Figured I'd share this cautionary tale since it might help someone avoid the same nightmare. Had a client in Oklahoma City with OG&E service, big manufacturing facility. Did an audit in 2015 and found what looked like a $75K overcharge on their Schedule MGS rate. Problem was, I missed a load factor adjustment clause that actually made their billing correct. Client filed for the refund, OG&E denied it and pointed out my error. Now I'm facing a $15K lawsuit for the client's legal fees plus my own defense costs. Thank God I had E&O insurance.
E&O claim horror story - learn from my mistake
Ouch Susan, that's rough. How did your E&O carrier handle it? Did they cover the defense costs right away or make you jump through hoops? I've always wondered how smooth the claims process actually is when you need it.
Derek, they were actually pretty good about it. Assigned a lawyer within 48 hours and covered all defense costs outside the policy limits. The adjuster knew utility auditing which helped - didn't have to explain what a demand ratchet was or why transformer loss adjustments matter. Still stings though, especially since it was such a basic mistake on my part.
We all make mistakes Susan, that's why we carry insurance. I had a close call with a Georgia Power audit last year - thought I found an error in their Schedule PL billing but turned out I was reading an outdated tariff. Caught it before the client filed anything but it was a wake-up call. Now I triple-check effective dates on all tariff revisions.
Howard makes a good point about tariff dates. Alabama Power updates their schedules constantly and sometimes the utility website isn't current. Always call the rate department to confirm you're working with the right version. Susan, did your policy have any deductible on the claim?
Albert, yeah there was a $2,500 deductible but that's nothing compared to what this could have cost without coverage. The real lesson here is to slow down and double-check everything, especially on the big potential recoveries. When you see $75K on the table it's easy to get excited and miss the details.
Susan, thanks for sharing this. It's a good reminder that even experienced auditors can miss things. I always have my assistant double-check tariff calculations on anything over $25K just for this reason. Idaho Power has some tricky seasonal adjustments that caught me once early in my career.
Warren's right about having someone else review the big ones. I do the same thing here in Pennsylvania. PPL has some complex rider adjustments that are easy to misread. Susan, how did this affect your relationship with the client? Did they stick with you after the mistake?
Sylvia, surprisingly they did keep me on. I was completely upfront about the error, offered to waive my fees for the next audit, and they appreciated the honesty. The facility manager said everyone makes mistakes but not everyone owns up to them. Still doing their monthly bill reviews two years later.
That's great that they kept you Susan. Shows the value of building good relationships. I had a similar close call with Cincinnati Gas & Electric - thought I found an error in power factor billing but it turned out to be a special contract provision. Client was understanding when I explained the situation before we filed anything.
This whole thread is why I always recommend new auditors start with smaller accounts to learn the ropes. Entergy New Orleans has relatively straightforward tariffs compared to some other utilities. Better to make a $5K mistake than a $75K one while you're building experience and confidence.
Juan's advice is solid. I tell everyone starting out to walk before you run. PG&E's commercial tariffs are incredibly complex - I still double-check myself on their Schedule A-10 calculations after 8 years. Susan, hope everything worked out okay with your claim. Thanks again for sharing the story.