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This page contains a single entry from the blog posted on January 16, 2008 2:20 PM. The previous post in this blog was Party on. The next post in this blog is Bad penny. Many more can be found on the main index page or by looking through the archives.

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Wednesday, January 16, 2008

More on Portland water billing "service" charges

Our two recent posts about water billing by the City of Portland have elicited some interesting responses. One reader who was victimized by the city's abrupt price-jacking maneuvers wrote in with this:

I read your blog and saw that you were talking about the water bureau and the base charges. I thought you might like some of the back story on this issue.

I am a SE Portland resident who has a well but am on sewer. For many years the Water Bureau has been collecting the sewer payments and just tacked on a small base charge for expenses. This situation changed for me this last July. My base charge went up 597% at that time from around $3+ to $19-20 per bill and my bill went to monthly.

I tried with PWB and BES to find out why and fix this. Long story short, this didn't come from BES, and the PWB from top and bottom either didn't know what was happening or just stated this was being done as a service to me. Well, I really don't care for this kind of service so I complained and met the old brick wall and after many calls.

I called the ombudsman office and Kristen Erbes from that office listened and was very helpful. She worked on this for several months and the final outcome was that the PWB didn't have ordinance to back this up. The PWB had done this as a business decision and even though they agreed to switch all 205 well owners back to quarterly they wouldn't refund the extra charges because it wasn't a mistake.

I think that information has been in the media already, but what was more interesting to me was the ombudsman's final report on the incident, which the reader also sent me. I've posted it here. In it, the ombudsman's office made some observations that imply criticism beyond the sewer-only customers' complaints:

While the Ombudsman certainly appreciates the convenience monthly billing would provide many customers, we do not believe this convenience should come at a price of $150 more per year. This is especially true for sewer-only well accounts where a meter is not even read.

The Ombudsman looked at comparable jurisdictions and the service charges they issue to see how Portland's charges compare. As shown in the following table, Portland's service charges for monthly billed accounts are higher than service charges levied by other comparable jurisdictions.

Annual Combined Water/Sewer Billing Charges

Estimated Charges per Year

JurisdictionQuarterlyBimonthlyMonthly
CharlotteN/AN/A$43.20
DenverN/A$35.88$46.44
Kansas CityN/A$139.50$202.68
SeattleN/AN/A$186.00
Portland$77.58$116.35$232.70
[Footnotes omitted. -- JB]

Other utilities including both Seattle and Northwest Natural provide budget billing or average billing in which the estimated annual usage is divided into 11 monthly installments and the final bill refunds the customer if their usage falls below the estimated amount or bills the customer if their usage exceeds the estimated amount. This is a customer service provided without additional charge.

Recommendations

* * * * *

2. The Water Bureau should go further to balance the convenience of more frequent billing and the cost that is passed on to customers. The Water Bureau reports that they offer budget/equalized billing for free. If this alternative exists, then it is hard to justify switching accounts to monthly billing at an added cost of $150 per year.

3. The City Council should look closely at the difference in base charges between quarterly, bi-monthly, and monthly accounts before adopting the next rate ordinance to ensure Portland Water Bureau Customers are being charged fairly for the services they receive.

It looks to me as though Portland is the only city among its peers that is charging for the "privilege" of quarterly billing, and that it's charging up a storm for bimonthly and monthly billing as well. While the city is surveying water customers about what sort of billing they'd prefer, it ought to ask itself why it has to charge so much for billing compared to other cities.

Comments (16)

I suspect it's because Portland's employment costs are much higher than the other jurisdictions mentioned. It's unlikely that these other cities have anything remotely like PERS and are probably not paying health insurance costs nearly as high. Salaries may be higher as well.

I doubt Seattle employees are cheaper.

I wonder why the ombudsman didn't compare the PWB costs to other water jurisdictions in the metropolitan area (i.e. Gresham, Rockwood PUD, Clackamas River Water). It seems like that would be a better comparison.

Perhaps there are economies of scale in bigger systems... but then again,
"Portland" and "economies" are concepts that don't mix well.

