White Paper: Utility & Telecom Audits—Potent (but Painless) Budget Help for Tribal Governments and Casinos

8/22/2019

Utility billing errors and miscalculations can cost tribal governments hundreds of thousands of dollars per year—and they are not easy to find! A comprehensive audit process developed and utilized by ERS Utility Solutions has confirmed that many tribal governments are being overcharged for energy, telecommunications, water and sewer services at gaming casinos, schools, health care clinics, community centers and other tribal-run facilities. Reducing utility expenses and recovering overcharges is a potent, but painless, budget solution for tribal governments in this era of self-determination and growing demand for services.

THE CHALLENGE: TRIBAL GOVERNMENTS FACE INCREASING DEMANDS FOR SERVICES WHILE CASINOS DEAL WITH GROWING COMPETITIVE CHALLENGES

Tribal governments are sovereign and self determining. As such, they face growing pressure to provide members with a full range of services, from transportation and safety to housing, education, health care and more. On many reservations, these are housed in multiple tribal-run facilities that require significant oversight and money to maintain and operate.

One major source of revenue in recent years has been tribal casinos. Their popularity and importance to tribal communities have grown exponentially since 1988, when Congress passed the Indian Gaming Regulatory Act (IGRA). It provided a regulatory framework for Indian gaming and defined five specific ways in which casino profits can be spent: 1) to fund tribal government operations for programs, 2) to provide for the general welfare of the tribe and its members, 3) to promote tribal economic development, 4) to support charitable organizations, and 5) to help fund operations of local government agencies.

As tribal reliance on casino profits has grown, the Indian gaming industry has faced many challenges from those who want a share of the lucrative recreational gambling market. Current concerns include legislative proposals that would allow Internet gaming (I-gaming) across state lines and attempts by states to renegotiate expiring compacts to include or expand revenue sharing. These pressures could mean slimmer profit margins and fewer resources for tribal governments to improve the quality of life in American Indian communities.

Tribal Government Obligations Grow

Social Services
Schools
Health Care
Housing
Transportation

Government Operations
Law Enforcement
Job Creation
Economic Development

Many tribal governments are responding to current realities by looking for ways to operate more efficiently and by cutting waste in their budgets. Because casinos and tribal-run facilities such as schools health care clinics and government service centers are very energy, telecom and utility intensive, it makes good business sense to start by analyzing costs associated with these services. A comprehensive utility and telecom audit is a good place to start.

THE SOLUTION: COMPREHENSIVE UTILITY AND TELECOM AUDITS FIND AND CORRECT ERRORS THAT STANDARD BILLING AUDITS MISS

Modern utility billing is extremely complex. Hundreds of calculations by meters and measuring devices go into creating energy, telecom and other utility bills. That often is where mistakes are made. Unfortunately it is difficult or even impossible to spot calculating equipment errors or even regulatory issues just by looking at the bill. Discovering all of these “hidden issues” is especially challenging when tribal governments own or operate multiple casinos and facilities served by different utility and telecom providers or which are located in different states where tax, tariff and regulatory issues differ.

Like many organizations, tribal governments don’t always have the time or expertise to decipher all of the complex rate structures, tariffs and methods of calculating monthly utility bills. Mistakes can go on for years and cost tribes millions of dollars. Catching overcharges early and at the source can save time, money and legal headaches.

The most common type of professional utility bill audit is a standard review of invoices to analyze rates and check for compliance with current utility and telecom service contracts. This basic auditing approach can identify the low-hanging fruit. However, it does not yield the same high-impact results as the three-pronged, comprehensive utility and telecom audit process that ERS Utility Solutions specializes in performing for tribal governments and casinos.

Here is how it is done:

1. Historical, forensic bill analysis and rate review--A comprehensive utility and telecom audit begins with an exhaustive historical review of billings, limited only by the statute of limitations on refunds in each state and the historical data available. Local, state and federal surcharges and fees are researched and line items are checked to identify related billing errors and misapplications. Rates for services are checked for compliance with current and prior contracts.

2. Onsite inspection of metering systems and equipment--Site verification specialists go to work, inspecting and verifying meters and calculating equipment. They check current transformer (CT) and voltage transformer (VT) ratios, delivery pressure settings, meter sizes, meter test records and maintenance histories. On the telecom side, they use a proprietary methodology to reduce WAN service rates, inspect demarks and verify billing detail against services that are installed and in use, identify and clean up outdated analog services, and develop a complete, up-to-date service inventory for each location.

