Finance Committee Agenda and Packet 2010 11 15

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COUNCIL COMMUNICATION TO: MAYOR AND CITY COUNCIL FROM: MALCOLM FLEMING, CITY MANAGER DATE: NOVEMBER 15, 2010 SUBJECT: UTILITY BILLING ISSUES ORIGINATING DEPARTMENT: FINANCE SUMMARY: The Finance Department would like to bring two Utility Billing Issues to the attention of the Mayor and City Council. First, the Finance Department has discovered a number of utility water billing accounts that are not billing using the correct rate table, resulting in a number of accounts being overbilled. The Finance department is issuing credits when possible, but for some accounts the credit owed is large enough that the Finance Department staff believes we should issue checks. The total amount of billing credits to be issued is $20,540. The total amount of checks to be issued is $55,969. A detailed discussion of this issue follows below in the section entitled "Correction of Service Size billing error ". Second, the Finance Department is in the process of reviewing all old, outstanding utility receivables in order to make a recommendation as to their appropriate treatment and disposition. This is being done in conjunction with a review of the City's "red tag" policy and procedures. A detailed discussion of this issue follows below in the section entitled "Review of Utility Accounts and Red Tag Procedures ". Correction of Service Size billing error: By ordinance, monthly water billing is calculated using rate tables that vary by tap size (aka service size). As a part of the radio read meter replacement program, the Public Works Operations Department compiled a spreadsheet of all meters installed throughout the city. In performing some routine account analysis, we compared the service /tap size in the billing system to the meter size on this spreadsheet and discovered that 25 of the approximately 6,600 accounts (or .4 %) have a tap /service size that is less than the meter size. This error can result in either under or over billing depending upon consumption levels. Prior to 2003, water billing tables were based on consumption levels only, not tap /service size, so the maximum period of overbilling was January 2003 through October 2010. Of the 25 accounts, 19 resulted in overbilling and should receive a credit adjustment and 6 resulted in under billing and will be corrected prospectively. We looked at the magnitude of the credit as well as the historical consumption patterns of the 19 accounts to determine which accounts should IL S SUBJECT UTILITY BILLING ISSUES AGENDA ITEM