Consent Item 13
Consent Item 13
To: Ava Community Energy Authority
From: Chris Davis, Account Services Manager
Subject:
Adopting a Resolution of the Board of Directors of Ava Community Energy Authority Approving Sacramento Municipal Utility District Task Order 4 for Accounts Receivable Recovery Agent Services
Date: March 19, 2025
__________________________________________________________________ Recommendation
Adopt a Resolution to allow the CEO to negotiate and execute a contract with Sacramento Municipal Utility District (“SMUD”) for accounts receivable recovery agent services, through December 2026, aligning the contract with Ava’s current SMUD Agreement.
Summary
The initial policy regarding Delinquent Accounts and Collections (Accounts Receivable Recovery Process) (“Policy”) was adopted as part of the February 7, 2018 Staff Report covering Administrative and Operational Policies. The Board of Directors (the “Board”) received an informational review of this Policy at the November 20, 2019 meeting. At that time, staff planned to implement the Policy by the end of the 2019-2020 fiscal year. However, the Policy was put on hold in response to the State’s emergency customer protections, which were introduced to support customers impacted by the COVID-19 pandemic. The State’s COVID-19 State of Emergency terminated on February 28, 2023.
Consent Item 13
Staff updated the Policy, and the Board approved it on March 20, 2024. Staff then took steps to implement the Policy, starting with issuing a request for proposals for collection agencies in September 2024.
Ava is able to collect on unpaid bills after the customer’s Ava account has closed, or terminated, and the debt is at least 61 days old. After this period, the debt being collected by PG&E on Ava’s behalf is reversed, and it becomes eligible for Ava’s own collection activities. Over the past four years, Ava has accumulated nearly $20 million in uncollected billings eligible for recovery, with approximately $5 million becoming eligible for recovery annually, stemming from over 300,000 customer accounts. Residential customers account for 59% of the total outstanding bills ($11.5 million) and 95% of total accounts (~287,000). Approximately $400,000 becomes eligible for collections each month.
Residential C&I Total
Monthly Average
Uncollectible $241,050 $167,840 $408,890
Monthly Average
Customer Count 5,970 315 6,285
Average Uncollectible
per Customer $40 $533 $65
Yearly Average
Uncollectibles $2,892,600 $2,014,080 $4,906,680
Table 1: Average Uncollectibles, 2020-2024
Financial Impact
SMUD will assess both an initial set up and an ongoing fee to administer recovery services. The initial setup includes integrating systems and processes across agencies configuring, compiling, and updating reporting and data, and customer service representative training. The initial fee is $100,000. The monthly administrative fee of $5,000, will support researching and responding to customer inquiries and disputes and managing and analyzing data and resolution of data discrepancies. Additionally, SMUD’s partner, ICS, will retain 10% of the recovered amount. Ava anticipates the monthly administrative fee costs will be covered by ongoing past-due payments received through the recovery efforts.
Based on other CCA collections activities, staff estimates 2-15% of past due balances will be recovered., Based on $400,000 in past-due balances eligible for collections monthly, staff expects to recover $8,000 - $60,000.
Consent Item 13
Collections Rate Total Collected Net to Ava
2% $8,000 $7,200
10% $40,000 $36,000
15% $60,000 $54,000
Table 2: Estimated range of monthly recoveries
Analysis and Context
Following Board approval for the Policy, Ava issued an RFP in September 2024 for an Accounts Receivable Recovery Agent to implement the approved policy.
Three agencies responded to the RFP; none are local to Ava’s service territory. The top two agencies were selected for interviews: SMUD, in partnership with ICS, and Harris & Harris (H&H). These agencies were evaluated based on the following key criteria: experience, recovery rates, cost, and customer communications and recovery methodology. Both agents had extensive experience, but SMUD was deemed more suitable, due to costs, its existing relationship with Ava, and their managing of the same process with another CCA, Valley Clean Energy.
