“Keeping the city’s collection rate high reduces the overall cost of doing business and therefore helps keep utility rates competitive for all of the residents and businesses that are in Lebanon,” said Scott Brunka, Lebanon’s deputy city manager. Lebanon, which along with Hamilton has city-run electric, has collected at least 99 percent of its billed utilities for the past three years and seen a drop of $120,000 in uncollected funds between 2009 and 2011.
Doug Childs, director of Utility Business Affairs for the city of Hamilton, said the city has seen a drop in non-payments of more than $150,000 in 2011 compared to 2010. He credits this drop-off in uncollected rates to a variety of factors, including Hamilton’s proactive billing and collection procedures; the city’s low utility rates, especially for natural gas; and the mild winter weather which kept the bills lower than usual.
“A lot of the collection rate depends on how high utility rates are in general,” Childs said. “Our utilities cost 10 to 15 percent lower than regional costs so that helps keep our delinquency rates down.”
In Middletown, the city’s utility bills include water, sewer, storm sewer and refuse billing. Nearly $340,000 is still owed to the city from a 2009-2011. That represents less than a half-percent of what’s been paid, or around 1,100 properties, a year. And more than 90 percent of those 1,100 utility customers are residential, said Middletown Finance Director Russ Carolus.
“We do not give up on them,” said Carolus. “We keep them for a long time, several years. I haven’t written off anything in five or six years.”
Fairfield had the highest percentage of unpaid bills of the cities examined. Fairfield Finance Director Mary Hopton said she is not worried about the delinquent bills affecting the city’s bottom line. About $109,000 is owed to the city from a few hundred former city customers.
Collecting delinquent payments
Each city has a distinct process for trying to collect delinquent payments. Childs said Hamilton tries to work with customers, including making payment arrangements and encouraging a fixed pricing plan so that one abnormally high month won’t wipe out someone’s budget.
“Winter time is usually the highest months for billing because use of gas creeps up,” Childs said. “You want to keep that under control before summer comes and your electric bill starts to increase. We really try and work with people and educate them about what they are getting into.”
In Fairfield, the bill stays with the property. But if there is a way to get the customer who owes the delinquent bill — and Hopton said there are ways — they will pursue that and may use a collection agency.
In Lebanon, accounts that are delinquent and “closed out” are sent a second payment notice by the service department. If no response is received, the accounts are then turned over to a third party collection agency for collections.
“We provide extension agreements and can arrange payment plans to try and work with account holders to avoid the disconnect or collections process if possible,” Brunka said.
In Middletown, if a property owner, or utility-paying tenant, fails to pay their water and sewer bill, they’ll get a yellow bill with shutoff information, and additional charges may apply, said Carolus.
“If you do not pay by the due date, we will assess a $25 fee for processing the shutoff,” said Carolus.
While meters are read through a fixed-based radio system, and can be recorded remotely, public utility workers must physically shut off the water supply to a home. And unlike some electric policies, there’s no regulations preventing the city from turning off the water for lack of payment.
In Fairfield, the city changed its utility bill collection process a couple years ago to where shutoff notices for water and sewer service are sent a week after a 30-day late notice is sent out. Utilities are cut at the 45-day mark if payment is not received. Before, the shut off notice went out at the 45-day mark.
“Ninety-five percent (of customers) at least pay by the time they get that shutoff notice,” Hopton said.
Debt can follow user
A major challenge of collecting utilities is with renters who have more tenuous ties to a property than homeowners and business owners. Childs said about 45 percent of Hamilton’s population is rental property, whose customers are harder to track down if they fail to pay bills.
Carolus said the people who don’t pay their utility bills and move, will typically relocate within Middletown. And the outstanding bill usually does not stay with the property.
“Right now, it follows the person,” said Carolus, though he said there are some cases where an assessment is levied on a property. If the person wants to get utility service at their new location, they’ll have to pay their delinquent bill, Carolus said.
Like Hamilton, Lebanon has a rather large renter population. Individuals who have an old delinquent account from a previous address are not permitted to sign up for a utility account at a new address until the old bill is paid.
Fairfield will write off some of the delinquent bills after a certain point because “your collectability has such little chance. If they’re going to hide, they’re going to hide,” Hopton said.
But while the bill stays with the property in Fairfield, if the person responsible for the delinquent bill moves to another property in the city — or back into the city if they had left — Hopton said the city will know if that person was responsible for the delinquent bill and require them to pay the outstanding balance. If they don’t they will not receive water and sewer services.
“If you want water restored, the bill has to be paid,” she said. “We collect everything now that way.”
Of the delinquent bills that have accrued in the past several months, it’s mostly because of recent issues, such as bankruptcy, litigation, sale of property or foreclosure, Hopton said.
The city is in the process of cleaning up the delinquent bills, Hopton said, deciding which ones to write off and which ones to hold on to.
“It’s a very laborious process,” she said. “We have to decide if it’s worth pursing or not.”
All city utility directors admit they are running a business and sometimes hard decisions come with that.
“Sometimes you do have to cut people off,” Childs said. “You hate to do it, but at the end of the day, we are a business.”
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