Every other year, in odd-numbered years, I conduct the Utility Fee Survey. This survey was designed to research what fees utilities charge, how much they charge for each fee, and to see what trends, if any, are occurring with fees. Here are links to other Utility Fee Surveys:
The Utility Fee Survey alternates years with the Utility Staffing Survey, which is conducted in even-numbered years. Below are the results of the 2015 Utility Fee Survey.
Demographics of survey respondents
106 utilities, representing 19 states, ranging in size from 83 to 90,000 active accounts participated in the survey. Click on the links below to see charts of the various demographic data:
Tap fees and impact fees
The survey started with water and sewer tap and impact fees. There are a couple key distinctions to keep in mind when comparing tap and impact fees.
Tap fees should recover the cost of making the actual water or sewer tap. This includes direct costs such as labor, materials and vehicle use as well as any indirect costs associated with completing the tap. Tap fees are classified as operating revenues.
Impact fees, sometimes called availability fees or system development charges, are designed to cover the incremental capital cost of adding an additional user to the water or sewer system. Impact fees are classified as non-operating revenues.
For utilities charging an impact fee based on number of bedrooms, monthly or daily usage, I assumed three bedrooms or 3,000 gallons per month.
Residential water tap fees charged by utilities responding to the survey range from $20.00 to $8,000.00 as shown below (clicking on the any of the graphics will open a larger image in a new window):
Two other utilities charge the actual time and materials cost incurred for a residential water tap.
Utilities responding to the survey charge residential sewer tap fees ranging from $50.00 to $10,000.00 as depicted by this graph:
Two other utilities charge the actual time and materials cost incurred for a residential sewer tap and one charges time and materials plus $350.00.
Residential water impact fees charged by utilities responding to the survey range from $25.00 to $25,754.00 as shown in this graph:
Utilities responding to the survey charge residential sewer impact fees ranging from $350.00 to $21,600.00 as shown here:
Of the 106 participating utilities, 104 charge a late fee. As shown by this graph, charging a late fee as a percentage of the bill is the most popular method:
Surprisingly, compared to the 2012 Utility Fee Survey, utilities charging a percentage is down just over 10% (57.7% vs. 67.8%), while those charging a flat amount is up nearly 9% (32.7% vs. 24.1%).
Utilities that assess the late fee as a percentage charge from 1% to 10%, with 10% being by far the most popular, as this graph depicts:
Late fees range from $2.00 to $45.00 for utilities that charge a flat amount. (The utility that charges $45.00 does so in lieu of charging a reconnect fee.) This graph illustrates the late fee flat amounts:
Eight of the utilities charge a hybrid late fee – a combination of a percentage with a minimum amount. Here is a graph showing what they charge:
Seven of the 106 utilities do not cut off for non-payment. All of the 99 that do cut off for non-payment charge a cut-off or reconnect fee as a flat amount, ranging from $10.00 to $150.00 as shown below:
Of the 99 utilities that cut off for non-payment, 71 of them (representing 71.9%) assess the cut-off fee as soon as the cut-off list leaves the office. I’m pleased to note that the percentage of utilities charging the cut-off fee immediately is up 10% from the 2012 Utility Fee Survey.
Cut-off fee terminology
As more utilities adopt this best practice of charging the cut-off fee as soon as the cut-off list leaves the office, many are finding that terms such as “cut-off fee”, “disconnect fee” or “reconnect fee” are becoming outdated. For that reason, the survey asked what each utility calls its cut-off fee. The results are displayed in the following chart:
For the number of responses, including the 22 terms included in the “other” category, please click here.
As you can see, reconnect fee and cut-off fee are still the most popular terms, but many utilities have adopted terms that do not refer to cut-off or reconnection. Calling your cut-off fee “delinquent fee” or “non-payment fee” or any of the other terms that do not imply cut-off or reconnection helps to avoid the inevitable arguments with customers who must pay the fee but have not been cut off.
After hours reconnect fees
Of the 99 utilities that cut off for non-payment, 51 of them (representing 51.5%) will reconnect after hours and charge a fee for this service. 41 of the 51 utilities (or 82.4%) will reconnect anytime after regular office hours. The remaining 10 utilities will only reconnect during selected time periods as shown below:
After hours reconnect fee amounts range from $15.00 to $250.00 as shown by the following graph:
Returned check fees
Of the 106 participating utilities, 105 charge a returned check fee. Returned check fees range from $6.00 to $50.00, as this graph illustrates:
In one of my earliest newsletters, I wrote about application for service best practices. One of my recommendations was to charge a non-refundable application fee, in addition to any security deposit, to all new accounts. I’m pleased to report that 55 of the 106 utilities (representing 51.9%) responding to the survey charge such an application or administrative fee. This is down slightly from the 52.3% reported in the 2012 Utility Fee Survey. These application fees range from $5.00 to $100.00 as shown below:
Meter reread fees
25 of the 106 utilities (or 23.6%) charge a meter reread fee if the customer requests their meter be reread. This is up from the 18.2% charging a meter reread fee in 2012. In many cases, this fee is waived if it turns out the customer was correct and the utility misread the meter. Of the utilities that charge a meter reread fee, the fee ranges from $5.00 to $50.00 as this graph shows:
Meter tampering fees
78 of the 106 utilities (or 73.6%) charge a meter tampering fee. This is up from 60.2% charging a meter tampering fee in 2012. Nine utilities charge the actual cost of repairs or cost plus an administrative fee. Four more utilities recover their costs through the judicial system. The remaining 65 utilities charge a flat fee ranging from $15.00 to $1000.00 as shown below:
One of my earliest issues explained why I believe utilities should accept credit cards. Of the 106 utilities responding to the survey, 86 of them (or 81.1%) accept credit cards. I’m pleased to report that this is an increase from 62.5% three years ago. Of the 86 that do accept credit cards, 40 of these charge a convenience fee on at least one form of credit card payments as shown below:
The convenience fees charged by these utilities are too diverse in how they are assessed to be graphed, so they are presented here in a table.
In addition to the fees that have been described in the three results issues, the survey asked what other fees utilities charge. Below I’ve listed a few of the more creative fees that were reported:
Meter test fee
A number of utilities charge a fee if the customer requests that their meter be tested. The survey didn’t specifically ask about meter test fees, however one utility volunteered that they only charge the fee if test determines the meter is registering correctly. Hopefully all utilities follow this policy because the customer is probably doing you a favor if the meter test reveals the meter is registering incorrectly.
Return trip fee
When turning a meter on, most utilities will not leave the water on if the meter indicates water is running inside the house and no one is home. This requires the utility to make a return trip when the customer is home to turn the meter on again. Several utilities charge a return trip fee to cover the time and expenses involved in returning to the customer’s home.
Same day connection fee
A number of utilities routinely provide next day service for activating new accounts. A few of these utilities charge an additional fee for providing same day service.
Field collection fee
Most utilities have adopted the best practice of not collecting money in the field on cut-off day. At least one utility still allows customers to pay the field technician to avoid being cut off and they charge an additional $25.00 to provide that service.
Does your fee schedule need reviewing?
If you think your fee schedule needs to be updated, please give me a call at 919-673-4050 or e-mail me at email@example.com to learn how fee review could help.