Utility Billing Procedures
About Billing Procedures
This information is intended as a resource to Washington local governments on the many issues associated with utility billings. Information in this document is most applicable to sewer, water, and storm drainage utilities which are the most prevalent. Much of the information provided can be extrapolated to other utility services such as gas, electric, and solid waste, but only after confirmation by legal counsel. The focus is on cities and counties. Special districts may have different statutory provisions. Private utilities are regulated by the Washington Utilities and Transportation Commission and regulations normally are not directly applicable to a public utility. The Commission does not have authority to make or enforce any order affecting rates, contracts, or charges or services of municipal utilities. Please note that this information does not include or substitute for accounting principles in accordance with accepted standards and directives by the state auditor's office.
General Statutes Governing Public Utility Services
- Ch. 35.92 RCW - Municipal Utilities (Specifically authority to operate utility - RCW 35.92.010, 35.92.020, and 35.92.050)
- Ch. 36.89 RCW - County - Storm water control facilities
- Ch. 36. 94 RCW - Sewerage, Water and Drainage Systems (Authority for county to operate)
- Ch. 54.16 RCW - Public Utility Districts - Powers
- Ch. 57.08 RCW - Water-Sewer Districts - Powers
- Ch. 87.03 RCW - Irrigation Districts - Generally
Deposits, When and If Required
Many utilities require, or at least preserve an option to require, a deposit for the purpose of guaranteeing payment in case of delinquency or an outstanding balance at time of account closure. Issues to consider in requiring a deposit include:
- Amount of deposit
- Length of time deposit is to be held
- Disposition of unclaimed deposits
- Circumstances for imposition or reimposition of deposit
Deposits can be required in any reasonable amount. Utilities generally require either a deposit or a satisfactory prior credit record. The deposit amount may be based on two months of average charges for all services received. Some utilities use the two highest months of prior services on the account.
The length of time that utility deposits are held varies widely. No state statutes direct a jurisdiction to return the utility security deposit at any specific time. Many cities retain the utility deposit until termination of service and payment of all charges. Others refund the deposit after a satisfactory establishment of credit: That might be 12 or as long as 24 months. A municipal utility does not have to pay interest on a utility deposit. See AGO Memorandum dated July 28, 1997 re Interest on Utility Customer Deposits (Library Loan).
A utility should make diligent and thorough efforts to return deposits to the customer once the account is closed. Sometimes, despite best efforts, utility deposits may remain unclaimed after a number of months or years. Ch. 63.29 RCW, the Uniform Unclaimed Property Act, applies to unclaimed utility deposits. A utility deposit is presumed abandoned, if not claimed for more than a year after the account is closed. The Department of Revenue has outlined provisions for local governments to follow in the Unclaimed Property Sec.'s UPC Guide for Local Governments.
With respect to utility service after commencement of a bankruptcy case, legal counsel should be consulted since specific procedures must be followed in bankruptcy proceedings. A utility may require a new or additional deposit, if chronic delinquencies occur, or if the customer's credit rating changes for the worse. A tenant may be required to make a deposit even if the landlord is not required to do so. Many cities place underlying responsibility for utility bills with the property owner. See Landlord Tenant Issues.
Sample Provisions Requiring Utility Deposits
- Port Angeles Municipal Code Sec. 13.16.015
- Toppenish Municipal Code Sec. 13.16.030 - Deposit required when – Amount designated
- Richland Municipal Code Ch. 3.26 - Utility Deposit System (Page 23 of document)
- Fircrest Municipal Code Sec. 17.04.005 - Creation of accounts - Deposits on renter-occupied premises
- Tacoma Public Utilities Deposits website
Combined Utility Accounts - Allocation of Payments
Most jurisdictions which provide more than one utility service combine all utilities into one bill, itemizing each utility amount. Because the most effective tool for collection of delinquent water and sewer accounts is the ability to turn off water service, some cities have provisions in their utility billing ordinances that establish the order in which payments will be applied, with the most current water billing as the last priority. This allows a water utility delinquency to be established more quickly with customers who chronically underpay their total utility bill or do not pay that portion of a combined utility billing with which they may have a disagreement. In addition, such prioritization helps to clarify amounts owed in case of a billing dispute.
