SR-121796-6B
Contract 6578 (ecs) 68
,
EPWM EPD CP SM Santa Monica, California
Council Meeting December 17, 1996 DEe 1 7 1996
TO Mayor and City Council
FROM City Staff
SUBJECT Recommendation to Authorize the City Manager to Negotiate and
Execute an Agreement with TnStem. Inc for Utility Billing Audit Services
INTRODUCTION
The report requests that City Council authonze the City Manager to negotIate and
execute an agreement with TnStem, Inc to perform utility billing audits for the City's
accounts with Southern California Edison (Edison), The Gas Company, City of Los
Angeles' Department of Water and Power (DWP), and General Telephone and ElectriC
(GTE)
DISCUSSION
The City's utility bills are processed by the Finance Department and costs are allocated
among the various departments based on the location of utility service account
numbers The City IS billed monthly or bl-monthly, depending on the billing cycle. for
approximately 355 Edison accounts (including streetlights), 42 Gas Company accounts,
4 DWP accounts for electriCity to operate the water pumps at the Arcadia Treatment
Plant and the well fields located In the City of Los Angeles, and over 150 GTE accounts
for leased lines, radiO Circuits, and telecommunication services Each utility has Its own
, 68'
1 .
DEe , 7 1996
rate schedule and billing practices, making momtorlng by City staff for any errors
difficult
A number of firms have been established to assist cities. large bUSinesses and
Institutions With recovering utility overpayments and negotiating rate adjustments
Many cities have received substantial refunds and enJoy continued rate savings. As
part of the City's efforts to reduce ongoing utility charges, a Request for Proposal was
Issued to seven utIlIty audit firms to develop and Implement a comprehenSive review of
the City's utility billings Three firms responded With proposals which were evaluated
and reViewed by staff representing the Finance Department] EnVironmental and PubliC
Works Management Department, and the InformatIon Systems DIVISIon Staff checked
each proposer's references and] based on the pOSitive expeflences reported by the
State of Texas and the CIty of Portland, Oregon] selected TnStem] Inc, a utilIty billing
firm based In Waco, Texas The other two firms reqUired that the CIty enter Into an
agreement reqUlflng reimbursement of a percentage of future savings Staff contacted
cities which reported ongoing disputes over such payments TnStem does not make
thiS requIrement, but prOVides the same service
TrlStem performs audits on a contingency baSIS based on refunds secured rather than
charging up-front fees or requlflng a share of future savings TnStem's fee for Its
services IS 49 percent of refunds which are receIved by the City If no refund IS found
due to the City, there IS no fee The audit Will be completed In approximately eight
months The firm then flies claims and initiates negotiations as necessary to obtain a
2
satisfactory response The California Public Utility Commission has regulated that up
to three years of overpayments can be recovered from the utility
BUDGET/FISCAL IMPACT
The City will pay TnStem, Inc 49 percent of each cash or credited refund from the
audited utilities Any refunds resulting from Tn-Stem's audit will be credited to the
vanous departments' utilIties accounts and resulting payments to TnStem will be
charged against these established accounts
RECOMMENDATIONS
Staff recommends that the City Council authorize the City Manager to negotiate and
execute an agreement with TnStem, Inc to perform audits of the City's Southern
California Edison, The Gas Company. Los Angeles Department of Water and Power,
and GTE utIlity bIlling accounts
Prepared by Craig Perkins, Director of Environmental and
Public Works Management
Jory Wolf, Manager of Information Systems
Candace Tysdal, Accounting Manager
Roger Gorke, EPWM Sentor Administrative Analyst
Susan Munves, Conservation Coordinator
3