When it comes to utility bill management, the expression “garbage in, garbage out” is particularly true. If the raw data isn't correct, then the conclusions you draw from the faulty data will not be correct either.
As discussed in our recent webinar, 10 Tactics of Successful Energy Managers, the typical utility bill workflow process is riddled with opportunities for errors. Today’s blog is about how (and why) to check your utility billing records for errors.
Opportunities for Errors
For example, the utility company’s meter reader may read the meter incorrectly, the meter may be broken, or an estimated bill calculation process may be inappropriate or invalid.
Once the data is in the utility company’s system, there may be an error calculating use from the meter multiplier, or applying the correct rate schedule to the account. But that’s not all.
Once the data is “safely” on the printed bill, it may be inaccurately transcribed during a data entry process on your end. Or your staff may inadvertently introduce a unit of measure error even if the cost data is transcribed correctly. The accounting folks may be happy, but what about your energy tracking?
Importance of Auditing
For these reasons, it's important to regularly check your utility bill data for mistakes. Proactive review of your energy information for obvious errors will help ensure that you are building your energy management activities on a reliable foundation.
The successful energy manager will audit all utility bills regularly—ideally every month. Here are some valuable audit metrics to include in your audit process:
Check the expense per unit of the commodity, as compared with previous bills. This is a great audit for catching “unit of measure” errors and even rate schedule issues. You can use the unit cost data to compare meters of the same commodity on the same rate.
Unit Cost per Vendor
Check the expense per unit of the commodity, as compared with other accounts for the same commodity and vendor. This is a great audit for catching “outliers” that shouldn’t be there. Common sense dictates that a single vendor will be charging the same or very similar rates for the same commodity. Discrepancies observed in this audit can quickly reveal billing issues.
Unit Cost per Rate Code
Check the expense per unit of the commodity, as compared with other accounts using the same rate code. This is another commodity-based audit that can be very revealing.
But be cautious about drawing quick conclusions from unit cost data, since there may be significant and “normal” seasonal variations in pricing based on the market forces of supply and demand. When interpretations are questionable, make certain to cross-check data with analogous bills from previous years, and check your vendor rate schedule to spot seasonal changes.
Not All Vendors are Equal
It is important to identify the energy vendors who tend to have more frequent billing issues. You will often discover that there are certain vendors who are more likely to issue rebills (a common symptom of vendor billing issues). It pays to keep a close eye on those accounts, so that you can catch problems before they’re compounded in future months.
One EnergyCAP client had an unpleasant surprise when his utility vendor unexpectedly issued rebills not just for the last month but for the past 12 months, to the tune of an additional $45,000 in unanticipated utility expenses. This is a rare and extreme case, but it does happen, so try to address potential billing problems early. They tend to recur and compound over time.
Document Your Success
Whenever you are successful in catching an error, make sure to keep a “running tab” of your found savings.
Keep a written log with all the pertinent information. A spreadsheet works great for this purpose. Include the following columns:
Description of Error
Amount of Error (both Use and Cost, and include a column for the Unit of Measure)
This record can be a starting point for some interesting discussions with others in your organization! Over time, the log will become an important document highlighting your value as an energy manager.
Once you have a process in place for tracking and documenting utiilty billing errors, you'll be amazed at how quickly your savings add up!