February 3, 2012

Mistake in Shipyard's sewer bill costs city money

How much? Officials won't say. But actions in 1996 allowed Shipyard Brewing Co. to pay for a fraction of its usage until 2011, cutting revenues by an estimated hundreds of thousands a year.

By Tom Bell tbell@pressherald.com
Staff Writer

Maine's largest brewery, the Shipyard Brewing Co., has been billed for only a fraction of its sewer usage since 1996, an apparent oversight that has cost the city of Portland hundreds of thousands of dollars a year in lost revenue.

click image to enlarge

Empty bottles are about to be filled with beer at Shipyard Brewing Co. in Portland during the summer of 2007. The city is investigating the source of a billing mistake, discovered a year ago, that allowed the company to pay only a portion of its sewer bill since 1996. Company officials say they shouldn’t have to make back payments for sewer service for which the company was never billed.

2007 file photo by John Patriquing/Staff Photographer

click image to enlarge

Fred Forsley, CEO, Shipyard Brewery

The error was discovered a year ago, when city employees were working with Shipyard as part of an initiative to help city businesses reduce sewer usage.

Shipyard has been paying its full sewer bill since last March. The additional charges since then have ranged from $17,000 to $41,000 a month, according to Portland Water District records provided in response to a Freedom of Access request by The Portland Press Herald.

Shipyard bottles more than 3 million gallons of beer annually. Breweries typically discharge two to six gallons of water into the sewer system for every gallon of beer produced, according to Chris Swersey, manager of technical brewing projects for the Brewers Association, a national trade group.

Portland officials won't say how much money the city has lost in all. The Portland Water District would not release Shipyard's water usage data without the company's approval because it is proprietary information, said Ron Miller, the district's general manager. He said the brewery will decide whether to release the data by Monday, the deadline set by Maine law for responding to the newspaper's request for information on the billing errors.

The city's failure to collect a portion of Shipyard's sewer payments means those costs have effectively been paid by other users, including businesses and homeowners. The unbilled sewer charges would amount to about $300,000 a year based on what the company paid in 2011, Miller said.

Shipyard President Fred Forsley confirmed that figure, but said the charges would have been less in previous years because the company produced significantly less beer. He said he did not know the total amount he should have been billed.

Without knowing how much water the brewery has used since 1996, when a second water line was installed, the Press Herald was unable to estimate what Shipyard's sewer payments would have been since 1996.

Forsley said Shipyard has always paid its sewer bill and that he was never aware the bill covered only a portion of Shipyard's usage. He contends the brewery is not responsible for making back payments for sewer service it was never billed for.

The payments would be so large that the brewery would go out of business, and with it would go the 75 jobs it provides, Forsley said.

City officials are trying to determine how the mistake occurred and are working with the Portland Water District to make sure all of the city's sewer customers are being billed properly, city spokeswoman Nicole Clegg said. The city won't decide whether it will seek back payments until the investigation is complete, she said.

"Right now we need to understand what happened and why," she said.

The city is responsible for maintaining sewer lines. The water district is a quasi-municipal organization that provides water to customers in Portland and 10 other communities. It also provides waste treatment services to six municipalities, including Portland, and collects sewer fees for the city from businesses and homeowners.

Sewer bills are based on how much water a business or household uses, because water usage is usually an accurate indicator of how much wastewater a business or household produces.

The brewery operates in a building served by a metered, 4-inch water line that was installed in 1979. Shipyard has always paid the sewer bill on the account established for that line.

In 1996, at a time when Shipyard was the fastest-growing craft-beer producer in the country, the brewery added a new 6-inch water line.

(Continued on page 2)

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