I just completed a business review for a utility and calculated their Days of Exposure while I was on-site. If you’re not familiar with Days of Exposure, it’s the number of days of service a customer ends up owing for if they skip out and never restore service after being disconnected for non-payment. My calculation resulted in 94 Days of Exposure, as shown below (clicking on the graphs will open a larger image in a new window):
Longer reading period
This utility serves a predominately rural customer base and reads meters using handhelds. They start reading on the first of the month and finish near mid-month, taking about two weeks to read all of their meters. When I initially calculated their Days of Exposure, I used the number of days from the end of their reading period as the value for blue bar in the graph above for days until bills are mailed.
An epiphany as I was traveling
Recently, all my work has been with utilities who read meters using either drive-by or AMI systems. As a result, I’ve grown accustomed to it only taking a day or two, at the most, to complete the reading process.
Driving back to the airport, I had the realization that their Days of Exposure would be much different for accounts which are read early in the reading cycle. When I recalculated using this value, the result was 109 Days of Exposure:
Impact on potential write-offs
With the increased Days of Exposure, their potential bad debt write-off also increased from $76.38 to $104.52!
This utility has regularly raised rates, but their security deposit hasn’t changed in years. Unfortunately, potential write-offs can creep up on you if your security deposit doesn’t keep pace with rate increases.
Calculate your Days of Exposure
If you haven’t done so recently, please take a minute to calculate your utility’s Days of Exposure by clicking here.
Do you need to improve your Days of Exposure?
If your utility’s Days of Exposure seems high or results in a significant write-off amount, please give call me at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review could help you find ways to improve.
“Ask the Expert Blogs”
I’m flattered that the good folks at MuniBilling have asked me to contribute to a series of question-and-answer blog posts they are calling Ask The Expert Blogs. You can see the first few blog posts here.
2022 Utility Staffing Survey
There’s still time to complete the 2022 Utility Staffing Survey, if you haven’t already participated.
If you’d like to complete the 2022 Utility Staffing Survey, please click here. This should only take a few minutes to complete and I will publish the results in future newsletters.
Thank you in advance for taking the time to complete the survey and please feel free to share it with your peers at other utilities.
© 2022 Gary Sanders