Just wanted to share this cautionary tale with everyone. We missed a demand ratchet calculation error on a CPS Energy industrial account - Schedule IPL-TOU. Our client got hit with an additional $45,000 in demand charges over 18 months that should have been credited back. Client is now coming after us for the full amount plus their legal fees. Thank God we have E&O coverage through NRECA. Anyone else dealt with similar situations? The stress is killing me.
E&O insurance claim - CPS Energy billing error cost us $45K
Angela, that's rough but exactly why we all need solid E&O coverage. I've had two claims in my 15 years - one with APS over a solar net metering calculation, another with SRP demand billing. Both times my insurance saved my business. What's your deductible? Most policies I've seen are $5K to $10K for small shops like ours.
This is my worst nightmare scenario. I carry $1M in coverage through State Farm but sometimes wonder if it's enough. PG&E has some seriously complex tariffs out here in California - Schedule E-19 alone has like 47 different rate components. One mistake on a large industrial customer could easily hit six figures. How much coverage do you guys typically carry?
I learned this lesson the hard way early in my career. Had a TXU Energy error that cost a client $12K back in 2008. Now I carry $2M aggregate through Travelers. The premium is only about $300 more per year than $1M coverage. Worth every penny for the peace of mind when you're dealing with Oncor transmission charges and ERCOT settlements.
PSE billing errors up here in Seattle can get complicated with all the hydroelectric allocations and BPA charges. I use Philadelphia Insurance Company - they specialize in professional liability for consultants. Rate is about $1,200/year for $1M coverage. They actually understand our business unlike some of the general carriers.
Thanks everyone. Our deductible is $7,500 which we're having to pay out of pocket. The insurance company is handling the rest but it's still a huge hit to cash flow. Going forward I'm implementing a secondary review process for all demand billing calculations. Can't afford another mistake like this.
Angela, consider requiring a senior review for any account over $10K annual spend. That's saved me more times than I can count with SMUD and PG&E commercial accounts. Also document everything - timestamps, screenshots, calculation worksheets. Your E&O carrier will thank you if there's ever a claim.
One more thing - make sure your policy covers both 'acts and omissions.' Some cheaper policies only cover errors in work performed, not failure to catch something you should have found. Big difference when dealing with Seattle City Light power factor corrections or complex time-of-use schedules.