The Size of the Challenge
Water remains relatively inexpensive. So if a handful of end-users can’t, won’t, or forget to pay their water bill, you wouldn’t think it would have much impact on utility finances. It turns out that payment performance is actually a really big deal that costs the industry hundreds of millions of dollars each year. As of 2010 U.S. water utilities generated over $42 billion in annual revenue and given the pace of rate hikes over the past few years that number is now likely closer to $50B. Perhaps unsurprisingly, water utilities report being unable to collect between 0.5% and 1.5% of billed revenues each year. To make the math simple, let’s assume that 1% of $50B in annual revenue is uncollectible which equals losses of $500 million each year.
An Unexpected Surprise
I recently picked up an out-of-town guest at the airport after a long day at work, and we arrived at my apartment late in the evening, around 9pm. My guest happened to see a big piece of paper attached to the mailbox with blue painters tape. I expected that it was an election flyer, so I pulled it off and found the light switch for the porch. Stepping inside, I looked at the notice. It said that my water had been shut off.
I rent an apartment, and I have never seen a water bill. I tried to recall the lease terms – I was pretty sure that the building owner paid for water service. I read the fine print on the notice that indicated water service would be restored if I paid in person at the main office during business hours the next day. However, … see more
Most of us experience anxiety when we open our monthly utility bill. Depending on the total cost, some of us feel frustration and/or confusion and/or anger. It is human nature for these negative emotions to stick with customers, even though the incidences of unusually high bills may not be frequent. But still it is important that water utilities address this aspect of their operations because it is critical to building public trust and changing behavior.
Our water bill is the only guaranteed and regular contact that a water utility has with its customers. How then can improvements in billing help customers find what they need, understand it and act appropriately, so as to avoid placing outright blame on the utility?[bctt tweet=”Our water bill is the only regular contact that a water utility has with its customers.” username=”getwatersmart”]
Before providing some solutions, let us first acknowledge that receiving a bill … see more
WaterSmart is a software-as-a-service (Saas) company and a vendor to over 50 water utilities. As a company that employs a lean and mighty team of 40, we also make use of dozens of software providers to help us build our product, run our sales & marketing, and take care of our employees. Often we are able to learn a lot from our vendors – we take particular note when we experience a seamless onboarding processes, smart pricing plans, or great user interfaces. A recent customer service experience with a vendor was also a learning experience – mostly in what not to do.
WaterSmart is nearing the size at which we could save money by switching to a different health benefit and payroll structure. We’ve been pretty happy with our current provider, but it is a good practice to regularly evaluate other options as we grow. In considering other vendors, only … see more
My neighbors and I received an attention-catching letter this summer about our water rates. Because we’ve done such a great job at conserving water in the past year, our water rates are going up – a lot.
California continues to experience an historic drought and last year, for the first time in history, Governor Brown mandated cities to reduce their water consumption by 25%. We all had to do our part by curtailing outdoor use of water, taking shorter showers and letting cars go with less frequent washings.
All of these actions were very successful. Cities across the state essentially achieved the 25% reduction goal according to the State Water Resources Control Board’s recent report. Ironically, at the same time many communities in the state have seen their water rates increase despite the reduction in water use. At Stanford, for example, our rates just increased 29% even as we reduced … see more
Water utilities spend a disproportionate amount of time engaging with disadvantaged communities, often to address delinquent or unpaid bills and service disconnections that leave everyone worse off. If a utility is using a shutoff notice as an engagement tool, they are doing it wrong. There are better ways, like implementing customer assistance programs (CAP) to prevent shutoffs in the first place.
Preexisting notions about disadvantaged customers being out of reach of digital communications methods are, in fact, incorrect. According to the Pew Research Center, over 50 percent of low-income households own a smartphone. Smartphone penetration in this demographic creates substantial opportunities for utilities to reach disadvantaged communities with software solutions like customer self-service platforms and targeted digital communications.
The following framework is inspired by the EPA’s framework for implementing customer assistance programs. Customer self-service software can help utilities engage effectively with disadvantaged communities. … see more
As water industry observers recognize, utilities have historically considered themselves silent providers of service. In the past, customers would only choose to communicate with their utility in the case of frustration or dissatisfaction: A high bill; water quality concerns; a service outage. Thus utilities would often measure customer satisfaction by a lack of interaction with their ratepayers.
Consequently, and unsurprisingly, utilities have minimized communication with stakeholders on the theory that it is better not to attract too much attention. In the relatively infrequent cases when they have chosen to communicate, they generally use one of two modes:
- Pure broadcast: Blanket communications, using a single set of content for every message sent. Think billboards, bill stuffers, door hangers, static web pages, and, more recently, social media channels such as Facebook or Twitter. These approaches are undirected and largely ineffective, except in huge quantities. In marketing or sales parlance this approach is
Water utilities are having a hard time getting public support for increasing investment in their infrastructure — a crucial need that underpins the viability and resilience of our cities and suburban communities. More than 250 million Americans are at risk of losing the reliability and safety of their municipal water utilities as these systems reach the end of their useful life. People yell and scream at their elected leaders about rate increases even as they face the warning signs of broken water mains and episodes of contaminated supplies. How can utilities leverage public messaging to generate more support for their mission? How can utilities neutralize complaints and win over their customers to support the necessary improvements in our water systems?
A new whitepaper from Hahn Public Research sheds light on this subject. Research indicate that utilities should design their public messages to focus more on the benefits and features customers … see more
Water utilities are responsible for one thing above all: supplying safe drinking water to their populations on a daily basis. In light of the recent public health crisis in Flint, MI, utilities have never been under more pressure from the public to perform this service. Simultaneously, factors such as unpredictable weather patterns, population growth and urbanization, and aging infrastructure are all working together to increase that pressure. In the face of these challenges – and with a finite supply of water — business as usual won’t do. Water utilities must find ways to innovate and evolve to meet future generations’ water needs.
So how can water utilities adjust to serve the population of the future while maintaining reliable, safe water delivery?
In more than 24 years as the CEO of the El Paso Water Utilities Public Service Board, I learned that the key to water utility operations is simple: do … see more
Water and Wastewater utilities receive “credit ratings” just as a private individual has a FICO® score. While organizations like the Fair Isaac Corporation calculate personal credit scores, for entities like local government utilities, the three groups that generate credit ratings are Fitch Ratings, Moody’s, and Standard and Poor’s (S&P). For the utility, a higher rating means better access to credit, and at more favorable terms. S&P published the criteria it used for “Water, Sewer, And Drainage Utility Revenue Bonds” in 2008. To say that things have changed with the economy since 2008 is an understatement! In 2014 S&P solicited comments on its re-worked methods and assumptions for calculating these credit ratings. The new criteria will result in credit rating changes to 1 in 4 utilities (of the 1,600 utilities that S&P rates). Some ratings will go down. How can your utility be among the 200 that will have a higher … see more