Has anyone else had trouble getting Xcel Energy to sign a standard engagement agreement? They're pushing back on our liability limitation clause and want us to carry $2M in E&O insurance instead of our usual $1M. This is for a potential $85K audit of their large general service schedule. The facility manager is getting antsy and I don't want to lose this client over contract terms. Any suggestions on how to negotiate with Xcel's legal department?
Xcel Energy refusing to sign standard engagement letter
Xcel can be tough on contracts, Hank. I've dealt with them through some Tennessee clients who have facilities in their territory. Try proposing a middle ground - maybe $1.5M coverage with a cap on liability at 2x your fee. That's worked for me with other large utilities. Also make sure your engagement letter specifically excludes consequential damages. Xcel's legal team seems more comfortable with that language than blanket liability limitations.
I had this exact issue with Georgia Power last year. What worked was adding a clause that limited our liability to actual damages proven to be directly caused by our negligence. No punitive or consequential damages. Georgia Power's legal department was fine with that because it still gave them recourse for genuine errors. Maybe try that approach with Xcel? The insurance bump to $1.5M isn't unreasonable for an $85K project.
Good suggestions, thanks. Terry, did you have to adjust your fee to cover the higher insurance costs? I'm trying to figure out if I should absorb it or pass it through. The client is already price-sensitive and this is my first project with them.
I built the extra insurance cost into my hourly rate for that project. Came out to about $300 more in total fees, which the client accepted when I explained it was required by their utility. Better than eating the cost yourself, especially on your first job with them. Position it as a utility requirement, not your choice.
Xcel Energy made me jump through similar hoops in Omaha last year. Ended up with $1.5M coverage and liability capped at three times the engagement fee. The key was getting their facility manager to pressure their legal team - he wanted the audit done and didn't want contract delays. Sometimes the client can be your best advocate with their own utility.
Update us on how this turns out, Hank. I've got a potential Xcel project in Ohio coming up (they serve a small area near Toledo) and want to know what to expect on the contract front. FirstEnergy is bad enough without having to deal with Xcel's legal department too.
Just wanted to follow up - we got the contract signed with $1.5M coverage and liability limited to actual damages not exceeding 2x our fee. Client agreed to cover the insurance differential as a separate line item. Thanks for the advice everyone. Audit starts next week and should recover at least $40K for the client based on preliminary review.