I'm drowning in a complex lease audit involving Public Service Company of Oklahoma and their environmental compliance rider allocations. Multi-tenant office building with 12 different spaces, and the landlord is using some convoluted formula to allocate PSO's Environmental Compliance Plan Rider costs. The monthly allocation is running $4,500 total across all tenants, but I can't figure out if the methodology is correct. Has anyone dealt with PSO's rate riders in lease pass-through situations?
PSO rate rider allocation nightmare - help needed
Rick, those environmental riders can be tricky. Here at MLGW we don't have the same structure, but I've consulted on similar cases with other utilities. The key is understanding whether PSO bills the rider as a percentage of usage, flat fee per meter, or based on demand. What does the actual PSO bill show for the rider calculation? That should tell you if the landlord's allocation method is legitimate.
I dealt with something similar with Kentucky Utilities environmental surcharges. The landlord was allocating based on square footage when the utility actually bills it as a percentage of kWh usage. Made a huge difference for my client who had high square footage but low electrical usage. Get the actual tariff from PSO and compare their calculation method to what the landlord is doing.
Oz is right about checking the tariff methodology. Here in Baltimore with BGE, I've seen landlords use square footage allocation for everything when some charges should be allocated by actual usage, demand, or even number of meters. $4,500/month across 12 tenants seems high for just environmental riders. Are you sure they're not bundling other charges into that allocation?
Knox, you might be onto something. Looking closer at the landlord's allocation spreadsheet, I think they're including fuel adjustment charges and possibly transmission charges in what they're calling "environmental rider" costs. The PSO bill shows the ECP rider as only $2,200/month total, not $4,500. This landlord is being creative with their accounting.
Rick, that's classic lease audit territory. I see this all the time with Consumers Energy here in Michigan - landlords will lump multiple utility charges together and give them misleading names. Break down every line item on the actual utility bill and match it to what the landlord is billing. I bet you'll find several discrepancies beyond just the environmental rider issue.
Tina's advice is spot-on. I always create a line-by-line reconciliation between the actual utility bills and the landlord's charges. It's tedious work but that's where you find the money. Rick, once you have that reconciliation, you'll have a clear picture of what the landlord is overcharging and can calculate the refund your client deserves.
I agree with the reconciliation approach. Down here in Charleston with Dominion Energy, I've found landlords will sometimes allocate charges that should be their responsibility as building owner. Things like outdoor lighting, common area HVAC, lobby electricity. Make sure you're not paying for spaces you don't control or benefit from.
George brings up an important point about common area charges. I've seen landlords in Pennsylvania try to pass through parking lot lighting, elevator electricity, and even their property management office utility costs. The lease language should clearly define what's includable in pass-through charges versus what's the landlord's responsibility as building owner.
Thanks everyone. I've now identified about $1,800/month in improper allocations between the environmental rider overstatement and common area charges that should be landlord responsibility. This audit is going to result in a nice refund for my client. Appreciate all the guidance - this forum is invaluable for complex cases like this.
Excellent work Rick! That's a solid recovery. Cases like this show why professional lease audits are so important. Most tenants would never catch these creative accounting practices on their own. Hope you get a good fee on this one - you earned it with that detective work.