Throwing Money Away On Utility Bills
Utility BillsBelieve it or not, the vast majority of commercial, industrial and institutional organizations pay their utility bills largely by guesswork. Since these services are vitally essential to your operation, you assume the need and pay the asking price without question. In so doing, you are probably paying considerably more than you should. This fiscal carelessness stems from three misconceptions: Misconception 1"State public service commissions establish utility rates and compel the utility companies to see that customers receive the lowest rate-and that such action is enforced."The fact is that for all practical purposes utilities actually establish their own rates. State public commissions recognize the fact that the initiative for making and changing rates lies with the utilities themselves. Utilities are subject to varying degrees of regulation in most states. However, in actual practice, the interpretation and application of rates by utility companies are given broad latitude and vary greatly. In the final analysis, state public service commissions are fundamentally concerned with the "over-all" picture of rates-and then only with respect to the total annual revenue yielded a utility company. While we can quote from the rules and regulations of most every state commission, we think the following statement from the Georgia Public Service Commission represents the unanimous viewpoint of most all commissions: "This commission does not require that utility companies guarantee to commercial and industrial consumers the lowest available rates for a given operation. When two or more rate schedules or types of services are available it is the customer who must make the final decision as to which type of service he/she desires. This can have a major effect on their utility bills. If the customer guesses wrong as to what type of service will be most economical, the utility cannot be required to reimburse him for his mistakes." The significance of this statement lies in the admission by this commission that the customer is doing no more than guessing when he is selecting a rate and the utility cannot be held responsible. Misconception 2"The Federal Energy Regulatory Commission (FERC) exercises direct authority over utility rates."The fact is, the FERC had no control over your local gas or electric rates. The Public Utility Act of 1935 gave the Federal Power Commission (before the FERC) regulatory powers over interstate wholesale rates of electric utilities. The Natural Gas Act of 1938 broadened regulations by the Federal Power Commission to include the transportation and sale of natural gas in interstate commerce. Sounds good doesn't it? But, you do not buy utility services on an interstate basis. Therefore, the FERC has no jurisdiction over your rates. You can see it for your selfright here at the FERC's Do's and Don't page. The first item in what the FERC does not do is Regulation of retail electricity and natural gas sales to consumers; . Misconception 3"Utility companies automatically give customers the lowest rates obtainable."The truth of the matter is the power companies themselves state the selection of rates is the customers responsibility. Since the full facts are often not available to the customer, the selection of lowest rate is a matter of guesswork for anyone but skilled analysts with unlimited rate information. The utility may have dozens of rates and millions of customers. Here is an example of rates from one utility, LIPA (Long Island Power Authority): Residential Rates: 1. Rate 180 General Service Residential Time Of Use Rates: 1. Rate 181 Voluntary, Multiple Periods (Without space heating) Commercial Rates: 1. Rate 280 Small General Use With new rates, optional rates, special class rates, etc., the utilities are quick to point out that they are serving millions of customers and it is impossible for them to police the uses to which their services are put after it passed through their meter. On this premise, your utility company does not guarantee to the individual customer the lowest and best rate they might offer. While the language may vary between utilities, essentially their rules and regulations read much the same as the following quotation: "The Company does not guarantee that customers will be served under the most favorable rate at all times and will not be responsible for notifying the customer of the most advantageous rate". When you plant was first constructed, your small business first started, etc., undoubtedly your electrical and gas systems were very carefully studied for a minimum investment and operating cost consistent with safety, reliability, and provision for expansion. However, the utility requirements of most successful companies increase rapidly as time goes on, due to increased business volume as well as changes in production techniques requiring greater use of electricity and gas. A corresponding increase in costs usually is accepted as normal; no thought is given to the possibility that another rate may result in very substantial savings on your utility bills.
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