CITIZENS’ ADVISORY COMMITTEE
Meeting Minutes
June 17, 2004  

CAC members in attendance:  Myrna Poticha (Chair), Michael Buchenau, Tim Flynn, Jim Legas, Larry Keesen, Roberta Simonton, Theresa Jehn-Dellaport, Theresa Worsham  

DW staff:  Marie Bassett, Patti Miller, Richardo Maestas, Mary Price, Kerry Kuykendoll, Greg Fisher,  Teri Chavez  

Guests:  None.  

Agenda and Minutes  

The agenda was adopted as is.  

The minutes were approved with the following clarification: Page 2 first paragraph of minutes, last sentence:  Marie stated a twenty year holding period on new storage projects at or below Cheesman Canyon (this will not impact Antero or Eleven-Mile Reservoir plans).   

Staff Update -- Marie Bassett, Director of Public Affairs  

Marie announced that the following long-time, Denver Water employees will be retiring in June and July: Rocky Wiley, Manager of General Planning, Ron Duncan, Manager of Fiscal Planning & Budget and Jane Earle, Manager of Community Relations.  

On May 26, the Board approved the 2004 Rebate Program. The Board funded this program with approximately $500,000. To date, there has been minimal response.  Most applications received have been for washing machines.  The staff may recommend extending the closing date ( July 31, 2004 ) if funds still remain after
July 31.  

Myrna Poticha expressed disappointment that the rebates were not available to “spring Xeriscape planters”.  Spring is a better time to make changes in a landscape, yet these customers were not able to take advantage of the landscape and soil amendment rebates.  

On June 9, the Board approved the Option 2 service fee increase (meter size service charge). This was the option the CAC recommended the Board adopt.  

Roberta Simonton stated that she was pleased that Master Meter districts will pay the service fee increase per connection.

Staff is studying ways to establish a wetland or fen near Antero Reservoir. A fen is a unique wetland fed from subsurface water.  There is an existing fen near Antero that would be destroyed if the reservoir were enlarged.  

The drought is causing revenue shortfalls, due to a decrease in water use.  This is of major concern to the Board.  They are looking at what operating expenses can be cut or delayed.  

Denver Water’s Drought Monitors are doing a very good job.  In general, they are very dedicated and helpful explaining the water use restrictions and rules to all customers. One monitor recently issued a citation to the Denver Sheriff Department for watering on the wrong day.  

Larry Keesen asked what the current reservoir levels are and if there is a possibility that restrictions could be lifted by the Board?  Marie said the system levels are at 82% full and that the staff is not making this recommendation; however, the Board could do this.  The staff is requesting that changes to water use restrictions be limited to no more than every two months, to align with the bi-monthly bills.  

Denver Water Customer Service – Patti Miller, Customer Care Manager

Mary Price and Richard Maestas, Customer Information System Project Manager and Database Administrator were available to address questions about CIS.  

Patti explained that she has only been at Denver Water for six months.  She has been working on improving the work culture in Customer Service as well as performance statistics. She highlighted some of the following statistics and improvements:  

Performance Statistics for Call Center

Operational changes have been put into place to deal with increased number of calls, due to the drought. In the short term, five temporary employees were added to answer drought related questions or concerns. The current phone system (IVR) has also been reconfigured to be more efficient and informative.  The department is focusing on providing complete customer satisfaction the first time a customer calls, writes, or sends an e-mail (first contact resolution).  This eliminates the cost of return calls. The department has recently changed its name to Customer Care.  

Some of the long-term strategies for improving call center service include:  

1. Provide Customer Care Representatives (CCRs) with more training on how to defuse customer anger and problem solving techniques. Set clear performance standards. Provide additional skills training for supervisors to provide specific tools for effective feedback and thus avoid “surprise reviews”.
   
2. Improve communication routed to CCRs by making sure Reps are informed prior to customers (i.e. news release, customer mailings).  Also, including CCRs in regular staff meetings and project teams. This is improving morale.
   
3. Monitor calls and provide real-time feedback to CCRs. Supervisors are able to do this with improved reports. 
   
4. Empowering CCR’s with authority to assist customer right away.
   
5. Provide customers with more self-service technology such as: automated phone payments and online payments.  This will free up phones and move the transactions to an IVR and Web site.  This new service is in the testing phase and should be available by early July.
   
6. Install new phone system with state-of-the-art technology.  The current system is at least 15-years-old and has lots of limitations – especially lack of capacity. New technology will also improve the way calls are routed. Staff is currently reviewing final proposals from three vendors.
   
7. Review policies for servicing delinquent payments. Delinquent accounts make up 3% of the customer base. Department spends 80% of time on 20% of our customers.  Initiated a program to educate customers to make timely payments.
• DW no longer provides service turn-on after 3:30 p.m.
• Customers are responding with payment earlier and this change has been very positive.
• Outbound calls, for a “soft collection campaign” has recently been approved.  
• Customers with a regular delinquent payment history will receive a friendly reminder call to let them know that payment is due by certain date and the Rep can take their payment by phone now. 

Myrna Poticha said this outreach was a very good idea.
Larry Keesen agreed and said that the current $25 turn off fee and $25 turn on fee probably does not cover labor costs.  

8. Install new Customer Information System (CIS).  Currently, many calls require lots of time for research and follow-up due to the data limitations of the old (CIS).  A new CIS will improve phone service.

Tim Flynn asked how many employees work in Customer Service.  Patti said there are 40 employees total; 16 in the regular call center and 5 who process drought calls.

Tim asked how many calls per person per day were received.  Patti said about 100 per person per day.  He said he was impressed with this work load because he knew from experience this is very hard work.  

Roberta Simonton asked what the daily correspondence rate is.  Patti did not want to guess and offered to find out and let Roberta know.

Note:  The average weekly correspondence rate is 1000 pieces, or 200 per day.

Rates Discussion – Kerry Kuykendoll, Manager of Rate Administration and Greg Fisher, Rate Analyst  

Kerry proposed to explain rate structures in two parts, over the course of two CAC meetings.  

Roberta Simonton, Larry Keesen and Myrna Poticha expressed concern that a two-part presentation would not allow enough time for the CAC to provide input to staff on rates before staff makes a recommendation to the Board at the August 11 meeting.  Taking this under consideration, Kerry proposed to move quickly through the rate structure history and objectives during this meeting and to allow time at the July 15 meeting for CAC to prioritize rate objectives and to give their feedback on rate structure.

Myrna Poticha recommended that in the future, new CAC members be briefed and educated on the rate structures at a separate meeting.  

Kerry provided a brief overview of Denver Water ’s rate structure history between 1959 and the present (see attached handout).   In general, the number of rate blocks decreased over the years.  Around 1990, rates changed from a decreasing to increasing block rate structure.  Since 1992, the inside residential customer consumption started decreasing, due to multiple factors:  the defeat of Two-Forks Reservoir, adding a Conservation Program and metering all customers.  In the past ten years, consumption has flattened out.  

Kerry explained price signals and elasticity of demand.  Industry average:  for every 10% increase in price, you can expect a 2 – 4% decrease in demand.  Some factors that impact this average: if rates are low to begin with, the type of demand (indoor has less elasticity than outdoor use) and income demographics of customer (the more affluent have less elasticity).  

Kerry reviewed how the various customer classes use water.  Residential and small multi-family customers using 60,000+ gallons (3^rd block) are around 11 – 14%.  The “all other” class has a large disparity of customer types, so it’s not possible to generalize.  

Larry Keesen asked if staff has developed a new rate structure.  Kerry said it’s not ready yet.  

Larry Keesen was of the opinion that the rate increase between the first and second block should increase its spread – even double.  Roberta Simonton also shared a similar opinion.  Tim Flynn disagreed.

Kerry explained that rates must be cost based justified and must correlate with the revenue it generates to be in compliance with the Charter.  Surcharges have more flexibility because they are designed to be a penalty.  

Greg Fisher covered factors that impact revenue sufficiency:  95% of costs are fixed but only 10% of revenue is fixed.  Increasing block rate structure is volatile in terms of revenue during abnormal weather years, especially during drought.  Seasonal and flat rates are less volatile but also less conservation oriented.  Many studies show that price signals are felt on the bill amount rather than the particular rate structure.  

CAC was asked to brainstorm objectives that a rate structure should achieve and still be in compliance with the Charter.  The following objectives were suggested:

1. Sufficient revenues to operate the company
2. Comply with the Charter
3. Promote conservation
4. Fairly allocate costs among all customers
5. Fairness within each customer class
6. Fairness between classes
7. Non-regressive within rate classifications
8. Simplicity not as important as “Big bang” on total bill
9. Reliability and consistency in revenue
10. Minimize volatility of business operation
11. Keep it simple
12. Monthly bills to provide customers quicker feedback on consumption
13. The more you use.  The more you pay.

One strategy or method was offered:  more blocks. Tim Flynn disagreed with this.  

Kerry offered to return to the July CAC meeting to finish this rate discussion.  Committee members will be asked to prioritize the above objectives, and then provide feedback for new rate structure alternatives and finally evaluate alternatives according to rate objectives.  

Roberta Simonton requested a scatter gram showing consumption patterns.

Larry Keesen asked if staff is considering an increase for tap fees.  Kerry said a 5 – 10% increase may be proposed to the Board.  

CAC Business  

West Slope Representative Resigns  

Therese Worsham announced that she has accepted a new job in Golden and as a result will be residing on the East Slope.  She verbally submitted her resignation and the June 17 meeting will be her last (as a representative of the West Slope).  Marie Bassett presented Ms. Worsham with a letter of appreciation for her service on the Citizens Advisory Committee.  

Theresa Worsham suggested that Denver Water place advertisements announcing West Slope CAC position in the Summit and Grand County newspapers.  

Schedule for Filling West Slope CAC Position

The consensus of the committee was for staff to publicize vacancy and accept applications in July and to interview applicants at the September CAC meeting.  

Teri Chavez explained that media effectively covered the recent approval of the service charge increase. This information is also on the Denver Water Web site. Community Relations does not feel there is a need to do an additional direct mailing to customers.  

A motion was introduced and approved to follow the Correspondence Protocol that Joe Sloan submitted to the CAC.  

Jim Legas requested that staff provide all CAC members with the DW Report on Future Water Projects (Water for Tomorrow IRP).  

Future CAC involvement at Board Meetings  

Roberta Simonton will attend the Board meeting on June 23, 2004 .

Theresa Jehn-Dellaport will attend the Board meeting on July 14, 2004 .  

Future CAC Agenda Items  

Direction of Denver Water – Chips Barry, Manager of Denver Water : July 15

Rate Structure, Part II – Kerry Kuykendoll:  July 15  

Visit Cheesman Reservoir in lieu of regular August meeting. The exact date is to be determined at July 15 meeting.  Tim Flynn is not available on Wednesday mornings. Many members expressed preference for a Friday tour.  It was suggested that Joe Sloan e-mail members to determine date preference.  

Denver Water’s Media Relations - Trina McGuire-Collier, Manager of Media Relations

Future Storage Projects – Planning Division  

The meeting was adjourned at 7:15 p.m.  

CAC Meeting Actions for Next Meeting – July 15, 2004