DEPARTMENT OF PUBLIC WORKS: PURSUE QUARTERLY BILLING OPTIONS

8-F
DEPARTMENT OF PUBLIC WORKS: PURSUE QUARTERLY BILLING OPTIONS
Problem Identification:
The City’s practice of billing water charges on a quarterly basis limits its ability to maximize interest earnings through effective cash flow management and could be a contributing factor to customer delinquency rates.

Recommended Action:
Move from quarterly to monthly billing of the City’s water charges to accelerate cash flow and increase collection rates.

Classification:
Revenue Enhancement, Service Improvement

Functional/Operational Area:
Bureau of Water and Wastewater

Estimated Annual Impact:
While the immediate financial impact cannot be estimated, moving to quarterly billing would allow the Department to accelerate cash flow leading to increased interest earning. Additionally, monthly billing would likely lead to a reduction in delinquency rates

Estimated Implementation Costs:
Shifting from quarterly to monthly billing would increase the City’s postage costs. Additionally, there could be increased processing costs.

Barriers to Implementation:
The City’s existing meter-reading operation, a cumbersome and labor-intensive process, would likely prevent transitioning from quarterly to monthly billing (see related Recommendation 13-B).

Projected Implementation:
3 – 5 years

Next Steps:
Closely monitor the City’s current evaluation of new meter-reading technologies. Evaluate the feasibility of transitioning segments of the City’s customer portfolio to monthly billing prior to the implementation of new meter-reading technologies.

Analysis:
The Bureau’s ability to act on this recommendation will be largely dependent upon the implementation of new meter-reading technologies aimed at improving the quality and timeliness of the billing information collected by the City (see Recommendation 13-B for additional information).

In FY2000, the City approved plans for a 19 percent water rate increase and a 15 percent sewer rate increase. It is projected that these increases will result in the average Baltimore water user paying over $115 per quarter in water and sewer charges.

Most citizens pay their household bills on a monthly basis. By allowing billing charges to accumulate for a three-month period, some customers receive a bill that might be more easily managed on a monthly installment as opposed to an accumulated lump sum. Additionally, the monthly payment of charges would allow the City to increase annual interest earnings.

In FY93, the City of Philadelphia’s Water Department moved from quarterly to monthly billing. Within one fiscal year its collection rate increase by over 6 percent.