From City Manager Ray Griffin:
The current frustration with some of our utility customers has sparked debate about the efficacy of the City’s new security deposit policy. I certainly understand our customers’ frustrations and I regret there has been so much consternation about it this week. In order to better “wrap our arms” around this situation, I have worked with Finance Director Brafford and Billing & Collections Supervisor Bennett to review the data and share same with you.
In August 2011, Council approved new policies concerning re-establishing a security deposit system and reverting to a monthly billing and collections cycle that would not permit customers constantly having arrears on their accounts. These new policies were staged as follows:
1. Phase 1: Security deposists were to be required for new accounts that could not provide a letter of good credit reference and existing customers whose service was terminated for non-payment, effective 1 November 2011. Click the chart below for detail:
2. Phase 2: Customers would no longer be able to pay one month’s bill and carry one month’s bill for bills due after 1 February 2012.
Phase 1 implementation of requiring customers to establish security deposits went relatively well. For the period 1 November 2011 through 10 February 2012 a total of 363 existing customers and 260 new customers were required to establish security deposits. The existing customer group for this period of time were for accounts terminated for non-payment of two months’ billing in arrears.
Phase 2 implementation
Phase 2 implementation began the week of 13 February. It has been during this week’s implementation when we’ve received the loudest outcry about the new policy. Members of City Council, City Administration, Customer Service Division and media have received very vocal complaints from customers upset about their service being disrupted for nonpayment and/or having to pay a security deposit. Not all of the 375 accounts service was terminated due to payment being received prior to meter readers reaching their homes/places of business. The 20th Billing District, which is the one whose payments were past due on Monday, 13 February and cut off date on 14 February is the largest of the City’s three utility billing districts.
4,174 bills were mailed to customers. The cut-off list was prepared after the close of business on Monday the 13″‘ and showed 375 accounts listed for non-payment, or 9% of the bills rendered. Of this amount, 36 were businesses and 339 were residences. Of this amount, 106, or 28.5%, were for bills that had two months in arrears and the balance was for bills with one month in arrears. The total arrears for this billing cycle, after 5 p.m. on the 13th was $54,118.Additionally, of the 375 accounts being placed on the cut off list for non-payment, 195 had not been cut off during the previous 12 months while 180 had been cut off at least one time during the previous 12 months.
Questions have arisen from many customers as to why they couldn’t be granted an exception for the security deposit. They expressed frustration since they had paid their bills each month. The current ordinance and policy does not provide for a waiver of security deposit if the account is disconnected for non-payment.
It appears there are perhaps several reasons why so many one month customers found themselves in the cut-off situation. I based the following on conversations my staff and I have had with customers this week.
- The inserts and information printed on the bills regarding the policy changes were not read
- Some customers were busy with other things and forgot to pay prior to the cut-off date
- Some customers stated they did not understand the how to read the bill and its messages
Basis for the Policy Changes
The basis for the policy changes are the result of a multi-year effort to reduce bad debt, accounts written off; and to reduce the risk of the City for future losses due to unpaid accounts. The unpaid accounts are represented in two basic forms. First, customers not paying their bills
and moving out of the City’s water district. Second, customers not paying their bills and moving to another part of town and attempting to set up a new account in a different name have been reasons for bad debt exposure Having a security deposit on-record for problematic accounts (those that have been terminated for non-payment) has the effect of reducing the City’s exposure to bad debt.
Recommendations
1. Maintain the current ordinance and resolution setting forth the new policies concerning security deposit requirements and paying bills-in-full once-a-month; however, tweak these to provide for the following:
a. One-Time courtesy waiver of security deposit requirement: For customers that have otherwise had a good pay history, i.e., not being cut off for non-payment within the past twelve (12) months, a one-time courtesy waiver of security deposit will be permitted. (See Ordinance 12-20)
b. One-time crediting of security deposit for good-pay customers caught up in the transition: For customers that have otherwise have had a good pay history, i.e., not being cut off for non-payment within the past twelve (12) months and were placed on the cut-off list during the week of 13 February 2012, will have their security deposits credited to their accounts. (See Resolution I 2-15)
c. Grace Period Provided: A two business-day grace period will be provided to all accounts before the cut-off list is prepared, effective immediately. (See Resolution 12-15)
2. The Revenue Collections staff will continue to work with customers having trouble “bridging the gap” transitioning rom the pay-one-bill—leave-one-bill to once a month billing and payment of account via payment agreements.
You may download a copy of the agenda, with the proposed ordinance here. (12 pages) 20120220_coh_called_meeting_water