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

(Continued from page 1)

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

A submeter was installed on that line to measure the additional volume of water coming in. The water district's work order for the submeter, dated Sept. 3, 1996, specified that a sewer account would not be set up for the 6-inch line, according to district records.

At the time, a wastewater technician with the city named Dave Peterson told water district employee James Pandiscio, who has since retired, that the new water line required no sewer account because the service was for "brew water only," according to a statement that Pandiscio gave to the water district on Jan. 20.

As a result, the brewery never paid a sewer fee for the millions of gallons of water that flowed through the 6-inch water line from June 1996 to March 2011.

Miller, from the water district, said the district made an inquiry to the city in 2004 -- eight years after the new line was added -- about the brewery's sewer bill. He said new software for the district's billing system "flagged' the 6-inch line at Shipyard as a problem because the line had a submeter measuring water volume but no sewer account set up for it.

Miller said the district contacted Peterson on Oct. 7, 2004, and told him the city was losing a lot of revenue. Peterson replied that he understood. Miller said Peterson also told the water district to remove records of the submeter to eliminate the software flag while allowing the line to continue providing water without a sewer account.

It is unclear whether Peterson, the Public Services Department's "outstanding employee of the month" for November 2006, was acting on his own initiative or following directions from someone with higher authority in City Hall. He died in 2007.

Other breweries in the city, such as the Allagash Brewing Co., determine a sewer fee by subtracting the volume of beer they produce from the total amount of water they use.

Forsley is now looking for the same kind of sewer credit for Shipyard, according to a Sept. 14 email to the water district from Portland Public Services Director Michael Bobinsky. Bobinsky said he is not offering the credit yet, but instead is billing Shipyard for the full sewer fee based on both water lines.

Officials from the city and the water district met Jan. 27 to discuss the issues. Miller said the city believes the water district is responsible for the mistake because it had never billed the brewery for sewer costs associated with the new water line. But Miller said the city is responsible because it never set up an account for the water line.

Forsley said Portland's sewer fees are double what is charged to competing breweries in other cities. He said he will be focusing on wastewater reduction, with a goal of bottling one gallon of beer for every three gallons of wastewater the brewery produces. Forsley would not say what the brewery's current beer-to-wastewater ratio is.

"In reality, we are putting a lot of water down the drain,' he said. "My goal is to minimize that."

Shipyard makes about 15 types of beer under the Shipyard brand, including seasonal best-sellers such as Summer Ale and Pumpkinhead Ale. It has acquired other brands, including Sea Dog Brewing Co. and Casco Bay Brewing Co., and makes non-alcoholic Capt'n Eli's soda. Shipyard also brews beer for other companies, such as Peak Organic Brewing Co. and Gritty McDuff's Brew Pub.

Company officials told The Portland Press Herald last year that Shipyard's annual revenue was about $20 million. In 2000, its annual sales were $5 million, company officials said at the time.

Portland is home to five breweries. Dave Kleeban, one of the owners of Maine Beer Co., said it's important that every business in the city pays its fair share.

"It shouldn't matter who you are," he said. "I can't imagine that there should be a special deal in place for one business in the city and not all the other businesses."

Richard Pfeffer, co-owner of Gritty McDuff's Brewing Co., said the city shouldn't make up for the mistake by forcing Shipyard to make back payments.

"It will be a real shame if the city tries to squeeze that much money out of a successful business," he said. "That's not going to benefit the city or the Maine brewery industry." 

Staff Writer Tom Bell can be contacted at 791-6369 or at:

tbell@mainetoday.com

Twitter:TomBellPortland

 

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