Are you paying the right amount for utilities? The devil is in the detail!

Wendy Cheeseman, Senior Sustainability Consultant, JRP Solutions

We recently saved a client quarter of a million pounds in fictitious water consumption. The combined factors of no energy manager, no meter reads for three years together with a change in supplier billing processes and the absence of water meter loggers created the perfect storm for a £425,000 invoice.

Of this amount, £250,000 was fictious consumption. The remainder was late payments fees (eventually) removed and £165,000 ‘catch-up billing’. (This is when you are billed against estimates which turn out to be far less than actual consumption and once an actual read submitted a hefty bill ensues.) This caused a myriad of woes from a hole in budgets as there had been no accrual for the amount left to pay, to concerted attempts to engage with utilities’ key account managers who responded with legal challenges before reviewing the evidence our team put in front of the supplier.

When was the last time you scrutinised your utility invoices?

The example above is only one of very many that our consultants have seen. Here are a few more:

1. One of our consultants found a school that was paying for an energy supply to a neighbouring site and had been doing so for years. This was picked up through checking meter numbers and billing info as well as the on-site audit.  Another school had a broken meter and was overcharged by £8,000 which we were able to get back for them.
2. A customer had been billed on gas consumption assumed to be 100 cu ft after the meter had been changed to read in m³.
3. Over £30K was save for another customer when a gas meter that had failed had been replaced and the supplier had massively over-estimated the consumption during the down time.
4. It is not uncommon for a customer to go out of contract with their supplier and then be reverted to standard rate.  In the case shown in figure.1, there is a clear message on the invoice to say that they are ‘out of contract’ (in green) this means they pay over twice as much (yellow) because the bill had not been validated.  This had been going on for 18 months so cost them £6,500 or 50% extra.
5. We have seen many examples of the wrong CCL discount associated with CCA/CHPQA.
6. One customer was massively under paying on electricity as a result of a sub-meter not being set up correctly. 

Errors represent a considerable amount of time to investigate, justify, evidence and communicate for those that are rectified and where the errors are not investigate, or even noticed, considerable losses can occur.

How and why do these errors happen?

These are some of the typical reasons that we have seen:

• Lack of responsibility:  One department pays the bill and another manages the utility. Utilities invoices are often sent directly to an accounts department and may not go through a validation process or this may happen off-site at a broker. Where customers don’t have a dedicated energy manager, scrutiny of the bills can fall through the gaps – at a cost.
• Limitations of fiscal metering: Old manually read meters. These can be replaced and read remotely and reads sent direct to suppliers. These can be installed by your supplier or you can install your own with much greater functionality such as AMR (automatic meter reading) devices which can capture your data on demand every 30-60 minutes (or less)
• Poor scrutiny of invoices: Invoices entered into the accounts log without validation of line items.
• Meter exchanges: New meters are installed and do not record the correct multiplying factor for units.
• Mistake: Mistakes happen on all sides – double checks are always advised.
• No meter reads: Your supplier needs to adhere to the Balance and Settlement Code as well as their supplier license. They should make every effort to read the fiscal meters regularly but often don’t. Finally when there is an estimation, consumption can be wildly out
• New occupier: You may be receiving estimated bills based on consumption in recent months that was for a different occupant, or when the building was empty
• Water Leaks: If your water bills are going up and up chances are you have a leak this is expensive and can cause significant damage – think about loggers that show continuous flow

Metering can be complex and fault finding takes time as there are often many parties involved. For this reason, most clients just carry on paying as they don’t have the time or knowledge to dispute.

8 steps to minimise costs

Here are some sensible and often quite simple steps that will ensure your invoicing is correct to maximise cost savings:

1. Provide regular meter reads – if nothing else provide a quarterly or monthly read to your supplier.
2. Check meter details – Compare the Meter Serial Number on the bill with that on your meter and that the read is in line with what is diaplayed on your bill.
3. Fit loggers and AMR (Automatic Meter Reading) – this will give you a wealth of data to find consumption savings too.
4. If consumption data is poor, then information can often be obtained by referring back to billing.
5. Be persistent if you feel the billing is wrong.
6. Pass bills to your energy or facilities team to validate or appoint an outside consultant to do this.
7. Confirm all line items including the ‘fixed charges’.
8. Check if you are entitled to discounts. Academy schools pay only 5% VAT and no CCL. But they have to complete a simple form to do this it isn’t taken off automatically.

Data underpins all aspects of energy management, and it is vital to manage it well. 

If you have any questions or would like to discuss how we can support you with any of the above, please call JRP Solutions on 0800 6127 567.