PORTLAND — An arbitrator Friday ordered Shipyard Brewing Co. to pay the city nearly $300,000 in sewer fees for which the brewery was never billed.
“The decision provides a significant award to the city’s sewer fund,” City Manager Mark Rees said in a written statement. “I am hopeful today’s decision provides some measure of closure for all parties involved, including the city’s ratepayers.”
The settlement is well below the $1.5 million in sewer fees that were never billed, according to a Portland Press Herald analysis. That figure was confirmed by the city Friday.
The decision may set a precedent for several other businesses that were under-billed much smaller amounts. Those billing errors were uncovered in a city audit of sewer fees after the Shipyard error was discovered.
The arbitrator who issued the decision, Bangor attorney David C. King, declined to elaborate on the evidence presented during hearings in late February.
Fred Forsley, president and co-owner of Shipyard, said he was eager to put the issue behind him.
“I really want to look forward,” Forsley said. “We’re not unhappy with the ruling.”
Mayor Michael Brennan complimented Forsley and Shipyard for fully engaging in the arbitration process, which took about four months.
“I think that’s a very positive outcome to the process,” Brennan said after learning of the settlement from a reporter.
The billing error concerns a 6-inch water line installed for the brewery in 1996. The full fee for that line was not added to the company’s monthly sewer bill and the error was not discovered until 2011, when the city was working with businesses to reduce their water usage.
After the error was discovered, the city hired attorney Bryan Dench to investigate. Dench found no evidence of intentional wrongdoing, but couldn’t pinpoint the cause of the error, because of poor record-keeping and because two city workers involved with the billing error had died.
“Given the complicated circumstances surrounding the case and the fact that there is no evidence of wrongdoing, we accept the arbitrator’s decision and award to the city as the final resolution to this matter,” Rees said.
Forsley said the annual cost of producing its beer has jumped about $350,000 since Shipyard began paying its full sewer fee. Those added costs, along with increases in other utilities and beer ingredients, led to a 4-percent increase in prices in 2012, he said.
Shipyard spokeswoman Tami Kennedy said Shipyard has no current plan to increase prices in 2013.
“We’re taking additional measures to reduce our water usage,” Forsley said. “We’re trying to stay competitive.”
As a result of the billing error, Shipyard was not billed for sewer fees on a line that supplied 201 million gallons of water over 15 years. But the city has said the mistake did not affect Portland’s overall sewer rates because that was a tiny fraction of the 28.8 billion gallons of water used by city residents and businesses over the same period.
A city audit later found that another dozen commercial and industrial consumers were never billed for sewer fees. The uncollected monthly charges ranged from $24 to $332 and totaled nearly $47,000 in fees that were never billed, according to data provided by the city.
It’s unclear whether the arbitrator’s ruling requiring Shipyard to pay about 20 percent of the total amount owed will set a precedent for other outstanding sewer accounts.
Rees and Public Services Director Michael Bobinsky could not be reached by phone or email Friday afternoon for comment.
“Considering that we received the decision this morning, staff will meet in the coming weeks to discuss how to address the other un-billed accounts in a way that is fair and reflects today’s decision,” City Hall spokeswoman Nicole Clegg said.
The city has taken steps since discovering the billing error to improve its record-keeping and communication with the Portland Water District, which is responsible for the water pipes.
Last week, for example, the City Council approved a new permit and inspection program for commercial and residential submeters. That is expected to improve the accounting and quality of the installation of new submeters within the city, the city said in a news release.
Staff from the city and water district also meet every other month to discuss and review water-only accounts, high-volume water users and accounts with sewer charges.
“The city has and continues to take this matter very seriously as it is important that we honor and maintain the public’s trust in our sewer and billing system,” Rees said in a statement. “We have taken positive action not only in an effort to resolve outstanding payment in the matter with Shipyard but also to ensure that a mistake like this cannot happen again.”
Randy Billings can be contacted at 791-6346 or at: