BED Billing Issue: 60-Day Update

October 31, 2014

Contents
i.
ii.
iii.

Memorandum on 60-Day Update

Appendix A: Memorandum dated September 4, 2014
Appendix B: KPMG Billing Review Executive Summary

MEMORANDUM
To:

Mayor Miro Weinberger

Burlington City Council
Burlington Board of Electric Commissioners

From:

Neale F. Lunderville, Interim General Manager

Date:

October 31, 2014

Subject:

BED Billing Issue: 60-Day Update

Executive Summary:
In August 2014, Burlington Electric Department (BED) discovered several significant billing
errors affecting large commercial customers, including the City of Burlington (City). BED
corrected those errors and repaid the required amounts. Over the last two months, BED has been
executing an action plan to ensure the accuracy of customer billing across the board, including:
(1) reviewing customer accounts for active issues; (2) implementing process improvements
within billing systems; and (3) enhancing internal controls. This document details the progress on
the action plan as outlined in our original memorandum dated September 4, 2014, which is
attached for reference as Appendix A.
Key updates and findings:

Completed independent review of billing system: KPMG completed their report on

October 6, 2014. The report detailed 14 specific improvements to the billing system and
made two additional high-level recommendations. Internal BED teams have been
working to implement the reports highest priority improvements.

Found five additional misconfigured commercial meters: BED completed a desktop

audit of 522 current transformer/potential transformer (CT/PT) meters, i.e., those used on
larger commercial and industrial accounts, and found five misconfigured meters: three
cases resulted in BED over-billing customers for a combined total of $40,360; two cases
resulted in BED under-billing customers for a combined total of $208,700.

Implemented improvements to street light billing: BED completed the first phase of
internal process upgrades for street lights, including: a revised bill form with five internal
signoffs; and changing the inventory control process to sync physical street light
inventory to financial system accounting.

Finished review of manual billing: Other than street light billing, BEDs internal review
concluded that its leased light program is the only remaining manual billing arrangement.
The leased light program will be overhauled during the next 12 months.

BED Billing Issue: 60-Day Update

Update on City of Burlington Billing Errors:

Status: The street light billing error was resolved in August 2014 and BED conveyed accurate
monthly bills starting that month. The final repayment amount was settled in October 2014 by
way of a memorandum of understanding between BED, the City, and the Burlington School
District (Schools). By agreement, BED remitted $748,304 to both the City and the Schools
for a total $1,496,608 representing over-billing for the period of July 2008 through June
2014, plus 1% interest compounded annually.

Summary of progress: BED has made several billing system improvements specific to street
light billing to ensure ongoing accuracy.
(1) As street lights are removed (and retired on the asset books), they are being returned to
the stockroom for tracking on a material return ticket. This information is then logged in
to our inventory software, which is then provided to accounting/billing for confirmation
of the monthly totals;
(2) A new, automated, electronic notice is being sent from the work order software system
to all personnel involved in the inventory and billing of street lights whenever a street
light work order is closed out;
(3) A revised billing form which includes: opening balances, lights added, lights removed
and ending balances, by light type. It also includes signoffs by each of the functional
departments involved in the process: Operations (work orders), Engineering (inventory
control), Staff Accountant (journal entry), Controller (reviewer), and the CFO
(audit/confirmation).
(4) The sub-system inventory of street lights is now maintained and updated monthly in the
Engineering area and verified against the proposed bill.

Next steps: In addition to these improvements, BED will be implementing a fully automated
inventory and billing solution for street lighting. This process will utilize our existing
customer billing software and be fully integrated with our other software packages. This will
include the work order, fixed assets, inventory control and general ledger software packages.
Initially, we will be loading the complete inventory of street lights into our billing software,
with location IDs, light type and wattage and other identifiers. This software will then
interface with the work order software in such a manner that any work in the field will be
automatically reflected back to the inventory and billing records. Our expectation is that we
will have the inventory of lights loaded and functioning by calendar year end and the fully
integrated billing solution later in the fiscal year.
Finally, later in the fiscal year, BED will be completing a new inventory of street lights. We
will be using a zero-based approach. That is, as opposed to confirming available counts, the
counters would have no records/counts available and generate a fresh inventory, which is
then reconciled against Department records. The new inventory will be completed utilizing
established auditing standards in a controlled environment.