Recovery rates for both agencies are expected to be similar, given the unique challenges of CCAs, such as low brand recognition and the inability to have debt affect customers credit rating, due to lack of having key customer information, such as social security numbers and complex billing structure. Regarding costs, SMUD proposed a $100,000 initial setup fee and a $5,000 monthly management fee to cover ongoing administrative costs. Due to the role SMUD plays in Ava’s ongoing billing operations, SMUD would be involved in both the data integration and ongoing administrative work.
Although both proposals were comparable, SMUD presented a more cost-effective option, due to its lower primary recovery fee of 10% versus H&H’s 16.2%. SMUD's lower primary recovery fee (10%) and customer-centric approach—offering multilingual support and flexible payment options—align more closely with Ava’s priorities. Staff will collaborate with SMUD to develop standardized language for use across all customer communication channels. H&H, while effective, takes a more data-driven approach and less person-to-person interaction.
Since 2018, Ava has contracted with SMUD to handle our billing operations and customer service duties. SMUD is the nation's sixth largest community-owned electric utility, committed to sustainability, innovation, and exceptional customer service. SMUD is well-regarded for its customer service; their team is praised for being knowledgeable and friendly, often going above and beyond to assist customers with billing inquiries, service issues, and energy-saving tips.
Also, SMUD reinvests profits back into their local area, funding programs for low-income residents, energy efficiency initiatives, and education around sustainability.
Consent Item 13
Subcommittee Recommendation
Staff presented this item to the Financial, Administrative and Procurement Subcommittee (FAP) on March 12, 2025. The subcommittee recommended this item for approval and requested that Staff require frequent vendor performance monitoring. Staff has incorporated this feedback into the final Staff Report.
Recommendation
Staff recommends contracting with SMUD for accounts receivable recovery services through December 2026, aligning this service with Ava’s current SMUD Agreement.
Attachments
A. Resolution
B. Accounts Receivable Recovery Policy
C. SMUD Task Order 4 – Debt Collection Services
D. PowerPoint
Attachment Consent Item 13A
RESOLUTION NO. R-2025-XX
A RESOLUTION OF THE BOARD OF DIRECTORS
OF AVA COMMUNITY ENERGY AUTHORITY APPROVING SACRAMENTO
MUNICIPAL UTILITY DISTRICT TASK ORDER 4 FOR ACCOUNTS RECEIVABLE
RECOVERY AGENT SERVICES
WHEREAS Ava Community Energy Authority (“Ava”) was formed as a community choice aggregation agency (“CCA”) on December 1, 2016, under the Joint Exercise of Powers Act, California Government Code sections 6500 et seq., among the County of Alameda, and the Cities of Albany, Berkeley, Dublin, Emeryville, Fremont, Hayward, Livermore, Piedmont, Oakland, San Leandro, and Union City to study, promote, develop, conduct, operate, and manage energy-related climate change programs in all of the member jurisdictions. The Cities of Newark and Pleasanton, located in Alameda County, along with the City of Tracy, located in San Joaquin County, were added as members of Ava and parties to the Joint Powers Agreement (“JPA”) in March of 2020. The City of Stockton was added as a member to Ava in September of 2022. The City of Lathrop was added as a member to Ava in October of 2023. San Joaquin County was added as a member to Ava in July 2024. On October 24, 2023, Ava legally adopted the name Ava Community Energy Authority, where it had previously used the name East Bay Community Energy Authority since its inception.
