The City Auditor’s Office has found that the customer billing system that generates the City of Austin’s combined utility bills does not routinely scrutinize the readings on the majority of water bills, leading to the possibility of overcharges. for nine out of 10 customers.

Austin Energy manages the customer billing system, which generates a single invoice that includes its own services and those of Austin Water Utility and Austin Resource Recovery, as well as other charges and fees assessed by the city.

The audit shows that when there appears to be an error in a water meter reading, Austin Energy staff may estimate water usage based on previous readings, leading to other problems. “Auditors confirmed one instance in which the use of a system estimate contributed to a long delay before a significant water leak was detected,” the audit said.

Assistant City Auditor Katie Houston told the Council Audit and Finance Committee on Tuesday that because the Austin Energy billing staff does not evaluate the accuracy of 91 percent of water meter reads, it is possible that what should have been a $40 bill, for example, could turn into a $300 bill.

The reason is that customer billing employees only review meter readings that fall outside of a wide range. Only if the reading is less than 25 percent or greater than 400 percent of a particular customer’s average bill will the billing staff automatically ask for a re-read of a meter. That occurs only about 9 percent of the time, according to the audit.

Complicating the process is that Austin Energy contracts with Corix, a water utility company, to read the meters. When Austin Energy decides there is a problem with a meter reading, city staff must ask Corix to do the re-reading. Though that is part of the contract, it adds time to the process and puts pressure on the staff to get the answer in time to send out the bill.

Under the utility’s water billing rules, an average customer who normally uses 8,000 gallons per month could have “an expected range of between 2,000 and 32,000 gallons each month,” according to the audit. Houston noted that there has not been a review of billing parameters since 2011, when the customer care and billing system was installed.

As a result, the Austin Energy billing staff could bill a customer for a 24,000-gallon increase in usage in one billing period without any additional review. “In this scenario,” Houston said, “the average customer’s water bill would increase from $40 to over $300 in one period.” This could also result in increased wastewater charges.

Austin Energy Deputy General Manager Kerry Overton told the committee that since the audit was conducted, Austin Energy has added a step to identify a greater percentage of inaccurate bills. Overton also noted that if there is an error one month, it would likely be corrected when the meter is read the next month. That means adjustments will be made to the account automatically from one cycle to the next, he said.

Overton said Austin Energy concurred with four of the five recommendations of the audit. He pointed out that the customer billing system produces 5.4 million bills annually. Approximately 2.7 million of those include charges for water usage.

In its response to the audit, Austin Energy management promises to complete a water meter read verification pilot program by the end of November. In addition, it expects to implement a quality assurance program by the end of the year.

Auditors also want Austin Energy and the Austin Water Utility to develop a mechanism to identify potential water leaks on a timely basis. Austin Energy disputes the auditor’s expectation that monthly meter readings are a mechanism to identify potential water leaks. However, according to the report, Austin Energy and Austin Water are discussing the matter.

City Council Member Bill Spelman was concerned about long-term leaks and lateral water lines. He proposed a scenario in which a customer normally using 8,000 gallons per month suddenly seems to be using 20,000 gallons per month. That usage continues for several months. He asked, “Is that something which is through your standard operating procedures that is going to trigger anything?”

Elaine Kelly-Diaz, vice president for customer account management, told Spelman, “(The system) looks at your usage last year. If historically over time the use has been consistent over several months, then no,” the system would not catch that.

However, Kelly-Diaz added, “We have recently instituted a high bill … process,” so if one part of the bill is three times higher than last month, someone will look at the bill to determine if there is a problem before it goes out to the customer. She said Austin Energy does not yet know how much extra work that process will create because it has been in place for only 30 to 45 days.

(This story was updated Oct. 2 to correct an editing error that overstated the risk of the city’s billing system overcharging residents for their water bills. The audit found no large-scale issues with water meter accuracy.)

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