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City investigates budget billing

COVINGTON -- Mayor Ronnie Johnston didn't wait long to act on one of his campaign initiatives.

During the Jan. 9 City Council meeting, the first Johnston has presided over as mayor, he sought and received approval from the council to pursue budget based billing for utility customers.

Budget based billing would allow customers to pay a set amount each month, based on the amount billed during the last 12 months.

"It's relatively simple. A customer that has been a customer for 12 months can qualify," Johnston said in a follow-up interview. "You add the usage for a year and divide by 12 to determine your next 12 months payment."

The council gave approval for city staff to gather more information on the process. Johnston said he hopes it can be implemented by July 1.

"We are trying to develop more options for our citizens," he said, noting that he heard concerns from residents regarding erratic utility bills while on the campaign trail.

"I think this will at least take the big humps out," he said.

Customers with payments owed could participate, with the owed amount added to the 12-month payment plan, said City Manager Steve Horton. If one payment is missed, it would constitute breach of the contract and the customer would no longer be allowed to participate.

Horton recommended implementing budget based billing for at least a year to see how well it works. Johnston said it would be optional for customers who want another payment tool. Additional details will be worked out in the next few months he said, and customers will be notified before the option becomes effective.

Horton said there would need to be some type of "hedge factor" to protect customers from a large balloon payment at the end of the 12-month period.

"As for the 'hedge factor,' which has not been determined at this point, (it) could be zero to 10 percent, we are currently running some numbers to determine what is best to protect the customer. The best case would be at year end we do a calculation and the monthly payment goes down the next 12 months," Johnston said.

He predicted that, "The city will see a more consistent cash flow with this program, and I believe we will keep more people on the system, which will increase our overall revenue."