WHEREAS as a CCA, Call Center and Data Management Services (“CCDMS”) are fundamental to the efficient operation of Ava Community Energy; WHEREAS Ava, then East Bay Community Energy Authority, issued a Request for Proposals (“RFP”) for CCDMS in March 2021 and selected the Proposal from the Sacramento Municipal Utility District (“SMUD”) for further consideration and ultimately a three-year agreement;
WHEREAS Ava had entered into a Master Services Agreement (“MSA”) with SMUD for a term of approximately two years, effective January 30, 2018, permitting Ava to execute Task Orders to purchase services;
WHEREAS Ava and SMUD subsequently amended the MSA, effective December 20, 2020, to extend the term of the MSA until December 31, 2022; WHEREAS Ava and SMUD again amended the MSA, effective January 4, 2022, to extend the term of the MSA until December 31, 2024;
Attachment Consent Item 13A
WHEREAS Ava and SMUD executed Task Order 2, effective January 1, 2021, with an expiration date of December 22, 2022;
WHEREAS Ava and SMUD subsequently amended Task Order 2, to extend the expiration date to December 31, 2024;
WHEREAS Ava and SMUD executed Task Order 3, effective January 1, 2025, with an expiration date of December 31, 2029, and amended the MSA, effective January 1, 2025, to extend the term of the MSA until December 31, 2029; and WHEREAS Ava is wholly satisfied with SMUD’s services to-date and desires to amend the SMUD MSA to expand services to include accounts receivable recovery activities under Task Order 4, with updated scope and terms of compensation.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF AVA COMMUNITY ENERGY AUTHORITY DOES HEREBY RESOLVE AS FOLLOWS:
Section 1. The Board of Directors hereby authorizes the Chief Executive Officer to negotiate and execute, subject to the approval of General Counsel, Task Order 4 with SMUD, for the purposes set forth above and for compensation in substantial conformance with the terms set forth in the staff report associated with this Resolution.
ADOPTED AND APPROVED this 19th day of March 2025.
Jack Balch, Chair
ATTEST:
Adrian Bankhead, Clerk of the Board
Attachment Consent Item 13B
ACCOUNTS RECEIVABLE RECOVERY PROCESS
Policy Number: P-2024-4.1
Approval Date: March 20, 2024
Agenda Item: Consent Item 15
Approved by Resolution: R-2024-22
Delinquent Accounts:
Pursuant to Electric Rules 8 and 11, Pacific Gas & Electric (PG&E) uses the following process to determine past due accounts and the necessary action:
Residential Accounts Non-Residential Accounts
Day 0 Bill is completed and
issued. Day 0 Bill is completed and issued.
Day 21 Bill is due Day 17 Bill is due
Day 22 Past due Day 18 Past due
Day 27-
34 A new bill is issued for
current charges and a 15-
day notice is included for
past due charges.
Day 21-
34 A new bill is
completed for new
charges and any
unpaid charges and a 7-day
notice is issued for past due
charges.
Day 42 96-hour notification sent
Day 44-47 48-hour notice via mail
Day 48 Outbound phone call
Day 51 Account is eligible for
disconnection Day 43 Account is eligible for disconnection Day 60 Final letter is sent Day 52 Final letter is sent Day 95 Reverse debt to CCA Day 87 Reverse debt to CCA
Aging Accounts:
All Ava Community Energy accounts, whether Residential or Non-Residential, identified in the month aging accounts receivable report, as provided by PG&E, are eligible to be returned to PG&E for continued non-payment.
Accounts Receivable Recovery Process:
Closed Ava accounts with overdue amounts may be recovered by Ava or referred to a collection agency and are subject to the recovery process established by this policy.
This policy replaces the existing policy for Delinquent Accounts and Collections (P-2018-4).
Attachment Consent Item 13C
Ava-SMUD Task Order 4 1
EXHIBIT A: SCOPE OF SERVICES
Task Order 4 – Debt Collection Service
SMUD and Ava agree to the following services, terms and conditions described in this Task Order. This Task Order 4 is for Debt Collection Services, the provisions of which are subject to the terms and conditions of the Agreement between the Parties. If any provisions of this Task Order 4 conflict with any provisions in the Agreement, the provisions of this Task Order 4 shall take precedence.
The Effective Date of this Task Order 4 is the date of last signature.
1. SCOPE OF WORK
SMUD will provide debt collection services as required by Ava during the term of this Task Order 4.
