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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/17/2009 - SECOND READING OF ORDINANCE NO. 121, 2009, AMENDIN DATE: November 17, 2009 Lk AGENDAI I TEM SUMMARY STAFF: Ellen SwitzerFORT - AD SUBJECT Second Reading of Ordinance No. 121, 2009, Amending Chapter 26 Article XII of the City Code Relating to Utility Billing Errors. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on November 3, 2009, codifies the Utilities' current administrative policy which addresses utility billing errors. When a customer is overcharged, the Utilities will refund the customer the overcharge for a period not to exceed six years from the time the error is discovered. If a customer is undercharged for services received,the Utility will back bill the customer only if the undercharges occurred less than six years before the date the error is discovered and either the undercharges are for a minimal amount or the customer could not have discovered the error with reasonable inquiry. No interest will be paid or collected. At the November 3,2009, meeting, Council requested data on the frequency of billing errors. Attached is a memo with the requested information. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. Copy of First Reading Agenda Item Summary- November 3, 2009. (w/o original attachments) 2. Memo regarding frequency of billing errors ATTACHMENT 1 DATE: November 3, 2009SUMMARY STAFF: Ellen Switzer FORT CO LLINS CITY COUNCIL SUBJECT Public Hearing and First Reading of Ordinance No. 121, 2009, Amending Chapter 26 Article XII of the City Code Relating to Utility Billing Errors. EXECUTIVE SUMMARY /rl lr% TrVV 7 This Ordinance codifies the Utilities'U u`ntadm`n`isJtrjtive]:pfolicy which(addresses utility billing errors. When a customer is overcharged,the Utilities will refund the custome`r'tke overcharge for a period not to exceed six years from the time the error is discovered. If a customer is undercharged for services received, the Utility will back bill the customer only if the undercharges occurred less than six years before the date the error is discovered and either the undercharges are for a minimal amount or the customer could not have discovered the error with reasonable inquiry. No interest will be paid or collected. BACKGROUND/ DISCUSSION Utilities staff endeavors to accurately cor0uteallelec�i�wate�,wast we ateranastormwaterbillings,butmisreporting, data errors and equipment failures do loccur. When customer b Iling errors are discovered, corrections are made based on an administrative policy approved in 2000. Essentj`a ly, overpayments are reimbursed for a period not to exceed 6 years and under-billings are focgi en whim it is�reasonable to presume that customer was unaware of the billing error. The administrative policy has functioned well in the vast majority of circumstances; however, it lacks the authority of City Code. The proposed language incorporates the existing billing error policies as a new section in Chapter 26 of the City Code. The proposed new section also stipulates that it is a punishable Code violation for a customer to make any attempt or action to mislead the utility related to a billing error. It further states that the customer is responsible for due diligence in reviewing their billing statements and for reporting errors to the Utilities. In addition to the new Code Section 26-721 titled Billing errors, the Ordinance makes clarifications in Section 26-119 Charges in event of meter failure. The Ordinance also retitles-Section.26_7.20 from "Administrative procedures"to "Administrative rules and regulations". . :( I I� �� FINANCIAL IMPACTS No financial impacts are anticipated since this proposed ordinance codifies existing practice for correcting billing errors. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. November 3, 2009 -2- ITEM 16 BOARD / COMMISSION RECOMMENDATIONS Both the Water Board and the Electric Board reviewed the billing error codification as part of their individual 2010-2011 budget and rates and fees discussions before final language was developed. Both Boards voted unanimously to recommend to Council to approve the codification of existing policy related to billing errors. PUBLIC OUTREACH A notice to out-of-city electric customers related to the billing error code changes was published in the Coloradoan on October 11,2009. A similar notice was also�mailed by-postca id:to out-of-city customers. The proposed Code changes have been posted on the City's website-at www.fcgov.com/publicnotices since October 9, 2009. I Tr ATTACHMENTS 1. Water Board Meeting minutes, August 27, 2009 2. Electric Board Meeting minutes, September 14, 2009 3. PowerPoint slides from Board presentations ATTACHMENT Utilities Ci}y o�i electric•stormwater•wastewater-water 700 Wood Street Fort Collins PO Box580 For Collins,CO 80522 970.221.6700 970.221.6619—fax 970.224.6003—Too utilities@fcgov.com fcgov.com/utilitfes MEMORANDUM DATE: November 6, 2009 TO: Mayor Hutchinson and City Council Members THRU: Darin Atteberry, City Manager Brian Janonis, Utilities Executive Director