Agenda 12/13/2011 Item #10D12/13/2011 Item 10.D.
EXECUTIVE SIfMMARY
Recommendation that the ,Board of County Commissioners approve an exception to the
Public Utilities Division's errors and omissions adjustment procedure to correct existing
reclaimed water billing items, and to direct the County Manager or his designee to
implement staff's recommended actions.
OBJECTIVE: Approve an exception to the errors and omissions adjustment procedure to
correct existing reclaimed water billing items, and to direct the County Manager or his designee
to implement staffs recommended actions.
CONS IERATIONS: In support of the County's 10 -year Strategic Plan, the Public Utilities
Division implemented an annual audit program of key business processes and systems to
improve asset visibility and internal controls., Most recently, several successful audits have been
completed, including the landfill accounting and miscellaneous billing systems (completed by
Ernst and Young in the fail of 2009 and 2010 respectively). The Collier County Water -Sewer
District ( CCWSD) has several comprehensive internal review projects underway concurrently to
review CCWSD infrastructure for quality assurance and quality control (QA/QC) of services
provided and billed, including the Reclaimed Water System, Potable Water System, Waste
Water System and Utility Impact Fees.
This Executive Summary addresses the results of the Reclaimed Water System audit. The
reclaimed water system was audited in anticipation of the Board- approved rate increase effective
October 1, 2011. CCWSD management initiated this comprehensive self- audit, including an
external independent review by the utility rate consultant and outside legal counsel.
The audit includes field verification of meter size and service level provided (bulk, pressurized,
and pressurized- and. distributed) for all reclaimed water customers. Results of this field audit
were compared to the billing system records to identify any inconsistencies. Application of all
historical Board- approved rates was also audited.
There are currently 1,600 reclaimed water accounts. Of that total, 19 reclaimed water customers
currently have individual Board - approved Agreements for the Delivery and Reuse of Reclaimed
Water. Results of the field and billing system audits for the remaining 1,581 accounts identified
the following inconsistencies that resulted in under- charges or over- charges to customer
accounts:
1. Meter Size: The meter size in the billing system did not match the field verified meter.
size (18 instances, or 1.1 % of reclaimed water accounts).
2. Service Type: The type of service being billed was not consistent with the service being
provided (60. instances, or 3.8% of reclaimed water accounts).
3. Rate Code: Incorrect rate codes were entered in the billing system (29 instances, or 1.8%
of reclaimed accounts).
4. Reclaimed water rates effective October 1, 2008, per Resolution Number 2008 -221, were
not applied in the billing system from October 1, 2008, to September 30, 20099 (1,432
instances, or 90.6% of reclaimed water accounts).
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12/13/2011 Item 10.D.
5. No inconsistencies were found with the remaining 2.7% of all non - contract reclaimed
water accounts. There was no impact on accounts that had no variances from the field
audit, were opened on or after October 1, 2009, or where reclaimed water is provided at
no.charge to CCWSD facilities, such as at lift ,stations and treatment plants.
Staff updated the billing system records to correct meter size, type of service, and rate codes
concurrently with the implementation of the rate increase approved by the Board per Resolution
Number 2011 -30 effective October 1, 2011. At this time, no overcharge or undercharge
adjustments have been applied.
As opined by the County Attorney's Office, the utility may recover revenues during the statute of
limitations period. This opinion is also supported by outside legal counsel from Nabors, Gibin,
& Nickerson. Staff is recommending an exception to the errors and omissions adjustment.
procedure. No reclaimed water customers received free service. They paid in good faith the
amounts they were billed.
A financial summary of the facts and findings of applicable reclaimed water accounts is found in
the -following table.
The estimated net adjustment value of $131,561 (revenue recovery of $191,051, less credits of
$59,490) represents less than .03% of all billed revenues over the past five years.
The following options are available to the Board:
1. In instances where customers have been under- charged (revenue recovery), the Board
may direct the County Manager or his designee to take action to either
a. apply under- charges to the customer accounts going back over the statute of
limitations period, or
b. apply no under- charges to customer accounts.
2. In instances where I customers have been over - charged, the Board may direct the County
Manager or his designee to take action to either:
a. apply credits to the customer accounts going back over the statute of limitations
period (or issue refund checks if requested by the customer), or
b. issue no credits or refunds.
Staff recommends` now under- charges be applied to customers who have been under-charged (1b),
but apply credits to customers' accounts that have been over- charged (2a).
