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experience, the report extracted a summary of the proposed elements of a best practice program, as follows:

• The implementation of agreed upon, appropriate, and affordable payment arrangements, with flexibility to suit each customer, including:

− Centrepay (automatic debiting for households on assistance)

− Incentive plans

− Partial or complete waiver of debt

− Review of fees

• Suspension of disconnection, debt collection, legal action⎯while customers are on the hardship response program

• A specialist team skilled in responding to customers experiencing hardship, which:

− The retailer’s call centre and other staff refer customers to appropriate representatives

− Customers are able to contact directly

− Conducts home visits where it has been difficult to contact a customer by phone or in writing

• Staff training on:

− Causes of financial hardship

− Identification of customers experiencing hardship, including proactive identification

− Literacy and access issues experienced by some customers

− How to talk to customers experiencing hardship

− When to refer customers to the hardship response program

• A hardship policy that is clearly communicated to customers

• An articulation of the rights of customers experiencing financial hardship

• Links to:

− Energy/water efficiency programs

− Financial counseling agencies

− Concessions, government assistance, nongovernment support services

− Dispute resolution services

• Continuous review, including customer focus groups to gain feedback on hardship programs

These elements bear many similarities to those of the business process model discussed in Chapter 2.

CHAPTER 5

OBJECTIVES: SIGNIFICANCE OF CUSTOMER PAYMENT

ASSISTANCE

One of the most profound benefits of quality management is that the simple exercise of defining discrete business processes forces a concentrated focus on objectives. In contrast, when an ad hoc collection of practices is being implemented without formal recognition of the intent of the overall process, the sense of purpose can get lost. It can then become very difficult to assess how the overall effort is performing or to identify needs and methods for improving performance. In addition, having a shared sense of purpose is essential to the coordination and integration of practices that may need to be implemented across departments.

At the present time, the objectives of customer payment assistance programs in water utilities are understated (or even unstated) and under-appreciated. This results as much from the absence of a business process model as it does from some subtleties that need to be brought closer to the surface to raise awareness of the social significance of customer payment assistance.

The principal objective of customer payment assistance programs is most commonly viewed as a matter of supporting bill collection. Utilities have the same fundamental interests in cost recovery and cash flow as all other business enterprises, so this is a necessary objective. As documented in Figure 5.1, however, results of a water industry survey conducted in 2004 (Rubin et al. 2004) indicate that the level of uncollectibles is generally low, with overdue accounts amounting to less than 1% for most utilities. This narrow financial perspective tends to downplay the importance of efforts to assist payment-troubled customers in accomplishing the larger public utility mission. There are at least three additional dimensions that are quite important: customer/stakeholder perceptions, public health, and sustainability.

IMPLICATIONS FOR CUSTOMER AND STAKEHOLDER RELATIONS

The uncollectibles rate may be maintained at levels below 1% of a water utility’s customer base at any given point in time. However, Figure 5.2 (Rubin 2005) shows that nationwide there are an estimated 10 million households with annual incomes below $20,000 [roughly equivalent to 125% of the Federal Poverty Level (FPL)] that pay a water bill. This compares with a total 64 million households that pay water bills to community water systems. It is conceivable therefore that, over time, as much as 15% (10/64) of the customer base nationally might come into contact with a utility’s bill collection practices. In some communities, the proportion can be much higher. Further, the effect of collections practices on overall customer perceptions of the utility reaches beyond low-income groups, such as when a shut-off draws attention from community activists or it is covered in the local news media.

26 | Best Practices in Customer Payment Assistance Programs

The manner in which a water utility approaches (or ignores) the issue of nonpayment affects customer perceptions of the utility. Needless to say, customers are essential stakeholders. Customers vote, call television stations, or file complaints with State regulatory commissions when displeased with the way they are treated, especially in matters involving customer service. Utilities cannot therefore afford to regard their practices pertaining to the resolution of unpaid accounts as a small matter involving less than 1% of customers. The significance to a utility’s

26 17 6 43 17 16 24 0 20 40 60 80 100 120 140 160 180 200

None 0.1% - 1. 0% 1.1% - 2. 0% 2 .1% - 3. 0% more t han 3.0%

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P e rc ent r e side ntia l bi ll s unpa i d

N u m b e r of r e s ponde nts (N = 302)  

Figure 5.1 Range of water utilities’ level of uncollectible residential bills, 2004

9,994,226 15,009,909 18,153,559 20,940,550 $75,000 or more, Less than $20,000, $40,000 to $74,999, $20,000 to $39,999,  

Figure 5.2 Number of customers paying directly for water and wastewater service, by annual household income in 1999