As all California manufactured housing community owners and operators know, submetering and separately billing the residents for utilities (electricity, gas, water, and sewer) is a must. Utility charges are one of the largest community expense items. Over recent years, utility rates and charges to the community have been increasing at amounts well above the change in the Consumer Price Index. Even where rent control restricts the ability to increase rent, state law allows the community owner to increase submetered utility charges to the full amount of any increases in the underlying rates and charges. Therefore, community owners and operators should separately bill the residents for all eligible utility charges; this will not only lead to conservation, a goal shared by all stakeholders, but will also increase revenue for community owners.
Of course, in California, utility billing to the residents comes with challenges, including complicated state-law-governing rate methodology, aggressive regulatory investigative bodies (such as California Department of Housing & Community Development and Weights and Measures), and litigious residents. Therefore, it is essential that the community operators bill residents for utilities in a manner that is timely and compliant with the law. What follows is a description of tools to enhance manufactured housing community owners’ and operators’ ability to meet these requirements.
Rate Audit and Monthly Rate Updates: If the community is already billing the residents for utilities, it is recommended that the community have its existing rates and rate methodology reviewed by a professional billing agent. For instance, when ManageAmerica takes over a community’s utility billing, it undertakes a thorough review of the billing methodology and makes recommendations to the community operator. Once a rate methodology is established, rates must be reviewed and updated monthly. Such updates allow for the highest allowable recovery and help keep the community in compliance with applicable law. This is especially important with submetering for electricity and gas, whose rates change the most frequently. If rates are not updated monthly, the community will likely bill the residents for incorrect rates and charges.
Keeping Apprised of Changes in Law and Governance: When billing residents for utilities, it is imperative to be kept apprised of changes in the law. For example, over the last few years, the growing number of Community Choice Aggregators (“CCAs”) has had a direct impact on community owners’ approaches to both master meter and submetered methodologies. In response to this new industry dynamic, ManageAmerica worked directly with state-level Weights and Measures staff and WMA to suggest and implement changes to the law. In another instance, a recent amendment to state law effected the manner in which owners and operators can charge their residents for submetered water and sewer consumption. As drafted, the law was vague and left several items open to interpretation. It is imperative that your billing agent understands these issues and works with the proper parties (including your legal counsel) to achieve compliance.
The following are additional tools to aid manufactured housing owners and operators in administering proper submetered utility billing:
Automatic Meter Reading: One of the biggest challenges in submetered billing is obtaining accurate meter read data. The best solution is to install a modern automatic meter reading (AMR) system that reads meters on a predefined schedule (often hourly or daily), and reports that data to a web-based data management system. ManageAmerica’s billing system has application programming interfaces (APIs) that allow it to seamlessly import data from major AMR systems. In addition to providing timely, accurate data with no labor expenses, AMR systems can also provide operators with alerts about residents with zero usage, high usage, etc. This allows residents to fix leaks sooner and better manage their consumption and expenses.
AMR systems are popular for submetered water billing; they are gaining popularity for electric billing, and they will soon be used for submetered gas billing, as well. Most of ManageAmerica’s client communities that don’t have AMR systems employ our proprietary Mobile Meter Reading App (Android or iOS). The App automatically compares the current read input by the user to each resident’s usage history, and, if out of the ordinary, the App prompts the user to either correct the read or take a photograph for later review.
Electronic Billing: Enrolling in “E-Billing” enables residents to receive and view bill notifications via email or text. It speeds up delivery and reduces expenses for postage, paper, and labor. This convenient form of billing allows everyone from seasonal residents to senior communities to access their bills with ease.
Electronic Payment Solutions: Modern billing systems offer a range of automated payment solutions. Many residents elect to pay their bills online using ManageAmerica’s Resident Portal, either making a one-time payment or scheduling automatic recurring payments. Electronic payments are deposited automatically, without a trip to the bank, and are automatically reflected in the ManageAmerica resident ledger. Returns (NSFs) are also processed automatically, and they are immediately reflected on the resident ledger, including immediate automatic charging of NSF and late fees.
Payments can also be made using credit and debit cards in person or through the Resident Portal, automated check scanning with a desktop scanner, CashPay at retail locations (so community personnel don’t have to handle cash), and Pay via Text services. All these electronic payment solutions are provided in association with select national banks and third-party vendors who provide seamless service, typically resulting in the deposit being available in the owner’s bank account within a matter of days. Electronic payments drive improved collections, labor savings, fewer bookkeeping errors, and improved interest “float.”
Tracking Submetered Utility System Recovery Ratios: Utility Recovery Ratios can be very challenging to track using income statements because it’s so hard to “period match” revenue and expense. Two ratios are relevant in this context: 1) the Usage Recovery Ratio (submetered usage divided by master meter usage), which measures how much of the usage is attributable to common areas and line loss; and 2) the Charges Recovery Ratio (submetered revenue divided by master meter bill expense), which measures system profitability and overall efficiency. The ManageAmerica Utility Variance Analyzer report calculates these fields automatically once the master meter bill data is entered in the system. A submetered water system with submetered rates based on allocations of the master meter bill expenses is considered efficient if it has utility recovery ratios of 85% or more. If a community’s usage recovery ratio is significantly lower than 85%, it may be a candidate for a leak detection study. If a charge recovery ratio is significantly lower than the usage recovery ratio, the community’s rate-setting policy may need to be revisited. If you need help in calculating your community’s recovery ratios to maximize recoupment and ensure regulatory compliance, please contact the ManageAmerica Billing Team for an evaluation.
Although submetered utility billing for manufactured housing community residents presents challenges, it leads to maximum collection and conservation which can bring down the overall cost to the community. The tools described above can assist manufactured housing community owners and operators in collecting the maximum amount allowed by law and billing in a timely and compliant manner.
By Brice M. London
Originally published in the WMA Reporter, June 2023