OCA Audit Reports

Issued: September 2007

SUMMARY

This report presents the results of the audit of Austin Energy’s Bad Debt Practices. The purpose of this audit was to verify procedures in place to minimize bad debt, identify areas of improvement, and determine whether the collection agency hired by AE is charging rates in accordance with its contract.

Bad debt is defined as money due to the utility that will likely remain uncollectible. AE’s Customer Care division is responsible for handling the accounts collection process, including attempting to collect on past due balances. Once an account is inactive for a certain number of days and meets certain criteria, it is transferred to a collection agency.

We noted improving trends in the proportion of bad debt incurred by the utility. In addition, AE is planning to implement several best practices related to minimizing bad debt. These best practices include planning to hire multiple collection agencies and implementing an automated outbound calling system.

We did note additional ways AE could be more proactive regarding bad debt. AE could implement a risk profiling system that would allow them to tailor collection paths and customize security deposits based on the customer’s past behavior and could offer incentives for automatic payments.

We also found that the collection agency, Credit Systems International Inc. (CSII), is charging the City the correct rate for a majority of all accounts. In addition, AE was able to transfer the majority of accounts to the collection agency in time to receive the lowest rate under the contract.

Download the entire text of our Austin Energy Bad Debt audit report (Size: 329 KB) in Adobe Acrobat. You will need Adobe's Acrobat Reader to view these files. Or request a hard copy of this audit report, No. AU06120, by submitting this audit report request form.

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