Your Energy Manager
Topic: Audit Your Utility Bills
January 2007
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Independent Energy Consultants, is committed to helping its clients make well-informed and cost-effective decisions regarding their energy supply and consumption. We are sending you this newsletter to help you understand how energy decisions that are made, or not made, effect your company's bottom line.

Have you ever shopped for groceries and made what you thought was a thrifty purchase, only to later discover that you did not receive the discounted sale price? If you are like most people you might say to yourself "how could they mess up something so simple as the price of a gallon of milk or a loaf of bread". If you are a hard-core synic you might even be thinking that you have been deliberately cheated! The point is, as consumers we have all been victims of honest mistakes even with the most routine purchases.

Now lets look at the steps needed to generate a proper utility bill. For sake of discussion we will focus on electric bills, but the same or similar processes apply to natural gas, water, sewer, phone, propane, fuel oil, refuse, etc.

Electric bills are calculated in accordance with tariffs filed by your local utility and approved by your state or local utility regulator. These tariffs are a collection of rules, rate schedules and riders that can change monthly, quarterly, semi-annually and annually. Furthermore, you may be eligible to have your bill calculated on one of several rate schedules, with each producing drastically different results for the same usage. At this point I hope you see the difference in complexity between your electric bill and our grocery bill analogy. If we drill further into your electric rate schedule, we are likely to find that it is calculated based on factors such as your overall energy use, the peak power demand during a month, the reactive power consumed, and the time of day, week and season that you consumed your electricity. Complicating the matter further is the fact that each of the parameters mentioned is also likely to have a tiered rate structure where the price changes at discrete levels of usage. If you thought it was not possible for a utility company to make a billing error, maybe its time to think again. Contact Independent Energy Consultants to discuss how we can give you the assurance you deserve.
At Independent Energy Consultants we have the ability to automatically audit your historical and current utility bills. We conduct over forty (40) tests on each bill to ensure the inputs fall within predetermined tolerances and your bill amount agrees with our calculation. Errors generally result from either equipment malfunctions or human mistakes. For example, billing errors can be caused by a faulty or out of calibration meter, a data entry error by the individual reading your meter, the customer billing system having a coding error, or a billing system that does not reflect the latest tariff changes. Here are just a few of the tests we conduct to spot those errors:
  1. Is there an abnormal number of days in a billing period?
  2. Are there overlapping days between meter readings?
  3. Are any bills missing from a monthly batch?
  4. How does the usage compare to the same period in the prior year?
  5. Does the billed amount agree with our calculated amount?
  6. Is it an actual or estimated bill? Estimated bills pose additional risks.
OK, you spotted what you believe to be a significant overcharge on your bill - now what? If you think a quick call and an emotional plea to the utility's overworked customer service representative will get the job done, you are likely to be disappointed. The individual taking your call will ask a few questions and then pass your case onto a rate specialist. When the specialist finds time to return your call he/she is likely to speak a jargon that most do not, or should not be expected to understand. Then, just when you think you are getting somewhere you are probably going to be informed that (i) the burden of proof falls into your lap, or (ii) the utility can open an investigation, but it will cost you if their research shows no fault on their part. (My experience and observation of human nature leads me to believe that self-investigations rarely find fault with the investigator!)

Companies that are successful in receiving refunds or credits for overcharges are those that are able to present a comprehensive analysis. That analysis will show what went wrong, when it occurred, how long it lasted, and include a calculation of damages. To do this properly you must be armed with historical energy usage, the operating conditions within your facility, and a thorough understanding of the utility rate structure. If the resolution process with the utility breaks down, the customer needs to understand what other rights and avenues are available to them. Often this involves filing a formal complaint with the state regulators. Utility companies with deep pockets and familiarity with the dispute resolution process often have a huge advantage over ill- prepared litigants. The process can become protracted and legal fees may exceed the damages in question. The certified experts at Independent Energy Consultants are prepared to help you identify billing errors and collect on the same.

Contact us for your energy management needs.

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Independent Energy Consultants, Inc. | 820 Deepwoods Drive | Aurora | OH | 44202