Part 4: Billing and meter reading

Watercare Services Limited: Review of service performance.

4.1
Customers are entitled to expect timely, accurate, and easy-to-understand invoices from Watercare. In this Part, we look at:

Content and format of invoices

4.2
From a customer's perspective, it is important that Watercare's invoice contains relevant information and is easy to understand. We expected Watercare's invoices to contain relevant customer information.

4.3
The Essential Services Commission (the Commission) is the independent economic regulator of essential services, including water supply, in Victoria, Australia. The Commission has developed the Customer Services Code for Urban Water Businesses (July 2013) (the Code), which specifies the standards and conditions of service that water businesses must comply with in providing urban water services to customers. The Code sets out all those matters that a bill issued by a water business must contain.

4.4
We consider that the criteria set out in the Code are appropriate to benchmark Watercare's invoices against.

4.5
According to the Commission, a bill issued by a water business must contain the following information:

  1. the date of issue;
  2. the customer's billing address and account number;
  3. the address of the property to which the charges in the bill relate;
  4. the date on which the meter was read or, if the reading is an estimation, a clear statement that the reading is an estimation;
  5. the amount that the customer is required to pay;
  6. the date by which the customer is required to pay;
  7. the ways in which the customer can pay the bill;
  8. information about help that is available if the customer is experiencing difficulties paying;
  9. details of the water business's inquiry facility, including a 24-hour emergency telephone service number;
  10. reference to interpreter services offered by the water business;
  11. any outstanding credit or debit from previous bills;
  12. the total of any payments made by the customer since the last bill was issued;
  13. information on concessions available and any concession to which the customer might be entitled;
  14. the average daily rate of water or recycled water use at the property for the current billing period; and
  15. if a water business intends to charge interest on outstanding amounts, a clear statement of the rate of interest and from what future date it is to be applied.

4.6
Also, a bill should display a graphical illustration of the customer's current water usage for each billing period over the past 12 months and a comparison of the customer's usage with the same period from the previous year.

4.7
We have reviewed Watercare's invoice for domestic customers against the criteria established by the Commission. We consider that it contains most of the requirements set out in the Code. However, we note the following issues.

4.8
Watercare's invoice inaccurately indicates when customers might be charged a late payment fee. Watercare's invoice says:

Any balance unpaid after the due date might incur a late payment charge of $7.00 or 1% of the overdue balance, for each month or part of a month, whichever is greater.

4.9
This suggests that Watercare can impose a late payment charge for amounts outstanding from the due date. That is incorrect. Watercare's customer terms provide that late payment penalties are imposed on unpaid amounts from 24 days after the due date. Watercare needs to amend its invoice to accurately indicate the date from which late payment penalties will be applied.

4.10
Watercare's invoice includes some technical terminology that might make the bill difficult for customers to understand. In our view, the invoice could be improved through better use of plain language and everyday terms. For example, Watercare uses the term "volumetric charges" to describe charges based on water usage. Watercare could replace the phrase "volumetric charges" with the term "usage charges", which would make the invoice easier to understand. Some other water bills we reviewed – such as Sydney Water's bill – use the term "usage charge" to describe charges that depend on the amount of water that a customer has used.

4.11
Watercare's invoice provides only some information about how a customer's charges are calculated. For example, it contains details of the charge for every unit of water and wastewater as well as the $190 fixed charge for wastewater. Watercare currently charges domestic customers $2.28 for every 1000 litres of wastewater. Watercare determines that the wastewater volume for each household is 78.5% of the water volume, as measured by a customer's water meter.

4.12
Watercare assumes that, on average, 78.5% of water that enters the home goes down the drain through showers, baths, washing machines, dishwashers, toilets, and sinks. However, the invoice contains no information about how Watercare determined the figure of 78.5%, which customers might find confusing.

4.13
In our view, Watercare could usefully consider explaining how it determines the 78.5% wastewater figure, if there is enough space on the invoice to do so. Watercare includes this information in its price brochure.

4.14
Watercare's invoice currently includes useful information about a customer's water usage history. However, some of the information used to benchmark the customer's daily water consumption might be out of date. For example, the invoice includes the customer's usage history for the past four months and shows how their daily water consumption compares with a household with a similar number of inhabitants. We consider that this information is extremely valuable in informing a customer about their water usage – but it is based on household consumption from a 2008 BRANZ6 Water Use in Auckland Household Study, which might be out of date.

4.15
We understand that Watercare is working with BRANZ to update this information.

4.16
In our view, Watercare could also usefully consider whether its invoice should refer its customers to any interpreter services offered by Watercare or a third party.

Recommendation 3

We recommend that Watercare Services Limited revise its invoice form to clearly and accurately state the date from which late payment penalties apply.

Billinig cycle

4.17
Before 1 July 2012, Watercare billed customers every three or six months, depending on the billing cycles of the former councils supplying water. From 1 July 2012, Watercare began billing customers monthly.

