This is a nightmare situation and I need some guidance from those who've been through similar. Completed a 14-month audit for a Santee Cooper commercial customer here in Charleston. Found multiple tariff misapplications and got them a $45,200 refund check. My engagement letter clearly states 35% contingency fee, so I'm owed $15,820. Client is now claiming the refund was due to utility "goodwill" not actual errors, so no fee is owed. Anyone dealt with this kind of bad faith before?
Client refusing to pay after $45K recovery - need advice
Thomas, this is exactly why I always get copies of the utility's adjustment letters and make sure they specify the reason for the refund. Austin Energy is usually pretty good about stating "billing error correction" or "tariff misapplication" in their paperwork. Do you have documentation from Santee Cooper showing what the refund was for? That's going to be your key evidence.
Been through this twice with Xcel Energy customers here in Minneapolis. Both times I had to threaten legal action before they paid up. Your engagement letter should have a clause about attorney fees and costs being recoverable if you have to sue for your fee. If not, that's a lesson learned for next time. Document everything and send a demand letter ASAP.
Thomas, I'm also in Charleston and have worked with Santee Cooper quite a bit. They're actually pretty good about documenting billing corrections in their refund letters. If you don't have that paperwork yet, call their commercial billing department and request a detailed explanation of the refund. Use that as ammunition in your demand letter. What did your original audit report identify as the specific errors?
Thanks everyone. George, the original audit found they were being billed on Schedule 25 instead of Schedule 23, plus some transformer loss adjustments that weren't being applied correctly. Santee Cooper's refund letter does say "billing adjustment - tariff correction" so I think I have solid documentation. Going to send a formal demand letter this week with 30-day cure period.
Thomas, you've got a slam dunk case with that kind of documentation. Alabama Power uses similar language when they make billing corrections. One thing though - check your engagement letter to see if there's an arbitration clause. Some clients will try to drag you into expensive arbitration even when they know they're wrong, just to wear you down.
Thomas, this is unfortunately more common than it should be. As someone who's been doing this since before many of you started, I can tell you that clear documentation is everything. The fact that Santee Cooper used the words "tariff correction" in their refund letter makes your case. I'd also recommend filing a complaint with your state's Better Business Bureau if the client continues to stonewall after your demand letter.
Randy makes a good point about the BBB complaint. I'd also consider filing in small claims court if it's under your state's limit. Much cheaper than hiring an attorney and most small claims judges understand simple contract disputes. The threat of a court filing often motivates payment pretty quickly.
Quick update - sent the demand letter last Monday and got a call from their CFO yesterday. They're cutting me a check for the full amount plus interest. Apparently the original pushback came from their plant manager who didn't understand the engagement agreement. CFO apologized and said they want to discuss additional facilities for audit. Sometimes persistence pays off!
Glad it worked out Thomas! That's actually pretty typical - the person who signed the engagement letter often isn't the same person who sees the refund check. Good communication between you and the decision makers is key. Sounds like you might have found a good long-term client relationship too.
Excellent outcome Thomas. This is exactly why I always recommend getting signatures from both the financial decision maker AND the person who will be handling the day-to-day communication during the audit. Prevents these kinds of misunderstandings down the road. Congratulations on a successful resolution.