2. Background
Each of the investor-owned energy utilities have Commission approved tariff rules on how to deal with errors on customer bills as it relates to both electric and natural gas service. There are essentially two types of errors, a billing error and a meter error. A billing error is an error by the utility which results in incorrect billing charges to the customer. Billing errors may include incorrect meter reads or clerical errors by a utility representative such as applying the wrong rate, wrong billing factor, or an incorrect calculation. Billing errors also include failure to deliver a bill, actual or estimated, in a timely manner. A meter error is incorrect kilowatt hour, kilovar hour, or demand registration resulting from a malfunctioning or defective meter. In both cases the error is at the utility side and not the consumer's side.2
Currently, the energy utilities each have Commission approved tariff rules that specify how to charge or provide a refund to a customer once an error is discovered. These tariff rules are essentially the same for each of the California energy utilities.3 The time period that bills can be adjusted differs for residential and non-residential customers under the rules. We summarize how the rules apply for the different types of errors below.
2.1. Meter Errors
Where a meter test finds that a customer's meter is not registering correctly or is not registering at all, the utility may adjust the customer's bill. If the error caused the customer to be undercharged, an adjusted bill is issued. A refund or credit to the customer is issued if the error results in an overcharge. The credit is computed back to the date that the utility determines the meter error commenced, except that the period of adjustment may not exceed three years. Adjusted bills are computed as follows, depending on the type of meter error:
2.1.1. Fast Meter
If a meter is found to be registering fast, the utility will refund to the customer the amount of the overcharge based on corrected meter readings or the utility's estimate of the energy usage either for the known period of meter error or, if the period of error is not known, for the period during which the meter was in use, not to exceed six months.
2.1.2. Slow Meter
If a meter is found to be registering slow, the utility may bill the customer for the amount of the undercharge based on corrected meter readings or the utility's estimate of the energy usage either for the known period of meter error or, if the period of meter error is not known for the period the meter was in use, not exceeding three months in the case of a residential service, and three years for all other service.
2.1.3. Non-registering Meters
If a meter is found to be non-registering, the utility may bill the customer for the utility's estimate of the utility service used but not registered, not exceeding three months in the case of residential service, and three years for all other service.
2.2. Billing Errors
Where the utility overcharges or undercharges a customer as the result of a billing error, the utility may render an adjusted bill for the amount of the undercharge, and must issue a refund or credit to the customer for the amount of the overcharge for the period of the billing error, but not exceeding three years in the case of an overcharge, and, in the case of an undercharge, not exceeding three months for residential service, and three years for all other service.
2.3. Deposits
When a customer opens a new account for service, they must establish credit with the utility. For non-residential accounts, the amount of the deposit required may be twice the maximum monthly bill as estimated by the utility. If the customer must reestablish credit, the same amount of deposit is required.4
The Commission recently opened R.10-02-005 addressing residential service disconnections. R.10-02-005 proposed the following rule:
Once a customer has established credit as a customer of that utility, the utility must not require that customer to pay additional reestablishment of credit deposits with the utility for either slow-payment/no-payment of bills or following a disconnection.
2.4. Business & Community Outreach
The Commission's Business & Community Outreach group, which has dedicated staff to work with small businesses, has been receiving an increasing number of calls about billing/metering errors. These small businesses are being charged for errors made by the utility and not discovered for at least three years. The Business & Community Outreach staff state that in some cases the small business may be forced to shut down and/or claim bankruptcy due to the high amount of back-billing by the utility. The calls to the Commission are seeking a remedy to avoid foreclosures. These small businesses are the backbone of our economy and especially in these tough economic times are trying their best to stay afloat. As President Obama recently said, "The true engine of job creation will always be small businesses. What government can do is fuel that engine: by giving entrepreneurs and companies the support to open their doors, expand, and hire more workers."5
2.5. Summary
In summary, the utility is able to go back three years in order to recover undercharges from any non-residential customer even if that customer has been paying its utility bill on time and due to an error on the utility's billing and/or metering system is now responsible for an additional, sometimes significant, charge. If these new charges result in late or non-payment of the new bill by the customer, they may be subject to additional deposit requirements that may be especially problematic for a small business customer. Consequently, this OIR is initiated to consider treating specified small businesses the same as residential customers for purposes of billing adjustments and deposits.
2 There are separate rules for unauthorized use, or an error in registration caused by meter tampering by an unauthorized person.
3 See PG&E Electric and Gas Rule 17, 17.1; SCE Rule 17; SoCalGas Rule 14, 16; SDG&E Electric and Gas Rules 17, 18; PacifiCorp Rule 9, 17; Sierra Pacific Power Company Rule 18; Southwest Gas Rule 17; Mountain Utilities Rule 18; Golden State Water Company (Bear Valley Electric) Rule 17; West Coast Gas Company Rule 17, 17.1; Alpine Natural Gas Operating Company Rule 18.
4 Tariff Rule 7 addresses deposit requirements for each energy utility.
5 ForConstructionPros.com; February 8, 2010.
