An internal audit of the City’s meter reading, utility billing and meter testing practices found no instances of overbilling and no discrepancies in bills recalculated in the review. The audit did reveal a need for policy improvements and updated meter testing standards.
The internal audit followed best practices outlined by the American Water Works Association (AWWA) and the Texas Water Development Board (TWBD). Four hundred accounts were sampled during the audit process: 200 for meter bench testing, and 200 for meter reading accuracy and bill calculation. This number is two to four times higher than the number identified as a “sufficient sample” by AWWA and TWBD. The auditor also had access to some historic account data, including leak detection requests, as part of the comprehensive review.
Allen City Council authorized a review of billing practices and equipment because of citizens’ concern about high water bills and in preparation for a switch to new water meter technology. The audit focused on the meter reading process, metering equipment and utility billing process. It also included a data analysis of other factors which impacted water use such as temperature, rainfall and water leaks using data from January 1-December 31, 2019.
Results of the audit were presented in a workshop to Allen City Council on July 27. Watch the full presentation.
Finding 1: Meter reading equipment functioned properly.
The internal review found no discrepancies with the City’s meter reading equipment. In each of 200 tests, readings displayed on a home’s meter matched those gathered by handheld meter reading equipment. In addition, previous readings on handheld devices matched what was in the utility billing system.
Recommendation: Adopt policies and procedures to guide the meter reading process.
No policies and procedures had been formally adopted for acquiring meter reads, handling service orders, transferring data, removing meters or bench testing. The City of Allen Community Services Department will create and adopt specific policies and procedures for these processes by October 1, 2020.
Finding 2: Discrepancies exist between internal and external meter tests, but both methods indicated that overall customer water use was underreported.
Two hundred customer meters were removed and tested using City of Allen meter testing equipment. The same 200 meters were then sent to a third-party lab Southern Flowmeter, Inc. for independent testing. Overall meter testing results indicate meter inaccuracies caused utility customers to be underbilled for water use.
Internal tests revealed a weighted meter accuracy of 98.7%, meaning that, on average, meters underreported customer water use by 1.3%. However, external testing indicated meters had a weighted accuracy of 94.4%, meaning meters underreported customer water use by 5.6% on average.
Using external testing results, meter errors are estimated to cost the City of Allen 179 million gallons of water and $819,493 in revenue losses each year.
It was also observed that external bench test results consistently registered slower than the city’s internal bench test results. While the highest flow rates for a few meters tested fast on internal bench tests, these same meters were in normal range at highest flow rate on external bench tests. For this reason, the City will continue to research these results. Some discrepancy is attributed to the difference in the flow rates being used between the internal and external bench tests. In addition, the external bench test equipment is more sophisticated in measuring flow rate to the nearest tenth of a percent.
Currently, the City will test meter flow rates at the request of a customer for $25. If a meter is running fast based on the combined meter accuracy calculation, the fee is waived and a billing adjustment is made. Faulty meters are replaced. In most cases, as the overall audit bench testing results demonstrated, meters run slower with age, underreporting use.
Recommendation: Standardize meter testing equipment to match American Water Works Association (AWWA).
City of Allen meter testing equipment is more than ten years old and the testing process does not match the process recommended by the AWWA and used by independent labs. The City of Allen Community Services Department has committed to further investigate discrepancies between its own meter tests and those performed by a third-party testing lab. In addition, staff will investigate the costs of a more sophisticated testing platform and third-party verification of test flow rates.
Finding 3: The City’s utility billing software charged customers accurately.
The internal audit, which focused on a random sample of 200 utility billing accounts, found no discrepancies in the way customer bills were prepared. No discrepancies were observed in either the new billing system (launched in January 2020) or in the previous billing system. One hundred and ninety-eight accounts were examined in both systems for a total of 396 bills. (Four of the addresses were unable to be calculated in both systems because the properties did not have active utility accounts at the time of review.) In each case, utility billing software applied the accurate rate tier and billed customers appropriately.
Recommendation: Update policies and procedures to align with new utility billing software.
The review revealed that policies were out of date and did not align with current practices. Current standard operating procedures are from the previous software. The City of Allen Community Services Department has committed to updating these procedures to reference and align with the current software by October 1, 2020.
Finding 4: Water use is impacted by external factors including rainfall, weather patterns and leaks.
A review of average monthly temperature and monthly rainfall during 2019 was compared to water usage and this data demonstrated more water use during hotter months and/or months with less rainfall, noting that water use is charted based on the 4-6 week delay in recording and billing usage.
The EPA estimates that 60% of a homeowner’s total water budget could be spent on landscape irrigation alone for drier climates such as Texas. In addition, leaks use more water than people think. An irrigation line with a 1/2-inch leak watering 15 minutes two times per week would result in a water use (or loss) of 16,000 gallons per month.