Remote Disconnect Programs Proving Successful for America’s Rural Utilities

By Jim Roche, Cooper Power Systems/Cannon Technologies

Remote disconnect devices are giving rural utilities the ammunition to combat those consumers that are more than willing to take advantage of their neighbors.

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This hits home especially hard in America’s rural electric cooperatives where each consumer has an ownership stake in the local utility. Now armed with remote disconnect collars, utilities can properly educate their member-owners on the importance of paying their bill, allowing the utility to keep their rates as low as possible for all consumers. Implementing such programs goes a long way to making sure everyone’s paying their own way.

The need to disconnect non-paying electrical customers is nothing new for the nation’s member-owned cooperatives, but the tools of today allow for more efficient handling of these arrears. Due to the large service territories and long feeders of electric cooperatives, significant windshield time is required to manually disconnect a non-paying customer. Today’s two-way advanced metering infrastructure (AMI) systems allow real-time remote disconnection and reconnection of meters, providing significant cost savings and reducing the utility’s exposure to accidents.

We took a look at how a number of rural cooperatives have implemented remote disconnect programs around the country, and this article will highlight the details and benefits of these success stories.

Each of these programs was designed for the same overall goals:

  • Improved efficiency, and
  • Improved safety.

Decision Process

One of the initial considerations involved in examining a remote disconnect program is which metering locations can provide the most significant benefits to utility personnel. The service territories of cooperative utilities can vary greatly, which can, in turn, affect the number of consumers involved in the program. The number of arrears tends to be considerably higher for utilities that serve areas that are in close proximity to colleges or universities, are bedroom or suburban communities of large cities, or have local economies involving transient workers.

When evaluating remote disconnect programs, it’s important to involve key stakeholders and perform careful and justifiable selection of participants. Set clear boundaries and follow them justly and fairly; this allows for maximum value and keeps outsiders from crying foul.

While the number of non-paying or late-paying customers may vary due to a utility’s unique service territory, the way in which disconnect locations are selected does not. What follows is a summary of considerations used by the utilities surveyed to determine their program participants:

  • Anyone that had been disconnected twice or more in the previous year;
  • Inaccessible or hard to reach locations that had been disconnected in previous year;
  • Transient residences with high turnover (apartments, rental properties, mobile homes);
  • Locations with safety concerns (vicious dogs, threatening residents, firearm considerations); and
  • Going forward, any location that is manually disconnected for the second time in 12 months receives a disconnect device as a future deterrent.

Each of the interviewed cooperatives incorporated a list of customers that had been shut off twice or more in the previous 12 months. This list is often known as the billing clerk’s “frequent offenders list.” Lane Electric placed disconnects at accounts where they had frequent collection activity in their credit history, as many of their customers had grown comfortable with the idea of “curbside collections”—avoiding disconnection by paying at the last minute, even though they encountered substantial fees to do so.

All utilities deal with meters that are either hard to reach or difficult to access, this includes everything from locked gates to remote meter sockets located at extreme heights. Many times these accounts require the customer to be present to allow entry, causing scheduling difficulties and preventing efficient disconnection.

Including transient locations in disconnect programs makes good business sense for both the utility as well as many landlords, who often get caught “holding the bag” along with the utility. The automated meter reading aspect of the system also helps this situation as the amount of time from month end to bill delivery is significantly reduced, decreasing the opportunity for folks to skip town.

Safety is no laughing matter for the meter readers and service people tasked with disconnecting power or acting as impromptu bill collectors. Aggressive dogs are often used to deter utility personnel from doing their jobs. This past year, one of the cooperatives we interviewed encountered a situation where an angry homeowner released their dog to specifically attack a serviceman. Others have been threatened physical harm, sometimes with a gun in hand. Concern for safety is especially important when you consider these “bill collectors” are unarmed and can be carrying in excess of $1,000 worth of collections on their route. There are also inherent safety risks anytime an energized meter is pulled. Due to the numerous safety concerns, two-person crews are typically used. Ruth Pomplin of Lane Electric Cooperative in Eugene, Ore., also notes that, “The remote disconnect program alleviates the emotional aspects of shut offs for our servicemen.”

Offset Costs

Obviously the remote operation of disconnects saves significant “windshield time” for servicemen which translates into real dollars. As noted above, for safety, manual disconnect crews are typically made up of two people that spend considerable time traveling to and from the residence in question. In addition, a two-person crew provides for at least one witness in case of any customer disputes. This accrues not only labor costs but vehicle fuel and maintenance costs. For bedroom communities, service calls to reconnect customers routinely happen after hours, incurring overtime labor charges. It should also be noted that disconnect activities often take crews away from other responsibilities that are crucial to the performance of the utility, adding opportunity costs into the equation.

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A worker installs a disconnect collar on a meter.
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Cost estimates from the cooperatives varied from a cost of about $200 to $300 per event prior to implementing the remote program. Jim Fauth of Big Flat Electric Cooperative in Malta, Mont., estimates that their 1,800-meter cooperative spent at least $27,000 this year on disconnect/reconnect activities. Many of their problem accounts are over 60 miles away from the office, tying up two individuals for the majority of the day. They estimate their first round of disconnections, beginning each April, may have cost the utility upwards of $8,000 as they use two two-man teams for a solid week to disconnect up to 75 homes. Lane Electric is similar to a growing number of co-ops, with their headquarters located in an urban area, Eugene, while serving the outlying rural areas, thus resulting in longer travel times and greater costs.

