Some Medford residents grumbled when water bills and other utility bills were separated four years ago.

But that move has resulted in a $60,000 annual savings for the city as it processes bills for 26,000 customers.

City staff is now proposing the purchase of a $1.06 million utility billing system later this year that they say could save $125,000 a year and provide more encouragement for customers to pay electronically.

The council is expected to make a decision on the software contract in October.

The new software from Advanced Utility Systems also would allow the city to eventually merge the billing with the Medford Water Commission, if councilors and the Water Commission want to pursue that option.

But an analysis by city staff indicates there are more benefits to continue with separate billing.

"Is it an issue? I submit it's not," said Lorraine Peterson, Public Works business manager.

Previously, city officials worried that not having the ability to shut off water would result in increased delinquency rates for utility bills, which cover sewer, street and storm drain fees.

Peterson, though, explained to the council that the city has taken steps to deal with delinquent accounts, including attaching the amount owed to property taxes and to escrows through title companies.

In one case, the city received $10,000 in back utility payments when a house was going through escrow, she said.

As a result of these steps, including using a collection agency, the city has a delinquency rate of 0.91 percent.

The proposed software, which would streamline back-office functions, would also make it easier to start the collection process on delinquent accounts.

The city spends $656,653 annually for utility billing, an amount that would be $717,519 if it were managed by the Water Commission, the analysis found.

Peterson said the new software would allow the city to offer more ways to pay the bill electronically, including with a phone app. It also would have a more easily understandable bill for customers.

Already, 64 percent of customers pay their bill electronically, compared with 31 percent who pay by mail. The city receives in-person payments from 5 percent of customers.

It's not unusual for cities to have more than one utility bill — those that do include Central Point, Hillsboro, Roseburg and Talent.

— Reach reporter Damian Mann at 541-776-4476 or dmann@mailtribune.com. Follow him on www.twitter.com/reporterdm.