I keep hearing about the discovery rule but I'm not sure how to actually use it in practice. The idea is that the statute of limitations doesn't start until the error is discovered. But who decides when discovery happened? Is it when I find the error during my audit? When the client hired me? When the error first appeared on a bill?
Discovery rule — when does the clock actually start?
The discovery rule starts the clock when the injured party knew or should have known about the error. For utility billing, the argument is that a commercial customer paying a monthly utility bill has no reason to suspect a rate classification error or CT ratio problem without expert analysis. So the clock starts when the auditor identifies the error, not when the error first appeared. The key phrase in most state statutes is "knew or should have known." You need to demonstrate that a reasonable person in your client's position would not have known about the billing error without professional help.
One practical tip — always document the exact date you discover each error in your audit notes. Write it down: "On August 8, 2022, during analysis of 36-month billing history, identified that account is classified as Rate GS-1 when usage profile indicates Rate GS-3 would be applicable." This contemporaneous documentation is your evidence if the utility or PUC ever questions when discovery occurred. I also include this date in my findings report to the client.
Phil and Derek covered the legal framework well. I'd add that the discovery rule is most powerful for errors that are genuinely hidden — like a wrong CT multiplier buried in meter configuration data, or a rate classification that requires tariff expertise to evaluate. It's weaker for errors that appear on the face of the bill, like an obviously wrong meter reading or a charge that's clearly duplicated. The more technical and obscure the error, the stronger your discovery rule argument. This is another reason to document your methodology — show that the error required professional analysis to identify.
Perfect — this makes it concrete for me. I'm going to start dating every finding in my workbook and including a discovery date in all my reports. Simple habit that could be worth tens of thousands in extended recovery windows.