Recently, I wrote about the steps required to convert from billing in larger units, such as hundreds or thousands, to billing in individual gallons. (If your utility bills in cubic feet rather than gallons, please mentally substitute “cubic feet” everywhere I say “gallons”, because the same premise applies.) That post piggybacked on a previous blog post where I explained why I believe it is better to bill in individual gallons (and imperative if you have an AMI system).

Reasons why

That blog post listed two reasons why I encourage billing in gallons. Primarily, this was to ensure the usage on your customer’s bill corresponds exactly to the usage they can see in your customer portal. The other reason was, if you have conservation goals or drought restrictions, there is no way for your customer to accurately monitor their usage if you are rounding it on the bill.

Today I want to discuss one additional reason that I failed to mention in the previous blog post, which I’ll call “artificially doubling” of the bill. Using the stereotypical single customer who uses very little water as an example, check out the comparison below (clicking on the chart will open a larger image in a new window):

In this example, assuming our example customer uses 1300 gallons per month, the columns on the left show the readings, usage, and bill amounts if billing in gallons at a rate of $5.00 per thousand gallons. On the right are the corresponding values if billing in thousands of gallons at the same rate.

As you can see by the cells highlighted in yellow, every few months, when the meter rolls to the second thousands digit, the customer’s usage (and corresponding volumetric charge) doubles. The overall bill may not double, depending on how much your base charge is but, with a low base charge and a higher volumetric rate, this can have a pronounced effect.

How many times has your customer service staff dealt with customers who claimed their bill doubled, only because the meter rolled to an additional digit in the thousand’s place?

Who benefits?

Depending on the scenario, sometimes billing in thousands is to the customer’s advantage, other times not. To illustrate, let’s look at two hypothetical situations. In the first, the meter had just rolled to another thousand last month and is just about to roll again this month:

In this case, the customer is only billed for 4,000 gallons although their actual usage is almost 5,000 gallons.

In the reverse situation, the meter was just about to roll to another thousand last month and just rolled this month:

In this case, the customer used barely 3,000 gallons but they will be billed for 4,000 gallons.

I realize these are extreme examples I created to illustrate my point but, the truth is, situations like this do happen. Billing in gallons is more accurate and, with today’s technology, there’s no reason not to do it.

Is your billing process working well?

Do you need to change billing units, or otherwise improve your billing process? If so, or if  you’re unsure, please give me a call at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review could help you.

© 2024 Gary Sanders