• Start Up Activities
o Set up Ava as a client in ICS system
o Set up ICS reporting
o Set up ICS portal
o Create Placement File
o Create Payment File
o Set up automated file transfers between ICS and SMUD
o Update Aging Reports to reflect Payments
o Update CRM to reflect Payments
o Set up document storage repository
o Set up Dashboard
o Set up payment transfers into Ava bank account
o Train ICS CSRs on Ava information and policy
o Set up processes (NLAR, Litigation, Dispute)
• Data Analytics
o Profile customers based on customer type, past due amount, engagement history, available contact information, and more
• Here to Help Letter
o Reach out to each customer to let them know that we are available to help, Ava to approve letters
o Encourage a call with one of our Energy Advisors who can educate about programs available to them to help lower their bills, from energy efficiency opportunities to low-income programs o Provide information about payment channels and programs to remove perceived barriers to payment
• Customer Care Calls
o Encourage a conversation with our Energy Advisors who are adept at “save” techniques to significantly reduce opt-out rates, and explain energy bills, determine high bill root cause, and educate on energy usage management, Ava to approve call scripts
o Support 150 different languages through the call center o Record and monitor all calls for quality assurance and adherence to customer care protocols
Attachment Consent Item 13C
Ava-SMUD Task Order 4 2
o Store and make all calls available for two years
o Keep call center hours of 9am – 5pm Pacific Time
• Validation Notice
o When initial attempts at communication have been unsuccessful in encouraging customers to pay, initiate a formal collections process o Send accounts a validation notice which informs customers of their balance, instructs them how to pay and clearly advises them of their rights as outlined by federal and state laws, Ava to approve letters
• Segmentation
o Group customers using over 40 data points
o Employ a unique strategy for each customer segment
o Re-segment after periodic evaluation
• Written Notifications
o Distribute additional request letters and emails, with frequency based on segmentation and new available information, Ava to approve letters
o Assess communication strategies and modify as needed
o Translate content into multiple languages
o Verify phone number, hours of operations, addresses, formatting of client information and placement of Fair Debt Collection Practices Act (FDCPA) required verbiage o Include a settlement letter if authorized
o As requested, send additional information such as receipt letter, debt validation letter, payment arrangement letter, pre-authorization payment reminder letter, etc. o Store letters in customer’s account record
• Phone Calls
o Where a valid phone number is available, initiate collection calls, Ava to approve call scripts
o In compliance with Regulation F, limit call attempts and dynamically determine best call times
o Clearly communicate agent’s name and agency
o Ensure account authorization to speak with customer
o Request identifying information such as address or birthdate to validate o Read a statement of rights to the customer
o Communicate debt information and instruct customer on ways to exit the collections process
o Request full payment, discusses potential financial resources and negotiate a payment plan if needed
o Offer payment options via the IVR, online or through the mail o Initiate disputed debt process if applicable
o Monitor calls for quality assurance
o Store calls for five years
o Note customer’s account record with call data, follow up date, promise to pay, canceled payment, non-sufficient funds, or other activity o Assign account manager for high value accounts
• Customer Tracing
o Access several data providers to identify the best possible mailing address and phone number
o Check online resources to locate quality customer contact information o Standardize addresses to meet USPS guidelines to improve mail delivery o Check that an account isn’t part of a bankruptcy proceeding Attachment Consent Item 13C
Ava-SMUD Task Order 4 3
o Verify that the responsible party isn’t deceased through an automated scrub o Monitor credit reports looking for changes that may indicate a renewed ability to pay • Remittance
o Provide payment remittance through preferred channel
• Web Portal
o Provide access to client portal with updated customer data, notes o Post reports to AWS including Placement files, Placement File Test files, Placement File Exception files, Debt Acknowledgement reports, Batch Track reports, Special Activity reports, 248 Debt Reversals and Cancel Debt Reversals, Payment reports, Inventory Detail reports, Performance reports, Monthly Dashboard • Attorney Services
o Position accounts with an attorney and initiate a non litigation attorney referral process after 180 days
o Position select accounts with an attorney for litigation upon approval after 270 days • Administrative Support
o Coordinate and attend monthly meetings with Ava
o Coordinate and attend monthly meetings with vendor
o Coordinate and attend monthly meetings with PG&E
o Work with PG&E to resolve missing data
o Research and respond to disputes
o Research and respond to bankruptcies
o Research and respond to customer inquiries
o Update dashboard monthly
o Upload related files and reports to AWS
o Analyze data to ensure accuracy of collection process o Analyze data to propose collection improvement opportunities
2. APPROVAL PROCESS ACCEPTANCE
Both Parties agree to perform tasks, reviews, and approvals in a timely manner.
