4. SR 02-20-1995~~,~ `~1
ITEM 4.
ity of ~~ MEMORANDUM
River TO: Mayor & City Council
lk •
FROM: Pat Klaers, City Admi or
DATE: February 20, 1995
SUBJECT: UPA Request for Rebate of Sanitary
Sewer Bills
Representatives from UPA will be at this City Council meeting to discuss
with the City Council a possible sanitary sewer billing rebate. UPA believes
that it has been overcharged on its sanitary sewer bill and that they deserve
a rebate.
The recent history of the UPA bills is interesting and confusing. All sewer
bills are based on water consumption and things started getting complicated
at UPA when they began using City water for their air conditioning and
cooling system. This water was not discharged into the sewer system, but
discharged directly into the river. Accordingly, UPA believed that they
. should not have been charged based on water usage, but should have been
charged on what was discharged into the treatment plant. No meter was
installed by UPA to determine how much was discharged into the treatment
plant, but, by mutual agreement, the billed amount was based on fifty
percent of the water usage amount. This agreement took place in about
1991.
Another factor in the UPA bills that shorted the City was the fact that the
Municipal Utilities mischarged a number of large consumers around 1992-93.
The Council may recall discussion regarding the Utilities billing one third of
the rate that should have been charged out. This resulted in UPA paying
only one third of the total that it should have. About a year ago, this error
was corrected. However, from the City point of view, for about two years
UPA only paid 33 percent of what it should have.
Also about one year ago, improvements were made at UPA, and the WWTP
Superintendent understood that all of the facilities at UPA were then hooked
up to the City water system and that no private wells were being used.
Accordingly, WWTP Superintendent Darrell Mack sent a letter to UPA that
advised them that they would be billed at 100 percent of the water usage and
no longer at the 50 percent rate. Evidently this letter did not get to the right
people at UPA and the increased fees were charged and paid for about eight
• months before the situation was brought to the attention of the appropriate
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
• UPA people. Once this happened, the City was notified by UPA that we had
made a mistake in our assumption, and we agreed to go back to the 50/50
formula and corrected the overbilling for eight months.
In late 1994, UPA decided to install a meter to determine precisely how much
water was being discharged into the sewer system and on what volume they
should be billed for sewer fees. I understand that this meter is now installed
and indicates that UPA should have been billed far less than at the 50/50
ratio amount and, accordingly, UPA is asking for a rebate in excess of
$16,000 for overbilling the past few years.
A point of view that is opposite of UPA's is that if we are going to go back in
time and correct an overbilling based on assumed metered rates, then we
should also go back in time and correct the one third underbilling that was
done by the Utilities. If this underbilling was corrected using the 50/50 ratio
that was agreed upon by both parties, then UPA would owe the City in excess
of $51,000. However, if we went back in time and corrected the underbilling
using a metered rate (assumed to be 40,000 gallons per year), then we would
owe UPA the $16,000.
Staff has offered to call it even with UPA and start new at this point forward.
• As a show of good faith, I have also offered to pay for the meter at UPA in
order to get accurate sewer billing amounts -this would be about a $4,000
expenditure. However, UPA feels it needs to present its case to the City
Council and will be requesting consideration of a $16,000 rebate for
overbilling for the past four years. If UPA would have initially obtained and
installed a meter, then we would not be having this Council discussion. City
staff only charged UPA what it agreed to be charged.
As noted earlier in this memo, this is a complicated and confusing situation
and the Council may need some time to think about this issue. UPA asked to
be on this agenda to present their request. Also, please see the attached City
information from Lori Johnson.