3. Regulatory Review--Auditors complete a thorough review of the regulatory elements of utility and telecom charges, including tariffs, service guides, riders, administrative codes and PUC rulings specific to the type of facility and its location.

This comprehensive three-pronged analysis is followed by persistent advocacy to correct billing errors and recover overcharges. There is no risk for tribal governments because ERS Utility Solutions is paid only when it delivers refunds and savings.

ERS Utility Solutions
Comprehensive and Forensic Audit

Historical Bill Analysis
+
Onsite Inspection
+
Regulatory Review

Significant Savings/No Risk for Clients

ISSUES IDENTIFIED AND RESOLVED: THREE-PRONGED APPROACH FINDS “HIDDEN” OVERCHARGES THAT A STANDARD UTILITY BILL REVIEW WOULD NOT.

Below are real-world examples of ERS Utility Solutions’ comprehensive utility and telecom auditing at work— discovering and correcting billing errors that other auditing processes might miss.

Project A

Telecom
One-time credits and refunds $104,100
Annual reductions in recurring charges $192,000

Utilities
One-time credits and refunds $144,400
Annual reductions in recurring charges $126,000

Cumulative five-year impact = $1,838,500+

Project B

Telecom
One-time credits and refunds $67,200
Annual reductions in recurring charges $97,600

Utilities
One-time credits and refunds $87,400
Annual reductions in recurring charges $479,100

Cumulative five-year impact = $3,038,100+

Project C

Telecom
One-time credits and refunds $19,230
Annual reductions in recurring charges $27,210

Utilities
One-time credits and refunds $16,644
Annual reductions in recurring charges $138,400

Cumulative five-year impact = $863,920+

HISTORICAL BILL ANALYSIS

Duplicate billing of natural gas supply charges for a casino
Refund: $57,970
Annual Savings: $430,000

Omitted contract discounts by telecom service provider
Refund: $52,427
Annual Savings: $21,840

ONSITE INSPECTION

Billing of local telecom circuits to a building that had been razed for more than eight years
Refunds: $60,251
Annual Savings: $92,300

Billing of area light charges for lights that had been removed for more than six years
Refund: $19,701
Annual Savings: $9,060

Omission of sewer charge exemptions on hotel-casino
water/sewer services
Annual Savings: $44,000

Elimination of charges for unused telecom services
Annual Savings: $117,300

REGULATORY REVIEW

Billing of franchise fees from which tribal governments
are exempt
Annual Savings: $24,730

Billing of state, local, and federal taxes from which tribal
governments are exempt
Refund: $203,000
Annual Savings: $121,000

Rate reduction opportunity on main casino electricity service
Annual Savings: $28,840

Exemption from DSM program surcharges
Annual Savings: $9,800

Electricity rate classification opportunities for tribal
community centers
Annual Savings: $7,791

CONCLUSION: RECOVERING OVERCHARGES AND CORRECTING BILLING ERRORS SAVES TRIBAL GOVERNMENTS MILLIONS OF DOLLARS THAT CAN BE DIRECTED TOWARD OTHER TRIBAL AND COMMUNITY NEEDS.

Members depend on tribal governments to improve infrastructure, develop educational opportunities and provide social programs for American Indian communities. Despite growth in Indian gaming revenues, tribal governments face pressures to operate casinos more profitably and to reduce costs at other tribal owned and operated facilities. Utility and telecom auditing is an effective way to manage expenses, recover overcharges, and correct errors that could cost significant money over time.

Utility and telecom overcharges are common and costly. Complex pricing structures, frequent changes in government regulations, and a maze of other factors all contribute to inaccuracies. They cannot all be found on the bill. That is why a comprehensive, forensic audit that includes onsite inspection of meters and other equipment along with a detailed historical bill analysis and regulatory review is the best defense against overcharges.

Comprehensive Utility and Telecom Audits Deliver More than Budget Help:

Critical visibility into your utility and telecom expenses, service provider billing practices, and server utilization

Reports and information that can be valuable tools in managing these expenses going forward

Eradication of long-running billing and metering issues that would otherwise continue indefinitely, inflating costs for years to come

Improved service provider responsiveness
and attention to billing and contract details

This unique, three-pronged approach sets ERS Utility Solutions apart. It helps clients understand their utility needs and expenses, identify potential cost savings, and realize long-term, sustainable financial benefits. Choosing the wrong auditing firm is a gamble. Choosing the right one is a winning strategy.

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