Billing software made 129,000 mistakes at Duke Energy

The Public Utilities Commission of Ohio has proposed a $1.45 million fine against Duke Energy Corp. for repeatedly violating state administrative code while making more than 100,000 billing mistakes since 2022.

The fine is part of a revised settlement proposal, filed by PUCO staff on Aug. 12, to address ongoing problems with Duke’s “Customer Connect” software system. The revised settlement would triple an earlier penalty sought against Duke in March. But critics of both the utility and its regulator say the proposed settlement falls far short of what’s needed.

“This is unfortunately a sad tradition in Ohio, of the Public Utilities Commission standing up for utilities at the expense of consumers,” said Marc Dann, former Ohio attorney general who is trying to bypass the PUCO with a new Hamilton County lawsuit alleging Duke’s billing practices violate the Ohio Consumer Sales Practices Act. “A nickel, a quarter at a time, consumers are being beaten out of their hard-earned money at a time when it’s not going as far as it used to.”

In a PUCO filing last month, the Legal Aid Society of Southwest Ohio criticized the March settlement because it was negotiated “behind closed doors” without consumer input. The revised deal is “a step in the right direction,” said Legal Aid attorney Phil Rich, but it still calls for Duke to hire and pay for a third-party auditor to review billing complaints since 2022.

“We hope the settlement will nudge them closer to a fix, but we’re not expecting it,” Rich said. “We’re also still concerned that Duke’s customer service line is structured to prevent individuals from resolving problems.”

Duke declined to answer questions for this story but issued a statement saying many of the issues raised by the settlement have already been fixed.

“We apologize for any inconvenience these errors have caused for our customers and will work directly with any affected customers to regain their confidence,” the statement said, in part. “We continue to work diligently to address any system issues we’ve encountered, with most system issues having been resolved. And we have dedicated resources in place to work through outstanding customer issues as quickly as possible.”

Ray Pfeffer

‘They wiped me out’

The WCPO 9 I-Team has been looking into Duke’s billing problems because its customers — like Michelle Bruce of Covedale — regularly call WCPO 9 News about problems with their bills.

“Horrific. That’s what I called it from Day One,” said Bruce, who is suing the utility in a case of mistaken identity.

When her electricity went out in February, Bruce learned that Duke’s customer billing system had confused her with a Florida customer with the same name.

“Well, I guess because a Michelle L. Bruce, same name, registered for her power to be turned on in Florida, they thought it was me,” Bruce told the I-Team. “So, they wiped me out. And hooked her services up in Florida.”

Duke tried to resolve the problem by giving the Cincinnati Bruce a new account number. But in March and April, Duke made two withdrawals from Bruce’s bank totaling $242.17. When she objected, Duke took until May 21 to give her money back. By then, Bruce was concerned that Duke was confusing her usage rates with the other Michelle Bruce in Florida.

“I’m barely here,” she said. “So the usage to me didn’t match up with what I was being asked to pay.”

She also worried that any bill she paid would be applied to the Florida account. So she stopped paying. And in July, Duke threatened to shut off her power for the second time in five months. With help from Legal Aid, she avoided that problem by agreeing to a payment plan that begins in September.

But she still has serious questions about the accuracy of her bills.

“When I go up on my account, Michelle in Florida’s email address, phone number and some of her personal information is still up under my profile. Even today,” she said.

Bruce’s attorney, Marc Dann, has focused on consumer-protection cases since resigning as Ohio’s attorney general in 2008. He knows Ohio law requires consumer complaints against utilities to be heard by the PUCO. But he argues Duke violated federal law when it took money from Bruce’s bank account.

“The Electronic Funds Transfer Act prohibits companies from taking money out of somebody’s account without their consent,” Dann said. “Even people who have given consent for regular payments, if they take an extra payment by mistake, they’re liable to that consumer for $1,000 in statutory damages. They’re required to pay their attorneys’ fees.”

Dann also alleges Duke violated Bruce’s privacy rights and ran afoul of Ohio’s Consumer Sales Practices Act. He doesn’t want to litigate Bruce’s case through the PUCO because he thinks the regulator has barely scratched the surface with inquiries into Duke’s billing problems.

“We think that because of the way that they’ve been mixing up her name, and we’ve got reports of other mixed-up names at Duke Energy, that they may be taking money out of lots of peoples’ accounts,” Dann said.

Ray Pfeffer

Software upgrade leads to trouble

The I-Team has reviewed dozens of PUCO filings to determine what caused Duke’s billing problems, to what extent they’ve been fixed and how much money consumers lost in the process. January 2022 is a good place to start. That’s when the PUCO approved waivers so Duke could install a new billing system known as Customer Connect.

Duke’s annual reports to shareholders described Customer Connect as “a new system that consolidates four legacy billing systems into one customer-service platform.” Those reports also say Duke spent $251 million by the end of 2023 on “incremental operating expenses and carrying costs” related to its deployment.

A 2019 filing with the PUCO said the system would “enable customers and competitive suppliers to receive and use the granular data that is capable of collection with advance metering infrastructure,” commonly known as smart meters. Those capabilities could help modernize the nation’s electric grid, help Duke more quickly respond to power outages and help customers sell energy back to the grid from their home solar panels.

Because of those public benefits, the PUCO allowed Duke to charge its customers for the cost of installing the new system. But it also required the company to submit regular updates on “any significant issues resulting from the waivers” including “any significant billing errors, and corrective action.”

