Magnitude of Polk City Utility Overbilling Revealed

We have sited one specific example of gross over-billing on our blog back on November 15, 2010 in this post:  Proof of Utility Meter Software Problems and Gross Incompetence

Based on statements in the November 8th, 2010 City Council Meeting made by the Temporary Utility Consultant from FGUA, Mr. Sanderson, we had confirmation that there were system-wide issues with the water meters.  We had no idea how widespread the system problems were or to what magnitude until now.

A public records request was made to the city requesting:

1) Total gallons billed per month for Polk City Utilities, including breakdowns of total water, total sewer and total irrigation - For billing cycles May, 2009, through October, 2010.

2) Monthly reports from the meters at the well heads showing number of gallons of water pumped for Polk City Utilities - For May, 2009, through October, 2010.

Here is the PDF file containing the requested information received from the City on November 17th, 2010. Monthly Billing Summary for Polk City Utilities

If total gallons pumped exceeds total gallons billed, this can be explained by instances where the water system might be flushed out, the fire department uses water to put out a fire, or flushing fire hydrants.  When total gallons billed exceeds total gallons pumped out of the ground, the only explanation is over-billing.  Essentially, utility customers are getting billed for water that is supposedly passing through their water meters, but that volume of water never was even pumped out of the ground by city utilities equipment!

This report shows that between the time frame of June 10, 2009, to present, there were only 4 months where the gallons pumped exceeded the gallons billed, the rest of the time the gallons billed far exceeded the gallons pumped.  Over the 18 months we received data on, on average utility customers are getting over-billed over 10 MILLIONS GALLONS per month!!  The most extreme month was back in July of 2009.  That month alone, gallons billed exceeded gallons pumped by over 95 MILLION GALLONS!!  This is quite significant considering in the August 17, 2010, City Council Workshop minutes, Pam Lawson, the City Finance Administrator stated that there are approximately 2,000 water users and approximately 900-1000 sewer users.  Don't forget, the accounts with both water and sewer get double billed for both gallons in and out.

How much UNEARNED revenue this over billing  has generated for Polk City over the years, one can only guess.  Even if we figure it conservatively, just for over-billing for the month of July, 2009, at the lowest increment of the 1-6000 gallons usage rate schedule at the old rates of $1.74 per 1000 gallons, this over billing would have generated an extra $166,000 for the city that month.  Just looking at July, 2010, to present, when the new 62% higher rates are effective, on average the customers were over-billed approximately 16.5 million gallons per month.  Conservatively figured, this over-billed 16.5 Million gallons per month at the 1-6000 gallon usage rate of $2.62 per 1000 gallons comes to an extra $43,000 every month in extra unearned revenue for the city.  You know that not all of these extra gallons are being charged at the lowest usage rate, so this figure could actually be significantly higher.

In a City Workshop on April 20th, 2010, Pam Lawson, the City's Finance Administrator stated that on average 40-45 customers per month get their water shut off for late or non-payment.  Each customer is then charged a disconnect, reconnect, and late charge totaling an additional $105, bringing in an average of $4,725 extra revenue per month.  Since the the 62% rate increase effective July, 2010, the number of shut-offs each month has likely increased.  Over the July 4th weekend, 2009, over 200 customers ended up getting their water shut off because the deadline for late payment, July 5th, landed on a Sunday.  A line of people were standing at city hall to pay their utility bills when the offices re-opened Monday morning.  They were told that if they had only dropped their payment in the drop box instead of paying in person, they could have avoided the $105 in fees.  No exceptions were made.  That month, the city made over $21,000 extra revenue on those 200 plus customers who got their water shut off.  Some customers were so angry they are now on a list of individuals who are banned from entering city hall because of the threats that were made.  Is this any way to run a utility system that supplies a life sustaining service?

The city is having severe difficulty paying it's bills now with the benefit of all this extra revenue, it is basically stealing from its utility customers.  There is no possible way the city would be able to afford to operate if it charged ONLY for ACTUAL services it provides it's utility customers.  If this happened at a gas pump, and there was proof the business owner knew this level of error was occurring on a regular basis, the gas station would be shut down and more than likely the owner/operator would face criminal charges.  The same should happen to Polk City!

Which figures will this new $43,000 utility study be using to show revenue flow?  Actual or Inflated?  Why are the existing utility studies which were done at NO CHARGE TO THE CITY by both Hydro Solutions, in November 2009, and FGUA, in Spring of 2010, not being used?  Obviously, these rather recent studies would reflect a more realistic population growth projection than the study previously done in 2006, which was mentioned at the November 15th, 2010, Workshop as being outdated and inaccurate.  The only major change that might need to be added is this year's 62% rate increase.  Maybe the results of these studies do not show the city in a favorable light enabling City Attorney, Tom Cloud, to use them as supporting documentation to argue for the city to maintain the utility system.  With Mr. Hartman's impressive credentials, from GAI, would anyone even question the accuracy of his new study?  Mr. Tom Cloud sure spoke very highly of previous dealings with Mr. Hartman when he had been an expert witness for him in other cases involving utility issues.

The City did not entertain any other quotes or bids from other companies for this study before agreeing to give this job to GAI.  As REQUIRED by the recently approved, on November 8, 2010, Resolution 2010-09, states:

Section 3 – Sealed Bids
The City Manager shall advertise for and receive sealed bids for purchases or contracts in excess of twenty five thousand dollars ($25,000.00) and present the same to the City Council with a recommendation. If the City Manager recommends the acceptance of a bid other than the bid with the lowest total price, the reason for the recommendation shall be given.

Does our new City Attorney suffer from short term memory issues?  Why did Mr. Cloud encourage the council to approve getting this study done with GAI when there were no other bids even submitted or considered.  There were never any advertisements placed for this job, either.  He was present at both meetings so he would know that this resolution was just approved unanimously the week before.  This vote for the GAI study should be thrown out due to this violation.