Our Insights

Utility Billing Services Mistakes to Avoid

Apartment resident utility billing has become common in the multifamily industry for many reasons. It enables property owners to allocate and recover utility costs (water, electric and gas) and it gives residents control of their utility expenses and conservation efforts. A successful utility billing program goes far beyond simply providing residents accurate and timely utility bills. Here are some of the most common utility billing services mistakes to avoid:

1. Not disclosing the utility cost recovery program in the lease

This is a big one. A successful utility cost recovery program starts before the lease is signed. Residents should be made aware of your property’s utility billing policy before they sign the lease. Language should be included in the residents’ lease making them aware that they are responsible for paying for their utilities and how those utility expenses are calculated. Property or portfolio managers should get recommended utility billing lease language from its third party billing provider and/or consult their company’s legal counsel to ensure their utility billing lease language is legally sufficient and appropriate for the local jurisdiction.

2. Non-compliant billing

States, counties and even cities will often have legislation in place that provides strict rules on what utility costs can and cannot be recovered from residents. In addition to the actual utility expenses, utility bills often contain numerous line items that may or may not be allocated to residents such as taxes, street, light and other maintenance fees and various service fees. An experienced utility billing provider with a strong legal team is critical to provide guidance with billing compliance and to review each line item to make sure that only those line items which are legal to bill back to residents are used. Additionally, ensuring that your billing provider is separately entering each distinct line item from the master utility bill into its billing system, is only allocating those which are legal to bill to residents and allows you to run historic reports. A description and dollar amount associated with that line item and whether or not it was allocated to residents is critical to later proving you are only allocating legal line items if challenged.

3. Not maintaining compliance

The job is not done when your resident billing program has been properly disclosed in the lease and utility bill line items have been separately entered and reviewed for initial compliance at setup. Legislation is always evolving and local utilities are constantly changing their utility billing charges, so it is necessary to keep up with compliance every month. At NWP, our regulatory department is responsible for maintaining compliance for over 200,000 billing line items from over 3,000 Local Utility Districts (LUDs). Every month they get 500-1,000 new billing line items to review and resident billing will not move forward until these new items are reviewed for compliance.

4. Lax Data Security

In order to run a utility billing program, it is necessary to have residents’ personal information such as names, addresses, phone numbers and email addresses. This is exactly the type of information criminals would love to get their hands on. Make sure your property or portfolio is using a billing provider which has sufficient systems in place to ensure the protection of your resident’s personal information and has committed, in writing and in practice, to protect your residents’ data. Some common industry practices include using verified secure networks, data centers and SSAE 16 and PCI level 1 certification.

5. Poor resident service

Resident service is another key to a utility billing program’s success. Residents are going to have questions about their bill even if the program was reviewed with the resident at the lease signing. Someone knowledgeable in the details of your resident utility billing should be available to residents who can answer their questions. Property staff, if properly trained, can assist with this responsibility or if you are using a resident utility billing provider, they should provide this service and serve as the “expert voice” to answer basic questions and assuage any resident concerns. Residents also tend to have questions at all hours. NWP provides live resident support services 7 days a week and includes evening support hours as 20% of our resident calls are taken after hours and on the weekends.

Having a compliant, well run, utility billing program can provide great benefits for both property owners and residents. Property owners recover utility expenses from the residents who use them while encouraging conservation and residents get greater insight into their expenses and conservation efforts. The key is making sure the program is set up correctly, properly disclosed, compliant at all times and provides proper resident service.

About NWP Services Corporation

Headquartered in Costa Mesa, Calif., NWP Services Corporation (NWP) is an award-winning provider of utility management, energy management, electronic payments, submetering, back office accounting and IT solutions. NWP enables multihousing owners, operators and fee managers to reduce costs, create new revenue opportunities and grow their portfolios based on services that convert expenses into reliable revenue streams and provide operating cost reductions. For almost two decades, NWP has worked exclusively with multifamily owners and managers to provide a full life cycle of utility expense recovery through resident billing, invoice processing automation, utility spend management, analytics, and energy management.