Brown Smith Wallace Examines Beneath the Surface to Assist a Municipal Utility Resolve Utility Billing Problems
From the surface, the process of utility billing appears to be standard. Consumers are sent a bill once a month, typically in the same range as the bill they paid the month before. Maybe they complain about the costs, but payments come in and accuracy is rarely questioned.
But below the surface, there is a complex system of working parts that could lead to inaccurate billing and loss of revenue. These errors can begin at any point in the process, from meter manufacturers and reading providers to recording and billing systems. Not only are these errors small enough that they could go undetected for years, but they can also compound, requiring the municipal utility or public works department to analyze every step of the process to uncover where things have gone wrong.
In this case study, you’ll learn what a municipal government utility director discovered when she took a closer look at her organization’s billing processes. She conducted a high-level analysis to determine why the city’s water volume did not equal the billing volume for a single month, and uncovered indications of problems that had been building up over several years. The director and city manager called in Brown Smith Wallace to assist and uncover the root causes behind the discrepancies between the billing and production volumes.
This project started with trying to determine why the billing data did not match up with the consumption data for the municipal government utility (the Utility). This exploration took collaboration from six different organizations. There are many answers yet to uncover, but by looking beneath the “billing-as-usual” on the surface, several root causes have been identified along with recommendations to resolve them.
The process behind water billing has many working parts, and as such, when one part stops working, the process as a whole is negatively impacted. On top of that, because of the complexity of the process, it is difficult from the surface to know exactly which part needs to be fixed. What follows is an examination of the potential root causes that the Utility uncovered with Brown Smith Wallace that led to the discrepancy between billing and the amount of water consumed.
Water Meter Specification and Installation
The Utility recognized that an opportunity existed to recover water revenue loss by replacing outdated meters and utilizing automated meter reading. A meter change out program was planned and performed in 2007-2008. However, the quality control and data integration were not done well, and it is believed that some problems have existed since the original install. There were several contributing factors:
- Meter type (across all size meters)
- Meter registration (billing reads were to be sent in 10-gallon resolution)
- Format of data to be collected, manipulated (or not) by the vendor collecting the readings and transferring the data to the Utility
- The software vendor that set up the meter accounts
A problem area uncovered was the criticality of each vendor knowing what their piece of the puzzle was and how it fit within the larger picture and then making sure that once all the pieces were fit together, that the picture was correct.
Water Meter Measuring
The billing process begins with water consumption, which is measured through water meters. This means it is the first point in the process where accuracy could be compromised, and within meter measuring, there are several ways that could happen.
Types of meters and what they report
There are many kinds of water meters that measure the flow of water in different ways. Most commonly found in residential areas are displacement meters, seen in the left image, where the movement of water pushes a disk that registers flow through the meter on the register. Also commonly used in homes and small businesses are multi-jet meters, seen on the right, which measure consumption through the speed of the flow of water. The different systems still measure the same thing: the amount of water usage in a location. An additional calculation needs to be made to standardize the water consumption amounts across collection meter types.
Different units of measure, dials and calibrations
In addition to the different types of meters used, meters that use the same kind of measurement method might still vary in size, calibration and unit of measure. As seen in the two pictures above, while both are displacement meters, one meter is reading water in gallons and another in cubic feet, which can cause reading discrepancies when the Utility converts all readings into a standard unit.
Readings and Billing
The complexity in how water meters are made and programmed is only one of the challenges in the collection of utility billing data. In the case of this Utility, a third-party company was employed to collect the meter data via a cellular network. In both the collection and organization of data, more errors were created.
Reading and Recording Measurements
As stated before, the meters found in residential homes don’t come with a single standard unit of measure. Some measure consumption in gallons and some read in cubic feet. It is the job of the installer and the third-party company collecting these readings to assure a standard unit of measure applies to all readings or to document, recognize and convert the measurements accordingly. The third-party hired by this Utility chose the standard measurement of cubic feet for all water readings. The problem was the Utility had changed to gallons for the meters.
However, in addition to ensuring that the conversion to one unit of measure was accurate, there was another unforeseen problem. When Brown Smith Wallace investigated the third-party records of water meter measurements, they found that despite having chosen cubic feet for the readings, the meters recorded in gallons. These readings would then go directly to another third-party system in charge of the billing process. Utility management would have no way to know that the readings received are in the wrong unit of measurement.
As mentioned above, a separate third-party billing system calculated consumption from readings and created the balances for billing. However, aside from the problems with the data coming into the system, there were additional problems found in how the balances and billing were recorded, sent out and collected.
The recording of unaccounted water had many errors and inconsistencies between what meter was billed and not billed. The water produced by the water plant was manually recorded by personnel at the end of shifts. If inaccurate data was captured during this process, various reports did not reflect accurate water production data, which could skew the water loss data. These systems had no controls in place to require accurate data or alert employees to errors in the information provided.
This led to customers with no billings, with billings for one service or with an unexpected number of bills. This also led to meters with no readings, or meters with no calculated consumption, and problems with the billing not equaling the consumption from the readings. These were the errors that became visible enough on the surface that the Utility noticed.
Solution: Communication and Documentation
From water meter recordings to customer billings, what appeared to be miscalculated numbers wound up being the result of many fractured processes and data reporting inaccuracies. Not having a universal format for data input or an automated system that could prevent the errors or alert the Utility management of them before passing to the final stages of billing caused these problems to not only go unnoticed, but to compound on one another.
There are many parts to the utility billing process and many stakeholders involved in each, and the root problems uncovered are not limited to water consumption alone. When a complex system like this is only examined from the surface – because on the surface, revenue is still coming in – public utilities can unknowingly create an environment with high risk for revenue loss. Reviewing recording systems and data can be the first step in uncovering long-existing problems that are never too late to fix.
If you have questions about your systems, data and processes, contact Ron Steinkamp, Advisory Partner and Public Sector Industry Group Leader, at 314.983.1238 or email@example.com or Joe Montes, Data Analytics Principal, at 314.983.1380 or firstname.lastname@example.org.