I've been auditing regulated utility bills for years but just started working in Texas where the market is deregulated. The bills are completely different — there's a delivery charge from Oncor and a separate supply charge from the REP. I found an error on the Oncor delivery side (wrong rate class) but the client also thinks their REP supply rate is too high. Do I audit both or just the delivery side?
Texas auditing — supply vs delivery errors are two different animals
You should audit both but they require different approaches. The delivery side — Oncor, CenterPoint, AEP Texas — is tariff-based just like a regulated utility. Check rate class, demand charges, riders, all the standard stuff. The supply side is contract-based. Pull the client's REP contract and compare the contracted rate to what's being billed. I've found REP billing errors where the contracted fixed rate was $0.065/kWh but the REP was billing $0.072 because they applied the wrong vintage contract. That was a $4,200/month overcharge on a large warehouse in San Antonio.
Angela is right that both sides need auditing. The delivery errors tend to be the same ones you find in regulated states — rate classification, demand, riders. The supply errors are contract-specific: wrong rate, wrong contract term, unauthorized early termination fees, capacity charges not in the contract, and charges for ancillary services the client didn't agree to. You need the actual REP contract to audit the supply side. If the client can't find it, request a copy from the REP — they're required to provide it.
One thing specific to Texas — check the TDU delivery charges on the REP bill. Some REPs pass through TDU charges at a markup even though they're supposed to be a straight pass-through. Compare the TDU charges on the REP's bill to Oncor's published tariff rates. If there's a difference, the REP is pocketing the spread. I found this on three accounts with the same REP in the Lubbock area.
The TDU markup is something I never would have thought to check. Going to compare Oncor tariff rates against what the REP is passing through on every Texas account. Great tip Dean.