The City of Salem Utility Committee made several recommendations to the Board of Aldermen during their Dec. 13 meeting. Chairman and Alderman Kyle Williams was present, along with committee members Catherine Dent, Harold Hamilton, David Weiss, and Catherina Pot. Members Rick Letchworth and John Hambacker were absent.
A representative from HomeServe, a utility service and repair insurance company, presented two programs that the company offers. The representative attended virtually through Zoom.
HomeServe offered two products to the city. One was a leak protection program, and the other was a service line warranty program. The representative from HomeServe told the committee that the two programs go hand-in-hand, though they function a bit differently.
The leak protection program, if adopted, is an opt-out program, meaning that customers would see a small additional charge on each bill (a couple of dollars, depending on which level of protection the city decides to go with) unless they opt out. It was noted that within the first twelve months of service, customers can opt out of the program and be given a full refund from HomeServe. According to HomeServe, 97% of customers stay enrolled.
The program aims to alleviate the burden of high bills that customers may receive as a result of a water leak. Leaks from service lines, faucets, and toilets can leave a customer with thousands in bills at the end of the month, on top of a leak they are responsible for fixing.
If a customer detects a leak (either by getting a high bill, or physically finding the leak), HomeServe’s leak protection program will pay the amount of the bill that is over the average monthly amount.
The other program, a service line warranty program, aims to help homeowners fix problems when they occur. The representative cited the high cost of these kinds of repairs, which can run into the thousands. The program is basically an insurance policy, covering the repair costs if a customer’s line were to leak or break. It also covers some aspects of indoors plumbing, according to meeting discussion.
For this program, HomeServe would use the city logo to send out limited marketing materials advertising their program to residents. It was noted that the company would not use taxpayer funds for any marketing and would only be using the city logo to better reach city utility customers. This program, unlike the leak protection program, is an opt-in program, meaning customers will purchase coverage independently from the city.
The board made motions to recommend that the city utilize the programs.
In the first motion, Catherina Pot made a motion to recommend the implementation of the leak protection program at a $1000 per claim level. Though the city had the option of requiring that customers be on the bill protection program, Pot and others said they were reluctant to make it mandatory. Harold Hamilton seconded the motion, which passed by a 4-0 vote.
The other program was recommended through a motion by Harold Hamilton, and seconded by Catherine Dent, to recommend the implementation of the service line warranty program, pending legal review, with royalties from the company’s use of the logo to be remitted as savings to potential customers. Also, Hamilton added to his motion, “Pending legal review”. The motion was passed by a 4-0 vote in favor.
Since the Utility Committee is an advisory committee, both recommendations must now go before the Board of Aldermen to be approved before they can be implemented.
The committee discussed utility deposit amounts. According to City Administrator Sally Burbridge, the current utility deposit amounts were set in 2009 and no longer reflect adequate amounts to cover a last month’s bill, or to help recuperate amounts owed by customers who skip out on their bill. She said in her summary that today, the deposits are counted on for those purposes.
Burbridge recommended a shift away from the flat deposit amount that the city has been doing, which is the same across the board, no matter the anticipated usage or billing amounts. Rather, Burbridge recommended that the fees change to one-twelfth of the past year’s utility bills for the new service address.
Burbridge stated that this would allow the amount to reflect actual utility usages for that location.
“While individual usage of activities cannot be calculated in advance, the general condition of the home (insulation, windows, drafts, etc.) will determine a large portion of the utility usage for that location,” reads the staff summary.
Without making a decision, the committee moved on to another topic, before coming back to the deposits issue. Pot moved to recommend changing the deposit to a one-month average of 12 months of previous utility usage, which was seconded by Hamilton. The vote was 4-0 in favor.
The board also recommended changing collection agencies for past-due accounts receivable. Currently, the city is using Consumer Adjustment Company, Inc. as a collection agency. Though the staff summary notes that the city does occasionally receive checks from the company for past due amounts, the city, for some unknown reason, ceased the submittal of past-due accounts to collections in November of 2018. Burbridge stated that there is no record of why collections were stopped. Burbridge said that despite not having documentation, she had learned that a list of past due accounts receivable was compiled in 2021, but stated that she felt COVID and technical issues at the time likely caused the failure to submit. According to discussion from the meeting, there is around $1.1 million in aging debt to the utility. Staff will begin submitting to a collection agency in Jan. 2024, but Burbridge recommended switching collection agencies to allow for pre-screening of applicants.
Burbridge’s suggested company, Online Utility Exchange, allows for soft credit checks from the “big three” credit score reporting agencies, and charges the same percentage rate (30% of collected funds) as the current company.
After discussion, Catherine Dent made a motion to recommend the switch to Online Utility Exchange. The motion was seconded by Pot and was carried by a 4-0 vote.
Also discussed was the ordinance that dictates the focus and responsibilities of the committee. According to City Administrator Sally Burbridge, the original ordinance was adopted in 1980, and was in need of an update.
The original ordinance says that the utility committee is responsible for making recommendations for the operation of all utility services, rate structures, street construction, maintenance and repair, conservation programs, and long-range utility policy making.
Committee members discussed the street maintenance aspect of the ordinance. Alderman Wiliams indicated that he felt that the committee doesn’t need to deal with streets because other responsibilities take up a lot of time as it is, citing long meetings. Utility Committee meetings often surpass the two-hour mark, with some, including the Dec. 13 meeting, taking as much as three hours or more.
After some more discussion, Pot made a motion to recommend the removal of the street construction and maintenance aspect from the ordinance. The motion was seconded by Dent, and the motion carried 4-0.
