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Re: Membership Fee Increase
October 17, 2006
The board of directors of the Utility Notification Center of Colorado (UNCC) increased the membership ticket fees in 2006-2007 because of declining outgoing transmissions. A transmission is defined when a call for an underground facility locate is requested. Recently Xcel Energy and Comcast have asked for additional information regarding the increase in ticket fees. Our mission continues, as it has in the past, to provide notification services at the most reasonable cost. It is important to note that 100 percent of UNCC’s operating revenue is derived from the fees charged for outgoing transmissions.
The finance and budget committee was formed to review the operating budget, make recommendations and assist the board in setting the ticket fee. The committee is comprised of three board members, Qwest Communications, Xcel Energy, and Comcast; two staff members, executive director and center manager; our accountant and an economic analyst. This committee develops and presents the annual budget to the board for approval each year. The 2007 budget was approved unanimously at the June 2006 board meeting.
For your information, ticket prices decreased from $1.60 in 1986 to $.65 in 1999. Economic growth, inflation, and technology enhancements have increased the ticket price over the past seven years to $1.03 in 2006. The addition of the polygon realignment program in 2004 significantly decreased outgoing transmissions. There are other factors that have contributed to this decline some of which are within the organization’s control and others that are not. This letter and the corresponding MS Power Point presentation explain why the board increased ticket fees for 2007.
There are several contributing factors that must be considered when forecasting and establishing yearly ticket fees for membership. The two major factors to center finances include incoming call volume and outgoing ticket transmissions. Call volume is a major factor of the center’s cost while transmissions dictate center revenue.
The impact on call volume and center cost are:
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economy |
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weather |
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seasonality |
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advertising, marketing & promotions |
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new home starts |
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population and migration |
The following factors impact transmissions and center revenue:
Membership
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realignment of member facility geographic location within GIS |
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modifications to classification type of member |
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member delivery terminal deletions |
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copy terminal, emergency terminal |
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inability to locate facilities within time outlined under law |
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efficiency in managing ticket information |
Since UNCC was founded the notification process has constantly evolved. The primary goal is to provide the best possible notification information from the excavator to the membership. The notification process is the core business of UNCC. We strive to make improvements for those that we serve. The improvements in outgoing transmissions are driven by many factors:
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Geographical Information Systems (GIS) |
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acquiring quality street center line data |
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acquiring ortho imagery |
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accuracy |
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completeness |
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volume |
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excavator’s supplied information |
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operators ability to process information correctly |
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member’s ability to define location of its’ underground utility |
It is important to understand that improvements in GIS technology have resulted in the center’s ability to reduce the number of outgoing tickets to membership by an estimated 25-30%. At the request of the membership, a GIS department was established to facilitate accuracy of underground facility boundaries. This realignment process resulted in the polygon program that began in August of 2004. The program has been widely embraced by 138 Tier 1 and 98 Tier 2 members and has significantly reduced outgoing transmissions.
The board’s decision, several years ago, was to develop a zero-based budget that created a “pay as you go” system for membership. The intent was to have members that receive services today pay for services today. Since a large cash reserve had accumulated during the prior years, the board decided to deficit spend in 2003 and 2004. Although ticket fees increased, the fees set by the board were not sufficient to offset call center operating costs. Without fully understanding the impact of the polygon realignment, fees were held flat in 2005. This required the committee to recommend increasing fees in 2006-2007 to match operating revenue and cost.
Respectfully,
J.D. Maniscalco
Executive Director
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