Fellow auditors, MLGW's major rate restructuring that took effect in April has created more audit opportunities than I've seen in my 25+ years in this business. They completely overhauled commercial and industrial rate schedules, moving from simple demand charges to complex time-of-use structures with seasonal variations. The implementation has been problematic, to put it mildly. I've identified billing errors on 22 out of 25 accounts I've reviewed so far. The new Schedule GSA-3 has demand charges that vary by season AND time of day, but their billing system is applying summer rates year-round. One client is being overcharged $4,300 monthly because MLGW is using June-September demand rates in April and May.
MLGW 2023 rate restructuring - opportunities everywhere
Randy, I'm not surprised MLGW botched this implementation. Remember their smart meter rollout in 2018? That was a disaster too. What specific audit steps are you taking to identify these errors? The seasonal demand charge structure sounds complicated enough that customers probably won't notice overcharges unless someone like us reviews the bills carefully. Are you finding that MLGW is receptive to corrections when you point out the errors, or are they being difficult about refunds?
Amir, MLGW has been surprisingly cooperative once I provide detailed documentation. I think they know their billing system has problems and they're trying to fix issues quickly to avoid regulatory scrutiny. My audit process starts with obtaining complete rate schedules for both old and new tariffs, then building spreadsheets that calculate what bills should be under each structure. The seasonal demand charges are defined in Schedule GSA-3 Section IV: $12.85/kW during summer months (June-September), $9.40/kW during winter months (December-February), and $11.15/kW during spring/fall. Most accounts I've reviewed are being billed at the summer rate regardless of month.
Randy, this sounds like a goldmine for auditors willing to learn the new rate structures. Are you seeing similar patterns with other MLGW rate schedules, or is it mainly the GSA-3 issues? I'm considering expanding my territory to include Memphis if there are enough opportunities. Also, what's the typical refund timeline when MLGW acknowledges billing errors? Some utilities drag their feet on processing credits even after they admit mistakes.
Bill, the problems extend beyond GSA-3. I'm finding issues with Schedule LGS-1 where the new power factor penalties aren't being calculated correctly, and Schedule ISA where the interruptible credit calculations are wrong. MLGW is processing refunds within 60-90 days once they verify the errors, which is faster than most utilities. The opportunity is definitely here, but you need to invest time learning their complex new tariff structures. I've spent probably 40 hours just building calculation templates for their various schedules. The payoff has been worth it - I've identified over $180,000 in overcharges across my Memphis client base in just two months.
Randy, I'm curious about the power factor penalty calculations you mentioned. MidAmerican Energy in Iowa has similar penalties under their Schedule I-6 tariff, and I've found that many utilities struggle with the math when they update billing systems. What specific errors are you finding with MLGW's power factor calculations? Are they applying penalties incorrectly or failing to apply credits for customers with leading power factors?
Dana, MLGW's power factor issues are mainly calculation errors. Under the new Schedule LGS-1, customers with power factors below 85% should be penalized, and those above 95% should receive credits. But their billing system is using the old 80%/90% thresholds from the previous tariff. This means some customers are being penalized when they should receive credits, and others are avoiding penalties they should be paying. I found one manufacturing client with a 92% power factor who was being charged penalties of $800 monthly when they should have received a $200 credit. MLGW corrected it immediately when I showed them their own tariff language.
This thread is a great example of why major rate changes create such good audit opportunities. Utilities rush to implement new structures to meet regulatory deadlines, but their billing systems often aren't properly programmed or tested. Wisconsin Public Service went through similar issues in 2019 with their rate restructuring. The key is being proactive during transition periods rather than waiting months to review bills. Randy, are you finding that MLGW proactively notified customers about these billing errors, or are they only fixing issues when auditors identify them?
Dan, MLGW is definitely not proactive about identifying their own billing errors. They're only fixing issues when customers or auditors point them out. This creates a huge advantage for professional auditors because we're often the first to spot systematic problems. I suspect thousands of MLGW customers are being overbilled, but most don't have the expertise to identify the errors. The utility seems to be taking a "wait and see" approach rather than conducting comprehensive billing audits internally. This is fairly typical behavior - utilities rarely volunteer to find their own mistakes that would require refunds.
Randy, have you considered reaching out to local business associations or chambers of commerce in Memphis to educate them about these billing issues? When KCP&L had similar problems in 2020, I did presentations for several business groups and generated significant interest. Many business owners don't realize that utility billing errors are common during rate transitions, and they definitely don't know that professional auditors can help recover overcharges. It could be a good way to expand your Memphis client base while helping local businesses.
Randall, that's an excellent suggestion. I've been so focused on serving existing clients that I hadn't considered broader outreach. The Memphis Chamber of Commerce has monthly breakfast meetings that might be perfect for presentations about utility billing issues. With the scope of problems I'm seeing at MLGW, there's probably enough work for multiple auditors in this market. I could also contact the Tennessee Restaurant Association and Tennessee Manufacturers Association since those industries tend to have complex rate structures where billing errors are more common and costly.
This has been a really informative thread. Randy, thanks for sharing specific details about MLGW's rate structures and billing problems. It reinforces my belief that major utility rate changes create the best audit opportunities, but you have to act quickly while the problems are fresh. Utilities eventually fix their billing systems, but there's usually a 6-12 month window where systematic errors are common. The auditors who position themselves during that window can do very well financially while providing genuine value to customers.
Paula makes a great point about timing. I've noticed that utilities often announce rate changes 6-12 months in advance, which gives us time to prepare. Randy, do you track upcoming rate cases and filings across multiple utility territories? It seems like having advance knowledge of planned rate changes could help auditors position themselves for new opportunities. MLGW has been such a success for you that it might be worth replicating the approach in other territories facing similar rate restructuring.
Amir, I do try to track major rate cases through regulatory commission websites and industry publications. The Tennessee Public Utilities Commission posts all filings online, and I monitor several other state commissions for significant rate changes. The key is identifying utilities that are implementing complex new rate structures rather than simple across-the-board increases. Complex changes create more opportunities for billing errors. MLGW was perfect because they moved from relatively simple rates to highly complex time-of-use and seasonal structures. I'm currently watching a similar case with Kentucky Utilities that could create opportunities in Louisville next year.