4.18
Watercare said that one of the reasons it moved to monthly billing was because customer feedback had indicated that this would allow customers to better manage their budgets. An independent customer survey found that 84% of Watercare's customers preferred to receive a monthly invoice.

4.19
We acknowledge that, from a business perspective, there are advantages for Watercare in monthly billing, including better cash flow and the ability to better manage debtors.

4.20
Internationally, it is recognised that monthly billing can help customers, because they are able to budget better for more frequent smaller amounts.

Estimation

4.21
Although Watercare bills its customers monthly, not every invoice is based on a meter reading. Every second month, a customer's invoice will be based on an estimation of their water usage.

4.22
Accordingly, we expected Watercare to be clear both on its website and in its customer contract that, every second month, a customer's water invoice will be based on an estimated meter reading.

4.23
Watercare's website has clear statements that, every second month, a customer's invoice will be based on an estimation of their water usage, rather than an actual reading. The customer contract is not so clear.

4.24
Watercare's customer contract simply states: "Sometimes we may have to estimate how much water you consume and charge you accordingly." The contract does not state that, every second month, a customer's invoice will be based on an estimation of their water usage. We consider that it should. A reader might be left with the impression that meter readings will be estimated only occasionally, rather than this being a fundamental part of Watercare's billing process.

4.25
We understand that Watercare is amending its customer contract to better reflect the estimation process.

How meters are read

4.26
Water meters measure the amount of water that a household or business uses. They are usually located towards the front of the property, near the left or right boundary. In flats or apartments, there might be only one meter for all of the dwellings in a building.

4.27
From a customer's perspective, it is important that meters are read accurately, because the readings form the basis of actual invoices issued and underpin Watercare's estimation process.

4.28
Watercare uses traditional analogue metering, which is currently the most widely used metering technology. These meters need to be read by a visual inspection, which indicates the amount of water used over the designated reading period.

4.29
Each property has its meter(s) read every two months. Watercare uses two companies to read meters:

  • DataCol Group (DataCol) reads meters in the areas previously covered by Auckland, Franklin, Manukau, and Waitakere councils; and
  • Arthur D Riley and Co Limited reads meters in the former North Shore and Rodney council areas.

4.30
To observe the meter-reading process, we accompanied a DataCol meter reader on his route. Meter readers all carry a small hand-held device (PDA) to record readings. The PDAs show all of the meters that require reading along the meter reader's allocated route. It also shows extra details, such as addresses, notes about where the meter is situated on each property, and previous readings.

4.31
The PDA produces an alert for the meter reader when any reading appears to be too low or too high. These alerts are system-generated, based on historical consumption. They require the reading to be entered a second time, as a check that the meter has been read correctly.

4.32
The PDA will start showing messages when there are five readings remaining on a route. When all the meters on a route are read, a tick appears next to the route identification number. If this does not appear, the meter reader needs to call DataCol's head office to investigate why. Every nine readings are automatically uploaded into the DataCol system.

4.33
During our review, we had the opportunity to observe the meter-reading process and technology in practice. We consider that Watercare's meter reading is efficient and that the system has inbuilt quality-control mechanisms to ensure that meter readers read the meters and record the meter readings accurately.

Performance standards for meter readings

4.34
Meter misreads are inevitable. We wanted to know whether Watercare has any performance standards in place for the two meter-reading companies and, if so, how it monitors these standards.

4.35
Watercare has service level agreements with both of the meter-reading companies. These require that meter readings are 99.8% accurate. This means that there is a contractual requirement for 998 readings out of 1000 to be accurate.

4.36
We asked how Watercare monitored the performance of the meter-reading companies. Each month, Watercare records and reports mis-reads to its meter-reading companies. Watercare staff identify meter-reading errors through a variety of ways, such as during a meter-reading review, by feedback from maintenance crew or other staff visiting a property, or by customer feedback.

4.37
Watercare sends a list of possible errors to the meter-reading company so that it can review them. At the end of each month, Watercare generates a list of all reported errors. It discusses these with the meter-reading company, and a list of errors is agreed.

4.38
Figure 13 shows the percentage of accurate readings relative to the total number of readings recorded by two meter readers. It shows that, in September 2013, their meter-reading accuracy was 99.94% against a target of 99.8%. In other words, their error rate was only 0.06%.

Figure 13
Watercare's meter-reading accuracy, September 2012 to September 2013

Figure 13 Watercare's meter-reading accuracy, September 2012 to September 2013.

Source: Watercare.

4.39
During our 2012/13 annual audit, we selected 20 meter-reading samples and requested that Watercare provide the data that it receives from DataCol. We checked the readings shown in Watercare's data to confirm that they matched the readings that we observed onsite. They all did. We also checked the invoices sent to the customers to confirm that the readings shown on the invoices all matched the readings we had obtained. Again, they all did.