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Mj=tment Summa
1
#ofAccourts
%oftotal
Adtamt Aw$
%oftotal
Meter Site
18
.1.1%
$2,750
2.1%
Type ofSecvice
60
3.8%
$72,169
54.90/9
Rate Code .
29
1.80/0
$7,964
6.0%
Resolution 2008 -221
1,432
90.6%
$48,678
37.0%
No Impact
42
2.7%
$0
0.00/0
Total .
1,581
100.00/0
$131,561
100.0%
i) assumes 5 ear statute of limitations
The estimated net adjustment value of $131,561 (revenue recovery of $191,051, less credits of
$59,490) represents less than .03% of all billed revenues over the past five years.
The following options are available to the Board:
1. In instances where customers have been under- charged (revenue recovery), the Board
may direct the County Manager or his designee to take action to either
a. apply under- charges to the customer accounts going back over the statute of
limitations period, or
b. apply no under- charges to customer accounts.
2. In instances where I customers have been over - charged, the Board may direct the County
Manager or his designee to take action to either:
a. apply credits to the customer accounts going back over the statute of limitations
period (or issue refund checks if requested by the customer), or
b. issue no credits or refunds.
Staff recommends` now under- charges be applied to customers who have been under-charged (1b),
but apply credits to customers' accounts that have been over- charged (2a).
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12/13/2011 Item 10.D.
LEGAL CONSIDERATIONS: This item is legally sufficient and requires a majority vote -
JB W
FISCAL IMPACT: Revenue of the CCWSD Operating Fund is expected to increase by
approximately $20,000 in FY2012 based on the implementation of appropriate meter size, type
of service, and rate codes with no further actions. However, if the Board approves the staff
recommendation to apply credits to customer accounts, the CCWSD Operating Fund will incur a
one -time revenue reduction of approximately $59,490 in FY2012. This one -time reduction will
have no adverse affect on operations.
GROWTH MANAGEMENT IMPACT: There is no Growth Management Impact associated
with this item.
RECOMMENDATION: That the Board approve an exception to the Public Utilities Division's
errors and omissions adjustment procedure to correct existing reclaimed water billing items, and
to direct the County Manager or his designee to implement the staff's recommended actions for
these items, as stated in the Considerations section.
PREPARED BY: Joseph G. Bellone, Manager, Utility Billing and Customer Service
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COLLIER COUNTY
Board of County Commissioners
Item Number: 10.D.
12/13/2011 Item 10.D.
Item Summary: Recommendation that the Board of County Commissioners approve an
exception to the Public Utilities Division's errors and omissions adjustment procedure to correct
existing reclaimed water billing items, and to direct the County Manager or his designee to
implement staff's recommended actions. (G. George Yilmaz, Ph.D., P.H., P.E., Interim
Administrator, Public Utilities Division)
Meeting Date: 12/13/2011
Prepared By
Name: debbie chinn
Title: Administrative Assistant,Utilities Finance Operations
11/18/20119:56:25 AM
Submitted by
Title: Manager - Utility Billing & Cust Serv.,Utilities Finance Operations
Name: Joseph Bellone
11/18/20119:56:27 AM
Approved By
Name: HapkeMargie
Title: VALUE MISSING
Date: 11/18/2011 10:16:54 AM
Name: Joseph Bellone
Title: Manager - Utility Billing & Cust Serv.,Utilities Finance Operations
Date: 11/18/2011 10:24:34 AM
Name: LundPeter
Date: 11/18/2011 12:11:34 PM
Name: Danette Huff
Title: Manager - Irrigation Quality,Wastewater
Date: 11/18/2011 12:11:44 PM
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Name: WidesTom
Title: Director - Operations Support - PUD,Utilities Fina
Date: 11/18/2011 12:38:21 PM
Name: Steve Messner
Title: Plant Manager,Water
Date: 11/19/2011 12:28:37 PM
Name: JohnssenBeth
Date: 11/21/2011 11:23:24 AM
Name: YilmazGeorge
Title: Director - Wastewater,Wastewater
Date: 11/27/2011 10:24:07 AM
Name: WhiteJennifer
Title: Assistant County Attomey,County Attorney
Date: 11/29/2011 8:35:26 AM
Name: KlatzkowJeff
Title: County Attorney,
Date: 11/29/2011 11:46:36 AM
Name: GreenwaldRandy
Title: Management/Budget Analyst,Office of Management & B
Date: 12/1/2011 10:28:03 AM
Name: KlatzkowJeff
Title: County Attorney,
Date: 12/1/20114:09:33 PM
Name: OchsLeo
Title: County Manager
Date: 12/2/2011 10:56:46 AM
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12/13/2011 Item 10.D.
