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HomeMy WebLinkAboutH- 5 Resolution to Establish Light & Water Rules & Regulations � � E �AZUSA AGENDA ITEM MEMORANDUM TO: Honorable Mayor and Members of City Council FROM: Joe Hsu, Director of Utilities i VIA: Rick Cole, City Manager2C/ DATE: November 14, 2000 SUBJECT: Adopt resolution in accordance with the City of Azusa Municipal Code, to establish and amend to Light &Water Rules and Regulations regarding Level Pay Plan, Automatic Payment, Pre-Payment Billing, Pre-Payment Refund and Revised Connection/Re-connection Policies. RECOMMENDATION: Staff recommends that the City Council adopt the proposed changes to the Rules & Regulations as highlighted in Electric Rules 1, 6, 8, 9 and Water Rules 1, 5, 7, 8, 11. FINDINGS: The Light &Water Department has been actively working on introducing a series of new customer service initiatives this year; some like credit card acceptance and the printing of usage calculation detail on the utility bill are already in place, but several new initiatives (such as e-Commerce) are in various stages of development. Currently, the Customer Service staff are working on addressing issues surrounding the ease with which new customers can establish service, contact and communicate with Customer Service and manage their utility expenses. The proposed rule changes are requested in order to implement several new customer service initiatives which required modification of, or addition to, the current Rules and Regulations. These changes are intended to offer our customers comparable services to those of other surrounding utilities. This round of proposed changes includes: Level Pay Plan, Automatic Payment, Pre-Payment Billing, Pre-Payment Refund and Revised Connection/Re-connection Policies. Our Customer Information System is already ready to implement these changes if approved. The following findings outline each of the proposed revisions to the Rules and Regulations. /�/��17l/U� &//21-/A-6ie"(_____410,0iJ‘z, 1) Revision to definition of Application. (Electric Rule 1 page 23 and Water Rule 1 page 83.) Staff proposes reviing the definition of what constitutes an application as the former concept of a physical application as we currently know it is changing. Generally service applications are completed in person at the Light &Water office. In the near future Department is planning to go to phone-in and fax applications, with web based applications coming in 2001. From experience, staff is aware of the fact that a large number of customers find it inconvenient or burdensome to come into the office to complete an application, especially given that most other organizations have long ago stopped this practice. This change is anticipated to significantly improve the customer's initial impression of the Department. Fiscal Impact: None 2) Pre-Payments. (Electric Rule 6 pages 44 - 45 and Water Rule 5 pages 90 - 91.) The issue of pre-payments is another area of concern, especially given that the Rules currently require a pre-payment prior to service being established and these pre- payments are not returned until an account closes. The pre-payment is intended to protect the utility by providing a guarantee of final payment, but for long established business and residential customers this effectively ties up this money for years. Southern California Edison and other surrounding municipal utilities have in place more customer friendly policies, therefore staff is+ proposing the following: A) Billing of Pre-Payments. Currently most customers come into the Light &Water office to sign up for service and at that time are required to pay a prepayment prior to service being connected. As part of the effort to make signing up for service a little easier, the Department is proposing that in addition to taking phone in applications, consumers could have their pre-payments billed to them and due in 15 days. If the pre-payment has not been received by the due date, utility services will be disconnected and the consumer will be required to pay re- connection fees in addition to their pre-payment prior to service being re- established. Fiscal Impact: Staff does not anticipate any significant fiscal impact, though write offs may be slightly increased by customers who move into a service and then subsequently delinquently disconnect due to failure to pay the pre-payment. The Department would as a result write off consumption charges for two weeks of services. B) Refunding of Deposits. From a recent customer survey conducted by the Department, the pre-payment policies were mentioned as an area that our customers would like addressed as current policy is that refund only occurs when an account closes. For our long term customers this may mean holding these funds for years and maybe even decades. To address this issue, the Department is proposing that for those customers (Residential and Commercial) who maintain two years of perfect payment history would automatically have their pre-payment refunded and applied to their account. This would release the customer's funds and probably pay at least one of their utility bills. Customers who have been refunded and subsequently have their services disconnected due to delinquency will be required to pay a new pre-payment in addition to re-connection fees prior to service being re-established. Fiscal Impact: Based upon our tests of qualified customers, implementation of this policy will involve the initial refunding of over $60,000 with continued refunding over subsequent months which can not be predicted. A significant amount of funds currently held by the City may in time be refunded and additional fiscal impacts such as lost interest will result. C) Waiving of Pre-Payment for Good Credit. For customers with good payment history as verified through Equifax we will waive the pre-payment requirement. This is an option that the customer must choose as the Department proposes to recoup the cost by charging a fee equal to the Department's cost estimated at $2.30 per credit check. Fiscal Impact: All costs associated with offering this service will be paid by the customer. Additional impacts will include lost interest on funds not collected and possible write off by customers whose accounts are delinquently disconnected. 3) Level Pay Plan. (Electric Rule 8 pages 49 - 51 and Water Rule 7 pages 94 - 96.) Managing utility expenses has been in the news a lot lately as consumers have faced significant changes in their utility bills. While Azusa Light &Water customers are not facing billing swings due to rates, all consumers face the natural ups and downs in their usage due to weather. For many years investor owned utilities have offered a service that allows their customers to pay a fixed monthly amount for 11 of their 12 months of service; the amount is calculated by averaging the customer's utility bills for past year of service. By doing this, customers are able to smooth out the highs and lows that are inherent in utility bills. The Department is proposing that the plan be available to customers with a minimum of 12 months of good payment history as the nature of Level Pay often leaves the utility carrying a significant balance that the consumer will need to settle up with their 12`h bill. Customers participating in this program are expected to remain current with their Plan amounts or they will be returned to the traditional billing cycle. For customers with past payment delinquencies, but no shutoffs, an alternative plan will be offered whereby the plan amount will be calculated by adding the utility bills for the past 12 months and dividing by 11 months. Fiscal Impact: The fiscal impact of this service is unknown as three factors will determine the impact on the Department's accounts receivable and write offs. The first factor is the number of customers, the larger the adoption the larger the possible impact. Secondly, depending on the calculated Level Pay amount the customer may from time to time have a significant credit or debit on account with the City. As a result of high debit balances, some accounts may become delinquent and lead to possible write off. Ultimately all charges are collected over the twelve month period, but the largest impact will be in the net effect on accounts receivable. 4) Automatic Payment. (Electric Rule 8 pages 51 - 52 and Water Rule 7 pages 96 - 97.) For many people paying bills is a hassle they simply want to avoid, for these customers we seek to introduce Automatic Payment. For years the larger investor utilities have offered this service whereby customers can sign up to have the total amount of the utility bill automatically deducted from their checking account on the due date. This is good for the customer because it ensures a hassle free means of making timely payments and for the utility it offers a way to automate payment collection and promote good payment practices. There are nominal charges associated with this service that the utility would incur. Fiscal Impact: Minor transactional fees charged by the bank will be absorbed by the Department as a cost of doing business. Yearly expense is predicted to be less than $2,500. 5) Revised Re-Connection Policy. (Electric Rule 9 page 55 and Water Rule 8 page 99.) Currently customers can come into the Light &Water office and request same day connection of new services or re-connection of disconnected services for $15.00; this fee is charged up till our 5:30 p.m. closing time. Our current policy is problematic in that often the locations and/or number of last minute requests often entails the Department paying overtime to one or more of our Field Service staff. The current fee setup was never intended to cover the cost of employee over time and therefore the Department is proposing that the same day cut off time be changed to 5:00 p.m. Customers requesting same-day service after 5:00 p.m. would fall under our current after-hours connection policy. Fiscal Impact: The new policy is intended to reduce the amount of overtime paid by the Department, and in cases where there is overtime, the additional fees should cover the Department's costs. 