Update on UVM/ECHO Center Billing Errors:

Status: The metering errors that caused billing issues for UVMs Rubenstein Lab and the
ECHO Center was fixed in August 2014. At that time, BED remitted a check to UVM in the
amount of $357,794 to cover the over-billing for the period of 2009 through August 2014.

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BED Billing Issue: 60-Day Update

Summary of progress: BED has been working closely with the ECHO Center to address both
the under-billed amount of $259,287 and their significantly increased electric bill going
forward. By the first week of October 2014, our energy efficiency team, working with Cx
Associates, had completed a Phase 1 evaluation of additional energy efficiency opportunities
at the ECHO Center. From that study, BED and ECHO are moving forward on a Phase 2
building evaluation and retro commissioning proposal, including a geothermal energy
investigation, that we hope to begin in the coming weeks.

Next steps: Remaining work at the Rubenstein Lab and ECHO Center includes: resolution of
outstanding balances; continued collaboration on efficiency improvements; and, addressing
the non-standard sub-metering arrangement.

Action Item # 1: KPMG to provide an independent, third-party assessment of BED billing

practices and procedures.

Status: KPMG report complete. Implementation of recommendations ongoing.

Summary of findings: The KPMG Advisory Services Group (KMPG) started work on
September 15, 2014 with the purpose of finding gaps, weaknesses, and/or deficiencies in the
BED billing system. KPMG worked collaboratively with BED subject matter experts in key
areas from operations, billing, and information services to detail business processes. KPMGs
review specified 14 improvements largely centered on transforming manual processes into
automated processes that will contain an internal control loop.
An executive summary of the KPMG Advisory Services Group report dated October 6, 2014
is attached as Appendix B. The full report was provided to internal BED staff and contains
detailed descriptions and flow charts to guide the improvements.
The 14 improvements can be broken in four main categories: (a) work order process
automation, #1, 2, 3, 13; (b) improved interface between customer information system and
meter data management system, #4, 5, 6; (c) enhanced reporting capabilities, #9, 10, 11, 12,
14; and, (d) field technology upgrades, #7, 8. 1
In addition to the specific improvements, KPMG also recommended that BED begin an
organizational realignment around information technology (IT), metering, and meter data
management to harness the full potential of our advanced metering infrastructure, i.e., the
smart grid. They further noted the need for enhanced communication and cross-training
between internal BED departments.

Next steps: The internal BED billing workgroup has met numerous times and is preparing a
work plan for high priority improvements by November 7, 2014. Implementation of some
items is likely to take months due to the complexity of the modification and resources (both
time and capital) required to complete them. Also, BED is working on an internal IT
realignment that will focus resources toward enterprise-wide priorities, which will benefit
billing process improvements.

The internal BED workgroup also added a recommendation #15 to increase usage of an improved field deployment
manager to enable automation and minimize keypunch errors.

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BED Billing Issue: 60-Day Update

Action Item # 2: Conduct a comprehensive review of meter configurations to verify accurate data
collection and processing.

Status: Comprehensive review complete as part of KPMG review.

Summary of findings: The preliminary review conducted in late August 2014 found no billing
issues with residential or small general accounts, which make up more than 95% of BED
accounts. The comprehensive review confirmed the preliminary review, but did highlight
several potential weaknesses stemming from manual processes within the system. If
uncorrected, the issues could lead to discrete billing errors for certain customers. The KPMG
report recommended improvement for each of these weaknesses, specifically, customer
enrollment for new construction (#2), net metering (#3), and rate changes (#4), as well as
demand resets (#7).

Next steps: The issues noted will be remedied as part of the next steps for Action Item #1.

Action Item # 3: Flag non-standard billing arrangements for special review.

Status: Review complete. Internal BED workgroup developing transition plan for leased light
program.

