Quick question — when a state sets a backbilling limit of 24 months, does that apply equally to the utility backbilling a customer for underbilling AND to the customer claiming a refund for overbilling? Or are the time limits different depending on which direction the money flows?
Backbilling for underbilling vs overbilling — same rules?
Great question and the answer varies by state. In most states, the backbilling limit applies specifically to utility-initiated billing adjustments for underbilling. The customer's right to claim a refund for overbilling is governed by a separate mechanism — usually the state's statute of limitations for contract claims or unjust enrichment, which is often longer. So in Georgia for example, the utility can only backbill 24 months for underbilling, but the customer may be able to claim overbilling refunds going back further under the state contract statute.
Derek nailed it. The asymmetry between underbilling and overbilling limits is one of the most important concepts in our profession. In most states, the rules favor the customer — the utility's backbilling window is shorter than the customer's refund window. This is because regulators recognize that the utility controls the billing system and bears the responsibility for getting it right. When the utility makes a mistake that underbills the customer, the utility's recovery period is limited. When the utility overbills, the customer typically has a longer period to claim a refund.
That asymmetry is really important. It means when I find a metering error that's been undercharging a client, their exposure is limited. But when I find an overbilling error, the refund window is usually longer. Good to know on both sides.