published Monday, October 18th, 2010

Local businesses get electric bill shock

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    Staff photo by Dan Henry/Chattanooga Times Free Press - October 12, 2010. Joey Quarles sets up number signs to have Braille added to the facade at Intersign Corp. on Tuesday. Intersign is having to pay $121,000 to EPB for electricity because of the utility's billing errors.

With his business down by 25 percent because of lagging sales, Intersign Corp. President Hank McMahon said he felt sucker punched when EPB said it was doubling his bill and collecting another $121,000 for improperly billed power over the past three years.

“I felt like I was hit with a sledgehammer in the stomach,” said McMahon, whose company employs 93 people to make signs. “If I make a mistake in my business, I have to absorb that loss. But with EPB, their mistakes are passed along to their customers.”

EPB officials admit a transformer installation error by one of their employees in 2005 resulted in the inaccurate power bills over the past five years.

Executive Vice President David Wade said such metering errors are rare among the more than 160,000 homes and businesses the city-owned utility serves.

But in response to an open records request, EPB spokeswoman Dana Bailey said the utility has recorded 200 such metering errors since 2005.

As a TVA-regulated distributor, EPB must charge consumers the same amount for electricity, even if the customer is wrongly billed. State law requires the customer to make up for any discovered deficiencies going back 36 months.

Wade said it would be easier on EPB to absorb the loss “than to have to sit there and tell our customer we made this mistake.”

“We’re not doing this because it is the easy thing, we are doing it because it is the right thing,” Wade said. “That customer did use that energy and if we don’t charge that customer then we are really giving them an unfair advantage.”

Human error

The problem at Intersign developed when a transformer was changed in 2005 at the 55,000-square-foot building on Amnicola Highway, which then was owned by National Poster Co.

Wade said an installation error meant the metering equipment was improperly calibrated so it recorded only half the actual electricity usage.

When another metering error was found at another business, it was determined that the equipment had been improperly switched between that business and Intersign’s building.

“It was a human error in getting the meter readings right,” Wade said.

Intersign now has to pay twice as much each month for its power and also will have to pay EPB for $121,000 worth of power that was not properly billed in the previous three years.

“We can be pretty flexible in how long it takes to pay this back,” Wade said.

But Intersign’s chief operating officer, Jim Roides, said the higher power rates are boosting Intersign’s monthly electricity bill to $6,777 from the $3,837 previously paid by the business.

“This average increase equates to two to three jobs we will need to eliminate, based on EPB’s human error, to control our costs,” he said. “Where is the accountability and responsibility on EPB’s part?”

Roides said no other business he knows of “would even consider approaching their customers and demand back billing under any terms.”

McMahon said EPB’s error also led his company to pay more than he otherwise would have to buy the factory at the end of 2006, since its purchase offer was based in part on projected utility bills.

The Intersign executives said they were particularly upset to learn that EPB will pocket all of the back payments for power. The city utility already has paid the Tennessee Valley Authority for the electricity through its wholesale purchase contracts.

A TVA Inspector General’s audit released in August said EPB had cash reserves equal to 13 percent of its revenues, or more than twice the minimum cash margin required. It had the strongest balance sheet of any of TVA’s major municipal distributors, according to the audit.

But McMahon said he spends at least a quarter of his time figuring out how to cut costs to avoid more layoffs after two rounds of staff cuts in the past year.

“It’s extremely hard to have to look somebody in the eye and tell them that because of economic conditions we can no longer afford to keep you on the payroll,” McMahon said.

“Is EPB going to tell the next employees we have to lay off that they don’t have a job because [the utility] messed up?”

Click here to vote in our daily poll: Should EPB be responsible for mistakes made on electric bills?

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DEB said...

Even (IF) the power company did make a mistake (which I highly doubt) EPB has no right to charge customers for an honest mistake that they made. They should absorb the loss. There is no ethical behaviour in business these days. This kind of unethical behaviour causes EPB customers to loose trust in the company. I for one, am going to be reading my meter myself every month. If they ever pull this again, I will know. Should they or could they be sued over this? Electric power is overpriced. Also, while I'm talking about overpriceing I won,t forget to include Cable, which expects its customers to pay huge amounts of money for nothing but continuous replays of reruns and repeats.Cable tv is not worth more than 10.00 a month, if that.

October 18, 2010 at 6:24 a.m.
fairmon said...

If there are errors of under charging then there is just as likely comparable over charges. Is there any record of that?