Summary of findings: In addition to City street light billing, BED staff has confirmed one
additional non-standard billing arrangement: the leased light program (outdoor lights for
personal or commercial use).
BED owns, operates and leases roughly 1,000 lights to approximately 370 customers
throughout its service territory. These lights may be attached to buildings, or located in
backyards or parking lots. These fixtures were installed in the 1970s and 1980s with BED and
each customer entering into three-year agreements. These agreements had options for
continuous renewal and could be terminated by either party after the three years.
Approximately 200 of the lights are attached to a customer meter and the other 800 are unmetered. The inventory of leased lights has not been well maintained. There is no tariff for
leased lights, whether BED-powered or customer-powered. Generally, BED still bills these
customers at the initial agreement rates, collecting approximately $8,400 per month or
$100,000 annually.
In March 1997, BEDs General Manager decided that BED would no longer offer leased
lighting installations to its customers, but would maintain the leased lights that were in place
at that time. In 2009, the Burlington Electric Commission voted to end the leased light
program.
Over the coming months, BED will consider options to transition out of the leased light
business with minimal disruption to customers; there would be no abandonment, curtailment,
or impairment of service.
In conjunction with other ideas, BED may also consider the possibility that we could replace
the existing lights with highly efficient LED lights and utilize the on-bill financing (OBF)
grant monies to cover the cost of switchover to a new system plus the metering change where
applicable. The customer would the use the OBF billing arrangement to pay back those costs.

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BED Billing Issue: 60-Day Update

Next steps: An internal BED workgroup will develop a transition plan for the leased lights
program by June 30, 2015.

Action Item # 4: Implement procedural improvements and enhanced internal controls for City
street light billing.

Status: Ongoing.

Summary of findings: See above section Update on City of Burlington Billing Errors for a
detailed description of progress to date and next steps.

Next steps: See above.

Action Item # 5: Launch a meter-by-meter field review of CT/PT meters in the BED network
over the next 90 days.

Status: Metering Services has completed a field inspection of 58 out of 522 meters.

Summary of findings: This initiative includes a physical inspection of the CT/PT metering
system, cross checking the meter information, and photographing key equipment. The
collected information is entered into a database for future inspections and inquiries.
To date, the metering team has prioritized the desktop review (Action Item #6) and
addressing errors that have been found. Also, field inspections are taking longer than
expected; they are very time-consuming, as most inspections require two technicians to work
in an energized environment. We are revising the timeline to complete this task.

Next steps: Metering Services will complete the field inspections by April 1, 2015.

Action Item # 6: Conduct a desktop audit of CT/PT meter configurations.

Status: Metering Services has completed a desktop audit of 522 out of 522 meters. Five new
errors were discovered.

Summary of findings: After the discovery of the UVM/ECHO Center metering error in
August 2014, Metering Services began an investigation of all CT/PT meter configurations. A
CT/PT meter is a special meter configuration used for high usage commercial and industrial
customers. To calculate an accurate customer bill with a CT/PT meter, a multiplier must be
used to convert meter data into customer usage. The desktop audit was designed to compare
the multiplier on CT/PT meter with the multiplier in BEDs billing system. A mismatch of
multiplier value indicated a potential issue. When a mismatch was found, Metering Services
performed a physical inspection of the meter and verified the information.
If the multiplier on the CT/PT meter was greater than the multiplier in the billing system, the
customer was being under-billed by BED. If the multiplier on the CT/PT meter was less than
the multiplier in the billing system, the customer was being over-billed by BED.
The audit found five misconfigured meters, all of which were caused by the transition
between the manual and automated process within either BEDs billing system or the field
deployment manager, and compounded by the lack of an internal control loop. These process
weaknesses are consistent with the UVM/ECHO Center error.

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BED Billing Issue: 60-Day Update

Case #1: A large commercial customer had a transformer upgraded in 2012 and the
metering configuration was changed accordingly. The new meter required a higher
multiplier, but the lower multiplier remained in place in the billing system. BED
under-billed the customer by 50% from August 2012 through August 2014. The total
under-billing is $205,787.11. BED has made repayment arrangements with the
customer.

Case #2: A mid-sized commercial customer had a meter upgraded in 2013. The new
meter did not require a multiplier change, but a higher multiplier was mistakenly
entered into the billing system. BED over-billed the customer by 33% from March
2012 through September 2014. The total over-billing is $16,072.52. BED has
remitted a check in that amount to the customer.