Charges, Regulations and Additional Benefits

Each of the cooperatives interviewed continued to charge reconnect fees that were set up prior to implementing a remote disconnect program. These fees tend to range from $50 to $100 during business hours, with an additional $50 to $100 due if a reconnection is requested after hours. Some programs around the country report offering a reduced deposit for consumers willing to accept a remote disconnect device; however, the utilities participating in our survey chose not to give their customers an option for reasons of simplicity. Some utilities require deposits from all customers while others do not require deposits unless they’ve been shut off more than once in the previous year or they could not pay the entire balance in full upon their first disconnection. All utilities agree that their service charges do not offset the actual cost of performing on-site disconnect/reconnect activities.

Many utilities had previously reinforced poor consumer behavior by providing lengthy grace periods and allowing excessive scheduling options for bill collection.

While none of the cooperatives participating in our study fall under the purview of local Public Utility Commissions or Public Service Commissions, all of them try to follow their guidelines. These typically involve provisions for warm or cold weather so that the health of their consumers is not threatened. Local commissions do regulate the investor-owned and municipal utilities in North America and typically mandate that customers in colder regions not be disconnected from November until spring. Restrictions on summer months typically depend on the humidity of the region which governs the necessity of air conditioning. Even for utilities not governed by such commissions, it’s a wise practice to review their recommendations to sustain adequate public relations.

The utilities implementing remote disconnect programs are seeing not only financial benefits but improvement in member understanding as well. Most cooperatives report a substantial increase in member communications, with members calling the utility to make necessary arrangements before any disconnect activity is taken. Debbie Traylor of South Plains Electric Cooperative in Lubbock, Texas, believes their members “”get the idea as soon as the disconnect is set.” Other program managers report similar behavior modification. The utilities do have compassion for their membership, often urging consumers to take advantage of various assistance programs and payment plans that work to everyone’s favor. The programs work to educate consumers on the benefits of efficiency and watching their spending.

Success

Most of the customers polled report they are installing collars on about 3 to 6 percent of their services and those numbers are continuing to grow. Ilse Susen helps oversee the program for San Bernard Electric Cooperative where they are currently installing about 15 new collars per billing cycle. Their fellow Texas cooperative, South Plains, has nearly 1,500 devices installed and remotely disconnected 284 this past month, indicating that their servicemen are doing a good job at picking the right locations.

All of these utilities can now remotely disconnect their non-paying customers with the click of a mouse, almost effortlessly handling the process while in the safety of the office and without utilizing costly labor and vehicle fleets. Their systems also give them real-time verification of disconnection or reconnection, using the load flowing through the meter to accurately determine the device’s true state. This circumvents any tampering attempts by consumers and verifies that power is restored once the customers have paid their bill. These utilities can now cost-effectively perform after-hours reconnections by collecting payment over the phone and performing the device commands via their high-speed two-way AMI systems. The improved safety is a weight off of the shoulders of employees and law enforcement agencies alike. As the programs spread, their operational costs continue to decline while collected revenues are increased, meeting their outlined objectives. Traylor states it simply, “This system just works wonderfully, it really helps us out.” Fauth agrees, “For us, this is a real solution to a big problem.”

Future of Programs

All respondents stated their programs will continue to grow, and they are even considering utilizing additional functions inherent in their AMI system to implement additional programs. Several co-ops are looking at utilizing the built-in demand-limiting features of their disconnect collars to allow them to control during their colder months or to provide moderated levels of disconnection to members that require low levels of power. While there have been recent announcements that meter vendors are preparing to release underglass disconnect devices, many utilities prefer the idea of universal disconnect collars, as no meter exchange has to be performed to install them. Meter exchanges involve additional personnel and paperwork, thus for targeted programs, the advantages are downplayed. Of course, the future will allow the utility to make the choice that suits their needs. Some utilities are considering combining their disconnect programs with cost-effective, software-based pre-payment programs to give low-or fixed-income customers additional options.

All of the interviewed utilities deemed their programs hugely successful and beneficial to the cooperative’s bottom line. Disconnects are one of the cooperative’s financial tools to keep the lights on for everyone. As Fauth states, “Remote disconnection allows us to handle the situation. We could either penalize 100 offending consumers or penalize all 1,800, continuing to subsidize this behavior.” Pomplin sees a similar benefit: “This truly saves a lot of money for all our membership. Our AMI purchase allowed us to enter the new territory of automation which has significant benefits over our old manual ways.”

Any evaluation obviously begins with a review of the financial and intangible costs associated with both manual and remote disconnect/reconnect activities. When beginning to investigate implementation of remote disconnect programs, it’s important to identify your goals, determine your customer selection guidelines up front, and outline both new and existing policies on applicable consumer charges and fees. Like many utility programs, proper planning puts a project on a straight-forward path to success.

Remote disconnect programs can be successfully implemented when administered properly and when utilities choose to implement advanced AMI systems that go beyond monthly or daily meter reading. Those with significant rural territories can experience significant economical savings and reduced exposure to safety hazards. These programs are just another application of the advanced two-way AMI systems available today, offering tangible benefits to those that implement them.

Jim Roche is the marketing manager for AMR/AMI solutions for Cooper Power Systems/Cannon Technologies. He received his BSEE from Iowa State University in 1998 and has held various engineering and customer service positions at Cannon Technologies over the last 10 years. For more information contact him at jroche@cannontech.com.

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