Water Services Department Billing Data AccuracyWater Services Department Billing Data Accuracy...

Project Team

Ross Tate City Auditor

Aaron Cook Deputy City Auditor

Stacey Linch Sr. Internal Auditor - IT

Leigh Ann Mauger Sr. Internal Auditor

Project Number

1190054

This report can be made available in alternate format upon request.

Water Services Department Billing Data Accuracy

August 26, 2019

Report Highlights

Customer Care and Billing System

Water and Public Works have good processes in place to identify billing inaccuracies. We did locate several accounts that had inconsistent user and premise identification codes. Data Analysis and Visualization

In partnership with Arizona State University business analytic students, we created a visualization tool based on the number of service agreements common to geographical location. A data visualization tool may allow Water and Public Works to identify premises not being charged the correct services. Maricopa County Dining and Septic Tank Permit Review

Comparisons of County dining and septic tank permits to the Customer Care & Billing system information yielded numerous accounts with inconsistencies between the data.

City Auditor Department 140 N 3rd Avenue Phoenix, AZ 85003 602-262-6641 (TTY use 7-1-1)

Mission Statement

To improve the quality

of life in Phoenix

through efficient

delivery of outstanding

public services.

City Auditor Department

Executive Summary

Purpose Our purpose was to review the data in the Water’s Customer Care and Billing (CC&B) system and evaluate the customer billing process that could result possible billing inaccuracies. We used data analytic tools and other data sources to identify potential premises being billed inaccurately, so Water Services staff can focus efforts on high-risk premises.

Background The City maintains over 420,000 customer accounts in the Oracle Utilities CC&B application, which captures charges for water consumption, wastewater, and solid waste collection. Water and wastewater charges can apply to residential, commercial, or industrial users. Refuse and recycle charges are typically for single family residences. Phoenix City Code provides the process for developing rates and fees for City services. The Public Works Department (Public Works) manages the collection of solid and recyclable waste, and determines the specific rates for those services. The Water Department (Water) sets the rates and fees for wastewater and water consumption. In FY18, annual revenues from water sales and sewer service charges totaled $606 million; solid waste collections totaled $131 million. In April 2018, the City contracted with Arcadis to complete a third-party evaluation of Water’s meter-to-bill processes. In the review, they tested over 400 individual meters and accounts. In general, they found meters to be functioning accurately, and consumption being billed to customers appropriately.

Results in Brief Water and Public Works had processes to review exception reports from CC&B to ensure accurate billing for water and sewer fees.

We reviewed the Water and Public Works staff’s processes for reviewing exception reports, evaluating new and modified CC&B accounts, and ensuring accurate billing. Staff were reviewing exceptions reports frequently, identifying possible billing errors, and correcting issues when identified. Water did not have a formal process for tracking the exceptions reviewed. Inconsistent user and premise types in CC&B should be reviewed to ensure billing accuracy.

In our review of the CC&B data, we identified 2.119 million SAs that were associated to 439,685 unique premise IDs. User types are used to determine service rates for water consumption and wastewater discharge. We found inconsistencies in user types versus premise type among apartments, land, car washes, and commercial properties. These inconsistencies could impact billing rates.


Family residence accounts in CC&B with a County Eating and Drinking (E&D) permit should be reviewed to ensure the account billing is accurate.

We compared Maricopa County Eating and Drinking (E&D) permit data to CC&B data to identify possible incorrect or unbilled wastewater services. The E&D list from the County identified a total of 12,494 permits, of which 4,418 were located within the City of Phoenix. We compared the entire CC&B population (439,685 premises) to the E&D list and matched 3,175 premises by address. We then evaluated the user type of the 3,175 premises in CC&B and found 14 premises that were designated as single or double family residence. This could be an indicator that they are being charged residential sewer rates versus the higher restaurant sewer rate. A data visualization tool could assist Water and Public Works to identify City services that have gone unbilled or were inaccurately billed.

