I need your help. Need for you to give your opinion on a number if you can.

I posted something about a year ago about my mother getting overcharged on her water bill. For 24 years. Could be close to a settlement. I think I have a decent idea of how much they overcharged her. In the thousands of dollars over 24 years. (NOT including interest, just regular dollars.)

But I think that they should pay interest. They charge YOU 10% per MONTH if you are late! Others have mentioned similar court settlements (which I have not actually read about) and it was mentioned that the final settlement should factor in the time value of money -- that if you invested this overdcharge in some kind of yield-bearing account, that this is fairer to the customer. I think a judge would easily agree.

The question is... how much? To me, low end would be passbook savings account rate. I have researched this and from 1981 through 2005, the average is about 5.3%.

However, my father regularly invested in the stock market, so, it could be argued that a mutual fund average or the DJIA should be used.

This is a small town but what's right is right. So, what is right? If you have any opinion at all, please give an interest.

In other words, what interest/yield (%) would be fair to a customer who was overcharged?

Due to the magic of compound interest, an overcharge gets to be a hefty sum of money over 24 years.

I cannot find definitive numbers of how much investing in the DJIA would yield on an annual basis, 1981 - 2005. I do know it was about 1,000 in 1981 and now, it's 11,000 or so.

Point being, I just have to come up with some kind of annual yield/interest percentage. To plug into my calculator.

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Bill
Yamaha PSR2000

[This message has been edited by SemiLiveMusic (edited 08-28-2006).]

Bill look at it this way..if she was late paying her bill they would charge 1 and a half percent late charge[a month]...Seems unfair that on the other foot they are not made to pay the same..It will never happen..usery laws[not really usery but same idea] will probably get you no more than 2% a year..

Late charge... no, as I said in my post, if you are late, they charge 10% PER MONTH.

I would bet money that if this went to court, a judge would apply interest in favor of the little old lady. They screwed up after REPEATED GRIPES by me and my family over many, many years about this. My dillemma is how much interest to ask for.

Obviously, an alternative is to hire an attorney but at this point, that isn't the track. The town's attorney is her attorney anyway. But she and I don't want to go to court. They have admitted their overcharge. Makes me mad they make ME do all the work. There are so many unknowns. They only gave me records going back six years. Honestly, I think I will bill them somehow. No kidding, thinking about doing that. I've spent countless hours on this.

Thanks Fran, if anyone else has an opinion, please advise.

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Bill
Yamaha PSR2000

Bill ... They want YOU to come up with a figure, hoping it will not be too high ... Figure it out at the same 10% and let them tell you it's too high ... also give a reasonable estimate for time spent working on it and bill them for that as well ... there is something in finance and economics called 'opportunity cost' ... your mom lost the opportunity to use that money to her advantage, and you lost the opportunity to use your time as you see fit !!!
hey, your NAME is BILL ... use it !!!
t.


[This message has been edited by tony mads usa (edited 08-28-2006).]

Hi, Bill, sorry you guys are having so much trouble. You're talking about the opportunity cost of money here...what your relative could have earned if she simply invested the overpayment/overcharges. These "opportunity costs" are usually set on a very secure investment parameter.

I'd make things as simple and as above reproach as possible. Instead of asking for something like prime plus 2% or whatever and having to calculate it as a function of accumulation of overpayments, taking periodic rate changes into consideration, I'd just ask for compensation as a function of the rate the utility would have to pay for funds today. They probably have a line of credit for revenue shortfalls in place. Or, you could simply contact a local bank to get current line of credit rates, assuming top tier credit. Factor that percentage into your calculator. I don't think any court or the utility could argue with the logic. Rates have been less in the past few years, but much more through the early 90's. It's as fair and as easily understood a request as is possible. As far as a request for compensation for your time, you could include it in your first demand letter and negotiate from there, but you generally have to file suit for that kind of compensation. Many states (30+)have adopted the Uniform Commercial Code, which, in some cases, sets guidelines for interest rates. The 1.5% per month penalty rate for past due accounts, where legal(Uniform Commercial Code states), includes compensation for rebilling/staffing for the collection process, so I wouldn't think of asking for that kind of compensation, unless you go to court.

I know your relative dosen't want to get into protracted legal issues, and I know the utility dosen't want the adverse publicity.

As an accountant, and taking into consideration the issues of age and frustration, this is my suggestion of the simplest and easiset to resolve approach.
As a loan officer for a Credit Union and two bank holding companies, I could get you a rate for an open line of credit for a utility, if you'd like, and send it to you in the form of an official letter, as an "expert" for presentation as a support/rationalization document with your request. Just let me know...

Good luck!


Russ

[This message has been edited by captain Russ (edited 08-28-2006).]

Russ, I emailed you to see if I could phone you but it bounced back. So, I'll respond here.

Regarding what I quote above... I don't understand your logic, haha. What does the utility's cost for funds today have to do with her lost opportunity over the past 24 years? I don't understand this logic, advise me.

And if you stick with that, do you have any ballpark idea of what this rate would be?

Bearing in mind that funds rates are WAY down now versus much of the past 24 year period.

Thanks for your posts... and the other posters, too!

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Bill
Yamaha PSR2000

The logic here is simply one of paracticality. If the utility were to have a cost of X % for funds today, any judge or jury would have to say that, under ANY circumstance, this would be ballpark that would not overstate fair cost of money anytrime during the process. Practically speaking, this would be a possible fast way to get an acceptible settlement.Notice, I said acceptible, not equitable. Also, after a figure for the accumulated overcharges is reached, if operating funds were short, the utility would have to borrow the funds at today's rate, so asking for that amount of compensation is more than reasonable.

My corporate tax attorney is an ex-IRS agent and charges $250.00 per hour. For a person of advanced age and (I assume) limited income, this is one approach this guy and I discussed after reading your first post months ago. Large utilities and other corporations sometimes will fight and delay making settlements in the hopes that complaintants will give up, die or run out of money.

What I suggested is not the fairest settlement but one with a fair chance of a quick settlement. It's a practical one.

We switched to DSL recently, and I forgot to change my email contact on the zone. You're sure welcome to contact my via my cell...859-948-4687. I'll update my address when I get back to the office later this week.

If you have an estimate of total overcharges, an estimate of total payments or an estimate of the percentage of overcharges, I can access an actuarial table to give you a "best guess" as to a total settlement amount, based on the outlined approach.

The attorney here is asking what the offer (if any) has been from the utility.

I'd call the local paper and see if there is interest in a human interest story. That may help make the utility want to settle quickly.

When dealing with large organizations with well-funded legal departments, fairness sometimes gives way to what's feasible.

If this were to happen to me, I sue the hell out of them. I'd start with the Consumer protection division of the Attorney General's office and pay whatever it takes to embarass them.

This kind of stuff really get's to me, but that is probably not the right choice or approach for "practical" people.

Best of luck, however you proceed.

Russ