Is this, or is it not theft?

What would the city be doing if a corporation had done this?

Do you think Randy would raise a stink?

MW

Actually, a City of Portland employee's health insurance benefit alone is larger than the entire benefit package of the average City of Seattle employee.

What would the city be doing if a corporation had done this?

Well, typically (PGE and its "tax" charges being an example, the city might make a clumsy attempt to buy it.

John, do you have any evidence to back up that claim about Portland city employee benefits versus Seattle?

Just so you know, for family coverage the city health plan has a $450 deductible, plus 20% coinsurance on all in-network services. So if my family has $1,500 in total expenses during the year, I pay $660 out of pocket. If we go out of network, the deductible is $1,350 and 40% coinsurance.

I'm not complaining, it's a good health plan. But I don't think it's out of line with other large (>5,000) employers in the area.

If such a HUGE percentage of water bureau bills are the mere PRINTING and MAILING of the invoices, my solution would be to SEND MY BILL ONCE EVERY FIVE YEARS and let me keep the "Administrative Cost Savings".

But that woulod only work if the city let some employees return to the private sector like they so often promise.

I can see the water bureau gearing up evry four years like the census. Get that one billing out, then go home for the next three and a half years.

Maybe the same concept could apply to the State LEgislature as well. If they met every OTHER year instead of EVERY YEAR....

The economies of scale argument sure doesn't work here in Beaverton. We just moved from unincorporated Beaverton to Beaverton proper and our water bills doubled. We were under the Tualatin Valley Water District previously. Also, Beaverton does not have paperless billing options available even though the TVWD has had that for over 8 years. Unbelievable! The other thing that drives me nuts is the water is billed bi-monthly and the service charges are billed monthly. Yet another waste of paper and money. Portland doesn't have the only water bureau with its head up its a**.

Heard over the back fence this weekend - PWB is planning to impose about an 8.5% increase to retail customers and an even bigger one to it's wholesalers, beginning July 1, 2008. Ouch!

Jack,

I hope this will clear up some of the issues and or confusion about monthly versus quarterly billing and base charges. I assume if it doesn’t, you or one of your readers will post another question or comment and I will try to clarify.

As you established in your link to our rate ordinance, we assess the following base charge on water, sewer and storm water bills:

Daily charge per meter for a quarterly billed account; $ 0.2155 x 90 days = $19.39
Daily charge per meter for a bi-monthly billed account; $ 0.3232 x 60 days = $19.39
Daily charge per meter for a monthly billed account; $ 0.6464 x 30 days = $19.39

As you can see, the charge per bill ($19.39) is the same whether you are on a quarterly, bi-monthly or monthly account. The increased cost to the customer is due to the fact that most of our customers (primarily our retail customers) get 4 bills a year. That amounts to $78.65 per year ($.2155 per day x 365 days). The bi-monthly customer pays $117.96 ($.3232 per day x 365 days) and the monthly customer pays $235.93 ($.6464 x 365 days).

Why do the monthly and bi-monthly customers pay more than the quarterly customers? That is because we only go out to the property of our quarterly accounts to read their meter 4 times a year versus 12 times a year for our monthly accounts. With each read also comes the cost of generating a bill, customer service calls, having an inspector go out to the property for a re-read, send out reminder notices, send shut-off notices, shut off, turn on, etc. We have calculated a cost of $19.39 per bill that accounts for the cost of running the Customer Service department, from readers to inspectors to customer service reps to supervisors, to computer techs, to postage, etc.

At the same time, because we recognize that a quarterly bill in the neighborhood of $200 to $400 may be hard to budget for, we offer a program that we call “Budget Billing” free of charge for our customers who bill quarterly. Budget Billing takes a customer’s average consumption over the past 12 months and calculates an estimated monthly dollar amount that the customer will be responsible for paying for 11 months. On the twelfth month the customer will receive a true up bill which will either result in a final amount due or a credit depending on how consistent their water usage was to the prior year. The benefit of this program is a more manageable amount due by receiving a monthly statement. Since we read quarterly for our residential customers, in order to create a bill without having a read, the other two months consumption is an estimated amount. However, they still pay the daily rate billed for quarterly accounts. I recently signed up for the program to see how it works. My base charge on my first bill last month was $6.25 for a 29 day period (29 days x $.2155 = $6.25). It is the same daily rate that you paid on your quarterly bill.

Monthly billing is very different. Monthly billing means that we get a meter reading each month and generate a bill each month for the water consumed. One of the reasons we are looking at monthly billing is that in addition to getting a monthly bill that reflects actual consumption (and is more manageable from a household budget perspective), customers will know sooner that they have a leak or an increase in consumption that they may want to investigate, rather than waiting for two more months to discover they have a problem. Moving to monthly billing will come with a cost however. Instead of sending out 4 bills a year to over 180,000 accounts, we will have to read and bill those accounts 12 times. That will require an increase in personnel or move to technology such as AMR (Automatic Meter Reading), something that many utilities are using nationally and beginning to use here locally. We are just at the initial stages of exploring what the options are, the costs, benefits and drawbacks of those options, and the interests of our ratepayers.

The recent poll on our website did not mean to imply that the bureau was only looking at one option or another. The polling option we were experimenting with only allows one choice; otherwise we would have allowed customers to rank preferences as well. We are actually quite interested in implementing them all if that is what our customers want and/or need. Our reason for polling what our customers wanted most was to help guide us in which initiative to tackle first. I voted for paperless billing because that is a feature I get with Comcast and I think it's pretty cool and eliminates a lot of paper. I am personally not a fan of recurrent billing because I don't want anyone other than me tapping into my bank account - but not everyone has that opinion. Others want it to be a recurring charge on their Visa so that they can get frequent flyer miles. All of these are options that some of our customers want - and we think we should at least explore those options.

Implementing recurring payments and credit card payments 24/7 by phone has been frustrating and we are behind where we would like to be. But as I said on my post last week, given our history, we aren’t going to implement any new functions until we are sure that they will work properly. We are committed to that above all.

The issue that we have taken on from the Ombudsman’s report was whether a “sewer only” account (where the customer does not receive water from us and there is no meter to read) should pay the same amount ($19.39 per bill) as you and I pay. That is a legitimate question and something we will look at. In the meantime, we moved them back to quarterly billing.

I hope that provides you and your readers with some of the information you were looking for.

David Shaff, Director
Portland Water Bureau

David,

I have sewer only service through Portland, my water service is from the Rockwood Water PUD, and I receive bi-monthly bills from both PWB and the Rockwood Water PUD.

Would I have the option to switch my PWB billing to quarterly to save money? If so, how would I go about that?

David,

Thanks for the usual thorough and thoughtful response.

A couple of things: There's a big difference between physically going out to read a meter and merely sending out a bill. I can see charging people a lot extra who want more frequent meter readings, but merely getting smaller, more frequent bills shouldn't cost someone $233 a year.

The Bureau ought to tell everyone that it will read meters only once a quarter, period. If people want to pay in three monthly installments, they should be allowed to do so but pay a periodic service charge, just the way they do with car insurance, property taxes, and many other services. I'm talking a service charge of, like, $5 a month.

All other costs of meter reading and billing should be rolled into the basic charges for the water service itself. If a customer just takes a quarterly bill, there should be no Mickey Mouse "service charge." Telling a residential customer that it costs $20 just to get the customer a bill for water just makes people's blood boil. That's outrageously high. Whatever you're spending on public relations, you're burning it up with junk like that.

Another way to look at it: I'd gladly put, say, $800 on deposit with the city in advance to pay all my annual water and sewer bills, if it would save me $80 a year in Mickey Mouse "service charges." That's a 10 percent return on my money, which I can't get elsewhere. You could read my meter once a year and I'd make up in a lump sum whatever difference there was between the $800 and the actual bill.

I agree, I too would be willing to pay in advance. But the PWB doesn't even have to read my meter, the Rockwood Water PUD sends the reading to PWB to bill me for the sewer portion.


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