national multiple family submetering and allocation billing program ...

directly to and then paid by the third party billing company. However it is more common for the
owner or property manager to continue to receive the utility bill and then pass the information
along the billing service provider. The billing service provider sends the bills the residents, and
the residents send their payments to the owner. The owner pays the full utility bill.
Billing service companies profess not to make a profit reselling water and wastewater
services. The research team found that in most submetered properties the actual commodity
charge for water and wastewater from the utility is passed straight through to the residents
without any inflation. There were a few notable exceptions to this however. With RUBS it is
frequently impossible to determine the actual commodity charge from the bill sent to the
resident, and therefore it cannot be determined empirically if water and wastewater services are
being inflated.
Billing service companies make a profit by including a service charge on every bill they
send out. This service charge typically ranges from $1 to more than $6 per bill, and the average
service charge is about $3.25 per bill. Like service charges assessed by water utilities, the third
party billing company service charge is assessed irrespective of the amount of water used. In
addition to the service charge, billing service companies may assess late fees and other charges
on the resident’s bill such as a metering fee. The exact fees charged are often determined on a
property by property basis and depending upon the regulatory requirements of state or local
jurisdiction.
As evidenced by the number of billing service companies doing business in the US,
billing multi-family dwelling residents for water, wastewater, and other services is profitable. A
simplistic analysis shows that a relatively small company sending out 30,000 bills per month and
charging an average service fee of $3 per bill could gross more than $1 million per year. A large
billing service company sending out 300,000 bills per month could gross more than $10 million
per year. These are simplified gross revenue estimates and actual net revenue must take into
account all of the costs of doing business, but the potential profitability of this type of business is
apparent.
To learn more about billing service companies, their business practices, and how they
operate the research team developed a survey instrument that was sent to the highest-ranking
officer that could be identified at each billing service company.
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