DATE:
| 3/8/2022 | TO:
| HONORABLE MAYOR AND CITY COUNCIL | FROM:
| JACKIE ACOSTA, FINANCE DIRECTOR | SUBJECT:
| ADOPT A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT WITH UTILITY COST MANAGEMENT LLC FOR UTILITY BILL AUDITING SERVICES |
Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute an agreement with Utility Cost Management LLC for utility bill auditing services.
STRATEGIC PLAN ALIGNMENT
Goal A: Financial Stability and Sustainability - to foster fiscal health through disciplined long-term planning, heightened efficiency, increased revenue, and cost recovery.
BACKGROUND
Utility Cost Management LLC (UCM) is a company that analyzes utility bills of cities and private companies and seeks to recover overcharges and identify possible future savings on the client’s behalf. To do so, UCM constantly monitors developments in the regulatory environment to ensure that utility bills are in line with the latest regulations and interpretive decisions. With this understanding, UCM analyzes utility usage data from meters and utility bills to determine if a utility user is overpaying, and then works with the utility companies to secure refunds and lower rates. Since 1991, UCM has generated over $250 million in refunds and savings for a variety of clients, including for-profit enterprises, public entities, and educational institutions.
City staff met with UCM to discuss the possible engagement of their firm to conduct a utility usage analysis for Union City. After further discussion among staff, it was staff’s consensus that the City should contract with UCM to perform the analysis of Union City utility bills. The City council is asked to adopt a resolution that authorizes the City Manager to execute an agreement with UCM to begin ta utility bill analysis for the City.
DISCUSSION
UCM will gather and organize historical billing information on the City’s utility accounts, which may include, but is not limited to, electricity, gas, water, sewer and refuse collection accounts. UCM will analyze the bills and will submit a report summarizing the findings of its review, including incorrect rates charged to the City and areas of possible future savings. The report will describe the grounds for seeking refunds and savings opportunities identified for each account. UCM will prepare all forms required to initiate changes to the utility accounts and will take all the necessary steps to assist the City in implementing recommended changes to reduce future costs. UCM will prepare documentation and meet with utility company personnel to discuss each request. UCM will negotiates with utility authorities to ensure that refund calculations are acceptable and are paid in a timely manner. Once rate changes or refunds have been approved, UCM will notify City staff.
UCM does not charge up-front fees or deposits; rather, their compensation is structured as a percentage of actual savings realized, after clients receive their savings. Therefore, if their analysis does not generate any refunds or cost savings, the City pays nothing to UCM.
If any refunds are issued or future savings can be realized, UCM would be paid 42% of the refund amount and 42% of the future savings it realizes for the City for a period of three years. After the three-year period, the City receives 100% of the savings.
FISCAL IMPACT
Unknown at this time, however, errors found that result in refunds or future savings will be shared with UCM. Refunds will be split 42% (UCM) / 58% (City). Future savings will be split in the same manner for three years.
RECOMMENDATION
Staff recommends that the City Council adopt a resolution authorizing the City Manager to execute an agreement with Utility Cost Management LLC for utility bill auditing services.
Prepared by:
Jonathan Segarra, Management Analyst II, City Manager’s Office
Submitted by:
Jonathan Segarra, Management Analyst II, City Manager’s Office |