What to Do About Utility Backbilling: A Guide for Multi-Family Property Managers

No one wants to backbill or be backbilled. Whether you're on the receiving or on the giving end, backbilling is about as welcome as political arguments over the Thanksgiving table.

We've written about how to properly estimate tenant utility bills to help you avoid the need to backbill tenants and avoid what can be a legal mess.

But what about if your property is being backbilled by your utility provider? If you're in this scenario, the insight in the following article by John McManus of Harris Beach Murtha, attorneys at law, may help you navigate what feels like a turkey of a situation.

Are Your Apartments, Condominiums, or Other Multi-Family Buildings Receiving Large Electricity, Water, or Gas “Backbills”?

Apartment rentals, cooperatives, condominiums, and other multi-family residential buildings often use large amounts of electricity, water, and/or natural gas. On occasion, operators of multi-family residential buildings may receive large utility “backbills,” which can total tens or even hundreds of thousands of dollars.

A “backbill” is any bill for electricity, water, or gas delivered before the current monthly billing cycle. In the most common scenario, a utility fails to take an actual monthly meter reading and issues an “estimated” bill instead. A customer may receive and pay estimated bills for months or even years without realizing it. When the utility finally performs an actual meter reading, it may conclude that its prior estimated bills were too low and issue backbills to correct the months or years of purported underbilling. In addition to correction of prior estimated bills, utilities also issue backbills when they conclude that a customer was previously underbilled as a result of a meter malfunction.

Whatever the cause, receipt of a large utility backbill can be very disruptive. Most businesses that regularly pay their utility bills on a monthly basis do not expect to receive massive backbills for electricity, water, or gas supposedly consumed months or years ago.

Utility backbilling is permissible in New York State but subject to very specific legal restrictions on timing and amount. The energy regulatory attorneys at Harris Beach Murtha have extensive experience with these legal restrictions and in successfully representing clients in utility backbilling disputes – and Harris Beach has saved its clients millions of dollars in reduced costs. If the operator of a multi-family building receives a backbill, they can review it and the surrounding factual circumstances to determine if it is subject to total or partial cancellation under the relevant regulations. In appropriate circumstances, flexible fee structures are available so that a client will not incur any legal costs unless the backbill is reduced or cancelled.

If you receive a utility backbill and have any questions, feel free to contact John T. McManus at 518.701.2734 and/or jmcmanus@harrisbeachmurtha.com. Harris Beach Murtha has offices throughout New York State, Connecticut, and Massachusetts.

The information in this article is not a substitute for advice of counsel on specific legal issues. Prior results do not guarantee a similar outcome.

About John McManus

John McManus is a partner at Harris Beach Murtha with 20 years' experience in energy regulatory compliance. 

Learn more about the energy work of Harris Beach Murtha.