CHARACTERISTICS

Customers respond to tariff structures based on their expectations about the effectiveness of revenue collection. If customers expect that their electricity bills will never be collected, electricity prices will have little or no effect on their level of end-use consumption. But, where electricity tariffs are collected regularly (with penalties imposed for nonpayment), end-users will modify their electricity consumption levels accordingly.

Improved billing & collection systems to insure that electricity consumers pay their bills will generally result in lower electricity consumption. With every kWh of fossil-fuel-generated electricity avoided, production of the associated greenhouse gases and/or air pollutants will also be avoided.

In addition, improved billing & collection systems allow utilities to monitor payment and non-payment, and to identify chronic non-paying customers. Data from the system can be used to analyze and "age" accounts receivable and target non- or late-paying customers, generate late-payment notices, calculate late payment fees, issue warnings for non-payment and ultimately disconnect service for continued non-payment. Having access to customer account information improves a utility's ability to assess its own financial situation and reliability.

SIZE:
Appropriate for all electric utilities.

FEATURES:
Utilities can use direct access payment centers that increase the ease with which customers can pay their bills. Utilities can also develop management tools and internal procedures to monitor accounts received.

COST:
This action makes economic sense regardless of the GHG benefits.

CURRENT USAGE:
There is increased use of automated systems to provide information to customers and increase convenience of bill payment throughout the world.

POTENTIAL USAGE:
All utilities may benefit from improving their billing & collection systems.

ISSUES ASSOCIATED WITH IMPLEMENTING ACTION

• Customers may be hesitant to change their manner of payment or distrust new methods.
• Where electricity is provided by public entities, improving billing & collections may not be politically possible.
• Buildings must be metered to permit recording of electricity usage, preferably by time-of-day, to apply tariffs.

CLIMATE CHANGE IMPACT

EMISSION EFFECT:
    

CONDITIONS FOR EMISSIONS MITIGATION:

• Tariffs must be set so that electricity prices induce consumers to decrease their consumption, or at a minimum encourage more efficient use of electricity.
• Programs must be long-term in scope to achieve real reductions in emissions.

EMISSION ESTIMATE:
Varies according to the change in electricity demanded before/after implementing billing & collections reforms.

COST-EFFECTIVENESS:
Varies according to the administrative or investment costs required. Some investments are cost-effective regardless of the energy savings achieved.⁶

SECONDARY EFFECTS:
Varies according to the decrease in electricity demanded. For every kWh of fossil fuel power generation avoided, the associated emissions of air pollutants are also avoided.

RESOURCES

• The World Bank Energy Sector Management Assistance Program (ESMAP) provides country-specific assistance in evaluating and improving management of the energy sector. Previous country studies and technical assistance papers are available online at http://www.worldbank.org/html/fpd/esmap/
• The Staff Subcommittee on Management Analysis of the National Association of Regulatory Utility Commissioners (NARUC) sponsors operations and management training for utility executives. The NARUC website (http://www.naruc.org) links to minutes of recent meetings and posts articles from Management Journals.
• USAID and Hagler Bailly, Inc. are working with Armenergo, the state-owned utility, to improve transmission network and distribution system metering. By upgrading metering hardware using off-the-shelf technologies, Armenergo expects to improve commercial operations and increase cash collections.

CONTACTS

Hagler Bailly, Inc.
Michael Ellis
Principal
Arlington, VA
Tel: (703) 351-0300
Fax: (703) 351-5167
mellis@haglerbailly.com

National Association of Regulatory Utility Commissioners (NARUC)
Washington, DC
Tel: (202) 898-2200
Fax: (202) 898-2213
http://www.naruc.org

U.S. Energy Association
John Hammond
Energy Partnership Program
Washington, DC
Tel: (202) 312-1230
Fax: (202) 682-1682
Jhammond@usea.org

World Bank
Dominique Lallement
Manager
Energy Sector Management
Assistance Program
Washington, DC. 20433
Tel: (202) 458-2321
Fax: (202) 522-3018
esmap@worldbank.org
http://www.worldbank.org/html/fpd/esmap/