by Quentin Grady
In 2007, water in Lake Superior dropped to record lows. At one point, Atlanta had a scant three months’ supply of drinking water. In fact, 2007 may well go down in history as the Year of the Drought.
And the U.S. was not alone. In China, 3.2 million people came up short on drinking water, while Australians estimated that “The Big Dry” would reduce gross national product a full one percent.
Water utilities have much experience in preparing for and accommodating drought conditions, but meeting the challenge is becoming more difficult. As populations expand, the competition for water intensifies. Environmentalists are increasingly alarmed by America’s habit of tapping its aquifers beyond their capacity for natural regeneration. There is increasing fear that global warming could reduce rainfall in some regions.
Most customers are willing to do their part to ensure that water supplies remain adequate for community health and growth. But most need help — not just information but also carrots and sticks — if they are to successfully change their water-wasting habits. They also want assurance that their own conservation efforts are being matched by their neighbors — that the water they save isn’t simply going down someone else’s drain.
Advanced billing systems are a significant weapon in the fight to mitigate the negative effects of water shortages.
Adjusting Rates
While prices for most commodities rise and fall with availability, water utilities rarely use rate adjustments as a way to cope with drought. Cities may, in fact, explicitly prohibit frequent rate changes or require long approval processes that far exceed the duration of most droughts. As a result, relatively few utilities have invested in billing software that can respond to rapid or frequent rate change. They have been content to use legacy software and even old vendor billing systems that are able to do only rudimentary rate adjustment, such as hiking all rates within a class uniformly. Even then, legacy systems may require months of adjustment and testing before utilities can be confident that bills using new rates are correct.
This picture is changing, however, as water availability drops. Utilities and local officials are recognizing that more flexible billing can better meet the tests of fairness and affordability. An advanced billing system can handle:
• Variable rates that track water supply: Variable rates can, for instance, rise and fall seasonally, with the level of a reservoir, or with the varying costs of water and sewage treatment.
• Two-tier rates: These are common among energy utilities, where it is relatively easy to determine what a household might need, at a minimum, for heating and standard appliances. Setting two-tier rates for water is considerably more difficult. Minimums for drinking and cleaning vary significantly with the number of household members — information that is not always available to the water utility. Fortunately, today’s billing systems can help utility representatives gather and, over time, make changes to household size figures. Once recorded, those figures become a primary input into bill calculation.
• Penalty rates: Advanced customer information systems (CIS) can calculate excess water usage during droughts and automatically add penalties or fines to regular bills. It can also handle complex and changing penalty rules designed to ensure that customers in different classes and circumstances are treated fairly and accurately.
Consumption Information
Customers frequently respond to higher rates by reducing consumption. Over time, however, they may begin to see higher bills as normal. Consumption creeps back up.
Utilities must increasingly help customers change their water-use habits for a lifetime. That means ongoing, regular reinforcement of the conservation message.
Including graphs and charts on a bill is one approach to reinforcement. Graphs encourage customers to examine consumption variations and question what they are doing to cause consumption spikes. Bills that compare one household’s usage with, for instance, neighborhood averages may be particularly useful.
People who see evidence of excess consumption on a graph may also be motivated to adopt conservation techniques. An advanced CIS can print conservation suggestions on bills and vary them by season, customer class, or even specific customer demographics.
Making Information Understandable
Now that more than 80% of U.S. households have access to the Internet, it makes sense to use Web portals to personalize customer information and present it dynamically and interactively.
Linking a CIS to one of the highly sophisticated Electronic Bill Presentment and Payment (EBPP) or Customer Self-Service applications — or using functions built into the best CIS packages — can considerably improve the effectiveness of conservation initiatives. They permit customers to manipulate their own consumption data, viewing it in buckets that make sense to them — days of the week, for instance, or seasonally. They can also perform sophisticated “what if” analyses — seeing how long it would take an investment in drip irrigation, for instance, to pay for itself given the extent and type of their current landscaping.
Customer Self-Service applications may quickly pay for themselves when they let customers report leaks and pay bills online. Buttressed by easy-to-use FAQs that answer the questions most frequently asked in the call center, Web portals can lower the cost to serve by as much as $20/consumer/year by reducing the costs to:
- Answer the phone when the customer calls.
- Print, package, and mail paper statements.
- Process lockbox-based payments.
Making Conservation Easier
Customers committed to conservation soon pick the “low-hanging fruit.” They repair leaky faucets and teach the kids to turn off the water. But what’s next? Water-conserving equipment is one obvious answer, but explaining to customers that such equipment pays for itself in the long run may not be enough. Some customers, although motivated, may find it a challenge to pay the up-front costs of drip irrigation, xeriscaping, or switching to the “half-flush-option” toilets that are increasingly popular in such drought-plagued regions as Australia.
Some customers may be able to use home equity loans to finance such projects. Utilities can increase the rate of response to recommendations about equipment changes by lending money to customers for specific purchases and collecting payments as part of the regular monthly bill. Advanced CIS systems include functions to collect loan repayments in this way, making them increasingly useful in a utility’s efforts to help customers conserve.
On a larger scale, water utilities might use loan-repayment billing techniques to jumpstart a market for water conservation options as part of a new home purchase or major renovation. Jumpstarting may be necessary because relatively few builders have experience with, for instance, recycling graywater or storing rainwater. Builders will be far more likely to familiarize themselves with these systems and promote them if they can cover their costs immediately through money from the utility; the utility can then bill the customer for the option over the course of the next several years. Such an arrangement adds to the equity in the home without adding to the up-front purchase price.
Advanced Metering
The conservation techniques above can all be accomplished with a standard, single-read, mechanical or electromechanical water meter. However, utilities expand their options when they install advanced meters that measure water consumption in intervals — for instance, total per hour or total per day. Advanced metering facilitates:
• Leak detection: Given the pattern of contemporary family and business life, it is almost a foregone conclusion that, if consumption on a premise never drops to zero for any hourly interval, the cause is a leak. Consumers may be completely unaware of such leaks if they occur at slow rates inside walls or if the water drips into an underground location. All too often they discover the leaks only after foundations crumble or landscape plants rot. Thus, there’s a substantial increase in customer satisfaction when utilities can notify customers about such problems before substantial damage is done.
• Water regulation enforcement: Many regions address droughts by limiting outdoor watering or car washing to certain days of the week. Analysis of daily water meter patterns can identify possible violators without the need to send human inspectors to every garage and garden.
Proving It Worked
Stakeholders need to know that the conservation programs they support are having the desired effect. An advanced billing system can meet this challenge by:
- Tracking customer participation in various programs and crediting or debiting the customer’s bill appropriately.
- Consolidating statistics on participation in programs and providing that data either in simple reports or in business intelligence portals that permit real-time tracking and analysis.
Conclusion
The growing awareness of global climate change and its link with water supply offers water utilities a once-in-a-lifetime opportunity to focus customer attention on conservation. Utilities need to be ready to take advantage of this opportunity by ensuring that their billing systems have the features and functions that can make a significant contribution to wise water use.
About the Author:
Quentin Grady is senior vice president and general manager of Oracle Utilities with global responsibility for sales, product development and consulting operations within the organization. With more than 25 years of experience with major software suppliers to the utility and energy industries, Grady’s tenure includes executive positions with Measurex Corporation and ABB-Bailey, TAVA Technologies and SPL World Group, where he was executive vice president and GM of the Americas. He has a Bachelor of Science degree in computer science and mathematics and a Master’s degree in nuclear engineering.