Had the building with which the metering had been improperly switched have over charges?

State law says 36 months which should apply in this case instead of approximately 72 months.

October 18, 2010 at 6:28 a.m.
Yano said...

At around $3837 per month of undercharges, $121,000 represents around 36 months, as supposedly required by law.

This business should be given 10 years or more to pay this amount back. As for paying the correct amount from now on, Mr. McMahon is out of line complaining about that. Their competitors have to pay the correct amount and have paid it all along.

October 18, 2010 at 7:06 a.m.
fairmon said...

I agree Yano, maybe even 15 years to repay would be reasonable. The only issue not addressed is the price paid to buy the business based on an inaccurate lower amount and I have no good idea how to reconcile that.

I saw no action on the part of the EPB to prevent future errors or to detect similar under or over pay situations.

October 18, 2010 at 8:15 a.m.
hcirehttae said...

EPB charged me one month three times what they'd ever charged before. The usage was consistent over years and years, month by month, except for this one month. It wasn't even a peak usage time. They would not see that it had to be a mistake of some kind; they would not even investigate. "Just pay the bill." It's not a public utility; it's called a monopoly.

October 18, 2010 at 8:25 a.m.
sideviews said...

The city of Chattanooga is preparing to spend $300,000 to fight the privately owned Tennessee American Water Co., whose rates are regulated by the Tennessee Regulatory Authority which does not allow such back billing. Why doesn't the city object to EPB's practice of billing customers for its mistakes? Oh, that's right, the city owns EPB.Why doesn't TVA prevent these errors since it regulates EPB? Oh, that's right, EPB is one of its biggest customers.

October 18, 2010 at 8:34 a.m.
harrystatel said...

Nothing like a monopoly to provide efficient and effective customer service.

Might want to check who's receiving that $300,000.00 in taxpayer's money to "Fight the Hike." You'll find many of the usual suspects.

Harry Statel

October 18, 2010 at 11:13 a.m.
dave said...

I agree with Side views...The EPB is owned by the CITY and has no real regulation. There is NO recourse for it's customers. It stinks! Their extremely high rates are just another form of taxation. I say we are:

TAXED ENOUGH ALREADY!

October 18, 2010 at 12:18 p.m.
EaTn said...

Utilities are like the IRS.

October 18, 2010 at 3:35 p.m.
kmdavis56 said...

Why do we have to put up w/all the crooks in our government? We are currently paying almost 2.oo a day more than we did last year for electricity, why? Because the city is crazy about OUR money. Also, regarding the water company, the crooks are the city council, they voted and got an increase on the sewer charges while our backs were turned...they did a back room trick. Actually, I am tired of the monopolies in Chattanooga...the EP, comcast, the water company....THIEVES !@!!!!!!

October 18, 2010 at 8:35 p.m.
alohaboy said...

I am amused by all these people who feel utilities should be next to free, fuss about taxes and pay over 4100 per month to have the latest cell phone to text with as they drive to a $10 movie.

October 18, 2010 at 9:04 p.m.
alohaboy said...

That should be $100 not 4100

October 18, 2010 at 9:05 p.m.
sd said...

"Extremely high" rates? Our electricity rates are among the lowest in the country.

http://www.eia.doe.gov/electricity/epm/table5_6_a.html

October 18, 2010 at 9:31 p.m.
nodoginnafight said...

Unfortunate situation, but the business used the electricity and someone has to pay for it. Either he pays for it or every other EPB customer winds up paying it for him. And yes, sd is exactly right, the rates of all TVA distributors are among the very lowest in the nation.

I would say a compromise might be in order. EPB could knock off some as an acknolwledgement of their mistake and as a meaningful reminder to them that they need to be more careful in the future (although the bad publicity should be a pretty good reminder in and of itself) and they should give the guy plenty of time to get caught up.

But it is his responsibility to pay for the energy he uses.

October 20, 2010 at 8:34 a.m.
Worried1 said...

EPB needs to man up and admit and pay for THEIR mistake. My husband is an employee of this company and I was already worried enough about him keeping his job with sales down. Now this only adds more stress to an already overworked, fearful, hardworking staff and their families.

I can understand their bill being double from here on out as they should pay the same as everyone else using that amount of electricity. However, making them payback the $121,000 is ridiculous. Hopefully they will give them a long time to pay it back and in the meantime sales will pick up so they can afford it. Just another big company "sticking" it to the little guy!

October 20, 2010 at 4:36 p.m.
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