Found a major issue with Alabama Power pass-through billing at a Birmingham shopping center. Landlord has been charging tenants based on Schedule LGS rate but the master meter is actually on Schedule MGS. The rate differential added up to $18,234 in overcharges over 14 months. Anyone else seeing similar issues where landlords don't update their pass-through calculations when utilities change rate schedules? Property manager claims they weren't notified of the rate change but I found the utility notice in their files dated 8 months ago.
Alabama Power pass-through calculation error - $18k overcharge
Brenda, this is way too common. I see it all the time in Knoxville with TVA distributors. Property managers get lazy about monitoring rate schedules. Did you check if they have proper escalation clauses in their leases? Sometimes tenants can recover these overcharges plus interest if the lease language is tight enough. What's the tenant mix at this property?
Terry's right about the escalation clauses. Down here in Charlotte I've recovered similar amounts from Duke Energy pass-through errors. The key is proving the landlord had constructive notice of the rate change. Since you found the utility notice in their files, that's your smoking gun. Document everything and check if Alabama has any statutory interest requirements for tenant refunds.
Property has 12 tenants, mix of retail and small office spaces. Lease language is actually pretty good - requires landlord to use 'actual utility rates and charges' for pass-through calculations. Terry, what's your experience with TVA distributors on notification requirements? Do they send rate change notices directly to large customers or just publish tariffs?
In Ohio, FirstEnergy is required to send direct notice for rate changes to customers over 500 kW demand. Not sure about Alabama Power's notification requirements but you might want to check their tariff book. The fact that they had the notice on file shows they received proper notification. I'd definitely pursue recovery for your tenants.
Similar situation down here in Dallas with Oncor. Had a landlord billing tenants at residential rates for almost 2 years on a commercial property. $31K in overcharges. Property manager fired their utility consultant rather than admit the error. Brenda, make sure you document the timeline carefully - when the rate change took effect, when notice was received, when they should have updated calculations.
Marcus, that's exactly what I'm doing. Alabama Power changed the rate effective January 1st, notice was sent in November, but landlord kept using old rates through February. The math is pretty straightforward once you have the correct tariff schedules. Thanks for all the input everyone - this should be a solid case for the tenants.