Just uncovered a major billing error on a 120-unit master-metered complex here in New Orleans. Entergy has been billing demand charges on Schedule LGS-1 using the sum of individual apartment peaks instead of the actual master meter demand reading. We're talking about $3,200/month in overcharges going back 18 months. Property has been paying around $8,400/month when it should be closer to $5,200. Has anyone else seen Entergy make this type of error?
Entergy New Orleans - massive demand charge error on apartment complex
Juan, that's a classic diversity error. Individual unit peaks rarely coincide with the building's actual peak demand. I've seen this with other utilities too - the billing system gets confused between sub-meter data and master meter readings. Did you get the actual master meter demand data from Entergy to prove the discrepancy?
Terry, yes I have 18 months of interval data from the master meter. Peak building demand averages around 285 kW while the sum of individual unit peaks was hitting 420+ kW. The diversity factor is working in our favor big time. Entergy's commercial billing department admitted the error once I showed them the numbers.
Wow, $57,600 in total overcharges. That's a nice refund check! CPS Energy made a similar error on one of my San Antonio properties a few years back. They ended up crediting 24 months once we provided the documentation. Make sure you ask for interest on the overpayment too.
Juan, definitely push for interest. Most utility tariffs require them to pay interest on billing errors beyond a certain threshold or timeframe. With Duke Energy, anything over $500 or older than 6 months gets interest at their published rate.
This is exactly why I always request both master meter and sub-meter data when auditing apartment complexes. The billing systems at most utilities aren't set up to handle the complexity properly. Duquesne Light here in Pittsburgh has similar issues with their automated billing for master-metered properties.
FirstEnergy Ohio has a specific note in their LGS tariff about this exact issue. They state that demand charges for master-metered residential properties must be based on the master meter reading, not calculated from sub-meter data. Might be worth referencing similar language from other utilities in your discussions with Entergy.
Great point Jim. I pulled the LGS-1 tariff and it does clearly state that demand charges are based on "metered demand at the delivery point" - which would be the master meter, not calculated from sub-meters. Using that language in my formal dispute letter. Thanks for the tip!
Juan, make sure you document how they plan to prevent this error going forward too. APS here in Phoenix had to modify their billing system after a similar issue. You don't want this happening again in 6 months.
Update: Entergy approved the full refund of $57,600 plus 6% annual interest - total credit of $61,244. They're also implementing a billing system flag to prevent this error on other master-metered properties. Sometimes persistence pays off!
Excellent work Juan! That's a substantial win for your client. Cases like this are exactly why property managers need professional bill auditing - $61K is probably 3-4 years worth of audit fees paid for itself in one shot.