expanding and enhancing customer-level...expanding and enhancing customer-level billing analysis:...
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http://efc.sog.unc.edu
@EFCatUNC
Expanding and Enhancing Customer-Level Billing
Analysis: Non-Residential Customer Sales Profiles and
Resilient Pricing Structures and Modeled
Shadi Eskaf and Jeff Hughes
Environmental Finance Center at UNC School of Government
Presentation to the UWC – September 4, 2015
Two Analyses: One Project
Non-Residential Sales Profile
• OWASA
• Fayetteville PWC
• Greensboro Water
• Town of Cary
Alternative Rate Models for
Residential Customers
• OWASA
• Fayetteville PWC
• Town of Cary
• Charlotte Water
Acknowledgements
3
North Carolina
Urban Water Consortium
Cary, Charlotte Water, Fayetteville PWC, Greensboro, OWASA
NON-RESIDENTIAL* SALES PROFILES * INCLUDING MASTER-METERED MULTI-FAMILY CUSTOMERS
Approach and Outputs
• 4 utilities, individually:
– Meetings and discussions; input into the analysis
– Interactive historical sales profile
– Interactive historical top ten customers profile
– Analysis (and list) of customers that significantly changed LT demands
• Report to the UWC with cross-utility takeaways:
– How do utilities treat non-residential customers differently?
– Why it is important to understand non-residential customers?
– How can utilities better understand their non-residential customers?
Report will also be published by Journal AWWA in January 2016
Utilities can Profile their Non-Residential
Customers by Water Usage Metrics
Demonstration of Utility-Specific “Non-Residential Dynamic Dashboard”
Number of Non-Residential Customer Classes
OWASA: 14 (unique for UNC)
Fayetteville PWC: ~10 (unique for PWC operations)
Cary: >20
Greensboro: 3 (use meter size instead)
Consolidated into fewer rate classes
Non-Residential Customers Use a Lot of Water
(and pay a lot for water)
Big Data Can Assist Efforts in Resource and
Financial Planning and Customer Service
• “Key Accounts”
• Plateau Analysis
• Meter Right-Sizing
Key Accounts: Top 1% of customers pay ~25% of total charges
Interactive “Top Ten” Customers Dashboard
Mete
r num
be
rs (
hid
den
)
Customer Plateau Analysis
While fewer non-residential customers down-plateaued than up-plateaued,
they reduced water use significantly more
Identifying which customers significantly increased LT water demand (up-plateaued) or
significantly decreased LT water demand (down-plateaued)
Meter Right-Sizing
Takeaways for the UWC:
Billing Data – a Gold Mine of Information!
• Mining the customers’ billing data individually can assist
efforts in water resource management, financial planning,
customer service, and outreach
• Identifying and working with key accounts
• Understanding why and how non-residential customers
are changing demand patterns
• Detecting anomalies to investigate billing errors or better-
sizing of meters
Possible Areas of Future Work
• Integration of customer profiling with the billing system
• Development of new considerations for rates analyses
– E.g.: proportions of use and charges by customers with certain water-using behaviors (peakers, hidden irrigators, plateauers, etc.)
• Detailed analysis of specific types of customers
– Cooling towers
– Multi-family residential customers
– Customers that sub-meter and charge beyond the meter
– Down-plateauing non-residential customers
• Analysis of customer types by customer characteristics using NAICS codes, GIS, parcel type, or other supplemental data
ALTERATIVE RATE MODELS FOR
RESIDENTIAL CUSTOMERS
Why New Rate Models?
Because the Status Quo Does Not Work for Everyone
• Traditional rate structures create a paradoxical
relationship between conservation and financial health
• Water utility variability does not match utility cost
variability
• There is a large national infrastructure gap
• Weather is becoming less predictable
• It is much easier to create individualized rates
20
True or False
• Meters are a reliable predictor of the cost impact a
customer has on their utility?
• Costs vary significantly with the amount of water you sell?
• Customers understand their rates?
• You are confident that you understand what drives
customer behavior?
• There are many utilities that rely on historic usage rather
than current monthly usage to determine monthly bill
Research Shows…..
• All residential 5/8” meters are not created equal (Boyle et al, 2011)
• Total bill amount has a bigger impact on customer consumption than billing frequency or rate structure (Wichman, 2015)
• Alternative rate structures are arising in the face of big infrastructure projects (Spang et al, 2015)
• Individualized, tailored rates can provide greater customer equity, more stable revenue, and send more accurate price signals to promote conservation. (Teodoro, 2002)
Research Objectives of Alternative Rate Models
• Increase revenue resiliency in the wake of declining
demands (increase proportion of revenues
obtained from fixed charges)
• Incentivize conservation and peak-shaving
• Address affordability and fairness
Alternative Rate Modeling for Residential
Customers with UWC Members
• Step 1: Conducted Preliminary Analysis of Four Alternative Rate Models
• Step 2: Reviewed Preliminary Analysis with Utility Staff and Select One
• Step 3: Conducted deep dive into one alternative rate model and its impact on utility and customer finances in one year
– Compared existing rates to alternative rates: effects on utility revenues, effects on customer bills, who pays less or more
Benefits and Challenges of Alternative Rate Models
Benefits
• Increased revenue stability
• Targets peaking customers
• Reduces bills for low-
peaking/low-users
• More steady bills for
customers
• Potential integration with AMI
technology
Challenges
• Billing software capability
• Customer understanding and
acceptance
• Detrimental impact of leaks
• Dealing with transient
community
Possible Areas of Future Work
• Research into communication and customer understanding (and acceptance) of alternative rate structures
• Research into current billing feasibility and implementation ease
• Modeling alternative rates with non-residential customers
• Utility pilot programs
• Survey of customers on billing and preferences: how they pay, perceptions, understanding of rates, reactions to financial incentives, their value of water, other utility-selected questions for their customers. Statistically representative.
http://efc.sog.unc.edu
@EFCatUNC
Environmental Finance Center at UNC School of Government
Jeff Hughes: [email protected]
Shadi Eskaf: [email protected]