Case #3: A mid-sized commercial customer had a transformer changed in 2013. The
new meter did not require a multiplier change, but a higher multiplier was mistakenly
entered into the billing system. BED over-billed the customer by 50% from August
2013 through September 2014. The total over-billing is $10,618.57. BED has made
remitted a check in that amount to the customer.

Case #4: A mid-sized commercial customer had a meter upgraded in 2013. The new
meter did not require a multiplier change, but a higher multiplier was mistakenly
entered into the billing system. BED over-billed the customer by 50% from March
2013 through September 2014. The total over-billing is $13,669.52. BED has made
remitted a check in that amount to the customer.

Case #5: A small commercial customer had new service brought online in 2013.
When the meter was installed, an incorrect lower multiplier was mistakenly entered
into the billing system. BED under-billed the customer by 33% from July 2013
through August 2014. The total under-billing is $2,912.67. However, the customer
has since gone out of business and closed the account. BED does not have the legal
ability to attach a repayment obligation to either the next tenant (if/when one should
be found) or to the landlord (as the usage in question here belonged to the tenant). As
such, we have decided to discontinue collection at this time.

Next steps: Through our field review (Action Item #5), we will continue to review CT/PT
meters. Also, through our regular review (Action Item #7), we will catch CT/PT errors early
and take corrective action. Finally, implementation of the KPMG recommendation #1 will
create an error alert if there is a mismatch between the installed meter and the billing system.

Action Item # 7: Develop and implement a regular review process for complex meters.

Status: Developing preventative maintenance plan and review process.

Summary of findings: Upon the completion of CT/PT verification and inspection activities
(Action Item #5), Metering Services will implement a preventative maintenance plan that will
cycle every CT/PT metering installation through an inspection and testing program every five
years. In addition, every new CT/PT metering installation will be reassessed within 30 days
of the date of installation to ensure that all connections and metering data are correct.

Next steps: Implement review process by April 1, 2015.

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BED Billing Issue: 60-Day Update

Conclusion
The BED team continues to give unresolved billing issues their full attention. The KPMG review
was very helpful in finding and troubleshooting areas of weakness and deficiency, and focusing
resources on the highest priority issues.
As we continue to strive for 100% billing accuracy, BED will keep its shoulder to the wheel
resolving past issues, quickly addressing any new issues, and communicating with our customers
in an open and transparent manner. We will report additional findings and progress in our next
60-day report by December 31, 2014.

Page 7 of 7

Appendix A

MEMORANDUM
To:

Mayor Miro Weinberger

Burlington City Council
Burlington Board of Finance
Burlington Board of Electric Commissioners

From:

Neale F. Lunderville, Interim General Manager

Date:

September 4, 2014

Subject:

BED Billing Issue: Analysis, Resolution, and Next Steps

Executive Summary:
Recently, Burlington Electric Department (BED) discovered significant billing errors that have
resulted in the over-billing of two large commercial customers (the City of Burlington and the
University of Vermont) and the under-billing of one large commercial customer (ECHO Center).
We have corrected these errors and made arrangements to repay the required amounts. The errors
discovered are isolated to these specific customers and do not affect residential and small
commercial customers. In each case, BED has an action plan to implement procedural
improvements and enhanced internal controls to ensure these errors do not occur again.
BED values its customers above all else, and we are taking additional steps to ensure the accuracy
of customer billing processes across the board. We have begun an in-depth, multi-part review to
validate each billing process, including the following actions: a) hiring KPMG to provide an
independent, third-party assessment of BED billing practices and procedures; b) undertaking a
comprehensive review of meter configurations to verify accurate data collection and processing;
c) launching a thorough field review of current transformer (CT) meters similar to the ECHO
meter configuration; d) completing a desktop audit of previous CT meter configurations; and e)
providing a full report on our findings.

City of Burlington Street Light Billing:

During a recent update to our citywide load forecast, a BED analyst discovered an odd trend in
the data: street light electricity usage was rising, when it should have been falling because of our
program to replace old street lights with energy-efficient LED fixtures. Immediately, we began an
internal investigation that revealed that BED has not been removing the old lights from the billing
system when adding the new replacement lights. In effect, BED has been double billing the City
for the replacement street lights.
Based on our research, the street light billing error has existed since at least 2006, which is the
earliest benchmark to compare actual inventory against billed lights. In 2006, the City had 3,245
actual street lights, but BED was billing for 3,549 lights. In June 2014, our actual inventory
showed 3,275 lights, but BED was billing for 5,052 lights a difference of 1,777 lights.

