Audit of the City’s Metered Water Billing

Executive Summary

The City of Chicago Office of Inspector General (OIG) conducted an audit of the Department of Finance (DOF) and Department of Water Management’s (DWM) processes for billing water use and addressing customer billing issues.

The objectives of OIG’s audit were to determine whether,

• DOF and DWM correctly identify and respond to the causes of unexpected increases in water bills—also known as billing spikes—for metered accounts;[1]
• DOF consistently applies payment plans, credits, and adjustments to customer accounts; and
• DOF uses consistent and reliable procedures for verifying unusual water use and calculating estimated water use.

A |  Conclusion

DWM and DOF are jointly responsible for ensuring Chicagoans are billed accurately for their water use. OIG concluded that while the water meters of the size typically installed in single-family homes, two-flat, and three-flat residential buildings are accurate and unlikely to lead to billing spikes, DWM and DOF’s processes related to service orders, billing exceptions, and estimate and credit calculations may introduce errors that lead to or worsen spikes for some customers. Further, poor communication practices can extend the time the City takes to resolve these errors and compound customer frustration as they attempt to resolve them.

B |  Findings

OIG found errors in DOF’s bill review process, poor service order coordination between DOF and DWM, and incorrect manual credit calculations that created or increased the magnitude of customer billing spikes. DOF’s process for estimating bills does not fully align with the Municipal Code of Chicago (MCC) and introduces billing errors. DOF’s exceptions reports—used to identify accounts that may have billing errors—do not reliably detect and prevent such errors. Furthermore, poor coordination and incomplete documentation of service orders can contribute to billing spikes and a slower complaint resolution process. OIG also found that DWM service orders were sometimes duplicated. DWM did not ensure completed service orders were promptly and thoroughly documented, causing staff to complete multiple orders for the same problem. This not only wasted DWM staff time and resources, it also directly caused the City to overcharge at least one customer.

OIG further found that water meters typically installed in residential buildings such as single-family homes, two-flats, and three flats do not cause billing spikes. OIG reviewed 2,200 DWM meter tests and concluded that meters generally measure water use accurately. The design of the meters makes it unlikely they will measure more water than the amount that flows through them.

Finally, OIG found that poor communication via DOF and DWM’s written notices and poor customer service can add to customer frustration, prolong resolution time, and compound billing errors. Written notices, such as water bills, lack real-time information on water use. Because customers are not promptly informed of spikes in their water use, they cannot quickly take action to resolve potential leaks. After DOF resolved billing complaints, the department did not always follow up with the customer. DOF’s policy places the responsibility on customers to call for updates on billing issues. Some customer service representatives did not thoroughly review customer accounts and provided inaccurate information, thereby delaying the resolution of billing issues.

C |  Recommendations

OIG recommends that, as DOF and DWM look to modernize the City’s meter reading system and Banner billing system, the departments should ensure that the new system(s) include features designed to prevent duplicate service orders, and ensure that calculations of estimated water use and credits to correct account balances are thoroughly documented and reviewed.[2] DOF should work with its information systems vendor to ensure that its exceptions reports capture billing errors. DOF and DWM should work together to define roles and responsibilities for the entire service order process, from an order’s creation through its completion.

In addition, to reduce customer misunderstandings, DOF and DWM should distribute clarifying information on water meter functionality and the water distribution system. In its role as contract manager, DOF should ensure that customer service representatives are trained to accurately explain these topics, and to thoroughly review account histories and take detailed call notes. DOF should also ensure that customer service representatives keep customers up to date on the status of complaints and respond to customer inquiries, including emails, in a timely manner.

D |  DOF and DWM Response

In response to OIG’s audit findings and recommendations, DOF and DWM stated that they will continue to work together on process changes and training to ensure meter readings are properly recorded and bills are correct, and will distribute information about water meter functionality to customers. DOF stated that it will correct some of the account adjustment calculation errors identified in OIG’s report, that it has already improved its customer service training and quality management, and that it will continue to work with its customer service vendor to improve response times. DWM stated that it will continue to train staff completing service orders and to review their accuracy. The departments also stated that the City intends to move from Automated Meter Reading to Advanced Meter Infrastructure technology, at which point it plans to acquire a customer-facing portal that will allow account holders to access their water use information. However, the departments also stated that other improvements, such as modifying Banner to identify excessive or deficient readings and modifying DOF’s meter change-out report to identify all meter change-outs, would require substantial additional cost to the City. DOF and DWM agreed with some of the report’s conclusions and disagreed with others, and thus have not committed to all corrective actions. Without appropriate corrective actions, the issues identified in the report are likely to persist.

The specific recommendations related to each finding, and DOF and DWM’s response, are described in the “Findings and Recommendations” section of this report.

[1] For purposes of this audit, OIG uses the term “spike” to describe a bill with an increase of at least twice the customer’s previous water use.

[2] When DWM cannot collect a meter reading, DOF estimates the customer’s water use and bills the customer based on their previous use. DOF can also credit a customer’s account to resolve a billing error. See Background section B and Finding 2 section A for more information.