Well, it finally happened. After 8 years of auditing, I got my first E&O claim. WE Energies is claiming I miscalculated demand charges on a Gp-1 schedule audit, resulting in $28,000 in underbilled amounts. The customer is now looking to me for recovery. Thought I'd share what I've learned so far in case it helps others avoid this situation.
First E&O claim experience - lessons learned
Oh man Dan, that's rough. What was the specific issue with the demand calculation? Was it a billing determinant problem or did you miss some coincident peak requirement? NorthWestern Energy has some tricky demand provisions that can catch you if you're not careful.
It was a coincident vs non-coincident peak issue. The customer had multiple meters and I calculated each separately instead of looking at the combined demand during system peak hours. Rookie mistake honestly. The tariff language was ambiguous but I should have called WE Energies for clarification instead of making assumptions.
Dan, sorry to hear about this. How responsive has your E&O carrier been? Are they providing legal counsel or just cutting a check? I've always wondered how the claims process actually works. This is valuable information for all of us.
The carrier has been pretty good actually. They assigned a lawyer who specializes in professional liability claims. First thing they did was get copies of all my work papers and the original tariff. They're not just rolling over - they're actually challenging WE Energies' interpretation and demanding to see their billing system calculations.
This is exactly why I always send a preliminary findings email to the utility before finalizing my report. Gives them a chance to catch any misunderstandings before the customer gets involved. Consumers Energy actually corrected me on a Schedule D-1 interpretation last month - saved everyone headaches.
Tina's approach is smart. I do something similar with Duquesne Light. Their tariff administrators are usually helpful if you approach them professionally. Dan, are you documenting everything for future reference? This kind of experience is gold for improving processes.
Absolutely Claudia. I'm keeping detailed notes of every conversation and document. Win or lose, this is going into my standard procedures manual. The lawyer suggested I start including specific language in my engagement letters about tariff interpretation and utility confirmation processes.
Dan, has the utility provided their internal audit work papers? Sometimes they make calculation errors too. I had Entergy Louisiana try to blame me for their own billing system glitch once. Turned out their demand reset wasn't working properly for six months. Documentation saved me.
Juan, that's a great point. My lawyer is pushing for their complete audit trail. WE Energies has been slow to produce documents which makes me wonder if there's more to this story. The customer is getting impatient but I'd rather take time to get it right than rush to a settlement.
Following this thread closely Dan. I'm relatively new to the field and this is exactly the kind of real-world education they don't teach you. Hope it works out in your favor. Keep us posted on how it resolves - we're all learning from your experience.
Dan, thanks for sharing this experience with the forum. It takes courage to discuss claims publicly but it helps all of us improve our practices. I've seen similar issues with coincident demand calculations - it's one of the trickier aspects of multi-meter accounts. Keep fighting the good fight and let us know how it turns out.