By April 2023, one year after installation, PUCO staff said Duke had reported 106,453 billing errors, including:

• 52,000 customers did not receive a “Price to Compare” message on their bill. That’s a tool that helps utility customers shop for the best rate.
• 39,000 customers were charged the wrong amount for riders, which are fees that allow utilities to recover costs for specific upgrades.
• 5,645 customers got lost in the Duke system, including 3,400 who went unbilled for months at a time. That’s a problem because Duke is allowed to collect past-due payments in one bill when their mistake is discovered.
• 5,600 customers had inaccurate credit amounts in their Percentage of Income Payment Plan, or PIPP, which allows low-income Ohioans to pay no more than 10% of their gross monthly household income for electric and gas service.
• 4,208 customers had pricing mistakes on their bills, including incorrect calculations for billing demand, which is a way for utilities to charge more during times of peak energy usage.

The mistakes were not confined to electric customers only, according to a “notice of probable non-compliance” sent to Duke by PUCO staff last November. The notice said “many” of Duke’s gas meters “required different functionality to be compatible with” Duke’s new Customer Connect system. The problem led to a $2,000 bill for one customer, whose gas meter hadn’t been read for two years.
It isn’t clear from PUCO records how many Duke customers had ongoing mistakes after April 2023. But the Better Business Bureau of Cincinnati shows that billing-complaint volume is moving in the right direction for Duke. So far in 2024, the utility has 30 complaints about its billing practices, compared to 49 last year and 63 in 2022.

Ray Pfeffer

Numbers ‘out of whack’

That’s little consolation to customers still struggling with Duke Energy math, customers like Steve Finzer of Anderson Township.

“The numbers just seem out of whack,” said Finzer, who contacted WCPO 9 Consumer Reporter John Matarese this month because Duke has been unable to explain why his electric usage spiked this year.

Finzer saw year-over-year increases in monthly usage, ranging from 29% to 80%. In one of those 80% months, Finzer and his wife traveled to Boston — leaving their home empty for two weeks.

“Nothing has changed in our lifestyle,” Finzer said. “We had a new furnace and a new heat pump installed in 2019.”

Duke first referred Finzer to his electric supplier, Dynegy, then to Honeywell, which helps Duke manage its smart meters. He kept asking for an energy audit, but Duke ultimately said that service wasn’t available. Finzer tried to make sense of the readings on his home meter, but he wasn’t sure what numbers to use.

So, he was happy to learn that the PUCO recently ordered Duke to modify its bills to include meter readings at the beginning and end of each month.

“That’d be extremely helpful,” Finzer said. “That way at least I know what it started with and what it ended with. And say, ‘OK, that’s the usage.’ Now, let me go ahead and try and figure out the problem.”

Duke objected to the new meter-reading rule, saying that’s now how its smart meters calculate usage.

“Although the meters typically do have a digital display that depicts a ‘reading,’ that five- to six-digit number is not transmitted to the company’s customer information system at all, much less for billing purposes,” the utility argued in a December 2021 filing.

Instead of meter readings, Duke’s smart meters remotely capture electric usage in 15-minute intervals without recording where the meter begins and ends. Then, it adds up the roughly 2,900 interval measurements every month to get a usage estimate.

Finzer doesn’t know if Duke’s method is accurate or not, but he likes the idea of having meter-reading data to check the utility’s math.

“No matter what method you use, there has to be some accountability,” he said.

Ray Pfeffer

Searching for solutions

Based on the PUCO’s June 12 order, Duke Energy must add beginning and ending meter readings to its bills by October. But that isn’t the only step regulators have taken to correct mistakes made by Duke’s Customer Connect system.

In November 2022, the PUCO approved a waiver allowing Duke to correct misstated credit amounts for 5,600 customers in the PIPP program for low-income Ohioans.

“The approach did seem to work,” said Legal Aid attorney Phil Rich. “People were still largely confused about the fix, but no one got terminated from PIPP” and “we’ve not had any complaints about PIPP billing inaccuracies since.”

However, the most significant step the PUCO has taken to date is to propose a third-party auditor to review customer complaints. The audit is required for all accounts in which customers contacted Duke or the PUCO to dispute a bill or meter readings since July 2022.

The auditor would review 24 months of billing history and “determine all (Customer Connect) system errors that remain unresolved.” It requires Duke to “recalculate all customer accounts associated with rebilling” to comply with state law and administrative code.

Duke agreed to the hiring of a third-party auditor in March, but it has yet to agree to a tripling of its proposed fine to $1.45 million. That came after the company disclosed a new Customer Connect mistake that impacted about 23,000 customers since 2022. Here’s how Duke described the problem to the PUCO:

“At a high level: due to a system issue, the charges for natural gas consumption were omitted from the monthly bills for ~23k natural gas customers. Although the meters correctly recorded usage at the property and a number of other charges were correctly billed based on that usage, the Gas Cost Recovery Rate (GCR), which covers the cost of the gas used, was not billed.”

The Aug. 12 filing was not made public until the WCPO 9 I-Team requested it on Aug. 20. Administrative Law Judge Manette Astra approved the proposed settlement on Aug. 23 but gave interested parties in the case until October 1 to agree or contest the deal.

Back in Covedale, the Michelle Bruce who doesn’t live in Florida has two words of advice for Duke: Show me.

“I’m not paying on a guesstimate or an estimate,” Bruce said. “Show me where you got that information from. I can just calculate something in a system. But show me. Because everything that they’ve done to me, given the circumstances, I think they should. I’m due that. Show me.”