Service Line Agreements A Tale of Two Cities…

Joey Murphy – Columbus Water Works Melinda Langston – City of Atlanta

A National Perspective

Water Research Project 4171

Water Research Project 4171

May 2009 Strictly Confidential

Service Line Warranty Program Atlanta, Georgia

Melinda Langston

Director, Water Conservation

The NLC Service Line Warranty Program, administered by Utility Service Partners, Inc. (USP), is an affordable

home protection solution for your residents offered at no cost to the city. It helps city residents save thousands of dollars on the high cost of repairing broken or leaking

water or sewer lines.

Mayor Kasim Reed and the City of Atlanta announced on September 1, 2011 the launch of the National Leagues of Cities Service Line Warranty Program, which could save residents thousands of dollars in unexpected

repair costs for broken or leaking sewer and water lines.

Currently 47 states which include 118 cities have partnered with NLC Utility Services Partners Inc.

Currently available

Available no later than Fall of 2012

Benefits • No cost for the city to participate • Generates revenue for the city • Affordable rate for the residents of the city • 24/7 customer service • Create jobs for local contractors • Easy implementation of program • All repairs performed to local code • Building community relations

No cost for the city to participate

Not a cent. USP pays for all marketing materials and program administration. Furthermore, USP will pay the city a royalty for every resident that

participates in the program!

Generates revenue for the city

$- $5,000.00

$10,000.00 $15,000.00 $20,000.00 $25,000.00 $30,000.00 $35,000.00 $40,000.00 $45,000.00 $50,000.00

2ndquarter

2011

3rdquarter

2011

4thquarter

2011

1stquarter

2012

2ndquarter

2012

Total

$- $129.86

$29,493.41

$9,899.28 $4,815.99

$49,755.00 Amount

These programs generate extra revenue for the city through the royalty that is paid by USP to the city.

*Denotes a contribution to the Care and Conserve Fund based on an incremental royalty payment for the “co-brand” relationship between the city of Atlanta and Service

Line Warranties of America (SLWA).

New Revenue to Atlanta’s Affordability Program

$95,000 (Nov 2011 – May 2012)

Affordable rate for the residents of the city

• Each warranty is sold separately and the price range is generally between $4 and $5 a month per product. • While costs for water line and sewer line repairs can vary, the average cost of repairing a broken water line or sewer line may range from $1,200 to over $3,500.

24/7 customer service Will a citizen have a long hold time when reporting a claim?

No. Repair calls receive the highest priority and are answered 24/7. Repair calls are connected to a live agent through a voice recognition unit (VRU).

Will the customer always get a live operator when they call?

Yes. Customers are directed to select to speak with either a service or claims agent and will then be directed to a live Agent.

Create “Green” jobs for local contractors

USP retains local, professional plumbers to perform all the service line repair work. 12 local Atlanta plumbers have done work and have been paid by Utility Service Partners a total of $265,473.36

Easy implementation of program

•Once your city has approved participation in the program, start up is simple. The program is designed for a quick launch, taking up little of your city employees' valuable time:

•Execute the simple, one page contract provided by USP.

•Approve the recommended Press Release (this is designed as a general notice to reduce resident confusion and calls to the city with questions).

•Approve the Campaign Letter provided by the USP Marketing team.

•Access monthly reports via the web.

By endorsing the USP programs, the city is able to reduce resident’s frustration over utility line failures by bringing them low-cost service options.

96% of survey respondents say that their image of the city is enhanced because the warranty program is offered as a service by the city

Product 2nd Quarter

2011

3rd Quarter

2011

4th Quarter

2011

1st Quarter 2012

2nd Quarter

2012

Total warranties

purchased *

Sewer 0 53 1536 362 56 2007

Water 2 88 8330 577 91 9008

Total 2 141 9866 939 147 11,095

*(per product) since the program’s inception with the City of Atlanta

Building community relations

Columbus Joey Murphy – Columbus Water Works

∗ Columbus started investigating service line agreements in early 2006

∗ One of our Strategy Teams developed a Performance Work Plan (PWP) to thoroughly investigated ALL alternatives related to service line agreements

∗ Alternatives Included: ∗ 3rd Party Provider – (Utility Becoming Billing Agent) ∗ Self-Administered – (Utility Hiring the Plumbers) ∗ In-House – (In-House Staff Performs All Functions)

Columbus- How We Started

∗ A random sample of our customers (+/-800 total) was performed over a one year period to determine if they would likely participate in this type of service

∗ 10% Definitely ∗ 15-20% Potentially/Might

∗ In addition to our internal survey, we talked to several other utilities throughout the Country to benchmark their saturation rates which ranged from as low as 5% to as high as 30%.

Columbus- Testing the Market

∗ In addition to our own surveying…ALL the major 3rd party player have been testing the market. Along with soliciting Columbus Water Works along with the City of Columbus.

Some More Aggressively that Others (April 2012)

∗ At this point, Columbus is not pursuing partnering with any 3rd Party to provide service agreements for customer service laterals (water or sewer)

∗ Columbus is also not entertaining providing this service in-house either via through internal oversight and/or with internal forces

So what did Columbus Decide to Do?

∗ Potential Damage to Reputation of Utility ∗ Liability Concerns – (Private Property Issues) ∗ Reliance on 3rd Party Performance ∗ Customer Acceptance & Trust ∗ Resistance from Private Sector

Reasons for the Decision

∗ Potential improved Customer Satisfaction ∗ Potential Community Benefits ∗ Slight enhanced revenues ∗ Water Quality Improvements (water loss reductions)

Benefits You Might Expect

QUESTIONS