FROM: Ellen Switzer, Interim Utilities Finance and Budget Manager `C�,��r RE: Response to Billing Error Ordinance Concerns At the November 3, 2009 Council Meeting,Council Member Troxell requested data on the frequency of utility billing errors. More than a million bills are issued by Utilities Services each year. The overwhelming majority of the bills are 100% accurate. The table below shows the billing corrections made in the years 2001 through 2009 (year-to-date). Included in the error+rate are those bills that are corrected before being sent to the customer. Customer billing data exists beginning October 2000. Earlier data is not available. r Co�unt'ofountof 6 �� � � Utility Bills Utility Bills g eor �� Wk t ht� X i I•` _ "Y_ear ,, .Issued i4d usted ,t , Rate.,_ 2001 1,020,894 3,726 0.36% 2002 1,079,687 2,941 0.27% 2003 1,093,905 2,626 0.24% 2004 1,159,714 5,824 0.50% 2005 1,165,869 1,284 0.11% 2006 1,085,332 1,279 0.12% 2007' 1,047,659 6,121 0.58% 2008 1,065,928 1,452 0.14% 2009 11-5-2009 YTD 1,000,205 1,745 0.17% �of t Collins 11/62009 Billing Error Memo Page 2 of 3 The QualServe Benchmarking Survey (associated with the American Water Works Association) reports a benchmark that also addresses this issue: Billing Accuracy Rate (billing adjustments per 10,000 bills.) Data is,available for 2003 and 2005. The 2003 accuracy rate for Fort Collins Utilities was 7.8 errors. The 2005 accuracy rate for Fort Collins was 3.96 errors. This compares to a 2005 median reported by the QualServe survey participants of 7.2 errors. This data is limited to water and wastewater billings. Most billing errors are caught quickly and corrected before a bill is issued to the customer or prior to the next billing cycle. The type of errors to which the proposed billing error ordinance is directed may have remained undetected for months or years. Over-billing Errors 1) The first type of error is usually discovered within days after the bill is issued. It is discovered either by staff(before or after the bill is actually mailed to the customer) or through a customer inquiry after the billing is received. If the error is corrected before the mailing, the customer is never aware that a correction has been made. If the customer has been mailed the bill, the customer is notified immediately, the incorrect invoice is cancelled, and a corrected invoice is issued. An example of this occurred a few months ago when electric bills were issued to large commercial and industrial customers based on a faulty date for the monthly coincident peak. Customers were notified of the error within days of the billing, the original invoices were cancelled, and revised invoices for the month were re-issued based with the corrected data. While this type of error is regretful it does not happen often, and is corrected quickly. 2) The second type of error can continue for months or years without detection by staff or the customers. An example of this error relates to stormwater billing. Each property's stormwater impact is calculated when a development plat is approved. The calculations are based on lot size, prorated shared areas, and run-off factors. The calculation does not change unless additional impervious surfaces are added or removed. The monthly bill is computed by applying the current stormwater base rate. Over the last few years, several older subdivisions and commercial areas were found to have miscalculations related to an incorrect run-off factor or prorated shared area. The largest of these errors affected seventy-four residential customers and resulted in refunds totaling $43,041. The refunds ranged from $850 to $42. Fifty-five of the customers had received service in excess of 6 years. Should the Utilities have made refunds for the full length of service, it is estimated that the refund would have totaled an additional $26,085. However, there are no utility billing records to verify data prior to October 2000. Under-billing Errors When errors are found such that a customer has been under-billed, the Utilities does NOT collect the under-billed amount from the customer unless it apparent that the customer willfully hid the error from the utility. If the Utilities is unaware of the error, the customer is given the benefit of the doubt and unless evidence exists to the contrary, it is assumed that the customer was also unaware of the under-billing. Since the internal administrative policy was adopted in 2000, there fit` Collins 11/6/1-009 Billing Error Memo pagc 3 of 3 is no documentation of a customer being back-billed for an error that occurred beyond the current billing cycle. Should it be determined that the customer should have been aware of the under-billing error and intentionally withheld this information-from the Utilities, the proposed ordinance permits the Utilities to collect the under-billed amounts for a period not to exceed six years. Public Utilities Commission Regulations While the Utilities is not regulated by the Colorado Public Utilities Commission (PUC) in this matter, the PUC addresses billing errors in its Code of Colorado Regulations (Public