Winter-Pocalypse Billing and Compliance

Thomas Fox
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Compliance Evangelist

When will technology replace compliance professionals? Never and for all the evidence you need consider two disparate news items from the past week which I will be exploring over the next couple of blogs. In one, I was an active participant and the second I was a very interested reader of a length court decision. The first one involved a $202,000+ billing notice I received from my local energy provider, CenterPoint Energy. The second involved a $900,000,000 hiccup by Citibank, which I will take up tomorrow. Today, billing errors during a winter-pocalypse.

As all readers of this blog are very aware, Houston and the state of Texas was hit with a 100-year winter event this past week, our winter-pocalypse. We had single digit over one night and then temperatures dipping into the teens over the next two nights in Houston. It was worse in other areas of the state. To top it off, Texas power system endured a catastrophic failure causing up to four-day power outages in some areas. In Houston, we lost power for 18 hours on Monday, various rolling outages on Tuesday and then 23 hours on Wednesday. Thereafter, the entire state was subject to some very opaquely-mandated rolling-blackouts. These were required by the manager of the Texas power grid ERCOT. However, it was the local electric providers who had to execute the rolling power blackouts.

You can therefore imagine my surprise when I received the CenterPoint Energy invoice which appears at the top of this blog post, announcing that the Fox household owed some $202,102.16 in gas charges. My wife almost had a coronary. It did seem a bit excessive particularly in light on the ongoing rolling blackouts across Houston, CenterPoint Energy.

It was fascinating to watch and even participate in what happened next. I texted a colleague about what happened. His response? TWEET THAT PHOTO NOW. So, I did, on Twitter and Facebook. Several others starting posting tweets with their invoices as well. I then went to my neighborhood Facebook page and found that several other folks had also done so. What was most enlightening about this social media buzz was that the amount was the same for each invoice, $202, 102.16. That was a pretty good sign the invoice was either fraudulent or sent it error.

Within a couple of hours, an article appeared in the online version of the Houston Chronicle, mentioning these invoices and how they were popping up, literally across the city. There was no comment by CenterPoint Energy or even a phone number to call in to. To be fair CenterPoint Energy did have its hands full at that time trying to get power to city residents and most importantly the water pumping and water purification stations.

By the next day, the online version of the Houston Chronicle was reporting that the invoices were sent in error. Your humble blogger, as reported by Marcy de Luna,  “was one of around 27,000 CenterPoint customers who received a similar shock when they checked their email. But the Houston utility said the astronomical charges are a mistake.” She also quoted a Press Release from CenterPoint Energy which stated, “Customers who received an email notification showing an amount due of $202,102.16 for natural gas should disregard and not pay it as they don’t owe this amount,” CenterPoint said. “We are sorry for the inconvenience. This was only an email message error, not a billing error.” Finally, “CenterPoint officials said the power outages caused a technical issue that generated incorrect bill notification emails that were sent to about 27,000 Houston-area customers.”

Now let’s unpack this from the compliance perspective. This was not the first time I had been sent a bill for an astronomical amount. I once had a multi thousand-dollar water bill. But a few calls and visit by a meter reader solved the problem. Here, in the middle of our winter-pocalypse, phone service was down as often as power and water so calling in was not really an option. However, what did work was the social media path. Compliance professionals should take note of this phenomenon or what Matt Kelly calls amplification of a message through the use of social media. Even adding in my role in being a part of like-minded CenterPoint Energy customers who were either outraged by the billing, confused by the billing or simply befuddled by the billing. The clear message is that social media can amplify a message and do so very quickly. As a compliance function and greater corporate family are you ready to respond?

You had better be ready with a crisis management plan. Jonathan Marks on Board and Fraud has noted, “In today’s environment, organizations of all types face a variety of threats to their operations. Some risks can be planned for, monitored, and mitigated, but other high-impact, hard-to-predict events occur more often…Thanks to social media, the speed with which news of a crisis, whether accurate or inaccurate, can spread is reduced to minutes, making the organization’s ability to respond quickly and effectively-highly critical.”

CenterPoint Energy identified the problem as an “email message error” and not a “billing error”. Anyone who received the invoice knows that line was certainly not correct. We all go to the billing. Do not blame the transportation delivery system of email for processing problem. Clearly there was no human review or oversight before the billing went out via email. In other words, there was a process error as a second set of eyes were not used to double check that the invoice amount delivered by email was correct.

No word on the results of a root cause analysis by CenterPoint Energy to find out what caused the problem and how to prevent it going forward. CenterPoint Energy was able to issue a new invoice, the corrected one shown below. So, while all’s well that ends well; it would appear CenterPoint Energy certainly has some work to do beyond getting the power grid up and running.

Tomorrow join me as I look at how the failure of a financial control cost CitiBank $500 million.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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