Working on a retail client in downtown Atlanta whose landlord is passing through Georgia Power charges at $2.47/kWh when the actual tariff rate is $0.089/kWh for their GS-2 schedule. The lease says "actual utility costs plus reasonable administrative fee" but this seems way beyond reasonable. Client is paying an extra $8,200/month on a 40,000 sq ft space. Has anyone dealt with Georgia Power pass-throughs where the landlord is clearly padding the bills? Looking for advice on how to approach this without burning bridges with property management.
Georgia Power triple net lease - landlord inflating pass-through charges?
Derek - that's outrageous even by Atlanta standards. I've seen some creative accounting from property managers but 2700% markup is theft. In Tennessee we've had similar issues with TVA pass-throughs where landlords were charging commercial rates for what should have been industrial. First thing - get copies of the actual Georgia Power bills for the building, not just the landlord's summary. Lease language is key here - "reasonable administrative fee" typically means 3-10%, not 27x the actual cost.
This sounds like the landlord might be on a different rate schedule than they're claiming. Georgia Power's GS-2 tops out around $0.12/kWh all-in with demand charges. At $2.47 you're looking at emergency/interruptible rates or they're including something else entirely. Jack from Louisville here - we had a similar case where the landlord was passing through their entire building's peak demand charges to just one tenant. Make sure you understand exactly what's being allocated and how the submetering works.
Connecticut perspective here - this is exactly why we always request utility allocation methodology in writing before signing anything. But since you're already stuck, demand an audit trail showing how Georgia Power's master bill gets allocated to individual tenants. The math should be transparent. If they're using a management company, sometimes they're double-billing through multiple layers. Document everything and consider involving a real estate attorney who specializes in commercial leases.
Derek and everyone - I'm also in Atlanta and have seen this exact situation with Georgia Power pass-throughs. The problem is often that older buildings don't have proper submetering, so landlords use square footage allocation but then add their own "management fee" on top. Rachel here - I'd recommend getting a copy of Georgia Power's actual tariff GSA-6 or whatever schedule applies to the building. Compare line by line. Sometimes they're passing through costs that should be their responsibility like line losses or power factor penalties.
Update on this - got the actual Georgia Power bills and you guys were right. Landlord was allocating the entire building's demand charge ($47,000/month) based on square footage instead of actual usage patterns. Our retail space has minimal demand compared to the server room upstairs but we were getting hit with 22% of the total demand costs. Also found they were including their management office utilities in the "common area" pass-through. Total recovery so far is $31,000 with ongoing monthly savings of $6,800. Thanks for the guidance everyone.
Excellent work Derek! This is exactly why utility allocation methodology needs to be spelled out clearly in lease agreements. For anyone else dealing with Georgia Power pass-throughs, make sure you understand whether you're on a net, modified gross, or full service lease and what that means for utility responsibilities. The devil is always in the details with commercial real estate.