How water usage is estimated

4.40
We wanted to know how Watercare estimates its customers' meter readings.

4.41
In most circumstances, an estimation is generated automatically by Watercare's billing system. It is calculated as the average daily usage between the two previous actual readings multiplied by the number of days in the billing period.

4.42
For example, a customer had actual meter readings of 808 kL on 16 August 2013 and 841 kL on 16 October 2013. This gives an average daily consumption of 0.55 kL between the two actual readings (that is, 33 kL ÷ 60 days).7 If the next billing period covers a 30-day period from 16 October to 15 November, Watercare would estimate the customer's meter reading as 857, based on an assumed water consumption of 16 kL (that is, 0.55 kL x 30 days = 16.5 kL, rounded down to 16 kL), and would invoice accordingly.

4.43
Watercare uses a number of other internal processes to ensure that its estimates are accurate. For example, the Revenue Team reviews all meter readings and estimations before invoices are sent to customers. This is called the Usage Review Overlay, which is done every day.

Accuracy of Watercare's estimation process

4.44
From a customer service performance perspective, it is important that invoices based on estimated meter readings are very close to actual usage for the month estimated, so that a customer is not under- or overbilled to any significant extent.

4.45
Estimations, by their very nature, will be inaccurate to some extent. But we consider that their accuracy might be usefully assessed by looking at:

  • the complaints and correspondence that Watercare receives about estimated meter readings; and
  • the number of negative water volume invoices that Watercare issues.

4.46
Figure 14 sets out the number of complaints and/or correspondence items about estimated meter readings that Watercare received between July 2012 and June 2013.

Figure 14
Complaints and correspondence received by Watercare about estimated meter readings, 2012/13

Figure 14 Complaints and correspondence received by Watercare about estimated meter readings, 2012/13.

Source: Watercare.

4.47
As we expected, the number of estimation complaints increased after the introduction from 1 July 2012 of monthly billing, which uses estimated meter readings every second month. However, complaints and correspondence about estimation have reduced since then. This provides some evidence that Watercare's estimations are improving.

4.48
We also reviewed the number of "negative water volume" invoices that Watercare issued each month (see Figure 15). Usually, a negative water volume invoice is issued because the previous invoice was for more than the customer's actual usage (possibly because of an incorrect meter-reading or an incorrect estimation). The negative water volume invoice corrects matters.

4.49
A normal invoice for water usage is called a "positive water volume" invoice. A "zero water volume" bill is an invoice that does not include a charge for water usage – it might, for example, include only a fixed wastewater charge.

Figure 15
Negative volume water invoices issued by Watercare, January 2013 to June 2013

Number of invoices issued January
2013		 February
2013		 March
2013		 April
2013		 May
2013		 June
2013
Positive water volume 367,695 369,815 370,144 373,310 385,827 346,314
Zero water volume 5966 5853 5670 5676 7133 7209
Negative water volume 5276 6128 6126 6556 10,633 11,309
Negative water volume as percentage of all invoices 1.4% 1.6% 1.6% 1.7% 2.6% 3.1%

Source: Watercare.

4.50
The number of negative water volume invoices increased from 1.4% of all invoices issued in January 2013 to 3.1% of invoices issued in June 2013. This indicates a steadily increasing trend in the extent of overbilling.

Estimating the water usage

4.51
There are some circumstances where estimation might not accurately measure a customer's water consumption – for example:

  • where a customer dramatically changes their pattern of water consumption; or
  • where a new house owner has a different consumption pattern than a previous owner.

4.52
Watercare states, on its website, that customers can contact it if they feel that the estimated meter reading is not correct. Watercare can easily rebill the customer based on an actual meter reading that they provide.

4.53
We understand that Watercare will determine, case by case, whether to rebill a customer. However, Watercare provides no public information on when it will do this. In our view, it would be more helpful if Watercare specifically set out its rebilling policy on its website.

4.54
Estimation is fundamental to Watercare's billing process. In most instances, one out of every two invoices issued will be based on an estimated reading.

4.55
In our view, Watercare should provide its customers with more information about the estimation process, which might allow them to better understand the invoices they receive. In particular, Watercare could:

  • change its customer contract to say that a customer's bill will be based on an estimated meter reading every second month;
  • set out on its website how Watercare makes an estimate; and
  • provide clearer information on its website about when a customer can request that they be billed based on an actual reading rather than an estimate.
Recommendation 4

We recommend that Watercare Services Limited amend its customer contract to correctly reflect the process and frequency for estimating meter readings and tell customers how they can request an invoice based on an actual reading.

6: BRANZ is an independent research, testing, consulting, and information company that provides resources to the building industry.

7: There are 61 days from 16 August 2013 to 16 October 2013. However, Watercare does not count the final day when it does this calculation, and would therefore use 60 days to estimate the meter reading in this example.

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