Utility Bill Auditors - Guidelines on How to Choose the Best One
Published on January 5, 2011
Good utility bill auditors can not only recover refunds from past bills, but also save you money on future ones. Selecting the wrong one can be a costly mistake. Here are some guidelines to consider, 13 questions to ask and a sample RFQ to use when deciding which utility bill auditing company is best for you. Fee structures are also covered.
An internet search will reveal thousands of utility bill auditors and services. Many come and go due to low start-up costs. Ask your potential providers how long they have been performing utility bill audits. This is important as some older companies that have just started offering this service may hide this fact. They do so by stating how long they have been in business rather than how long they have provided utility bill auditing services.
You want to avoid companies that are new and inexperienced, particularly those that are not committed to the business long term. A good indication of a company’s longevity and integrity is the associations that they participate in. Check to see if you are a member of the same organization, such as a chamber of commerce, and if so, make them aware of it. Ask other members of the organization if they have used the bill auditor. It is always good to check if the utility bill auditing company is a Better Business Bureau Accredited Business and what their rating is. Click here to learn more about it.
Salesman or Account Manager
It is common that the only person you engage with from the utility bill auditors is their salesman or account manager. You should be comfortable with this individual. If you feel they are prone to overstate truths, speak in superlatives or just do not seem genuine, they may not be a good fit for you. This person is your representative within the bill auditing company. You will rely on them to make sure you are treated fairly. It is also their responsibility to make sure all promises, made or implied, are kept as many will fall outside the contract. In short, you should feel comfortable trusting this person. Be wary of those trying to be your superficial friend and instead look for a professional, preferably someone with a financial background and not just sales.
The real value in hiring a utility bill auditing company comes from the experience of those actually conducting the audit. Learn how large their auditing staff is and how many years of combined experience they have. Avoid ambiguity and explain that you are asking about auditors. Be sure they do not include market and sales personnel or support people such as clerical, IT, human resources or other support departments. If their auditing staff averages less than 5 years experience per auditor or has fewer than 5 auditors, keep searching.
Look for quality as well. Check to see that they have highly-skilled legal and tax experts, former high ranking utility executives, seasoned auditors, and tariff specialists. Ask for auditor resumes.
Learn of the utility bill auditor's experience in your industry. Seek out professional bill auditors that have worked with other companies like yours whether your organization be a company, municipality or non-profit. Ask for testimonials and references and contact them. Find out how much they saved others in your industry.
While it is true that only positive references are given, there is still value in calling them. When you do, other than the usual questions, ask:
- Were you compensated for this reference?
- What other organizations do you know that used this bill auditing company but were not as pleased as you? (contact them as well)
Perform your due diligence; learn the answers to these questions before selecting utility bill auditors.
- Which utility bills do they audit?
- Do they look to recover funds and savings on past as well as on future billings?
- What is their track record for utilities (electric, gas, sewer, water) in your industry?
- Have they experience with your utility providers? Are they familiar with their rates, their tariff structures?
- Are they local to your state and so familiar with local tax or other incentives?
- Do they just recommend how to get your refunds and better rates or do they work through all appropriate agencies or utilities to implement all changes and obtain all refunds, savings and credits available?
- How many auditors will be involved on your audit?
- Do they use proprietary advanced technology to analyze the utility data to identify utility cost savings?
- How do they analyze your utility bill costs and how does the process work?
- How quickly can the utility bill auditing process be done?
- When can you start seeing savings or a refund?
- How do they demonstrate utility bill savings; what proof do they use?
- Do they look only at your bill copies, or also at your online records? If they do a “quick audit” with only your bills, you can expect the audit to be less time consuming, but also to be less thorough and to miss potential savings.
Utility bill auditors use one of three pricing structures for their service. These are: fixed fee, hourly and contingency. With fixed fee the consultant analyzes how much time and effort will be required and quotes either a specific price or a price not to be exceeded. The benefit of this is having a fixed cost; you know what it will be. The drawback is that you pay for the service whether the company saves you money or not. There is no financial incentive for the bill auditor to exhaust every possible means of savings. They get the same amount of money regardless of saving you significant dollars or none at all.
Hourly fees is another means utility bill auditors use to charge for their services. These can be as high as $250 per hour. The disadvantage is the difficulty in verifying the time they spend and charge you on the audit. Again, there is no incentive for them to perform a quality audit. If you should chose to pay an hourly fee, have them perform the audit on-site where you can monitor them at least somewhat.
Some utility bill auditing companies are paid only when they deliver positive results to you. Such pay-for-performance aligns them to your needs, to recover all refunds, savings and credits and to negotiate for lower tariffs. Such a contingency based fee is usually a percentage of the savings found. Many companies prefer this arrangement as there is no risk. That is if no savings are found, no fee is paid. In addition a bill auditor compensated by this means is more critical of accepting clients and only does so when they are confident of delivering savings.
Contingency fees range from 50% of the savings to as low as 35% depending on your company’s size, complexity of the audit and your record keeping. The lower range applies to enterprises spending greater than $25 million per year and have not performed a recent audit. Numerous locations are what contribute most to complexity and may increase the percentage charged.
Whether you choose a fixed fee or an earned fee ask if there are any additional charges. Also ask how the contract can be cancelled should the relationship sour. It is best to know this up front.
Do not get confused with energy efficiency consultants or energy auditors. Unlike utility bill auditors these consultants work with operational efficiency, testing and monitoring, economical designs, equipment choices and controls. They are better known for their comprehensive energy audits, retro-commissioning and infrastructure upgrades. They work to improve efficiencies in buildings and equipment. Some electrical utilities provide this service for free. Check with your utility before hiring one.
Occasionally energy consultants will offer a utility bill auditing service but it is not their specialty. Ask potential bill auditors if they are selling other services such as installing energy efficiency equipment, bill paying or energy procurement. Some of these also purchase and resell energy on a wholesales basis or offer bill paying services. They may give a utility bill audit free as part of their package but can be a conflict of interest. If they are being compensated in other areas, how much effort will they spend analyzing your bills? The more specialized the service a company provides, the better they are at that specialty.
Use an energy consultant and their energy audits to reduce your energy use. And use a utility bill auditor to: highlight areas in which you may be overspending, identify unnecessary services, recognize billing mistakes and discrepancies, work with utilities for refunds, and to find lower utility rates.
Deciding on One
Once you have narrowed your list of potential providers down to two or three, share the list with each provider. They are expert at extolling how they compare and may reveal a weakness or strength that you did not consider. But be fair and give each company a chance to refute any negative accusations.
It is unlikely that you will find a utility bill auditor that meets all the requirements discussed here. But you can now make an informed decision and find the one that best suits your needs.
To see Utility Audit Solutions, LLC answers to these questions, click here.