BlogOct 12, 2021

5 Things To Look For In A Utility Bill Audit

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Do you own a small business and constantly need to account for expenses to ensure your costs are under control? Or do you run a large commercial and industrial business? Whether your business is large or small, you are expending capital to keep the lights on and your business afloat. If you just received an energy bill with excessive charges, you may need to perform an energy audit.

Many businesses receive utility bills monthly, which cover electricity, gas, water, and more. Due to the volume and complexity of these bills, most companies simply pay the bills without auditing for errors or ensuring that the charges are in line with contracted rates. Utility companies are not immune to mistakes. In fact, about 17% of all utility invoices contain an error of some sort.

Whether your utility bill seems excessive or not, don’t dismiss the fact that there could be an error, and you may stand to recover lost money that you overpaid. Your business may be especially affected if you carry out your operation in two or more buildings. A detailed utility expense audit usually requires the services of an expert, but there are certain things even you can look out for in a utility bill.

What is a Utility Bill Audit?

A utility bill audit is a review carried out when a property or business owner decides to thoroughly assess their utility invoices to reduce errors. Businesses should perform energy audits on an ongoing routine basis. However, a company usually starts an audit due to a higher-than-normal utility bill.

As a business owner, a utility bill audit helps you unravel inconsistencies such as payment errors, incorrect meter readings, wrong opening or closing of accounts, and late fees.

The audit exercise aims at improving utility costs over a long period. Therefore, it also includes a complete assessment of vendors used by the property owner. The audit process also helps you to find better rates or develops a plan to bring about cost savings. In-house personnel may undertake the auditing exercise or decide to use the services of a utility bill audit company.

In summary, a utility audit focuses on assessing the charges on your bill to verify their validity and determine what steps to take to lower them.

Look Out for These 5 Things in a Utility Bill Audit

Here are five simple things you can look out for while assessing the overall utility usage of your business.

Clerical Errors

Whip out a calculator and do the math. Mathematical operations are prone to errors, miscalculations, or overlooked details. Do a thorough calculation and compare the charged fees to the contracted rates. These errors may have a ripple effect on the final bill and may result in utility refunds.

Report any error found to the utility providers and keep track of the utility audit. These records will help you to make an informed decision whenever you decide to make changes in the future.

Peaks and Valleys

Pay attention to surges in the bill. For instance, water remains constant while electricity is likely to go up or down depending on the season. If there is a surge that you cannot explain, then go back to the utility company for clarification. If you have any reason to doubt the validity of your utility charges, don’t hesitate to ask for clarifications.

Also, some utility companies gradually raise their rates annually, usually due to competition, business demands, rising costs, etc. In your utility bill audit, you might want to compare your utility provider’s costs to other providers. This will help you determine if it is profitable to continue doing business with them. For instance, your company could lower its utility costs by simply switching to another utility provider.

Know Your Utility Rate

Typically, there are various rate structures companies can select. Your company is not limited to what the utility assigns. Therefore, review the different options and select the best package for your business.

Most property owners choose specific utility rates only to outgrow them once their company expands or the community changes. As a result, the original utility rate may become a financial burden once the company grows and expands.

Whatever utility package you choose, the utility company will have a set charge per unit of energy, per unit of water, etc., which you should know for future audits and comparisons.

Compare Your Energy Meters with the Audit Numbers

Ensure the energy usage number is closely within the range of the current meter reading. Both numbers should not vary widely. You might also want to ensure the previous number of utility usage is equivalent to the charges on last month’s bill. Keep a record every month to catch any reporting errors.

Look into Tax Exemptions

Some utility companies and businesses overlook tax exemptions, so do thorough research to ensure they are affected in the final bill. Notably, such tax exemptions vary by city and state and are subject to change. Always be on the lookout for tax benefits that your property can enroll in to secure rebates or deductions.

How is a Utility Bill Audit Completed?

Here are the basic steps to perform a utility audit:

  1. Data Gathering
    • At this stage, the utility audit company acquires relevant information from the business.
  2. First Review
    • The utility auditor reviews the full billing history to detect errors and savings opportunities. Then, the utility auditor will contact both the business and the utility provider to correct mistakes and facilitate refunds. The audit company will also notify the client if there are avenues for saving costs.
  3. Database Compilation
    • The auditor enters billing, meter, and facility info for every account into a spreadsheet alongside audit formulas. The auditor will share the database with the business once the audit finalizes.
  4. Documents Acquisition from Utility Providers
    • This stage is where rates and tariffs are collected as well as historical billing, usage data, meter readings from the utility companies. The auditor usually executes this task at the same time as the data compilation stage.
  5. In-depth Analysis
    • This stage involves a thorough audit of all the documents the utility and business provide. The analysis includes:
      1. Conducting a review of the database using manual techniques and data analysis software which checks for errors.
      2. Assessment of all historical documents.
      3. Assessment of service agreements and related transactions to point out mistakes, savings opportunities, and breaches.
  6. Acquisition of supplemental information
    • The auditor sets up a consultation with the business and utility providers in regards to the accounts requiring verification of service to determine billing validity and opportunities for saving costs.
  7. Refund Claims
    • The business and the utility company review the refund claims alongside backup documentation and discuss how to correct and refund the verified account errors.
  8. Field Work
    • For businesses requiring physical assessment to determine billing validity, the audit company will arrange fieldwork such as viewing meters, transformers, lighting, and other equipment whose operation affects the monthly billing.
  9. Additional claim
    • Here, the utility audit company will submit claims to the utility providers for any account where fieldwork results in the discovery of billing errors.
  10. Final Report
    • Once the utility bill audit is complete, the auditor rectifies all error accounts, savings approved, implemented recommendations, and refunds. The audit company will provide a final report to the client. This report summarizes the work, including accounts audited, errors corrected, rate changes, and other cost savings. The final report should also include recommendations to prevent a repetition of such errors.

Use The Right Tools For The Job

One of the best things you can do in response to a utility bill audit is ensure that you are using high quality utility data management software to track all your utility data and determine how effective your energy usage is. At EnergyPrint, we have a wide host of solutions to help make sure you make the most out of your energy analysis.