3. TERM AND TERMJNATION
3.1. Term
Task Order 4 is effective on the Effective Date of this Task Order and shall remain in effect until December 31, 2026.
3.2. Termination
This Task Order 4 may be terminated pursuant to Section 4 ("Term and Termination") of the Agreement. In the event that Ava chooses to terminate this Task Order 4 prior to December 31, 2026, Ava will pay SMUD for fees incurred to date. Such fees shall be due and payable (30) calendar days after the date of the invoice by SMUD to Ava.
Attachment Consent Item 13C
Ava-SMUD Task Order 4 4
4. COMPENSATION FOR SERVICES
4.1. Hourly Rates
Services performed under this Task Order 4 will be billed as follows:
Description Fee
Set Up Fee $100,000 one time
Administrative Support $5,000 per month
Primary Placements 10% of debt collected
Secondary Placements 22% of debt collected
Attorney Referral 50% of debt collected
Litigation 50% of debt collected
Primary placements include accounts that have not gone to other collection agencies.
Secondary placements include accounts that have gone to other collection agencies already.
Costs for marketing and outreach such as postage and vendor fees shall be pass through.
5. PAYMENT TERMS
Fees incurred under this Task Order 4 will be invoiced monthly. For services under this Task Order 4, Ava shall pay all undisputed invoices within thirty (30) calendar days of date of the invoice.
6. TASK AMENDMENT
This Task Order 4 may only be amended or otherwise modified with the written agreement of the Parties and approved by each Party's governing body where required by law or policy. Any changes to the scope defined in Task Order 4 will be addressed through a task amendment process.
Attachment Consent Item 13C
Ava-SMUD Task Order 4 5
SIGNATURES
The Parties have executed this Task Order 4, and it is effective as of the Effective Date.
Ava Community Energy
By
Name
Title
Date
Approved As To Form
Sacramento Municipal Utility District
By
Name Brandy Bolden
Title Chief Customer Officer
Date
Approved As To Form
Accounts Receivable
Recovery Process
Chris Davis | March 19, 2025
Attachment Consent Item 13D
Recommendation:
Staff recommends contracting with SMUD until December 2026, aligning the contract with Ava’s current SMUD agreement.
Executive Summary
● Ava has accumulated $20M in uncollected billings over the past 4 years ● $400k in eligible collections per month from 300K+ customers ● The Board adopted new write-off and collections policies in 2024; staff seeks to implement these into operations
● Recommended Vendor: SMUD (partnership with ICS)
● Key Benefits of SMUD: Cost-effective, positive client feedback, seamless integration with our billing system
2 Attachment Consent Item 13D
Background
Uncollected Billings:
• $20M in total, with $5M becoming eligible for recovery annually • 300,000+ customers with eligible accounts (closed and 61+ days overdue) • 59% of debt is residential
Ava’s Policy History:
• 2018 policy adopted, paused in 2020 due to COVID-19 protections • The State’s COVID-19 state of emergency terminated on February 28, 2023 • Staff issued an RFP September 2024 for debt collection services • Ava’s Accounts Receivable Recovery Policy was adopted March 2024 3 Attachment Consent Item 13D
Ava’s Accounts Receivable Recovery Policy
Delinquent Accounts:
Pursuant to Electric Rules 8 and 11, Pacific Gas & Electric (PG&E) uses the following process to determine past due accounts and the necessary action: (Refer to the chart on the following slide for more details.)