Appendix A
BED Billing Issue Memorandum

The extended timespan of this error, combined with monthly increases as lights were replaced,
has resulted in an over-billing by BED to the City of $1,779,201 since 2006.
Root cause
The root cause analysis of this error shows multiple points of failure in the street light billing
system. At the core of the error was a complex manual process that lacked the internal controls to
validate billed lights against actual inventory on a regular basis. City street lights touch three
departments within BED, each with its own variation on how it treated the lights as an asset and
considered the City as a customer. These variations caused gaps that led to a breakdown between
Operations replacing a light and Finance accounting for that same light. (As an important note:
this type of manual billing process differs greatly from the standard billing process used for more
than 95% of BED customers. The standard process uses digital data collection from meter to bill
with a two-stage validation process to ensure accuracy.)
Further complicating the street light error was a billing arrangement with the City that
unintentionally obscured the cost and number of lights. Historically, the Citys street light bill has
been netted out against BEDs payment in lieu of taxes (PILOT), such that the PILOT payment
sent to the City would show principally what BED owed, with the street light invoice provided in
the attached documentation. That invoice did not show the month-to-month change in the number
of street lights or cost increases over time. This arrangement lacked the clarity of standard BED
customer bills and was a factor in why this error was not discovered sooner.
Billing resolution
BED has met with the City to make payment arrangements for the over-billing. By industry
practice, BED looked back six years (i.e., the State statute of limitations) to determine the
charges. For the period from July 2008 to June 2014 (six fiscal years), BED will remit $1,464,604
to the City. BED will make this payment from its operating fund reserves and will not seek rate
recovery. The payment will not impact customer rates.
Improvement plan
As of August 2014, we have corrected the Citys street light bill and will send detailed monthly
invoices to the City under their own cover.
We have implemented, or are in process of implementing, a number of distinct procedural
improvements and enhanced internal controls to guard against this error occurring in the future.
By broad category, these changes include: more transparency in City billing; clarifying and
streamlining intra-departmental procedures; street light inventory and billing upgrades; and prebill data validation.

Next steps: Implement system improvements and report back by October 31, 2014, as part of
the larger report outlined below.

UVM Rubenstein Lab / ECHO Center Billing:

At the request of UVM, BED conducted a comprehensive review of its Rubenstein Lab building
on the waterfront, part of which the ECHO Center leases from UVM. During that review, BED
staff found an error with a billing determinant in the CT meter configuration that led to ECHO
being billed for only half of its actual usage with UVM billed for the other half. The net result of
this error is an over-collection by BED from UVM of $357,794.

Page 2 of 5

Appendix A
BED Billing Issue Memorandum

Root cause
The root cause analysis of this issue points to a series of errors that occurred when the ECHO
Center was commissioned in 2003; a secondary error was created when accounts were
reconfigured in 2009. The problem was exacerbated by the absence of regular internal reviews of
the meter configuration. The explanation of these errors is complex and this memo will only
cover the high-level moving pieces.
Initially, at building commissioning in January 2003, rather than providing ECHO with its own
account and electric service separate from the Rubenstein Lab, a decision was made to submeter ECHOs usage off the Labs main service with BED billing UVM for the combined usage
of the building and UVM/ECHO internally settling their individual contributions. It is not clear
why the decision was made to sub-meter ECHO; electric service through a sub-meter is not a
standard procedure and runs counter to Public Service Board orders.
The sub-meter for ECHO is a current transformer (CT) meter, which is a special meter
configuration used for high usage commercial and industrial customers. To calculate an accurate
customer bill with a CT meter, a multiplier must be used to convert meter data into customer
usage. For ECHO, the physical CT meter was installed correctly, but the wrong multiplier was
entered into BEDs billing system. The multiplier was half of its correct value, which resulted in
ECHO being billed for half of its actual usage. The multiplier error accounts for the bulk of the
underlying issue between UVM and ECHO. (As an important note: this type of error is not
applicable to standard residential and small commercial customer meters.)
The incorrect multiplier for ECHO, once entered into the billing system, was never validated
against the actual CT meter at any time after the initial installation.
As a final complication, in 2009 BED began providing separate bills to UVM and ECHO,
replacing their previous internal settlement process. During this conversion BEDs billing system
was incorrectly set up to charge UVM for both the Rubenstein Lab and ECHOs combined total
demand charges; those demand charges should have been separated by customer. The demand
error is the result of an incorrect manual process (non-standard sub-meter accounting) being
carried forward into an updated billing process without being reviewed for accuracy or
consistency.
Billing resolution
The billing impact to UVM and ECHO is as follows:

During the period of 2003-2009, BED sent ECHOs bill to UVM and the electric bill was
settled between the lessor and lessee. During this period, because of the multiplier error,
UVM was under-billing ECHO for its usage for a total of $254,662.

In 2009, BED began to bill UVM Rubenstein Lab and ECHO separately and directly,
although still with the sub-meter setup. The multiplier error continued during this period,
although it was BED that was now under-billing ECHO and over-billing UVM. From 2009 to
the present, because of the multiplier error, BED over-billed UVM by $259,287.

From January 2009 to April 2014, because of the demand error, BED over-billed UVM by
$98,506.

The total over-billing by BED of UVM is $357,794. We have remitted a check in that amount to

Page 3 of 5

Appendix A
BED Billing Issue Memorandum

UVM. BED made this payment from its operating fund reserves and will not seek rate recovery.
The payment will not impact customer rates.
The University of Vermont is BEDs largest customer. We will continue to partner with them on
energy efficiency projects and to provide exceptional service as the campus grows and changes
over the coming years.
We also are working with the ECHO Center to resolve the under-billing and help them move
forward. The unfortunate result of this error is that ECHOs electric bill will double. Our energy
efficiency team is working closely with ECHO on possible cost saving measures.
Improvement plan
As of August 2014, we have corrected both UVMs and ECHOs bills and are working with each
organization on customer-specific projects.
We have launched a series of reviews targeted at CT meter configurations, which have potential
vulnerability for billing errors due to the complexity of the setup. Specifically, we are conducting
a meter-by-meter field review of the 522 CT meters in the BED network. This intensive review
will be conducted over the next 90 days. We have sent a letter to affected customers and will
follow-up with a report of findings specific to their meter(s). In the meantime, we are conducting
a desktop audit of CT meter configurations to identify obvious data anomalies and make quick
changes as required. Finally, BED will develop and implement a standard, regular review process
for complex meter configurations, such as CT meters, where there is an enhanced likelihood for
errors.

Next steps: Implement improvements and report back on progress by October 31, 2014, as
part of the larger report outlined below.

Looking Forward: Assessing Weaknesses and Finding Opportunities

The City and UVM/ECHO billing errors, while separate and distinct, have common attributes that
could lead to additional issues: data transitions between manual and automated activities; data
transitions between departments within BED; lack of regular data validation or error checking
procedures; and non-standard billing arrangements. BED management and staff have raised these
issues and have recommended a full system review to ensure the ongoing accuracy of customer
billing. The full system review will include:
1. Hiring KPMG to provide an independent, third-party assessment of BED billing
practices and procedures. In this transparent process, BED will open its books to
KPMG so it can identify potential points of failure, test and validate the meter-to-bill
process for error-prone processes, and provide findings on material weaknesses, process
improvements, and industry best practices.
2. Conduct a comprehensive review of meter configurations to verify accurate data
collection and processing. A preliminary internal audit of these configurations found no
active errors or threatening issues with residential and small general accounts. However,
the preliminary review did flag potential weaknesses that merit further review; most of
the flags relate to the common attributes outlined above.