6) Temporary Service. (Water Rule 11 page 104.) Recently the Department has had an issue with a street sweeping company over unauthorized water use. Currently the Rules and Regulations do not have specific language to address this issue. Therefore, the Department is proposing a revised Water rule that is more specific about the obligations of those using temporary connections. Fiscal Impact: Changes to the rule will result in the collection of additional revenue from street sweeping companies and others using Temporary Service. FISCAL IMPACT: All of the proposed changes included for Council adoption include unknowns (see Fiscal Impact notes above) that the Department can not accurately predict due the fact that customer behavior and adoption rates will be the critical factors. Taken in their entirety, the Department believes that most of the items will effectively have no long term impact other than lost interest on funds not collected due to reduced Pre-Payments and unpaid funds under Level Pay Plan. These policy changes have been written in such a manner as to limit the Department's possible risk exposure, but additional write offs may occur due to a lack of pre-payment on some accounts or outstanding balances on disconnected Level Pay customers. Experience with these services at the City of Colton has been very positive and no unusually high fiscal impacts have yet occurred. The Department will be tracking the costs of each of the following programs and may at a later date need to revise or cancel programs which become economically unjustifiable. Prepared by: Kevin Morningstar, Acting Consumer Service Manager Sallie Acero, Customer Service Supervisor RESOLUTION NO. 00-C133 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, AMENDING THE SCHEDULE OF CHARGES AND RULES AND REGULATIONS GOVERNING THE ELECTRIC AND WATER SERVICE SUPPLIED BY THE LIGHT AND WATER DEPARTMENT OF THE CITY OF AZUSA WHEREAS, pursuant to Section 78-37 of the Azusa Municipal Code, the City Council may from time to time establish and amend its Schedule of Charges and Rules and Regulations concerning utility services provided by its Light and Water Department; and WHEREAS, the Light &Water Department is introducing new services and policies which require modifications of the Rules and Regulations; and WHEREAS, the Light &Water Department proposed to implement the following changes: 1. Electric Rule 1, page 23 and Water Rule 1, page 83: Amendments to the definition of the term "Application". 2. Electric Rule 6, pages 44 - 45 and Water Rule 5, pages 90 - 91: Establish and Amend Pre-Payment Policies to include billing of pre-payments, refunding of deposits, and waiving of pre-payment for good credit. 3. Electric Rule 8, pages 49 - 51 and Water Rule 7, pages 94 - 96: Establishment of policies regarding Level Pay Plan. 4. Electric Rule 8, pages 51 - 52 and Water Rule 7, pages 96 - 97: Establishment of policies regarding Automatic Payment. 5. Electric Rule 9, page 55 and Water Rule 8, page 99: Amendments to Re- Connection policy. 6. Water Rule 11, page 104: Amendments to the Temporary Service policies. ; and WHEREAS, these modifications are intended improve and enhance the service which the Light &Water Department provides to the community and customers and will bring the Department current with industry standards; and WHEREAS, the City Council has determined that the proposed amended Schedule of Charges and Rules and Regulations pertaining to electric and water services is based on utility staff analysis and recommendation. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES FIND AND DECLARE THAT: SECTION 1: Adoption of Amendments. The City Council hereby adopts the amendments to the Schedule of Charges and Rules and Regulations set forth in Exhibit "A" which is attached to this Resolution and is incorporated herein as set forth in full. SECTION 2. Effective Date. The amendments to the Charges and Rules and iiRegulations shall become effective on December 1 , •is IPASSED, APPROVED AND ADOPTED t.' ♦ .2 , •f November, 2000. /,/ / Cristina C. Madrid ImPP- Mayor ATTEST: &gd, Z-- —<igic-10 Candace Toscano Deputy City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution was duly passed by the City Council of the City of Azusa at a regular meeting thereof held on the 20th day of November, 2000. AYES: COUNCILMEMBERS: HARDISON, STANFORD, ROCHA, MADRID NOES: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: BEEBE ABSENT: COUNCILMEMBERS: NONE Candace Toscano Deputy City Clerk