Sample Provisions for Combined Utility Account Payments
- Auburn Municipal Code Sec. 13.48.120 A. - Billing and Collection (storm drainage utility) - order of payments
- Marysville Municipal Code Sec. 14.05.030 - Utility bills – Delinquent accounts – Liens - Provides allocation of payments
- North Bend Municipal Code Sec. 13.40.140 - Allocation of Partial Payments
- Oak Harbor Municipal Code Sec. 3.95.060 - Payments applied
- Kirkland Municipal Code Sec. 15.20.020 - Due date -Delinquency -Penalty
Under RCW 35.21.300(4) all municipal utilities are to offer residential customers the option of a budget billing or equal payment plan. The statute also provides that a plan must be offered to low income customers eligible under the state's program for Low Income Home Energy Assistance. Budget payment plans typically compute the monthly bill based on the average use for the past 6 or 12 months. At the end of every budget payment period, the bill is adjusted so that the customer pays the full amount due for the previous 6 or 12 months. Then a new average is computed for the ensuing budget payment period. Many utilities also have provisions for extensions and deferred payments.
Sample Budget Payment Provisions
A number of utilities provide for automatic payment of utility accounts debited from a bank account. Some provide for payment by credit or debit cards online. The latter is often through a third party and there is often convenience charge. Proposed legislation has been reintroduced into the 2007 session to require cities, counties and special districts providing electric, natural gas, water or sewer services to 5,000 or more retail customer accounts to allow electronic payment of utility accounts through the Internet when upgrading, changing or purchasing new equipment related to billing or services.
Illustrations of Utilities Providing Electronic Bill Payments
Gift Certificate Payments
Some utilities are offering gift certificates. The methods of payment differ. In the illustrations below, Klickitat PUD provides for a payment on an account with a certificate to give to the recipient; similar to a gift card. Tacoma provides for purchase of a gift certificate applicable to what ever utility service the recipient wishes to apply it to.
Illustrations of Utilities Providing Gift Certificates
Overpayment and Underpayment of Utility Bills
Even in the most efficient utility operation and billing system, there will be instances of billing error, misread meters, etc., which result in overpayment or underpayment. Billing adjustments for water service leaks are discussed below.
If customer is overcharged, the customer is entitled to the amount overcharged plus interest on the amount collected in error. The statute of limitations applicable to refunding water service overpayments, whether due to a billing error, meter reading error or a faulty water meter, is probably three years from discovery of the error by the customer or from when notified of the error by the city. If a claim for a refund is then made within that three-year period, it appears, based on Western Lumber. v. Aberdeen, 10 Wn. App. 325 (1973), then the entire overcharged amount is then owed. However, these matters should be discussed with legal counsel before a refund is calculated. If a utility discovers that it has been undercharging a customer, the utility can, and should, require the customer to render the amount of any underpayment.
Sample Provisions Relating to Overpayment and Underpayment
Billing Adjustments Due to Leaks and Meter Error or Failure
As a general rule, utilities own and are responsible for maintenance of all water lines on public property (usually from the water main to the water meter). If a leak occurs in a utility-maintained line, the utility is responsible for repairing the leak and absorbing the cost of the lost water. Maintenance and repair of water lines on private property is the responsibility of the private landowner, as well as any water lost due to leaks or breakage. When there has been a leak in pipes which are under the customer's control, some utilities adjust the billing if the customer had no knowledge of the leak and promptly notified the utility when it was discovered. Of course, immediate repair of the broken pipe is required. See also related MRSC information on Water Conservation - Water Leak Detection - Water Efficiency Measures
Sample Provisions Adjusting for Water Leaks
Sample Provisions Adjusting for Water Meter Error or Failure
Voluntary Discontinuance of Utility Services (Snowbird Provisions)
Many cities and water-sewer districts provide for a temporary and voluntary discontinuance of utility services for "snowbirds" or those who will not be occupying their residence for an extended period of time. Almost all cities charge a shut-off/turn-on fee no matter how long the service is to be turned off. The only other question is whether they charge a minimum monthly fee to maintain the account while the service is turned off. A minimum 30 day temporary disconnection period seems to be most common.
Washington State Municipal Code Sections