Gwen from Montgomery. Started a demand charge audit on a hospital client expecting to find a ratchet issue. Did not find a ratchet problem but while pulling the interval data I noticed the meter multiplier in the billing system was 1.0 when the account's current transformer ratio required a multiplier of 40. Every demand and consumption reading for 26 months was exactly 40 times too low. The hospital had been dramatically underbilling relative to actual usage. Strange situation. How do I handle finding that my client has been underpaying?
Demand charge audit led to discovering a larger billing error
Walt from Pittsburgh. This happens occasionally. Your obligation is to report what you found accurately to your client. The utility will eventually catch this error through their own meter audit process and the backbill could be enormous.
Derek. A 26-month underbilling on a hospital account could be a catastrophic backbill. The client needs to know immediately so they can prepare financially and potentially negotiate a settlement before the utility discovers it on their own.
Is the utility required to discover and backbill this or do they sometimes miss it?
Mike D. Utilities have systematic processes for comparing metered usage to billing usage that should catch this. But large accounts with complex metering sometimes fall through the cracks for years. You cannot count on the utility missing it indefinitely.
I disclosed it to the client immediately. Their CFO was visibly shaken. The utility had not yet discovered the error. Client's attorney negotiated a payment plan with the utility that spread the backbill over 24 months. Much better outcome than if the utility had discovered it unilaterally.
Walt. You did the right thing by disclosing it immediately. Your professional integrity is worth more than any single engagement. And the client will remember that you found something that benefited the utility and still told them the truth.