What Is A Utility Bill Audit?
A utility bill audit is a process where a utility auditing company or utility auditor analyzes a company’s utility bills to check for errors, billing discrepancies, and other mistakes. Since utility bill calculations can be very complex, the billing statements are prone to errors and billing overages. There are a few main areas that a utility auditing firm will look at when performing a utility bill audit:
Basic Tariff Calculations
First, it’s best to simply look at the utility tariff to identify if the company is being billed properly. Tariffs are sometimes thought of as taxes in colloquial language, but utility companies also call their billing schedules tariffs. In deregulated energy states, the utility delivery charges, and supply charges in regulated states, are governed by the local utility tariff. When the utility company is not calculating these tariffs properly, it could mean a billing error and a refund is due to the customer.
Meter Read Errors
With the advent and implementation of smart meters in electricity and natural gas billing, many businesses are subject to a meter read error. These errors can occur on manually read meters as well as electronic meters and can be a computer or human error. If the manual read is not recorded properly, then the business could be charged for more energy than they consumed. Many electronic meters, on the other hand, use multiplier calculations to determine the total energy consumption in a building. When these equations are off, they can deliver higher meter readings.
Sales and Use Tax
Another aspect of a utility audit has to do with sales and use tax. In some states and jurisdictions, certain types of businesses or business processes are exempt from all or some of the sales tax paid on a utility bill. Understanding these specific rules can be very cumbersome, especially when there are multiple locations across different states. A good utility auditor will be able to calculate your sales tax exemption status by location and even claim refunds for sales taxes that might have been paid erroneously.