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Universal Service: A Performance-Based Measure for Competitive Industry

Fortnightly Magazine - June 15 1998

average "weighted arrears" rate for a specified period with the average rate for a base period. For matching its base level, the company receives a score of 5. For every 0.2 percent bill divergence from base, it receives a plus or minus rating of 1 on a 10-point scale.

* Calculates the number of average bills contained in an average arrearage. Hence, if one customer has an arrears of $400 and an average monthly bill of $200, that customer has a weighted arrears of 2.0 "bills behind." If a different customer has an arrears of $400 and an average monthly bill of $140, that customer has a weighted arrears of 2.86 bills behind. The second customer, and thus the utility serving that customer, is in more serious payment trouble. As the Bureau of Consumer Services observes, use of a weighted arrears measure "permits comparisons to be drawn between companies by eliminating the effects of different customer bills on arrearages." Without such a measure, "the interpretations of average arrearages, either over time or in comparison between companies presents some difficulties." Utility Payment Problems: The Measurement and Evaluation of Responses to Customer Nonpayment, BCS, Pennsylvania Public Utility Commission, October 1983.

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