Asset Management – Involving Customers in Levels of Service Conversations

Heather and Ross took turns answering the question below:

• In order to have an effective level of service, do you need the input from your customers?

Heather:

I would say, I take a stab at some comments and then I’ll turn it over to Ross to add some because I know they’ve done a lot in New Zealand about involving customers.

And my thought is that the best way to do a level of service is to involve customers. However, knowing the reality for many small water systems, I know that it’s difficult to do that.

So my suggestion is:

1. To start with setting levels that you believe currently exist within the system.
2. And then talk to your customers about the levels that you have. Either at the annual meeting if you do that, maybe a customer survey.

Try to find some way to start getting some customer input going forward so you can see if you need to revise those customer service levels. For example, we mention about pressure and whether the pressure is adequate in the system or not.

If you set the pressure at say 60 psi as your minimum or that’s what you are trying to maintain within your system. And maybe you say we’re trying to do between 60 and 70 psi.

You can start polling your customers and saying, do you feel like the pressure at your house is adequate?

You don’t necessarily have to say, do you like 60 psi because a lot of people have no idea what you are talking about. But you might be able to ask them, do you have any concerns about pressure? Do you have issues with that?

So you can start to get some customer feedback over time. But you can take an initial stab at serving those customer service levels without having to involve your customers right away. But I do believe you should involve customers at some point, to make sure your set your service levels at the right level because you may actually find (that) maybe you can drop the pressure a little bit.

Maybe your customers will still be happy at 50 psi say. And if you drop it a little bit maybe you don’t have to run a booster pump. Or you can save some energy or some costs that way. So, you don’t want to be completely locked in without talking to your customers because there may be opportunities for more of a dialog and cost reductions.

And then, the thing I would say about why our systems reluctant to do levels of service agreements that is something that we see a lot.

When I first learned about asset management over a decade ago, I had gone to New Zealand and Australia.

And really looked at what they were doing there and there were lots and lots of transparency with levels of service and customers’ needs have been provided.

And then when I brought the idea back to the US, most of the time I would find systems very very reluctant to ever tell customers what they were doing.

And I think a lot of the fear comes from, I don’t want them to know because if I don’t do it, they’re going to get mad or they’ll sue me or whatever.

So what it does is really just create more of that distrust between customers and the utility. When really what you want is, this is what we are trying to do.

We’re trying to provide service that meets these particular levels of service probably pressure, customer service, response times, those kinds of things.

We do need to work on getting to the place where people are comfortable being transparent about what they are trying to do. Hiding it is not really the way to be, we want customers on our side.

Because if you want to be able to raise a rate, you need them to understand what it is that you’re trying to do and how you are trying to do it.

So I do think this is something we need to go forward you know, involving customers more.

They’ve done an excellent job in New Zealand and I like Ross to touch on that and how you guys have really done a good job involving customers and getting them to understand what it is your utilities are doing.

Ross:

Thanks, Heather. Why we’ve done a good job, it was because we were mandated by legislation to consult.

So it was a whole new thing when it came in. Here are a couple of observations out of that process.

The first one is, several of the smaller systems I’ve ended up working with over the years, that the questions we asked them are:

• “Who are your main customers?”
• “Who are your critical customers?”

One case, there was a big meatworks that took half of the water in the town. And another case it was a big dairy processing plant that did about the same.

So you had these massive customers that were on the municipal supply and are paying for a lot of the water for the town and all those sorts of things.

The next question I ask them in both these cases is, do you talk to them at all? They replied, “Oh no, no we don’t.”

In my business with somebody who is 50 percent of my income, I might choose to talk to them more than once every ten years. And I think there’s a really key point – it is to sit down with them.

Where you do have major industrial or commercial customers.

Go and talk to them. Find out that what’s important to them, find out what you’re doing that’s frustrating them.

Is there anything that you can do to do business better for them? And put that into the mix.

I mean, take as an example. I know in Albuquerque where Heather is, there’s a massive big Intel fab there. They use water, a lot of water on those fabs for the process.

There, they would be a major and important part of the economy, Fortune 500 company obviously and a major water user.

Go talk to your major users. Is there anything that you need to know from them? So that’s the commercial and industrial level.

Do some work in that and the same if there are major discharge into your system the other way around with wastewater. So that is that side of it.

The second side with the input from customers is you’ve really got to watch out for that “squeaky wheel” syndrome.

It is where you get people jumping up and down because they have a particular issue that is concerning them.

And they may not be at all the representative of what the community thinks about it. And so when you are doing and looking for customer input, you need to bypass the pressure groups or if you have got advocacy groups.

Certainly, you need to listen to what they’re saying but also make sure that you’re getting some input from the wider community as to how they feel about service levels.

And I think that was the two really big lessons out of the customer interfacing issue that we come across.

Is there anything else you want to add Heather?

Heather:

The only thing I add is I went to a very amazing meeting when I was in New Zealand, the first time I was there, where they had a customer, a session with customers where the community was telling the customers about not just water, but water, roads, parks, all of that type of information.

And they were saying what it was going to cost the customers to, you know pay for the water upgrades, pay for the roads, pay for parks, pay for libraries, all that sorts of thing.

And it was a very different conversation than I’ve ever seen before where customers were actually saying things like, “Oh, you want us to pay more five years down the road and then you’re gonna extend the pipelines to community A or community B. We would actually like you to move that up to two years and we wanna pay more now so that you can run the pipe sooner.”

So when you can see that kind of conversation take place between customers and elected leaders, where customers were actually trying to engage in that conversation about what the rates will be and what level of service they will get, it’s really amazing.

And someday I really hope that we start to see more of that in the US where customers are really tapped into what the utilities are trying to do and the money it takes to do that and they’re willing to pay those rates.

I think that’s a really big step forward that we need to make. And move the conversation into the dynamic of here’s what you’re getting and here’s what you’re paying.

Similar to your cell phone or anything else where you buy so many minutes and you have so many phone lines and you get so much data and you pay a different amount based on the service you want.

And that same conversation needs to be there for water, you know it’s a little different in that each customer doesn’t get to pick service levels.

But it’s the same basic idea of where you tying what somebody’s paying to the services that they’re getting and I hope that someday that will be a little closer to that.

Ross:

Yeah, Heather and that’s varied from community to community. We’ve got some communities over here that really want other people to pay for their stuff as well. So that conversation that I know goes on, on occasion in the U.S., is no different anywhere else in the world. It’s just different mechanisms for having it.

So, but we have had communities that have, as you say in that example, that have taken a look at all the levels of services and said, “Yes, we want to change and we want this stuff here and we’re prepared to pay for it.”

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