Kevin D from Louisville, KY. My client owns a chain of 4 dry cleaning shops in the LG&E territory. One location had 9 months of estimated bills, and when LG&E finally got an actual read, the catch-up bill was $11,400 for a single month. The client nearly had a heart attack. The business normally runs about $1,800/month in electric. The catch-up bill includes the accumulated underestimate from 9 months all dumped into one billing period. The client is asking me if this is even legal. Is it?
Catch-up bill after months of estimates devastated my client
Kevin, yes it is legal — the utility is entitled to collect for actual usage regardless of how long the estimates ran. But the presentation is the problem. That $11,400 represents the true-up for 9 months of underbilling, not one month of actual usage. Your client should not have to pay it all at once. Most utilities will offer a payment plan for catch-up amounts. Call LG&E billing and request installment payments spread over the same number of months as the estimated period.
Had the exact same situation with a client on LG&E about two years ago. A bakery with 7 months of estimates. Catch-up was about $8,200. LG&E agreed to spread it over 6 monthly installments with no interest. They have a formal process for it — ask for the deferred payment arrangement department.
Thanks Jack. I will call about the payment plan. But here is what really bugs me — the estimates were too LOW for 9 months, meaning LG&E was lending my client money interest-free by underbilling. If the estimates had been too high, my client would have been overpaying for 9 months and LG&E would owe a refund. Either way the customer bears the pain. The utility faces no consequence for inaccurate estimates.
Kevin makes a valid point about the asymmetry. In Virginia, Dominion is required to pay interest on overpayments resulting from utility error, including estimated billing. Check whether Kentucky has a similar statute or PUC rule. If LG&E underestimated for 9 months due to their failure to read the meter, your client might have an argument that the catch-up should be interest-free or even discounted.
In Oklahoma, OG&E is required to offer a payment plan matching the duration of the estimated period. So 9 months of estimates means 9 months to pay the catch-up. No interest. It is actually in the tariff. Worth checking LG&E tariff for similar language.
Good leads — I will check the LG&E tariff and Kentucky PSC rules. Steve, that Oklahoma rule is exactly what I would hope to find. If the utility failed to read the meter for 9 months, the customer should not have to come up with the entire shortfall in 30 days.
Kevin, separate from the payment plan issue — have you verified the actual read is correct? Sometimes after months of no reads, the first actual read can be wrong too. Maybe the reader transposed digits, or read the wrong meter if there are multiple meters at the location. Always verify the actual read that triggered the catch-up before accepting the amount.
Ray that is an excellent point I had not considered. The dry cleaning location has two meters — one for the shop and one for the boiler. If the reader mixed them up after 9 months of not visiting, the catch-up could be allocated to the wrong account. I am going to request verification.
Also check whether the estimated amounts during the 9 months were applied at the correct rate schedule. Sometimes the billing system defaults to a different rate for estimated periods, especially if there was a rate change during the estimated window. The catch-up should be recalculated at the rate that was effective each month, not the current rate.
Rachel raises another good angle. Rate changes during estimated periods are a common source of errors in catch-up calculations. If LG&E had a rate increase during those 9 months, the pre-increase months should be trued up at the old rate and the post-increase months at the new rate. Utilities sometimes just apply the current rate to the entire catch-up.
Update: called LG&E. They confirmed a rate increase went into effect 4 months into the estimated period. They applied the NEW rate to the entire catch-up amount. I pointed out the error and they are recalculating. This should reduce the catch-up by around $900. Also they agreed to a 9-month payment plan. And I am going to verify the meter reads tomorrow.
Nice catch on the rate change. That is a textbook example of why you audit the catch-up bill itself, not just the estimated period. The correction on the correction can have errors too.
Verified the meter reads. Both meters read correctly — no swap. So the catch-up amount after the rate correction is $10,500 on a 9-month payment plan. Client is relieved. Not thrilled, but relieved. Better than $11,400 due immediately.
Good work Kevin. You saved the client $900 on the rate correction alone plus got them 9 months to pay instead of 30 days. That is real value even on a case where the underlying usage was legitimate.
Thanks everyone. Lesson learned: even when the catch-up bill is not an error per se, there are still multiple angles to reduce the pain and find mistakes in how the utility calculates the true-up. Never just accept the number at face value.