Baltimore and Baltimore County customer complaints about billing irregularities prompted an audit of water bills for 70,000 households. Citizens were outraged when the audit found that 65,000 (93%!) of the audited households were likely overcharged during the previous 3-year period and Baltimore’s Public Works Department issued more than $4.2 million in refunds. Aside from the out-of-pocket cost of the refund, the utility had to treble its customer support staff (at least temporarily) in order to deal with the flood of complaints and, perhaps most importantly, paid a high cost in terms of loss of consumer confidence in the utility.

Unbilled metered consumption

Generally speaking unbilled metered consumption refers to water that is used by customers known to the water system but is not billed. In other words, we are not referring here to unauthorized consumption (i.e., theft), but rather to authorized consumption that is, for some reason, not billed.

Sometimes the utility is mandated to forfeit billing such as when water is being used for public purposes like firefighting, flushing of mains and sewers, street cleaning, etc. In other cases, however, water meter data somehow did not make it into the billing system. For example, the same Baltimore region audit noted above also uncovered that of the 3,406 households that had received new meters during 2008-2010, 1,066 did not receive bills.

Data handling errorsfakeNumbers

It is quite rare (thank goodness!) that billing inaccuracies are due to fraud, although that does happen on occasion (see sidebar). For the most part billing inaccuracies result from unintentional errors in the data path. If water meter data is being collected manually, the meter reader may either misread the register or record it incorrectly. If the collected data is then entered manually into the billing system, there is once again room for human error. And even if the collected data is transferred electronically, there can be machine-to-machine communication mishaps.

Tips for minimizing billing inaccuracies

With the chance to recover lost revenues as well as build strong customer relationships, minimizing billing inaccuracies should be a high priority for any water utility. We hope you find the following tips useful – and would be delighted to get your feedback and insights.

  1. Flowchart your billing system process to uncover possible gaps in procedure or policy that allow groups of customers to go unmetered or unbilled.
  2. Increase billing frequency as much as possible, and base billing on collected data rather than estimates.
  3. Make sure your billing system is up to the task. In the incident reported above regarding the Baltimore Public Works Department, officials admitted that their billing system was more than 40 years old (!) and in the process of being replaced.
  4. Implement an AMR/AMI system for automated, virtually continuous meter reading. The margin for data collection error is significantly reduced and the data collection frequency makes it easier to implement Tip #2.
  5. Make sure that your Meter Data Management system is seamlessly integrated with your billing system.
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