We partnered with Arizona State University (ASU) Masters students to develop a data visualization tool which used software to plot all active accounts based on the premise longitude and latitude coordinates. We created a visualization based on the number of service agreements (SAs) tied to a premise. We color-coded the premises to show inconsistencies within geographical areas. For example, the premises in a neighborhood where most residences had five SAs were colored differently than those in a neighborhood with less than five.


Department Responses to Recommendations

Rec. #1.1: Review the discrepant user and premise types to ensure accurate billing for services; determine appropriate corrective action.

Response: Team has created a project task list to identify accounts that do not have the appropriate type user classification to ensure financial viability. Various resources will be used to determine necessary updates to accounts.

Target Date: 9/1/19

Rec. #2.1: Review the 14 family residential user type exceptions to determine if the appropriate sewer service rate is being applied. Upon conclusion of the review, determine if the E&D permit review is a process that should be completed on a regular basis.

Response: Team will create a plan to identifying discrepancies on accounts in CC&B against BI, Epcor and Maricopa County reports. Accounts will be updated and/or documented according to findings.

Target Date: 8/25/19

Rec. #4.1: Evaluate the need to create a data visualization tool for CC&B, potentially from an Oracle Business Intelligence product.

Response: Team will work with IT to create a data visualization with CC&B, BI and GIS layers.

Target Date: 9/15/19


1 – CC&B Data Analysis

Background City Ordinances require the Water and Public Works Departments to provide water, sewer, and solid waste services to specific premises as defined in the Ordinance. Billing of these services is maintained in the City’s Customer Care & Billing (CC&B) application. Demographic, financial, and geographic information are required elements of the billing processes. CC&B is designed as a V-Model which illustrates how City services are set-up and billed to the customer. The model delineates demographic, financial, and geographic information, and identifies how the components are linked in CC&B. The geographic side has service points (SPs) which link to the demographic side through service agreements (SAs). This is referred to as the SA/SP “handshake.” In general, services provided to a premise through the SPs are billed to the customer via SAs.

City Services Billing V-Model

Premise and services are linked through the SA/SP “handshake.” The geographic side of the model maintains information about the premise and service points, and designates all premises to a type; there are 17 different premise types. The premise types provide a general description of the premise; for example, residential, commercial, land, or industrial. The demographic side maintains the customer and service agreement information, and designates all users to a type. There are 35


different user types, which are tied to 42 different SA types. The user type drives the rates and fees charged for water and wastewater services. The user type provides additional details about the use of the premise, such as family residence, car wash, City office, service station, or laundry. We reviewed the service agreement and user type data, which drive the rates and fees charged to customers, to identify any discrepancies which could lead to inaccurate billing for services.

Results Most premises in CC&B had the common services provided by the City.

In our review of the CC&B data, we identified 2.119 million SAs that were associated to 439,685 unique premise IDs. Of the unique premises, we determined that 323,331 (74%) of the premises had five SAs. These SAs were typically for water consumption, wastewater flow, refuse, recycle, and bulk trash collections. In addition, we identified 91,278 premises that had less than five linked SAs, and 25,076 that had more than five linked SAs.

Premises by Number of Service Agreements

74% of premises had five SAs Inconsistent user and premise types in CC&B should be reviewed to ensure billing accuracy.

In our review of the CC&B data, we found that 2.05 million (93%) of the SAs were designated to a residential premise type, and 1.90 million (87%) were linked to a family residence user type. This is expected as premise type provides a broader description of a property, and the user type is more descriptive of the activity that is occurring at the premise. We identified the following irregularities between premise and user types:

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1 2 3 4 5 6 7 8 9 10

26,157 34,693

1,481

28,947

323,331

8,762 1,219 843 1,166 11,270

Service Agreements


• Apartment – there were a total of 482 SAs in CC&B with a user type of apartment; we identified 20 which had a premise type of land, and six that had a premise type of a hospital.

• Car Wash – there were a total of 265 SAs in CC&B with a user type of car wash; we identified two with a premise type of land.

