How to Succeed in Water Utility Operational Transitions
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1 How to Succeed in Water Utility Operational Transitions Christine E. Boyle, PhD Post-Doctoral Fellow Presentation to WRRI Annual Conference Raleigh, NC March 28,
2 Fast-paced transitions in water utility management present new challenges AMI meter rollouts Rate changes (structure and rate increases) Billing frequency change Conservation programming System mergers
3 New rewards & new risks during transitions Rewards Conservation gains Revenue stability Increased customer satisfaction Higher system performance (leak prevention, etc.) Cost savings Risks Public relations gaffs Billing system errors Inaccurate charges per tier to customers Overwhelmed and overworked staff Technical problems without staff to resolve
4 A sample of transitions in NC over the last 5 years Utility Greensboro Raleigh Durham Town of Cary Cape Fear Public Utility Authority Transition Billing Frequency, rate structure change, rate increases Billing Frequency, rate structure changes, AMI, conservation programming Billing Frequency, rate structure changes, AMI, conservation programming AMI, conservation programming, rate changes System merger, rate changes, rate structure change
5 Water Utility Customer Profiling Project TEAM Mary Tiger Shadi Eskaf Christine Boyle Casey Wichman Mai Anh Jeff Hughes PROJECT Billing-Level Analysis and Case Studies of 12 water utilities in the NC Urban water Consortium Phase 1: Phase 2: Phase 3: Funded by WRRI
6 HIGHLIGHTS Revenue impacts of conservation programming (Tiers, Pricing etc.) Quantifying the savings and costs of more frequent billing (Case Study: Durham) Managing Transition: City of Raleigh utility employees reflect on billing software change (Case Study: Raleigh)
7 CONSERVATION PROGRAMMING
8 Declines in household water use Average monthly household water use (kgal) Median monthly household water use (kgal) Year 1 Year 2 Year 1 Year 2 Burlington* 4,090 4,097 3,400 3,300 Cape Fear* 5,382 4,687 3,937 3,621 Cary 5,341 4,912 4,310 3,940 Durham 4,163 3,928 3,437 3,112 Greensboro - 4,240-3,740 Raleigh 6,022 4,911 4,488 3,847 Winston- Salem/Forsyth 5,377* 4,811 4,114* 3,842
9 A drop in big water users, and revenue? Change in revenue collected from big water users Cape Fear (FY09-FY10) ($1,012,465) Year 2 Year 1 Raleigh (FY07-FY10) ($358,731) Durham (FY07-FY10) $36,626 Cary (FY07-FY10) ($13,468) Winston-Salem (FY07-FY10) $2,624 Burlington (FY09-Fy11) # of households that averaged >20kgal per month
10 Comparing tiered rate structures
11 Utility Tier Range (FY12) Cape Fear 0-12k gallons per bi-monthly bill Cary 0-5k gallons per month Durham Greensboro Raleigh Winston- Salem/Forsyth 0-2 ccf per month 0-3 ccf per month 0-4 ccf per month 0-6 ccf per bi-monthly bill Tier Charges $2.64/ kgal $3.60/ kgal $1.73/ ccf $1.60/ ccf $2.53/ ccf $1.62/ ccf Tier 1 % of households that never exceeded Tier 1 (FY10) % of households whose average water use falls in Tier 1 (FY10) % of households whose 3 lowest non-zero months average falls in Tier 1 (FY10) 58% 69% 92% 40% 54% 91% 13% 10% 43% 14% 11% 9% 22% 72% 4% 10% 34%
12 Base versus variable CARY % of household revenue collected from base charges FY07: 8.6% FY08: 9.2% FY09: 9.6% FY10: 8.9% FY11: 7.7% DURHAM % of household revenue collected from base charges FY07: 18% FY08: 18% FY09: 29% FY10: 27% FY11: 28%
13 BILLING FREQUENCY COST- SAVINGS?
14 Key Benefits to Monthly Billing Source: City of Durham Water Department (May 25, 2011) Implements Best Business Practices Reduces delinquency amounts Bi-monthly customers may have up to 112 days of consumption before cut-off for delinquency Monthly customers receive 2 nd bill noting delinquency before cut-off for non-payment Could provide a reduction in lost revenue up to 26% Provides less risk to City regarding deposit fees Deposits are applied against delinquencies; potential to cover a higher percent of the delinquent amount owed Reduces leak/plumbing adjustments Leaks detected sooner Saves City and customer money
15 Projected billing volume increase: 504,000 regular bills produced in CY2010 ~ 80,000 bi-monthly bills for 5/8 and 1 meters ~ 4,500 monthly bills for 1-1/2 and greater meters 967,000 regular bills produced when monthly billing is fully implemented (~92%) Estimated increase in postage of ~ $250,000 Additional increase for mail materials envelopes and paper Some offset of postage & materials with implementation of e-billing The Plan Source: City of Durham Water Department (May 25, 2011)
16 Comparing costs associated with switch bimonthly>>monthly billing for Durham Bi-Monthly Billing Monthly Billing Net Effect of Monthly Billing relative to Bi- Monthly average Total Letters (Dec-Feb) FY FY FY Difference % change Friendly Reminder % Late Notice % Phone Notice % Cut-off Notice % Total Leak Adjustments (Dec-Feb) FY FY FY Difference % change Dollar Amount of Adjustments $ (6,955.63) $ (15,133.72) $ (22,647.50) $ 11, % Number of Adjustments % Mean Adjustment Amount $ (210.78) $ (521.85) $ (435.53) Total Meter High Adjustments (Dec-Feb) FY FY FY Difference % change Dollar Amount of Meter High Adjustments N/A $ (9,254.44) $ (793.42) $ 8, % Number of Meter High Adjustments N/A % Mean Meter High Adjustment Amount N/A $ (487.08) $ (264.47) Total Balances Cut-off (Dec-Feb) FY FY FY Difference % change Dollar Amount of Cut-offs $ 22, $ 22, $ 11, $ (11,074.08) -49.2% Number of Cut-offs % Average Cut-off Amount $ $ $ Total No. Service Orders (Dec-Feb) FY FY FY Difference % change No. of Service Orders %
17 NEW BILLING SOFTWARE ROLLOUT
18 Managing Transition: City of Raleigh utility employees reflect on billing software change Timeline of Raleigh s Transition
19 Keys to a successful shift include: 1 Properly scoping the project/allocating staff 2 Working with an experienced partner 3 Rigorously testing software 4 Training and testing employees
20 Key elements of successful transitions Don t under estimate time and resources required; Allow ample time for staff training; Educate customers and media about the benefits and impacts of the change; Plan for mid-transition evaluations to see how plan is working (or not working!), allow for mid-rollout modifications.
21 Christine E. Boyle, PhD (919) Environmental Finance Center at the University of North Carolina School of Government CB #3330, Knapp-Sanders Building Chapel Hill, NC
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