How do you handle temporarily inactive accounts?
I had a Town Manager who attended my recent presentation at the North Carolina Rural Water Association Annual Conference contact me with a question. He wanted to know what I recommended regarding billing for temporarily inactive accounts.
If you have seasonal customers, you know the issue he was inquiring about – snowbirds from colder climates who go south for the winter (or, conversely, winter homes in warmer climates) or summer homes where your customer only wants the utilities on for the summer months.
The dilemma facing your utility is should you continue to bill the base charge each month, even if the customer has no usage?
Recovery of infrastructure costs
One clue as to how to handle this is understanding the rationale behind your base charge.
For many utilities, the base charge is designed to recover the investment you have in providing service to the property, regardless if there is usage. You must maintain the infrastructure and service lines year-round and you have an investment in a meter at the premises, even if no one is living there.
If this is the case for your utility’s base charge, you have every reason to continue to charge the base charge, even if the account is temporarily inactive.
Fees in lieu of monthly billing
An alternative to billing the customer each month is to charge a fee to turn the service off and another fee to turn it back on (based on the user fee concept that you are performing a service for this customer that wouldn’t otherwise be required).
The idea here is the two fees combined should cover your staff’s time and effort to disconnect and reconnect the service as well as recoup what your customer would have paid if they left the service on with no usage and paid the base charge only.