NEWPORT — The city of Newport overbilled two of its commercial water customers by approximately $1.2 million over the course of six years due to faulty automated meter reading, City staff is now checking all meters of the same type, and the city has contracted for a review of its utility billing system.

In his 2021-22 budget message, City Manager Spencer Nebel cautioned that the Water Fund was “dealing with a number of significant issues impacting its ability to fund projects and operations.” Revenue was down $400,000, a rate increase was deferred last year due to COVID, and $500,000 was spent in relation to the emergency at the water treatment plan, when the facility’s membrane filters fouled and severely impacted processing capacity.

A third issue, Nebel wrote, was a six-year-long overbilling of perhaps the city’s single largest water consumer, Pacific Seafood, totaling approximately $700,000.

Nebel told the News-Times Pacific Seafood first identified a billing issue last year at its plant on Bay Boulevard at Hatfield Street. It was eventually determined that a compound meter had been read incorrectly by the city’s billing software since its installation six years ago.

Fortunately for the city’s Water Fund, Pacific Seafood didn’t ask for the money back. It agreed to forgive $240,000 of the overcharge, announced as a donation to the city, and accept the rest in credit for water use split between the next two fiscal years, $240,000 each. Nebel noted that the company has a stake in the completion of improvements at the water treatment plant. Seafood processors lost millions when their water was cut off for several days last summer due to the filter fouling at the treatment plant.

Then the issue surfaced again. Shilo Inn had been overbilled just less than $500,000 for water and sewer since October 2016 as a result of the same automated misreading of a compound meter. About 80 percent of commercial and residential water meters in Newport are read remotely by antenna and automatically input into the management software — the compound variety are typically only used in commercial or industrial settings.

In both cases of overbilling, the software was reading the incorrect gauge on the compound meter, resulting in charges of 10 times the correct amount, Nebel said. But in the case of Shilo Inn, owner Mark Hemstreet told the city that due to uncertainties in the tourism industry, the hotel was not in a position to accept a credit.

Earlier this month, the city settled the overcharge with interest — $162,221 from wastewater, $336,612 from water and $81,373 for five years interest.

Nebel said public works was in the process of checking for reading errors in the remaining compound meters, and the city hired its auditing firm, Merina+Co, of Tualatin, as a consultant to review its metering and billing processes. A report on that review will be presented to city council.

Beginning next month, Nebel said, all city water customers will be able to keep tabs on their own usage in real time and make payments online via the WaterSmart system, which can monitor for leaks, running toilets and other issues.

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