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Majority rules? Not in this case.

Posted May 9, 2012 by Erik Amelink

It seems inevitable. At most utilities, there are a small percentage of customers who drive policies for the majority. When I speak with utilities, they predictably can identify the group of customers who never pay their bill on time; the ones who are always looking for a “deal”. Typically, they know the customer(s) by name. Before I go further, let me clarify that this segment does not include customers who are truly experiencing financial hardship.

Some utilities choose a more aggressive approach in dealing with these “wheeling and dealing” customers; others take a more passive approach. Recently, I have discovered some interesting new ways to “encourage” more positive behavior in these customers:

  • One utility has imposed a 24-hour rule: if the customer has their service turned off for failing to pay, they cannot get it turned back on the same day. It saves the utility considerable money in overtime wages and puts the inconvenience on the person who created the situation. There are some exceptions to this rule of course: in the winter the water will be kept on so that the pipes don’t freeze.
  • Another utility is drastically changing its disconnect fees. The first time the service is turned off, the utility charges a modest $50.00 fee to turn it on again. The second occurrence results in a fee increase to $100.00. The third service reinstatement is charged at a fee of $150.00. Any successive service reinstatements require a prepayment.
  • Printing statements is clearly an expense for the utility. Since paperless billing is becoming more prevalent and utilities are looking for higher adoption rates among customers, one utility is now charging $1.50/month for those customers who still wish to receive a printed statement in the mail. The hope is that this fee will encourage customers to sign up for paperless billing and reduce the printing and postage expenses for the utility.
  • Lastly, another utility indicated that they make the process of turning the water service back on cumbersome for the customer. The utility had been found liable in the past for turning on water while the customer was not at home (the customer paid via phone from the office for the service to be restored). When the customer returned home, he or she discovered that several sinks had been left on and that had caused some flooding in the house. The utility has now instituted a policy in which the customer must go to the utility’s office and sign a waiver of liability form before the utility will restore the service. The customer must do this each time their water has been turned off.

Of course there will be situations (such as those suffering from true financial hardship) where these ideas just aren’t feasible and utilities want to foster goodwill with their customers. However, it is a business. If you make it easy for the deadbeats, then you not only set a precedent (for other deadbeats) but you lose money and expend resources unnecessarily. When customers continue to strain the policies, we ALL pay the price.

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