Rock Hill overcharges electricity customer as much as $800,000

adouglas@heraldonline.comDecember 4, 2012 

— Rock Hill’s utility and finance departments are refunding an industrial customer up to about $800,000 for several years of overcharging the company for electricity, city officials have told The Herald.

The city discovered the billing error through internal monitoring four or five months ago, Deputy City Manager Jimmy Bagley said. The city notified the customer within 30 days of finding the mistake and provided details about the city’s plan to make restitution.

The industrial customer who was overcharged has received one check from the city so far, Bagley said, and Rock Hill will refund the remaining amount on a payment plan over the next three years.

City officials are refusing to identify the customer involved and the exact amount the company was overcharged, citing privacy concerns.

Residential customers should not be concerned that their bills are inaccurate, Bagley said.

The billing mistake that resulted in overcharging the industrial customer was caused by a “usage conversion” error that does not affect smaller users such as residential and many commercial customers.

“Certain commercial electric customers require their power to be converted from higher levels to lower amounts, using equipment called an instrument transformer,” city spokeswoman Katie Quinn said. “Those transformers have different conversion ratios, and therefore different numbers that get multiplied to get a meter reading.

“Billing errors can sometimes be a result of a discrepancy between the multiplier that the conversion ratio calls for and the number that is in the billing system.”

The city does not use conversion ratios or multipliers for most residential customers because the electricity usage in a home is billed differently and is not as complex as the billing process for commercial and industrial customers.

Proposed refund change

The Rock Hill City Council voted last week to change the city’s policy on refunds and collection of undercharges on utility bills. The change was approved unanimously and will get a final vote Monday.

If approved, the new statute of limitations on billing refunds for overcharges would be three years – down from the city’s current policy to refund a customer the entire amount.

Under current policy, if a customer has been “inadvertently overcharged” and the city can determine how long the customer has been charged too much, the city will “credit or refund the excess amount charged during that entire interval.”

In cases of undercharges – when a customer owes the city – the proposed change to the statute of limitations is three years, up from one year for residential customers and down from five years for commercial customers.

If the city cannot determine how long the customer has been undercharged, the city’s current policy states that collection for undercharges will date back six months for residential customers and one year for commercial customers.

If the council approves next week, the city’s new policy would allow the city to collect on undercharges dating back three years if the city cannot determine how long a customer has been undercharged.

A new system

City utility employees read all electric meters once a month and review the equipment and usage of the city’s largest electricity customers once every five years, Bagley said.

The city implemented a more rigorous monitoring system about four months ago for commercial utility accounts. The new system is designed to ensure that all large industrial or commercial customers are physically reviewed by a city employee over the next several months instead of just every five years, he said.

Over the past few months, Bagley said, city utility employees have reviewed half of the city’s largest electricity users. Reviews of the remaining half will be complete by April, he said.

The Herald has asked the city to provide specific details about other refunds to customers. By Tuesday, the city had not provided the information.

Bagley did say that during the 24 years he has worked for the city, the number of significant billing mistakes has been minimal.

He estimated that the city has processed about a dozen significant bill adjustments – about half of those overcharges resulted in refunds and half were undercharges that resulted in a customer paying the city back.

In September 2009, the Rock Hill school district received a $241,142 refund from the city for an unintentional billing error. Those charges were related to a discounted rate the district pays for electricity at Old Pointe Elementary, Saluda Trail Middle, Castle Heights Middle and South Pointe High schools.

The most recent billing mistake for the unnamed industrial customer is not the result of the same problem with the school district’s bills, city officials said.

Mayor Doug Echols declined to comment on the city’s refund to an industrial customer who was overcharged. He said the council had received legal advice to not discuss the issue outside of executive session out of concern for privacy.

It’s not uncommon for the council to react to fix problems, said Councilman John Black. The council’s upcoming vote on a statute of limitations revision is needed, he said.

“Everything has a statute of limitations,” he said. “We’re not trying to get out of our mistakes.”

The city’s utility and finance departments, Black said, are “very well run.”

When he heard about the city’s plan to refund the customer all money owed, he said, he wasn’t surprised, because it’s the right thing to do.

“We fully need to compensate for our error,” he said. “We owe it to the citizens to pay them back, whatever it might be.”

Overcharged? Undercharged?

Commercial and industrial customers who suspect a problem with their utility bills can call the city’s customer service department at 803-325-2500.

Anna Douglas 803-329-4068

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