Aging Accounts:
All Ava Community Energy accounts, whether Residential or Non-Residential, identified in the month aging accounts receivable report, as provided by PG&E, are eligible to be returned to PG&E for continued non-payment.
Ava’s Accounts Receivable Recovery Policy:
Closed Ava accounts with overdue amounts may be recovered by Ava or referred to a collection agency and are subject to the recovery process established by this policy. 4 Attachment Consent Item 13D
Customer Timeline - PG&E
5 Residential Accounts Non-Residential Accounts
Day 0 Bill is completed and issued. Day 0 Bill is completed and issued.
Day 21 Bill is due Day 17 Bill is due
Day 22 Past due Day 18 Past due
Day 27- 34 A new bill is issued for current charges and a 15-day notice is included for past due charges.
Day 21-34 A new bill is completed for new charges and any unpaid charges and a 7-day notice is issued for
past due charges.
Day 42 96-hour notification sent
Day 44-47 48-hour notice via mail
Day 48 Outbound phone call
Day 51 Account is eligible for disconnection Day 43 Account is eligible for disconnection Day 60 Final letter is sent Day 52 Final letter is sent Day 95 Reverse debt to CCA Day 87 Reverse debt to CCA
Ava does not have an influence in this schedule or if/when a customer is disconnected.
Customer debt is also reversed to Ava if the customer voluntarily closes their account.
Attachment Consent Item 13D
Request for Proposals Process
In September 2024, Ava issued a RFP for Debt Collection Services. Three agencies responded to the RFP. Proposals were evaluated by a team, and the top two agencies were selected for interviews:
Vendors Considered:
• SMUD - Partnered with ICS
• Harris & Harris (H&H)
6 Attachment Consent Item 13D
Comparison of Collection Methodology
SMUD vs. H&H Key Differences:
• SMUD: 24/7 inbound IVR, manual skip tracing, persistent communication even after 90 days • H&H: Focus on analytics, credit score filtering, more frequent call attempts for smaller balances
Customer Journey Highlights:
• SMUD prioritizes customer experience through multiple communication channels, a "here-to-help" letter • H&H utilizes advanced analytics, but lacks long-term engagement tools 7 Attachment Consent Item 13D
Financial Analysis
• Setup and monthly management fees to SMUD apply to any vendor selected ▪ SMUD handles Ava’s data management and billing services, therefore they are essential to this process
• Estimated recovery rate: 10% (range: 2%-15%)
8 H&H Fee Structure:
● Recovery fee: 16.2%
● Fixed $100k set-up fee
● $5k monthly management fee
SMUD Fee Structure:
● Recovery fee: 10%
● Fixed $100k set-up fee
● $5k monthly management fee
k
Attachment Consent Item 13D
Uncollectibles Breakdown
9 Residential C&I Total
Monthly Average
Uncollectible $241,050 $167,840 $408,890
Monthly Average Customer
Count 5,970 315 6,285
Average Uncollectible per
Customer $40 $533 $65
Yearly Average
Uncollectibles $2,892,600 $2,014,080 $4,906,680
Table 1: Average Uncollectibles, 2020-2024
Attachment Consent Item 13D
Vendor: SMUD in partnership with ICS
Determining Factors:
• Lower primary recovery fee (10%)
• Integration with SMUD will streamline implementation
• Favorable customer feedback and cost-effectiveness
Recommendation:
Staff recommends contracting with SMUD until December 2026, aligning the contract with Ava’s current SMUD agreement. Staff will monitor monthly reports to analyze performance throughout the duration of the contract.
Recommendation
10 Attachment Consent Item 13D
Questions?
11 Attachment Consent Item 13D