Found a billing error with Delmarva Power for a client in Wilmington. Utility issued a $14,000 credit. I collected my 40% fee ($5,600). Six months later Delmarva reversed the credit saying their internal review determined the original billing was actually correct. Client is demanding I refund my fee. I spent 20 hours on this engagement and I believed the finding was valid. Do I owe the money back?
Utility reversed the refund after 6 months — client wants my fee back
This is a nightmare scenario. Whether you owe a refund depends on your engagement agreement. If it says your fee is earned when the recovery is received, and the recovery was later reversed, there's an argument that the recovery was effectively undone. If your agreement says your fee is earned when the error is identified and confirmed by the utility, you have a stronger position — the utility confirmed the error, paid the credit, and later changed their mind. That's the utility's decision, not yours. I'd push back with the second interpretation.
Phil raises the key contract distinction. Your engagement agreement should specify when your fee is irrevocably earned. My recommended language: the auditor's fee is earned and non-refundable upon receipt of written confirmation from the utility acknowledging the billing error, regardless of subsequent utility actions including reversal, reinterpretation, or adjustment. This protects you from exactly Diane's situation. For the current dispute, I'd suggest reviewing the utility's reversal rationale. If they made an error in their error correction, you may have grounds to challenge the reversal with the PUC.
Challenged Delmarva's reversal through the Delaware PSC. Turns out their internal reviewer applied the wrong tariff edition — the original credit was correct. Delmarva reinstated the credit plus interest. My fee stands. But the scare prompted me to add the 'non-refundable upon utility confirmation' language to my agreement. If Delmarva hadn't made the second error I might have been forced to refund.