I recently presented my “How to Increase Revenue Without Raising Rates” to a large group at a national conference and was surprised by how few participants raised their hands when I asked whether they charge an application or service initiation fee.

Why charge an application fee?

The purpose of any fee should be to recoup the cost of providing the service it covers. When a customer initiates service, your utility incurs costs in several areas.

Your office staff has to process the application, whether that’s in person, over the phone, or by processing an application submitted online. This involves staff salary and benefits, as well as the cost of a credit check, if you perform one.

Unless you have AMI meters and leave the meter on when a customer moves out, you must send a field service representative to collect a reading or turn the meter on. The costs incurred include not only the field service rep’s salary and benefits but also fuel, maintenance expenses, and vehicle depreciation.

Finally, your office staff has to update the service order and activate the account for billing. This results in additional staff salary and benefits.

If you don’t charge an application fee, the costs associated with initiating service are borne by your ratepayers. As costs increase, so must your rates.

What is the trend?

Based on the 2025 Utility Fee Survey, 60.5% of responding utilities charge an application fee. This is the highest rate in ten years of Utility Fee Surveys. Given how few hands were raised during my presentation, I can’t help but wonder if the utilities responding to the survey are a representative sample. Many of the survey respondents are newsletter subscribers or have heard me speak at various conferences and advocate for charging an application fee.

Are you missing out on other fees?

Are you charging all the fees you should be? If you’re not sure, I can answer this after completing a business review. Please give me a call at 919-673-4050 or email me at gary@utilityinformationpipeline.com if you would like more information.

© 2026 Gary Sanders