Quick question for the group. I'm auditing a restaurant lease where NV Energy mistakenly billed the property on a residential rate schedule for eight months instead of the correct commercial schedule. The landlord passed through the lower residential rates to my tenant client. Now NV Energy has corrected the error and is demanding back-billing of about $12,000. Who should be responsible - the landlord or tenant? The lease says tenant pays "actual utility costs as billed."
NV Energy billing error in lease pass-through
Kim, I've dealt with similar back-billing situations with CPS Energy. The key phrase is "as billed" - if the utility actually billed the lower amount, that's what was contractually owed at the time. The utility's mistake doesn't automatically create a tenant obligation for charges that were never properly billed. I'd argue this is the landlord's responsibility to negotiate with NV Energy.
Vivian makes a good point about "as billed" language. Here in Nashville with NES, I've seen similar cases where the utility's error created unexpected costs. Generally, if the tenant received the benefit of lower bills for months, they should expect to pay when the error is corrected. But the landlord should absorb any interest or penalties that NV Energy might be charging. That's not the tenant's fault.