Rate and Tariff review is an important part of any EMP. Believe it or not utilities companies all make mistakes. Some are small and no one ever really notices them like the billing dates overlap by a day to two that would just mean a small overpayment depending on the type of utility being paid. Some of them are really big like a $4,489 vacant electric bill for one month when it should have been $44.89.
Based on operating 60,000 units at Alliance Residential Management, municipal water districts seem to make the biggest mistakes and more often. It is usually because they are operated by a city that is always trying to reduce cost or will not invest in update computer billing systems. The water and sewer bills usually have the shortest time frame to pay the bill before late charges are assessed. Late charges should always be contested unless you know for a fact the bills were paid late because of a funding issue or an in-house processing delay. If your company processes all the utilities bills in house you should have an in-house auditor from a different department or a third party review of the bills once a quarter. Keep in mind the third party will charge a fee but usually it will be from the saving of anything they find. Auditors usually find the low hanging fruit such the sales tax on residential bills for gas or electrical service in the state of Texas. This is a very easy one to recover with your in-house staff. This type of recovery can usually go back three to 5 years if it is the same ownership entity.
The rate audit is usually the hardest to catch or find unless you are in a deregulated market for gas and electric. When your properties are located in a deregulated state or area the procurement of the energy will be with a local provider and under contract for a specific period ranging from 6 to 36 months. In Texas for instance we have over 38 retail providers of electricity. When the4 contracts for gas or electric are implemented you need to really examine and review the first couple of month’s bills for the correct rate. The biggest are of discrepancy we have seen are the house meters have one rate of the vacant units get charged another. Another big miss is not getting all the meters turned over to the new contract and this usually is not recoverable unless the utility provider missed the meters that were on the contract.
These are some of my thoughts on the biggest recovery opportunities and the largest mistakes utility provides have made over the years. These mistakes on bills, rate and tariffs are found money and in some cases have gone on for years. If you are not doing this in your company today you must start. There are plenty of utility auditors and we use NWP Cass services of our audits.