• Commercial – there were a total of 10,856 SAs in CC&B with a user type of a single commercial unit; we identified 276 with a premise type of residential, 33 with a premise type of City of Phoenix, and one as a fire line.

Water staff indicated that, in addition to the user type, the linked SAs contain the specific billing information. However, inconsistencies between user type and premise should be evaluated to ensure accuracy of the data. These irregularities were provided to the Water Services Department (WSD) for additional review.

Recommendation 1.1 Review the discrepant user and premise types to ensure accurate billing for

services; determine appropriate corrective action.


2 – Maricopa County Permit Comparisons

Background Phoenix City Code Chapter 28, Article V, Sewer Service Charges, outlines the process by which sewer service charges are developed. Specifically, Section 29-39, Sewer Service Rates and Charges, provides the following sewer rates for residential and commercial restaurants, with and without dining facilities, effective July 1, 2018. These rates are based on per-hundred cubic feet of sewage discharged.

City of Phoenix Sewer Service Rates Effective July 1, 2018

User Category Sewer User

Rate Sewer (Other

Rate) Total Sewer Service Rate

Residence (Single and Multi) $0.8708 $1.6026 $2.4734

Commercial Restaurant and Bakeries without Dinning Facilities

$1.8529 $2.9483 $4.8012

Commercial Restaurant and Bakeries with Dinning Facilities

$1.9622 $3.1088 $5.0710

Restaurants have a higher total sewer service rate.

When an account is set up in CC&B, a user category, or type, is assigned to all premises. The user category determines the sewer rate charge for the customer, and as reflected above, residential customers have a lower total sewer service rate than a restaurant. If a commercial restaurant premise does not have the correct user type in CC&B, the sewer rates charged could be significantly less than the required rates. Maricopa County (County) is the regulating entity for restaurants and drinking establishments within the City of Phoenix. To operate a bar, restaurant, or other food service establishment, owners must obtain an Eating and Drinking (E&D) permit. These permits are tied to a location and show that a location is able to act as a provider of food and drink for commercial purposes for a year. This can include hospitals, senior living homes, schools, and other such locations which provide food and drink. Most E&D permits are for restaurants. In addition, Phoenix City Code Section 28-26 Private Sewage Systems, indicates that where a public sanitary sewer is not available within the City, the building sewer will need to be connected to a private sewage disposal system, in compliance with the Arizona Department of Health Services and the Maricopa County Sanitary Code. Often,


the private sewage disposal system is a septic tank, which is independent from the City’s sewer line. Maricopa County regulates the permitting of septic tanks, and electronically stores septic permits back to 1987. These permits include the initial permitting of the tank, abolishment, and transfer of ownership. We obtained a list of all E&D permits and septic tank permits from the County, and compared the corresponding properties to premises in CC&B to determine if the premises were accurately coded in CC&B, and to ensure appropriate sewer rates were charged.

Results Family residence accounts in CC&B with an County E&D permit should be reviewed to ensure the account billing is accurate in CC&B.

The E&D list identified a total of 12,494 permits within Maricopa County. In CC&B, we identified a total of 439,685 premises, with 2,029 premises being categorized as a restaurant. We compared the entire CC&B population to the E&D list and matched 3,175 premises by address. The discrepancy between the E&D list of Phoenix restaurants and CC&B is because E&D permits are issued to schools and other establishments that serve food; however, they are captured differently in CC&B. In addition, we identified 1,315 premises with a user type of restaurant in CC&B, that were not listed on the E&D permit list. We then evaluated the user type of the 3,175 premises in CC&B which matched the E&D permits. We found that there were 14 premises that were designated as single or double family residence.

Residence with E&D Permit

User Type Number

1 Family Residence 10

2 Family Residence 4

14 residences identified in CC&B that may be restaurants.

In review of the 14 premises, it was determined that some had a premise type as commercial, land, or as a church; however, the user type through the SA drives the billing rate. These premises were provided to WSD for further review. The County data was not accurate enough to yield results that would be useful to identify inaccuracies in waste water billings.


