Confession: I audited a manufacturing plant in Toledo on FirstEnergy two years ago and gave it a clean bill of health. Last month another auditor found a $4,200/month rate classification error that I missed. My mistake: I looked at the rate code on the bill, looked at the tariff eligibility, and concluded the rate was correct because the client's demand was slightly above the threshold for the next rate down. What I didn't check was whether FirstEnergy was using the correct demand value in the first place. Turns out the billing demand was wrong because of a ratchet calculation error. The correct demand was below the threshold. The client should have been on the lower rate.
Missed an error because I assumed utility was right
This is a humbling but important story to share. The lesson is: don't just verify the rate — verify the inputs to the rate determination. If the rate eligibility depends on demand, verify the demand. If the demand depends on a ratchet clause, verify the ratchet. If the ratchet depends on 12 months of historical demand, verify each month's demand reading. Every billing calculation is a chain, and an error at any link in the chain can propagate forward. Thank you for sharing this openly — it will help other auditors avoid the same trap.
No shame in this Derek. I've missed things too. The important thing is learning from it. I now have a checklist that requires me to verify every input, not just the output. Takes more time but catches errors like this.
Appreciate the support. I've updated my process to verify the demand calculation independently before accepting the rate classification. Won't make this mistake again.