The Philadelphia Water Department (PWD) is one of the largest and most well-respected utilities in the nation. The Water Department began providing water service in 1801, and now provides water service to approximately 1.7 million people and wastewater service to approximately 2.2 million people in the Greater Philadelphia area.
With a poverty rate over 25%, the City is one of most economically challenged large cities in the country. In 2016, facing growing customer affordability concerns and account delinquency issues, PWD sought to establish a robust affordability program. The program development was driven by a City Council mandate to overhaul the existing customer assistance programs. Raftelis was engaged by PWD to provide program recommendations and assist in the implementation and rollout of the selected plan.
Using input from City policymakers, Raftelis helped PWD establish the Tiered Assistance Program (TAP), a cutting-edge affordability program where income-eligible customers receive a fixed monthly bill based on a percentage of their annual household income. TAP is one of the first of this type in the water industry.
TAP provides assistance to income-eligible customers through fixed monthly bills, regardless of usage, that are based on household income levels. Customers submit an application for program participation that are reviewed by program administrators. The program is available to customers whose household income falls at or below 150% of Federal Poverty Level (FPL) for their household size, as well as customers with special hardships who have an income below 250% FPL. Approved program participants receive monthly bills that range from 2-4% of their household income. In addition, customers who enroll have unpaid penalty and interest balances suspended and ultimately forgiven after two years of on-time payments. A benefit to this new program is the universal assistance program application. When applying for TAP, customers are applying for all three assistance programs; the income-based plan, special hardship, as well as the senior citizen bill discount. When applications are reviewed, eligible customers are placed into the program that provides them with the lowest monthly bill that they are eligible for.
Once the conceptual design of TAP was established, program eligibility criteria needed to be established. Raftelis worked with City policymakers to understand the target participants and used industry standards to recommend participation income thresholds. A key analysis during the process was understanding the financial impact to PWD; both in program administration costs and forgone system revenues. This included forecasting program participation, estimating bill impacts for eligible customers, and developing administration costs forecasts.
Starting in the summer of 2016, Raftelis worked alongside PWD to nail down program impacts, set program requirements, and establish billing data practices, protocols, and procedures. One of the key tasks in developing TAP, was the creation of an internal and an external public-facing website. The internal website is a database in which PWD can review all submitted customer applications and documentation, which makes the application approval process much smoother for PWD staff. In addition, the website communicates with the City’s billing system and can track the cost of the program and application processing speed among other performance metrics. The external website provides a way for customers to view information on TAP and request an application.
The program start date was approved for July 1st, 2017 and PWD and Raftelis worked diligently to meet this deadline. Prior to July 1st, Raftelis assisted with several training sessions regarding TAP for stakeholders within the Department as well as key members of the community. On July 1st, the program began on time and was well received by PWD customers. Since program implementation, Raftelis has continued to provide weekly onsite assistance to help ensure smooth rollout of the program and the transitioning of administration to PWD staff. The post-implementation assistance by Raftelis was key to ensuring a successful start for TAP. Since this new program streamlines the application method for all assistance programs, customers had questions as to what information was needed and who could apply. Further, this program was new for PWD staff and Raftelis was able to assist with technical issues surrounding the internal and external applications.
Since 2014, Raftelis has been engaged by PWD on a long-term contract to provide financial and management consulting services. The services involve debt issuance support, financial forecasting, service affordability review, and strategic planning assistance. At present under the agreement, Raftelis is performing a bond feasibility study and consulting engineers’ report for inclusion in PWD’s Official Statement for a 2017 planned bond issuance. The bond feasibility study provides a forecast of revenues and expenditures for the utility to assure bondholders that PWD will be able to repay bonds and meet debt covenants.
PWD engaged Raftelis to review their customer information system (CIS), billing processes, and data reporting in support of its 2015 rate case. PWD had historically faced challenges with obtaining accurate information regarding yearly financials when comparing reports from year end against numbers aggregated from monthly reports generated throughout the year.
Raftelis staff reviewed the internal components of the CIS in great detail and compiled a thorough accounting of the strengths and weaknesses of the system and their information reporting processes. Raftelis staff were then further engaged by PWD to perform the necessary reporting to support the 2015 rate case to implement the findings from the initial analysis. As a result, Raftelis provided a critical update to data supporting the rate case, which had previously been based upon figures scaled from 25-year-old reports. Raftelis staff performed data analysis on the financials of individual accounts and used its expertise in automation and programming to create new reports for use by PWD staff for future rate cases.
Historically, PWD’s rate-setting process included a complex and lengthy rate case. The 2012 rate case included a commitment by PWD to perform a management audit of customer service functions to examine those functions, improve them where needed to ensure good service to customers, and improve efficiency and cost-effectiveness. Raftelis was engaged for this study, and worked with PWD and the Water Revenue Bureau (WRB) on a strategic review of customer service functions. The WRB, a division of the City Finance Department, handles customer service for PWD customers relating to preparation of bills, application of payments, management of accounts receivable, and administration of assistance programs. WRB operates a customer call center, payment centers, and the customer information system (CIS).
Raftelis’ engagement was divided into two major components. The first component is a review of WRB functions for the purpose of increasing efficiency and the effectiveness of customer service. In particular, Raftelis has used benchmarking and process mapping to identify opportunities for improvement within customer service and implement change.
The second component of the study was a review of the information flow and reporting from the CIS. In particular, Raftelis completed a data-intensive review of the CIS and identified means to improve the accuracy and replicability of reporting. Raftelis produced reports to support the City’s ongoing cost of service study. Raftelis developed recommendations for improving the performance and lifespan of the CIS, such as database configuration changes. Raftelis’ unusual combination of strengths in financial analysis, data and information management, and large dataset analysis served the client well.
Raftelis completed the study and made many recommendations for changes. Raftelis is now tasked with assisting PWD and WRB with implementation of some of these changes.
This study will assist PWD and WRB in improving customer service and increase the accuracy and reliability of crucial financial and management reports that support effective utility management.