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Utility billing errors: A significant hidden cost to consumers

How companies can prevent utility billing errors that can lead to additional costs up to 15%

Utility billing errors can cost a business a hefty amount if not caught. (Credit Maksim Shchur)

Utility billing errors might seem like a minor inconvenience, but these inaccuracies can result in significant financial losses for many companies. Inaccurate utility billing data can lead to additional costs for customers ranging from five per cent to 15 per cent annually.

Why you shouldn't overlook your utility bills

Numerous companies, especially those involved in production or manufacturing, often find themselves billed based on inaccurate utility data. This could be due to mistakes in reported consumption or flawed estimates provided by utility companies. And if corrections are made, they tend to arrive months after the initial inaccuracies.

Unfortunately, billing errors have plagued utility customers for a long time. Such long-standing billing issues are why we, at 360 Energy, always stress the importance of regularly scrutinizing your utility bills. Operating without precise and up-to-date utility data is akin to navigating a plane in dense fog.

One of our 360 Energy clients recently found out just how costly utility billing errors can be.

A Case Study with a 360 Energy Customer

Initial discrepancies

When reviewing our clients’ monthly utility invoices, we noticed the repeated "zero" consumption readings on their natural gas bill. Despite the impossibility of the readings, the utility insisted they were correct. Upon review, we identified the culprit: a malfunctioning meter. 

Intervention and prolonged delays 

We intervened numerous times, pressing the utility company to replace the faulty meter — a process that took several months. During this period, our client continued to receive bills with incorrect readings, estimates, and reversals.

Neither the utility nor their customer knew how much gas was actually being used. The utility’s delay in taking corrective action even forced the customer to take the unprecedented step of carrying their entire gas variance from one contract year into the next. 

Data Correction and Unforeseen Consequences

Once the faulty meter was replaced early in 2023, reliable data was finally available. Unfortunately, the utility company had one more unpleasant surprise in store for our client.

Over the several months of faulty billing data, the utility customer had proactively managed their energy consumption as best they could. Once accurate data was finally presented, the customer learned they had consumed significantly less gas than the volumes they had procured.

Normally, a large positive variance indicates effective energy management. In this case, a large positive variance worked to the disadvantage of the customer. 

The utility company that provided faulty data also required their customers to eliminate any consumption variances at the end of the contract term. If the utility customer has not procured enough gas for the volumes they have consumed, they must purchase additional gas to meet the shortfall. Similarly, if the customer has used less gas than they committed to buy – in other words, if they have a positive variance – then they must sell that unused excess and do so within a short time frame and with additional fees. 

The financial impact

The problem for this particular customer was that they had procured natural gas during a time when prices were high. By the time the customer was able to finally learn they had a positive variance to address, prices had dropped and the customer was forced to sell their surplus gas at much lower 2023 market prices. 

Had the consuming company known earlier they had a positive variance, with accurate reporting data, they would have sold their excess natural gas when prices were higher and incurred a much lower loss.

The bottom line

The resulting financial setback for the utility customer was staggering, potentially reaching up to $100,000. 

The bigger picture: the prevalence of utility data errors

The above case isn't unique. Nearly 30 per cent of our clients face billing errors annually, and the trend is increasing.

The broader impact

Utility data mistakes hinder companies from effective management. The saying, "You can't manage what you can't measure," rings true. Companies and managers can only control their cost structure if they know how commodities like electricity, natural gas, gasoline, diesel and water are being used. 

Every management team in every company is expected to achieve efficiencies over time. Utility data provides the baseline foundation for making valid comparisons and for demonstrating corporate improvement. 

Energy consumers have the right to expect timely access to their correct, accurate and reliable consumption and pricing data. Flying blind never ends well. 

Don't navigate blindly

Utility billing errors can be complex and costly, but you don't have to navigate them alone. If you're concerned about the accuracy of your utility bills, consult with experts who can guide you through the process of verification and correction.

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