Utilities Commission 4 CCR 723.3 Rules Regulating Electric Utilities Section 3402.) The PUC requires refunds for over-billings for a period of two years and permits a utility to collect for under- billings for a period of six months. A similar regulation applies to water utilities regulated by the Colorado Public Utilities Commission. The proposed Ordinance is more generous related to refunds of overpayments. The Ordinance exempts customers from the repayment of under- billing errors except in those cases where the customer has withheld information from the Utility. If a customer has known of the error but did not notify the Utilities, the under-billing will be collected from the customer for up to six years. Grandfathering This codification is a continuation of existing administrative policies. There should be no impact to customers who have been billed in error as a result of the codification and no grandfathering is recommended. ORDINANCE NO. 121, 2009 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 26 ARTICLE XII OF THE CODE OF THE CITY OF FORT COLLINS RELATING TO BILLING ERRORS WHEREAS, the City maintains water, wastewater, stormwater and electric utilities, each with several thousand customers; and WHEREAS,while City staff endeavors to accurately compute all billings to the City's utility customers, data errors and equipment failures do occur; and WHEREAS, in 2000, City staff adopted an administrative policy to address billing errors; and WHEREAS, City staff believes that formalizing the utility's administrative billing errors policy in the City Code will provide clarity with regard to the limitations and requirements associated with utility billing errors; and WHEREAS, the City Council has determined that the amendments accomplished by this Ordinance are in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FOR COLLINS as follows: - Section 1. That Section 26-1 19 ofthe Code ofthe City of Fort Collins is hereby amended to read as follows: Sec. 26-119. Charges in event of meter failure. If any meter should fail to properly register a customer's water use in any billing period, the user shall be charged according to the average quantity of water used by such customer in a similar period as shown by the meter when performing properly. In the case of a discrepancy between the readings at the remote readout and the head of the meter, the amount of water registered at the head of the meter governs. Additional charges or customer refunds related to a meter or meter readout malfunction will be made in accordance with §26-721 and the administrative rules and regulations adopted by the Financial Officer pursuant to §26-720. Section 2. That the title of Section-26-720 of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-720. Administrative rules and regulations Section 3. That Chapter 26, Article XII of the Code of the City of Fort Collins is hereby amended by the addition of a new section 26-721 which reads in its entirety as follows: Sec. 26-721 Billing errors. (a) When an error has been made in an account, the following shall apply: (1) When the utility determines that a utility customer has overpaid for utility service and the overpayment occurred no more than six (6) years before the date the error is made known to the utility, the utility will issue to the customer a credit or a refund, without interest, as reimbursement for the overpayment if each of the following conditions is met: (i) the customer could not have discovered the error with reasonable inquiry prior to the date of discovery; (i i) documentation evidencing the overpayment is available in utility records or has been provided to the utility; and (iii) the utility confirms the accuracy and sufficiency of the documentation based on utility records. (2) When the utility determines that a current utility customer has been undercharged and has underpaid for utility service, the customer shall be billed for the undercharges unless the undercharges occurred more than six (6) years before the date the error is discovered and either of the following conditions is met: (i) the undercharges are for a minimal amount based on a threshold established by the administrative rules and regulations adopted by the Financial Officer pursuant to 26-720; or (i i) the customer could not have discovered the error with reasonable inquiry. (b) Any attempt or action by a utility customer to mislead the utility with regard to a billing error shall be a violation of the Code, punishable as provided in §1-15. Each day upon which any violation shall continue shall constitute a separate offense, publishable as such. (c) Each utility customer is responsible for using reasonable diligence to review billing statements and for immediately notifying the utility of a billing error. 2 Introduced, considered favorably on first reading, and ordered published this 3rd day of November, A.D. 2009, and to be presented for final passage on the 17th day of November, A.D. 2009. r Mayo ATTEST: City Clerk Passed and adopted on final reading on the l7th day of November, A.D. 2009. Mayor ATTEST: City Clerk