Got a nasty surprise this month when our Nashville office lease CAM reconciliation came through. Landlord is claiming our MLGW electric allocation jumped from $2,800/month to $4,200/month average for 2012. They're citing the new GSA-3 rate schedule but I'm seeing red flags everywhere. The square footage allocation seems inflated and they won't provide the actual MLGW bills. Anyone dealt with MLGW pass-through audits in mixed-use buildings? I'm thinking this needs a forensic review but want to make sure I'm not missing something obvious.
Landlord claiming 150% increase in MLGW pass-through - Nashville office space
Ed, you're right to be suspicious of a 50% jump without major changes. MLGW did have some rate adjustments in 2012 but nothing that dramatic for commercial accounts. Demand a copy of the actual utility bills - that's standard in any CAM audit. Also check if they're allocating common area usage properly. I've seen landlords in Charlotte try to push elevator and lobby HVAC costs onto tenants when the lease doesn't allow it. What does your lease say about utility cost verification rights?
Derek makes good points about the verification rights. In PA we see this constantly with PECO and PPL pass-throughs. Landlords love to play games with the allocation methodology. You need to verify: 1) Actual utility costs paid by landlord, 2) Square footage calculations, 3) Hours of operation adjustments if applicable, 4) Any capital improvements that might affect consumption. Don't let them get away with just showing you a spreadsheet. Get the actual MLGW statements and do the math yourself.
I just finished a similar audit here in Tulsa with PSO. Landlord was double-billing demand charges and allocating them based on square footage instead of actual usage patterns. Ended up recovering $18,000 for my client over two years. Ed, definitely get those MLGW bills. If they refuse, check your lease for audit rights - most commercial leases have a clause allowing tenant review of utility records with reasonable notice.
Thanks everyone. Lease does have audit rights but landlord is being difficult about scheduling. Steve, did you use a specific methodology for the demand charge allocation? Our lease just says "proportionate share" which could mean anything. I'm also seeing some questionable late fees and reconnection charges that seem to be getting passed through. Going to push harder for the actual MLGW documentation before I decide whether to bring in outside help.
Ed, those late fees and reconnection charges are usually not tenant responsibility unless specifically stated in the lease. Wisconsin law is pretty clear on this - landlord's payment issues can't be passed to tenants. Check Tennessee statutes but I'd bet it's similar. As for demand allocation, we typically use connected load or actual metered data if available. Square footage alone is almost never accurate for electrical costs.
Linda's right about those fees. Here in Texas with CenterPoint and Oncor, we've successfully challenged similar charges. The key is proving the fees resulted from landlord negligence, not tenant usage. Ed, if you need help with the MLGW tariff analysis, I've got their rate schedules going back to 2010. Their GSA-3 did have adjustments but nothing near 50%. You might want to check if they switched rate schedules without proper justification.
Update: Finally got the MLGW bills after threatening legal action. You all were right - landlord was allocating based on gross square footage instead of rentable, inflating our share by about 35%. Also found $1,200 in late fees from 2011 that somehow made it into our 2012 reconciliation. Meeting with property manager next week armed with the real numbers. Thanks for the guidance everyone!