12/13/2011 Item 10.D.
CCWSD CUSTOMER ACCOUNT ADJUSTMENTS PROCEDURES
COLLIER COUNTY WATER -SEWER DISTRICT
PROCEDURE FOR DEBIT OR CREDIT ADJUSTMENT OF CUSTOMER ACCOUNTS
FOR UNFORSEEN SITUATIONS, ERRORS AND OMISSIONS
The purpose of this Collier County Water -Sewer District (CCWSD) procedure is to provide a
debit or credit adjustment to the water and/or sewer account of a customer where an unforeseen
situation has arisen or an error or omission by CCWSD has been identified. The situation will
likely have occurred as a result of meters or devices that are part of a customer's water service
system being incorrectly installed or not assigned to the customer account, the provided service
being incorrectly identified on the account, or the incorrect rate code being applied to the
account.
CONDITIONS
Situations may arise whereby CCWSD services have been provided to a property without
appropriate charges and fees being applied to the customer account. Furthermore these services
may have been provided to the property through one or more changes of ownership of the
property. It is the customer's responsibility to promptly discover services that are being received
but not being billed. There is no obligation for the CCWSD to adjust accounts when the water
and/or sewer services have been metered and charged properly. Also, fixtures or devices may
have been installed incorrectly or have malfunctioned. It is the CCWSD's desire to make prompt
reimbursement for the unusual circumstance by fair apportionment of the cost of the billing
charges resulting from the stated conditions. Similarly it is the CCWSD's responsibility to
recover costs for services that have been provided but not correctly billed.
The Water - Sewer District is self - supporting through the customer fees received monthly for the
services provided. By virtue of the Special Act that created the District, Section 17 states:
Free water and sewer services prohibited. - No free water or sewer service shall be
rendered by the District and no discrimination shall exist in the fees, rates, and charges
for users of the same class.
Under the Florida Statute of Limitations, we have an obligation to all customers of the Water -
Sewer District to recover all back charges owed for up to five years.
CUSTOMER RESPONSIBILITY
1. Should a customer discover that an unforeseen situation, error or omission has occurred
affecting their account, it is the customer's responsibility to contact Customer Service to
report the matter as soon as practicable.
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12/13/2011 Item 10.D.
CCWSD CUSTOMER ACCOUNT ADJUSTMENTS PROCEDURES
ADJUSTMENT PROCEDURE
1. Upon discovery by CCWSD staff or notification of the situation, error or omission a
customer service representative or billing team member will evaluate the circumstances and
prepare an initial adjustment proposal.
2. The representative's supervisor will review the adjustment proposal. The supervisor will
send any adjustment proposals to their manager for review, as appropriate. [See authority
levels below]
3. The approved adjustment proposal will be passed to the accounting team for calculation.
4. Using the following guidelines, the accounting team member will calculate the adjustment.
GENERAL INSTRUCTIONS
A. Any debit or credit adjustment will reflect a fair assessment of any services not received
or services used where inadequate notification or awareness was afforded to the
customer.
B. Calculation of any adjustment will be made by the accounting team on a form provided
and shall include a complete and adequate description of the problem and justification for
the adjustment. A Revenue Manager must approve any adjustment over $2,500.00.
C. Proposed adjustments up to $2,500.00 will be reviewed and approved or denied by the
Customer Service Manager before a credit adjustment is made to the customer's account.
D. Proposed adjustments in excess of $2,500.00 will be reviewed and approved or denied by
the Utility Billing & Customer Service Manager before a credit adjustment is made to the
customer's account.
E. All adjustments require up to two approvals depending on the workflow /approval
hierarchy to ensure compliance with accounting standards.
F. Once the adjustment has been made to the customer's account, the customer will be
notified by a customer service representative via telephone and the adjustment with
explanatory notes will be included on the next utility bill.
IMPLEMENTATION
The Utility Billing & Customer Service Manager, or his or her designee, shall be responsible for
implementation and interpretation of this procedure and is authorized to exercise the applicability
of this procedure in the various circumstances involving abnormal water usage or loss.
December 2010
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