The Schooley Mitchell Blog

Understanding your utility bills, No. 1: Common Billing Errors

To some degree, almost every business relies on utilities. It’s an operational expense necessary to running a safe and functional physical location.  

However, it’s also an expense that many business owners and operators don’t feel they have a lot of say over. From understanding usage and rates, to billing errors, to proper budgeting and planning, there is a lot a business can do to have greater understanding and agency in their spending.  

Part One of Schooley Mitchell’s four-part blog series.  

In this article, we are looking at the common billing errors that can potentially hurt a business’ bottom line; the first in a four-part series seeking to help business owners and operators better understand their utility bills.  

Billing errors can be an issue across all business expenses; the difference for utilities is that we don’t often understand what we are paying for or how to detect inappropriate pricing. To protect yourself from overspending on utilities due to billing errors, the first thing you can do is learn how to spot them.  

What are common billing errors found on utility bills?  

Unfortunately, there are a lot of potential errors that could be leading to you overspending. The errors we will be looking at include: 

  • Incorrect classification 
  • Physical issues with your meters 
  • Meter reading problems 
  • Paying for the wrong meter 
  • Confused rates  
  • Meter multiplier issues 
  • Incorrect late fees 
  • Incorrect taxes 

Are you being classified correctly? 

A provider’s rates aren’t usually uniform across all kinds of customers. Usually, they’re divided between residential, commercial, and industrial. Among these classifications, there are also specialty rates for different kinds of customers, such as the elderly or different kind of economic development projects.  

You don’t want to be a business paying residential rates, and you don’t want to be missing any special rates discounts you might be eligible for. Paying for your correct billing classification is important.  

Meter issues can cost you.  

You don’t want to pay the price of your meter not reading your usage correctly.  

This happens when meters experience installation errors, communication failures, damage, and so on. It’s very rare that meters are inspected regularly to prevent these kinds of errors or misreading. While a meter breaking isn’t super common, make sure you ask your utility provider to check up on your meter once in a while, especially if you feel something might be off.  

Likewise, there can be meter reading issues that transmit the incorrect data from your location to the provider. If it’s a small error, the company might not notice, but your wallet will. If there is a discrepancy, look back and see if there was a spike in your consumption or if your bill is an inaccurate representation of what you used. 

Essentially, being vigilant, reading over your own bills, and not relying on the meter to be infallible is important.  

Don’t pay for someone else’s meter. 

This is a particular issue for multi-location businesses. If you only have one facility, you only need to keep track of one meter. However, it becomes harder to keep meters straight the more locations and meters there are.  

Unfortunately, businesses can end up footing the bill for an external location’s meter. This is an incredibly costly billing error, and one you’ll want to keep a close eye on to avoid if your business expands.  

Are you being charged the right rates at the right time? 

Rate changes can vary a lot, from time of day to time of year. While power meters are generally reliable, as mentioned before, they can make mistakes. It’s possible for you to be charged the wrong rate for the time of day in which you’re using your utilities.  

Closely monitoring your bills or using a real time data-analytics solution to track your usage will allow you to better understand your consumption and ensuring your invoice matches.  

Keep an eye on meter multipliers.  

New Brunswick Power explains, “[t]he actual voltage/current used is often too large to be registered by your meter. The meter’s registering capacity may only represent a small percentage of your actual load.” 

Because of this, utilities use meter multipliers to invoice you more accurately. 

“The meter multiplier is similar to a map scale in that it relates to the meter’s scaled down reading of the actual consumption.”  

Sometimes, a faulty formula or mistake with a new meter can lead to an incorrect number or misplaced decimal. This could cost you a lot.  

These billing errors are more common in smaller municipalities and providers. Larger providers often use automated systems with less room for error.  

Incorrect late fees applied? 

These are as simple as they sound. Sometimes a late fee will show up on your invoice incorrectly. This can be at a substantial cost to you, unless you call your utility company to get it sorted out. 

Don’t pay for the wrong taxes.  

Some businesses will apply for different tax rates than others when it comes to utilities. Regional policies and incentives can be applied to save your business considerably, but you need to know what you should be paying and be able to/hire someone to advocate for yourself.  

In conclusion… 

These are just some of the possible billing errors that may be found on your utility invoices. The best thing your business can do to avoid them – and to recover any money lost to them – is be vigilant, know what you should be paying, and work with professionals who have the time and expertise you might not have.  

Next issue… 

In the next issue of our series on understanding your utility bills, we look at budgeting for your utility bills, and how this can help your business not only be prepared for its monthly invoice, but potentially save money as well.  

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