I'm working on a commercial lease audit for a manufacturing client in Youngstown. The landlord is passing through what they claim are "utility infrastructure fees" from FirstEnergy totaling $3,200/month. I've pulled the actual FirstEnergy bills and see no such line item. Has anyone else seen landlords create phantom utility charges to pad their pass-throughs? This looks like straight-up fraud to me but want to make sure I'm not missing something obvious.
FirstEnergy trying to slip phantom charges past tenant
Jim, I've seen this exact scam with Dominion Power here in Virginia. Landlord claimed "grid modernization fees" that didn't exist. In that case, the lease language was vague enough that they thought they could get away with it. What does your client's lease say specifically about utility pass-throughs? The devil is always in the details of that language.
This is unfortunately common. I caught a Pittsburgh landlord doing something similar with Duquesne Light bills. They were allocating common area lighting costs to individual tenants when the lease clearly stated only direct metered usage would be passed through. Saved my client $18K annually. Document everything and get copies of the actual utility bills, not just the landlord's summary.
Walt's right about documentation. I always request three years of actual utility bills plus the landlord's allocation spreadsheets. You'd be amazed how many "clerical errors" disappear when they know you're checking their math. In Tennessee, I've seen some creative accounting with TVA power costs that would make your head spin.
Thanks everyone. Lease language says "actual utility costs as billed by the utility company" so this phantom fee clearly violates that. I'm documenting everything and will likely recommend my client pursue recovery of overpayments. This landlord has been pulling this stunt for at least 18 months based on the invoices I've reviewed.
Jim, make sure you check if FirstEnergy has any legitimate "facilities charges" or "customer charges" that might be getting mislabeled. Sometimes landlords genuinely don't understand utility billing but call things by the wrong name. That said, $3,200/month sounds excessive for any legitimate charge. Good catch on this one.
Elmer makes a good point about legitimate charges being mislabeled. Here in Alabama with Alabama Power, I've seen "transmission service charges" get called all sorts of creative names by landlords. But Jim's situation sounds like deliberate fraud. The key is that $3,200/month phantom charge with no corresponding utility bill line item. That's a smoking gun right there.