The septic tank list from the County identified a total of 129,395 permits. In CC&B, we identified 11,423 premises that did not have an active waste water SA, and were not being billed for sewer in CC&B. We compared the CC&B list of non-sewer premises to the County septic tank list by address and identified 8,914 premises that did not match. This could be indicative of properties that are connected to City sewer; however, they are not being billed for the service. The County indicated the data came from several different tracking systems, was not always consistent, and had not been validated. In addition, septic tanks can last up to 40 years; therefore, there could be properties that had septic tanks installed prior to 1987 and would not be included in our comparison.

Recommendations 2.1 Review the 14 family residential user type exceptions to determine if the

appropriate sewer service rate is being applied. Upon conclusion of the review, determine if the E&D permit review is a process that should be completed on a regular basis.


3 – Exception Reports

Background CC&B account maintenance is handled by staff in the Water Customer Care Service Center (Center). Staff from Water and Public Works are trained on specific City service billing areas. When a customer contacts the Center the call is routed to a billing specialist based on the specific need (e.g., adding, changing, or canceling services.) To ensure customer accounts are established correctly, services are correct, and fees due to the City are accurately charged, procedures need to be in place to regularly monitor accounts. We interviewed staff from Water and Public Works (PW) to identify the controls in place to monitor accounts and identified the specific reports generated, their frequency, and the department/division responsible for monitoring the reports. We determined if the procedures in place ensured that account activity was accurate and in accordance with City policies and regulations. In addition, we reviewed the types of reports being monitored and determined if the reports were sufficient to identify account exceptions.

Results PW staff had processes in place to ensure solid waste charges were accurately billed.

We met with PW staff and reviewed their processes for establishing new solid waste services and verifying that accounts are being billed accurately. There are 5 full-time accounting staff assigned to the PW administrative group which are responsible for updating refuse and recycling billing entries in CC&B. In addition, the staff reviews several business intelligence (BI) exception reports generated from CC&B related to solid waste charges. Staff reviews and corrects errors within CC&B seamlessly, often without having to notify customers. Staff explained that they review eight exception reports to evaluate PW billings and ensure bills are appropriate. Staff explained that many of the reports are proactive in the evaluating newly established services and confirming that PW billings were established correctly. Staff reported they review three of the reports daily, and five monthly. We obtained a sample of the reports and verified they had completed their review of the exceptions within the prescribed frequency. The daily reports include the following:

• New SAs – to ensure that all new accounts have PW SAs as needed.

• New SAs that have additional containers – to ensure PW SAs with more than two containers are accurate, and to verify that they have established a Green Organics SA.


• Green Organics new SAs with containers – to review new services where a previous customer had Green Organics services, to ensure the new customer wants to keep the organics container and pay the fees.

Water staff had processes in place to review exception reports to detect inaccuracies in customer billing.

We interviewed Water staff and learned that they have internal processes for reviewing Oracle Business Intelligence reports generated from CC&B, and reviewing Planning and Development reports to ensure accurate customer billing. Staff provided a list of the following reports that they review, the frequency of review, and staff assigned:

• SAs started the previous day – daily review to ensure that all SAs are linked to a service point.

• Unbilled SAs and accounts – daily review to ensure that all SAs are linked to premises.

• Premises without sewer or water SAs – monthly review to ensure that water and wastewater services are being accurately billed.

• Nonpayment stopped accounts – monthly review to ensure that SPs remained linked to premises.

Water staff reported that the reports are assigned to employees, based on job functions, on a daily, monthly, and quarterly basis. The reports are evaluated and worked based on certain metrics, staff adds notes into CC&B based on their review. In addition, supervisors review the reports to ensure that the exceptions are being worked.

