We discovered a massive billing error on a primary metered manufacturing client served by Minnesota Power. Account has been billed for 6 years using wrong VT ratio - they were using 120:1 when actual ratio is 480:1. This means customer has been severely underbilled. Usage shows 200 MWh/month but actual consumption is around 800 MWh/month. Utility is talking about a back-bill adjustment of over $2 million. Anyone dealt with VT ratio errors this large? What's the typical statute of limitations on utility billing corrections? Clifford H.
VT Ratio Error on Primary Metered Account - Major Adjustment
Clifford H., this is a significant error that will likely require legal involvement. Minnesota typically allows utilities to back-bill for up to 4 years on metering errors, but the customer may have grounds to negotiate this down given the utility's responsibility for proper metering. The key issues are: 1) Who was responsible for VT installation and verification, 2) Were there any usage audits or inspections that should have caught this, 3) Whether the customer was on notice that bills seemed unusually low. Document everything about the original installation and any subsequent meter testing. This will probably end up before the Minnesota PUC. Randy D.
Wow, that's a huge error. We had a VT ratio issue with PNM in Albuquerque but nothing close to that scale. VT was programmed at 69:1 instead of 138:1 on a primary metered customer. Back-bill was about $180K over 3 years. Key was proving that normal usage patterns should have flagged the error during utility's routine reviews. Customer ended up paying about 60% after negotiations. Michael R.
Clifford H., check if your client's rate schedule has minimum demand charges or energy requirements that weren't being met. Sometimes these red flags in the billing should have alerted the utility to investigate. Also review any energy efficiency rebates or incentives they may have received based on the incorrect low usage data. That could complicate the adjustment calculations. Victor T.
Had a similar VT error case with DTE Energy in Michigan. Primary metered customer, wrong VT ratio for 3.5 years resulting in $840K back-bill. Customer successfully argued that the utility failed to properly commission the metering installation and should have caught the error during annual testing. Settlement was for 40% of the calculated back-bill. Definitely get legal counsel involved early. Marcus F.
The statute of limitations varies by state but most allow 3-4 years for metering errors. However, if the utility can prove the customer knew or should have known about unusually low bills, they might extend that. Review all historical usage data to see if there were obvious anomalies that should have been questioned. Also check if the customer's internal energy management flagged the discrepancy. Pam L.
Update on this situation. Utility agreed to limit back-bill to 48 months instead of full 72 months, reducing exposure from $2.1M to $1.4M. Customer is working with legal counsel on a settlement offer. The key factor was proving that annual meter testing should have identified the VT ratio error much sooner. Still a painful lesson on the importance of independent meter verification on primary metered accounts. Will update when final settlement is reached. Clifford H.
Clifford H., this case highlights why we should always verify VT and CT ratios on primary metered accounts during initial audits. The potential for these massive errors is just too high. Hope your client can get a reasonable settlement. Keep us posted on the outcome. Diana R.
Final update - settled for $875K paid over 36 months with no interest or penalties. Customer also negotiated annual third-party meter verification going forward at utility expense. Could have been much worse. Thanks everyone for the advice and similar case examples. Clifford H.