Terminating Water in Detroit: Poor Business Practices Lead to Human Rights Allegations

Last week, three United Nations experts responded to appeals from Detroit residents that terminating water service for nonpayment is a violation of the human right to water.

Delinquency is not an issue unique to Detroit; many municipally-owned water utilities struggle to keep customer accounts current. As the United States’ water infrastructure ages and is upgraded through costly programs, water customers nationwide are seeing double-digit rate increases, and increased treatment of delinquent accounts. It is important for municipally-owned utilities to apply sound business principles, such as keeping customer accounts current, because tolerating chronic delinquency impacts water utilities’ ability to serve their customers.

As the City of Detroit recovers from last summer’s $18 billion bankruptcy, the Detroit Water and Sewerage Department (DWSD) is working to recover debts from water customers. Terminating service for non-payment is in line with industry practices, but DWSD’s execution has led to customer accusations of unfair treatment and unnecessary hardship. One of the lessons utilities can learn from DWSD’s experience is to proactively keep customer accounts current, and to consistently enforce delinquency policies. Early and consistent enforcement enables utilities to address delinquency issues before debts get out of hand (and unpayable). Some of the best practices utilities should consider include:

  • Partnering with local social agencies: Federally and locally funded programs are available to assist customers facing financial hardship. Developing partnerships with social agencies is beneficial for both utilities and customers — If utilities provide tools for agencies to have real-time verification of customer bills, and support third party payments, it is easy for benefactors to assist customers with outstanding bills. Before executing widespread turnoffs for non-payment, it is important for utilities to ensure these partnerships are in place and high-functioning.  This ensures customers facing hardship have safety nets to avoid disruption of water service.
  • Collecting and maintaining good customer data: Numerous reports from Detroit accuse DWSD of billing errors and inaccurate account information. When utilities issue incorrect bills (for the wrong amount, or for the wrong customer), they lose credibility in the community they serve. To maintain enterprise data, utilities should develop and deploy a master data management (MDM) strategy. When utilized across the organization, data management strategies ensure data can be used for accurate billing, meaningful reporting, and enterprise analytics. This strategy enables all utility employees to have access to updated customer information, and to use this information for accurate billing and collections.
  • Rationalizing internal processes: Some of DWSD’s processes, such as assuming the administrative burden of verifying property deeds and notarized statements, create unnecessary work for both customers and employees. Prior to enforcing delinquency policy through widespread turnoffs, DWSD should have streamlined business policies and operations. Accepting third party payments, streamlining payment arrangements, and revising documentation standards, would have diminished burdens placed on customers and employees – and minimized negative customer service impacts.

Detroit Water and Sewerage Department informed the media that turnoffs will continue until all past-due accounts are treated. This will impact approximately 83,000 of 179,000 total customers. Unless they are able to provide customers with social support resources, confirm accuracy of billing operations, and develop streamlined collections operations, the Detroit Water and Sewage Department will continue to face highly-public condemnation of their collections efforts.

2 Comments

  • Devi’s Advocate June 30, 2014 8:02 pm

    How do your potential solutions help the utility solve their immediate problem of not having cash to pay for the services they’re providing? Don’t all of these solutions require several months to implement and receive the benefit?

  • Tricia Anklan July 1, 2014 9:57 am

    Correct – these solutions will take several months to implement and produce results. The most expensive part of the water business is infrastructure; the cost of treating and delivering water through established infrastructure is minimal. If DWSD is able to sit on these past-due accounts a bit longer, they can implement improved processes, which will reduce negative customer impacts as DWSD begins enforcing the delinquency policy (via turnoffs).

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