Businesses zapped for $200K

Published 10:18 pm Thursday, December 4, 2008

FRANKLIN — The city is looking to recover more than $200,000 it accidently under-billed 55 customers for electricity following a computer error it made in 2006.

The city began sending letters to the customers after an internal audit discovered that Franklin had been short-changing itself for 28 months. Collectively, the city is owed $200,460.49.

City Attorney Taylor Williams declined to provide a detailed list of the 55 customers affected, citing privacy issues, but did confirm they are eight churches and 49 businesses in the city, six of which were believed to now be out of business. No residences were on the list, and the affected customers were not concentrated in any particular part of the city. Amounts owed ranged from $8,313.75 to $89.

The Tidewater News is one of the affected customers, and reportedly owes the city $7,376.62.

The 55 customers were under-billed from June 2006 through October 2008. Williams said that during that timeframe, all of the affected customers were being billed at a rate of .03236 per kilowatt-hour; they should have been billed .0534 per kilowatt-hour.

“The error occurred in 2006 when, in an effort to make the bill easier to understand, (the city) broke out the fuel surcharge and started showing that as a separate cost on a bill,” Williams said. “At that point the entire computer program had to be reprogrammed. During that process, the wrong figure got queued back in when trying to redo the program.”

Williams said the employee who made the error no longer works for the city.

Not surprisingly, business owners weren’t pleased to receive the notices.

“If I make a mistake, I pay for my mistake,” said Dewey Corbin, owner of Angie’s Anything & Everything at 115 E. Second Ave. “And they should pay for their mistake. It’s not my mistake. I’ve talked to some of the other business owners and they said (the city) could shut the power down, they don’t care.”

The city says Corbin owes $873.58.

When Chuck Gatten, owner of Floor to Ceiling at 201 N. Main St., received his letter from the city on Thursday, he raised his eyebrows and had a look of disbelief.

“If we had been aware that our electric bill was significantly higher than the reality, then we would have taken more drastic measures to reduce our consumption,” Gatten said.

Gatten declined to provide exact numbers, but said he figured his electric bill would be about 35 percent higher after the price increase.

“We were watching our consumption very closely because we’re very conscientious over our heating costs and our cooling costs,” Gatten said. “There were other actions that we could have, and probably would have taken, as we have with our oil heating consumption. We’ve taken drastic measures and actually spent money to reduce the cost of that consumption because oil prices went up. We would not have done that if oil prices had stayed where they were. Of course now they’ve come back down, but that is neither here nor there. When they went up, we reacted to that. If our electric bill had maintained the level that it was then we would have taken measures to reduce that.”

When asked if he would fight the city, Gatten said “I don’t know at this point.”

Victor Story, who owns Vic’s Signs and Engraving at 107 W. Fourth Ave., said that he had not received a letter, and was glad that he hadn’t. Story is a member of the Business Friendly Committee, which has been looking into business complaints against the city.

“I know I’d hate to get a bill that said it was a miscalculation on their part,” Story said. “If I had a customer, I go out and put a sign up for him, then send him a bill and he pays me, then six months down the road I’m looking through my stuff and I charged him $500 not enough, I doubt if I go to him and tell him he owes me $500, and that he’s going to pay me for it.”

The city is not requesting customers pay the under-billed balance all at once.

In the two-page letter sent to the under-billed customers, which was dated Nov. 25, Williams said the city has a policy for handling an error that was made by the city in the billing process. That policy is to allow the customer to pay for the error over three billing periods, essentially three months.

Williams also wrote that the city council “has changed the policy in this instance so as to not impose too great a hardship on you,” and that the council “has directed that the payment plan be spread over the next 24 billing periods in equal installments beginning with the January 2009 payment.”

The second page of the city’s letter is a legal agreement for the under-billed customers to sign. Under the agreement, the customer would agree to pay for the under-billed balance over 24 months, and the city would agree not to charge any interest as long as the account was paid in full by Dec. 20, 2010. The city would only charge late fees if a scheduled payment was not made. If the customer closed the account before the amount was paid in full, the entire amount would be due at that time.

Williams said the reasoning behind the agreement was two-fold: to protect customers from having to pay for any other mistakes by the city, and to give them the option of spreading the payments over time.

“In trying to figure out what was the best way to burden the customers with what was our mistake, to pay it over 24 months seemed to be a reasonable period of time to ask people to pay it,” Williams said.

Williams acknowledged that he met with the city council in closed session at their Nov. 24 meeting and briefed them of the under-billing situation. He said that technically, the city council did not change the policy regarding paying for billing errors made by the city.

“I guess that’s a little bit of a misnomer,” Williams said. “(The city council) didn’t say ‘don’t do it that way.’ There was no actual vote. They didn’t change the policy. If there were another billing error today the mistake would be corrected by a request that the payment be made over three months.”