Page 4 of 5

Appendix A
BED Billing Issue Memorandum

3. Flag non-standard billing arrangements for special review. In addition to City street
light billing, BED staff has identified one other non-standard process: our leased light
program (outdoor lights for personal or commercial use). While this program was
stopped years ago, BED has not converted grandfathered customers to a new system that
will allow for better billing and auditing. BED will develop and implement a plan to
transition the current leased lights program to either a standardized tariff or metered
service. This plan will require Public Service Board approval.
The full system review will also incorporate all of the improvement plans borne from the specific
City and UVM/ECHO errors, summarized here:
4. Implemented procedural improvements and enhanced internal controls for City street
light billing, including: more transparency in City billing; clarifying and streamlining
intra-departmental procedures; street light inventory and billing upgrades; and pre-bill
data validation.
5. Launch a meter-by-meter field review of CT meters in the BED network over the next
90 days. We have alerted affected customers to the pending review and will follow-up
with a report on our findings. As of this report, we have completed 7 field reviews.
6. Conduct a desktop audit of CT meter configurations. Our goal is to identify more
obvious errors and work to resolve them quickly. As of this report, we have completed
208 desktop audits and are investigating one flagged issue.
7. Develop and implement a regular review process for complex meters. With complex
metering configurations, we want to inspect the physical meter set-up at regular intervals
(biennial or triennial) to test for accuracy and share findings with our customers.

Next steps: By October 31, 2014, we will provide the Mayor, City Council, Board of
Finance, Board of Electric Commissioners and our customers with a 60-day update report of
our findings and progress on resolving any outstanding issues. The report will include
findings from KPMG. Well report every 60 days thereafter until we close out our punch list.

Conclusion
Billing issues of this significance demand a full and timely response. Although the issues
identified affect only three of BEDs more than 20,000 customers, we strive for 100% billing
accuracy. Once these issues were discovered, BED moved immediately to address them and
develop an action plan to ensure the accuracy of customer billing across the board. We will
continue to report findings and progress in an open and transparent manner with our customers,
City leaders, and State regulators.
Our customers are the center of our universe at BED. We are deeply committed to providing our
customers with reliable, exceptional service in everything we do, whether its installing a meter,
answering a billing question, or helping them become more energy efficient. These billing errors
are serious business for us and, as a team, we are fully resolved to find the problems, fix the
problems, and work diligently to never let them happen again. I want to commend the BED team
for discovering these errors, working quickly to correct the issues, and addressing them with our
customers in a forthright manner.

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Appendix B

Burlington Electric
Department
KPMG billing process review
October 6, 2014

Appendix B

Contents
Executive summary

Summary of recommendations

Appendix B

Executive summary
The KPMG Advisory Services Group (KPMG) was engaged by the Burlington Electric Department (BED)
for assistance in identifying gaps, weaknesses, and deficiencies in current state business customer
billing processes. The review was focused on core billing processes with the goal of identifying and
documenting discrepancies in each process, comparing the current processes to best practices,
prioritizing the severity of any discrepancies, and documenting potential recommendations to resolve
identified discrepancies.
KPMG reviewed and documented the core processes in collaboration with subject matter experts from
BED. As a result of this review, we identified 14 specific recommendations to improve current processes
that we believe will help BED improve both the efficiency and effectiveness of its current operations and
billing processes. Most of the recommendations are related to enabling automation in place of current
manual processes.
In addition to the specific process recommendations outlined in this report, we had several organizational
level recommendations as described below.
In 2013, Burlington Electric Department finalized its implementation of a state of the art advanced
metering infrastructure (AMI) for more than 90% of its customer base. This upgrade has provided BED
with a more sophisticated approach to reading and analyzing data from and between each customers
meter and the metering data management (MDM) system.
A leading practice for utilities that have implemented AMI is to evaluate nearly all business processes
during or after an AMI deployment. This evaluation is designed to align people, process, and technology
to maximize operational effectiveness and efficiencies. The ultimate goal is to deliver improved results
across the organization and, most importantly, to customers.
We observe that while BED has made significant improvements to benefit customers with its AMI
implementation, the utility has not fully transformed its organizational structure, business processes, or
general workflow to reap the full benefits of the technology deployment. Specifically, information
technology, meter data management, and metering operations should be realigned to better harness
resources and skill sets to achieve the organizations goals.
Further, we observed that communication and training could be improved within areas that touch billing
processes. In particular, intra-departmental communication would benefit through interfacing systems
and people; organizational realignment will greatly foster communication. Also, enhanced training and
cross-training would minimize the likelihood of future billing errors and improve employee utility within
the organization.
Top-level recommendations:

Implement the 14 process improvements outlined herein to extend automation into

the current manual processes that feed the AMI system.
Start organizational realignment to take advantage of AMI and realize all of its
operational benefits and efficiencies to benefit customers.
Enhance communication and training within customer-facing and billing-related
departments to minimize likelihood of future billing errors.

