Floyd H from Topeka, KS. Evergy territory. Found a $19,400 rate classification error on a grain elevator. Filed the dispute and Evergy agreed. But instead of issuing a refund check, they applied a $19,400 credit to the account spread over the next 6 billing cycles. My client says he should not have to pay my fee until he receives actual cash. His argument: the credit just reduces future bills — he never gets a check. My argument: $19,400 in savings is $19,400 whether it comes as a check or a credit.
Utility issued a bill credit instead of a cash refund — client does not want to pay my fee
Floyd, the bill credit vs cash refund distinction trips up a lot of client relationships. Your client is technically receiving $19,400 in value — his next 6 bills are reduced by $3,233 each. He is saving real money. A bill credit IS a refund, just delivered differently. Most engagement agreements should define savings to include refunds, credits, and rate reductions.
I had this exact fight with a client in OPPD territory. He wanted cash, got a credit, and refused to pay my fee. I showed him that his next 6 bills would be roughly $3,000 lower each and asked him to write me a check for my fee amount out of the money he would not be spending on those reduced bills. He thought about it for a minute and said fine. Sometimes you just need to frame it differently.
Ken, that reframing might work. The grain elevator monthly bill is normally about $4,800. With the $3,233 credit applied each month, the next 6 bills will be around $1,567. The client is not getting a check but he is paying $3,233 less per month. That money stays in his operating account instead of going to Evergy.
Floyd, you could also offer to match the payment schedule to the credit schedule. Instead of one lump fee payment, let the client pay you in 6 installments as the credits are applied. Each month he gets a $3,233 reduction and pays you $1,455 (your 45% of the monthly credit). He never has to write a check for more than the credit he received that month.
Jim, that installment approach is brilliant. The client never has negative cash flow from my fee — he just gets a smaller credit each month instead of the full credit. Let me run that by him.
Client accepted the installment payment plan. Six monthly payments of $1,455 as the credits are applied. He is happy because he never writes a check larger than the monthly benefit. I am happy because I get my full $8,730 fee (45% of $19,400). It just takes 6 months instead of one payment.
Good resolution. Floyd, add a clause to your engagement agreement that specifically addresses bill credits: savings shall be deemed received by the client when applied as a credit to the utility account, and fees are payable as credits are applied. This prevents the argument from ever happening again.
Already added it Randy. Also added language defining savings to include refunds, account credits, rate reductions, penalty eliminations, and any other reduction in utility costs resulting from the audit. Belt and suspenders.
Floyd, one more tip. Some utilities will issue a cash refund if you specifically request it in the dispute filing. Evergy might have defaulted to a credit because that is their standard process. Next time, when you file the dispute, include a sentence requesting that the refund be issued as a check payable to the customer. About half the time, the utility complies. It avoids the whole credit argument.