,]
UPA SEWER USAGE HISTORY
•
END TOTAL 50 PERCENT CORRECT BILLED
DATE USAGE USAGE BILL AMT AMOUNT DIFFERENCE
12.31.90 1,029 515 423.30 141.10 282.20
1.11.91 910 455 423.30 141.10 282.20
2.3.91 931 466 423.30 141.10 282.20
3.8.91 677 339 423.30 141.10 282.20
4.5.91 1,268 634 6,721.80 2,240.60 4,481.20
5.6.91 1,690 845 6,721.80 2,240.60 4,481.20
6.11.91 2,983 1,492 6,721.80 2,240.60 4,481.20
7.3.91 2,856 1,428 6,721.80 2,240.60 4,481.20
8.7.91 3,284 1,642 6,721.80 2,240.60 4,481.20
9.6.91 2,340 1,170 6,721.80 2,240.60 4,481.20
10.7.91 3,882 1,941 6,721.80 2,240.60 4,481.20
11.8.91 1,038 519 6,721.80 2,240.60 4,481.20
12.5.91 100 50 127.50 0.00 127.50
1.7.92 170 85 216.75 0.00 216.75
2.6.92 1,174 587 1,496.85 690.15 806.70
3.5.92 514 257 655.35 218.45 436.90
4.6.92 851 426 1,085.03 362.10 722.93
5.6.92 945 473 1,204.88 402.05 802.83
6.5.92 1,584 792 2,019.60 673.20 1,346.40
7.8.92 1,743 872 2,222.33 741.20 1,481.13
• 8.6.92 1,780 890 2,269.50 756.20 1,513.30
9.4.92 1,697 849 2,163.68 721.65 1,442.03
10.7.92 1,822 911 2,323.05 774.85 1,548.20
10.6.92 1,462 731 1,864.05 621.35 1,242.70
12.4.92 1,486 743 1,894.65 631.55 1,263.10
1.7.93 1,601 801 2,041.28 672.35 1,368.93
2.5.93 1,152 576 1,468.80 489.60 979.20
3.5.93 1,508 754 1,922.70 640.90 1,281.80
4.8.93 2,036 1,018 2,595.90 865.30 1,730.60
5.7.93 1,476 738 1,881.90 627.30 1,254.60
6.8.93 2,680 1,340 3,417.00 1,139.00 2,278.00
7.8.93 3,4.81 1,741 4,438.28 1,479.00 2,959.28
8.5.93 3,629 1,815 4,626.98 1,542.75 3,084.23
9.8.93 4,184 2,092 5,334.60 1,778.20 3,556.40
10.7.93 2,376 1,188 3,029.40 1, 717.00 1,312.40
11.4.93 1,991 996 2,538.53 5,077.05 (2,538.521
12.9.93 1,756 878 2,238.90 4,477.80 (2,238.90)
1.14.94 1,556 778 1,983.90 3,967.80 (1,983.90)
2.4.94 1,156 578 1,473.90 2,947.80 (1,473.90)
3.7.94 1,167 584 1,487.93 2, 975.85 (1,487.92)
4.6.94 932 466 1,188.30 2, 533.76 (1, 345.46)
5.6.94 1,762 881 2,246.55 4,722.16 (2,475.61)
6.7.94 3,172 1,586 4,044.30 8,500.96 (4,456.66)
• TOTAL 122,969.97 71,236.53 51,733.44
2/17/95
UPA.XLS Page 1 of 2
• NOTES: Initially, UPA was charged based on winter quarter consumption as was
the policy for all customers
On November 20, 1991, the City received a letter from Doug Paumen
at UPA requesting that UPA be billed 50°~ of the high and low flow
meter usage because not all of the water was discharged into
the sewer system. The City agreed to a 50% split even though
a meter was not installed to measure the water being discharged into
the sewer system and even though policy stated that 100°~ of the
water usage is to be used to calculate the monthly sewer charge.
The Utilities was notified of this change and started billing based on
50°~ of the actual usage. However, the bills were calculated on .585/1000 gal
instead of the correct rate of 52.55/1000 gal.
While reviewing sewer customer charges for a possible rate increase
and to project growth rates, the City discovered that UPA was being billed
incorrectly. The Utilities was notified of the error and it was corrected. UPA was
not charged for the underbilling for previous years.
On November 16, 1993 ,Darrell Mack sent a letter to UPA
allerting them to the fact that their sewer bill would now be based on
actual water usage at a rate of 52.55/1000 gal. At the same time he
• stated that they had been billed incorretly in the past at 5.85/1000 gal instead
of 52.55/1000 gal. so they would see a large increase in their monthly bill.
In July 1994, Doug Paumen notified the City that he felt the sewer bills were
high. At that time City staff and UPA staff discussed the situation; the City
was told that not all of the water being used was now being discharged into
the sewer system as we were lead to believe by the contractors at UPA.
This was corrected and effective in July, 1994, the calculation reverted back
to 50% of the usage which was what UPA had previously requested.
Staff questioned why UPA had not been required to or had not installed a meter
when the building modifications were made in 1988 causing part of the
water to be discharged into the river. Staff suggested that it would be in UPA's
best interest to install a meter so that they could be charged based on the
actual volume being discharged into the sewer system.
UPA requested a refund based on their estimate of usage per month. Staff
felt that because UPA had been billed based on the usage they requested,
it would be inappropriate for-staff to grant a large refund. Staff also felt that
because UPA had been billed only 1 /3 of the correct amount for several years,
both issues should be taken into consideration when determining whether
a refund was appropriate.
•
2/17/95
UPA.XLS Page 2 of 2