Appendix B

Summary of recommendations
KPMG recommendations
#

Description

Operational area

Criticality

Automated Interface between Work Management System

(WMS) and CIS System (early warning for CT/PT and billing
multiplier exceptions). This line of sight interface between
the WMS system and billing operations will ensure that
transformer change outs and any derivation from the CT
and PT multipliers impacting re calculation of the billing
multiplier is communicated and verified for billing
purposes.

Engineering/Customer
Operations

High

Automate enrollment process and service order process

for new construction see detailed description in current
and future state.

Enrollment

High

Automate enrollment process and service order for net

metering see detailed description in current and future
state.

Enrollment

High

Automate enrollment process and service order for rate

changes see detailed description in current and future
state.

Enrollment

High

Perform virtual exchanges vs. physical exchanges for TOU

and Net Metering currently as these are low volume it is
best practice to perform more virtual exchanges and re
configurations taking full advantage of AMI benefits thus
reducing truck rolls and additional field work where
possible. Having a predefined process will reduce errors
and process mishaps as rate and tariffs changes favor net
energy metering and time of use implementations in the
near future.

Read/Measure/Validate

Medium

Perform rate changes on billing cycle vs. off cycle where

applicable performing rate changes off cycle introduces
many manual calculations and proration of customer and
demand charges. This can be easily avoided by adopting an
Customer Operations
on cycle rate change where applicable, enforcing a strict
process rule will avoid errors and manual calculations. Off
cycle rate changes should be handled on a case by case
basis and approved by supervisors only for control
purposes.

High

Implement an automated monthly report by read and bill

cycle identifying manually read demand meters for
stagnant demand resets timely reporting of manually
read demand meters will ensure accurate and timely billing
of high revenue customers, this process should be the
exception rather than the rule, ensuring processes and
controls are directed for corrective action.

Enrollment

High

Use Range Extenders and relays vs. swapping AMI Meters

for Non-AMI Meters based upon recommendation #7,

Metering/
Field Operations

Medium

Appendix B

KPMG recommendations
#

Description

Operational area

Criticality

root cause analysis must be performed on all

non-communicating meters with structured remediation
processes which takes the benefits of AMI into
consideration.
9

Implement a health check report (with appropriate reviews)

Billing
pertaining to customer life cycle and billing life cycle, this
will ensure billing timeliness is measured and monitored.

Medium

10

Monthly sync comparison from CIS to MDMS for

anomalies, while the CIS pushes to the MDMS for
customer and meter configuration, a monthly check
ensuring any change outs at the MDMS is tracked for out
of sync situations that may result in over and under billing
situations.

Billing

Medium

11

Weekly analysis of meter events vs. billing exceptions for

billing timeliness, connecting meter events to billing
exceptions allows for early warning billing exceptions.

Billing

Medium

12

Monthly customer ageing report from customer acquisition

Billing
to billing, this report will highlight billing timeliness

Medium

13

Enhance the use of field deployment manager (FDM) for

meter sets and meter exchanges

Read/Measure/Validate

Medium

14

Management Report of AMI to Non AMI meters with

reason codes, this is a further control ensuring impact and
magnitude of change outs.

Read/Measure/Validate

Medium

Criticality
High Based on the potential magnitude to revenue and customer satisfaction, KPMG has deemed this
recommendation to be of high importance and as such should be BEDs first area of focus.
Medium Based on the potential magnitude to revenue and customer satisfaction, KPMG has deemed
this recommendation to be of Medium importance and as such should be implemented in the near
future.
Low Based on the potential magnitude to revenue and customer satisfaction, KPMG has deemed this
recommendation to be of low importance and as such should be implemented in the long-term.

Appendix B

Contact us

Sagren Naicker
Director KPMG Advisory
T (212) 954-2277
F (212) 878-8683
www.kpmg.com

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