Recommendation None


4 – Data Visualization

Background We partnered with ASU W.P. Carey School of Business and worked with a team of Master of Business Analytics students in their corporate applied capstone project. The student team met with Water staff to identify an analytics project related to City services customer billing and accuracy. The team focused on developing a process to identify unbilled services using data visualization to assist the City in determining if all City services are billed accurately. Water provided the team with account data from CC&B from February 2019. The data included 17 fields including, address, premise ID, premise type, user type, and longitude/latitude. The data did not contain customer name or consumption data. We worked with the team as they analyzed the data to ensure validity and identify any inconsistencies. We applied different data selections for areas that would be valuable in the identification of possible billing inaccuracies of City services.

Results Water should evaluate the need to develop a permanent data visualization tool to assist in the identification of billing inaccuracies.

To identify premises with unbilled services, the team from ASU used data visualization software to plot all active accounts based on the premise longitude and latitude coordinates, and created a visualization based on the number of SAs tied to a premise. The intent was to determine in a geographical area any inconsistencies in SAs among neighbors. For example, in a neighborhood where most residences had five SAs, these premises would be represented in a certain color, and the premises with less than five would be visually represented in a different color. Premises with five SAs were identified with a green dot, which make up the largest population of accounts in CC&B. Premises with three SAs were identified with a red dot, two SAs with an orange dot, and those premises with one SA were identified with a blue dot.


Data Visualization of Premises

Geographic identification of possible billing discrepancies. The visualization reflects a neighborhood where most residences are identified with green dots, and one property with a red dot. The outlier property has only three associated SAs, whereas all other premises have five SAs. The data visualization tool allows the user to hover over the premise and view detailed information including premise ID, service agreements, etc. We identified premises in CC&B that did not have a wastewater SA, and plotted them to identify inconsistencies among geographical areas (see Attachment A – Active Premises without a Wastewater SA for a view of nearly the entire City). In the attachment, there are certain areas where entire neighborhoods are not tied into the sewer lines, which explains the grouping of the dots. However, in newly developed communities and neighborhoods where sewer lines are present, most premises should be charged for wastewater.

Residence has only three service agreements instead

of the expected five.


In the graphic that follows, we evaluated the Ahwatukee-Foothills area, which is a community where it is expected that most residences are tied into a sewer line. We evaluated those premises that did not have a wastewater SA.

Ahwatukee-Foothills Active Premises without a Wastewater SA

Identification of outliers in locations where sewer is expected. The full visualization identified 11 properties out of approximately 20,000 residences in the Ahwatukee-Foothills area that are active premises (being billed for other services) but did not have an active wastewater SA. In further review, we confirmed that one of the properties did have a septic permit with the County. The other premises were provided to WSD for additional research.


In the team’s review of the CC&B data, they identified 28 premises that had longitude and latitude coordinates that were outside of Maricopa County, and 11,823 premises that did not have any longitude and latitude values. Of the remaining premises, the team identified 91,278 premises with less than five SAs. These results alone are not an indication of exceptions; however, through the use of data visualization, staff can study neighborhoods and identify outliers (e.g., premises with less than five SAs). These premises were provided to WSD for review and have since been corrected in CC&B.

Recommendations 4.1 Evaluate the need to create a data visualization tool for CC&B, potentially from an

Oracle Business Intelligence product.


Attachment A – Active Premises without a Wastewater SA


Scope, Methods, and Standards

Scope We obtained a download of CC&B for one billing cycle, for all accounts from February 2019.

Methods We used the following methods to complete this audit:

• We reviewed Phoenix City Code related to water, sewer, and solid waste rates and charges.

• We interviewed Water, Public Works, and Planning and Development staff.

• We reviewed CC&B and Business Intelligence exception reports.

• We analyzed CC&B account entries and compared data to County septic, and Eating and Drinking property data.

• We created a data visualization of CC&B accounts by number of SAs. Unless otherwise stated in the report, all sampling in this audit was conducted using a judgmental methodology to maximize efficiency based on auditor knowledge of the population being tested. As such, sample results cannot be extrapolated to the entire population and are limited to a discussion of only those items reviewed.

Standards We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the performance audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

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