Hidden Electric Bill Errors and Overcharges: 5 Myths That Could Cost You Thousands

If you’re a CEO, CFO, controller, purchasing or facilities manager, you may have never considered the fact that your electric bills could contain errors and hidden overcharges.

However, businesses in Virginia and the Carolinas typically overpay by 5-15% due to these errors.

“Four out of five commercial or industrial customers are overbilled by the utility at some point.” according to Brian Coughlan, president of Utility Management Services, Inc. in Wilmington, NC.

This oversight stems from a few common myths about our nation’s energy providers:

Myth #1: Utilities are regulated by the government and have our best interest in mind

Myth #2: Computers and electronic equipment eliminate billing and metering errors

Myth #3: Electricity is electricity. There is only one price.

Myth #4: The electric company is obligated to select the best rate for my business

Myth #5: Nothing can be done to lower our electric bill. It is a fixed expense.

These myths are responsible for hundreds of millions of dollars in fees and errors annually in the southeastern United States.

As of May 2006, companies with the right knowledge of billing, metering and rate practices have eliminated more than $28 million (and counting) in overcharges and hidden errors from their electric bills.

This series will debunk these myths and provide you with helpful information that can save your business thousands of dollars a year in electricity bills.

But first we must understand the tremendous effect that small errors and overloads have on the results of a company…

Since electricity is a normal operating cost of your business, any reduction in this cost has a direct, dollar-for-dollar impact on your bottom line.

A good question is: “How much of our products/services must be sold to generate $1,000 in net income?” or “What is my net income as a percentage of sales?”

For example, if your net income as a percentage of sales were 2%, then you would need to earn $50,000 in gross sales just to net $1,000 in your bottom line.

In Dominion Power’s service territory, it is not uncommon for businesses that spend $1,500-$10,000 per month on electricity to have $900-$18,000 in annual fees and errors on their bill.

Assuming our example of 2% net income as a percentage of sales, that equates to $75,000-$500,000 in annual gross sales.

In fact, small mistakes can make a big difference in a company’s profitability.

In Part 2 of our series, we’ll expose Myth #1: Utilities are regulated by the government and have our best interests in mind.