Falls utility underbilling spans for nearly decade

NEWTON FALLS – In 2012, the school district paid what they were billed for electricity – $48,167.38. Now, the village-run electric department is saying they were unintentionally underbilled by $64,022.60 for the year.

The difference does not stop there.

According to the village, the school has been charged below their correct rate for the past eight years. Initial estimates of what the village has been failing to charge hovers around $500,000, according to documents obtained by the Tribune Chronicle.

This is the third time in a decade that Newton Falls has discovered commercial underbilling.

It is not that the school’s meter was not reading correctly; rather the problem stems from a software issue with the village’s electric transformer that feeds the school.

“A new transformer was installed with the school’s construction project in 2004; the multiplier should have been recalculated and updated at that time. This was not done until the issue was identified in 2013,” according to a statement released by the village.

The discovery was made by Municipal Energy Services Agency who was contracted to examine the transformer at the high school in April.

“The individual doing the testing has a billing system list of accounts and their multipliers. While testing the meter, each multiplier was reviewed, whereupon he stated this one was inaccurate,” according to the statement.

The last time the transformers in the village were reviewed was 2003; the time between checks has partially to do with the high cost of the audits.

Newton Falls Finance Director Tracy Reimbold said the third party audits cost about $12,000, a large cost for the department, which recently bolstered its revenue by increasing customer rates. Without the increase, the electric department would have been left to operate with about one sixth the suggested amount put forth by a utility study.

It’s a situation the village has been in before.

In 2005, council forgave now-closed Fiest Hardwoods more than $87,700 and Allan-Dell Assisted Living about $24,800. Both forgivenesses were passed as ordinances citing that there “will be no impact on current user rates” as a result.

Fiest Hardwoods’ underbilling was a result of an incorrect multiplier, while Allan-Dell’s was the result of a malfunctioning meter. The issues were discovered during a contracted third party audit in 2003.

Other departments don’t find the need for third-party testing of their commercial transformers at all. First Energy spokesman Chris Eck said the multi-state electric company, which serves approximately 6 million customers does not use third-party audits.

“When we add a new commercial service, we wait 30 to 90 days later to do a complete audit,” he said.

Annually, he said, they perform a statistical program that randomly samples transformers and meters to look for any variances. Since 2008, every commercial meter has been replaced or exchanged in their system.

Closer to home, the Hubbard Light Department also does not use third party audits.

“We don’t do scheduled maintenance until a problem develops,” said Assistant Supervisor of Light Martin Kelly.

The transformers are simply checked every year or two to ensure their temperature and oil levels are safe. Nothing is reviewed as far as multipliers go, Martin said.

Nevertheless, after discovering this latest issue, Newton Falls has implemented an internal policy to do commercial meter testing every three years, as opposed to every decade.

“We really don’t want to go every ten years again without checking the meters. It can be a revenue issue,” Reimbold said.

Just how much revenue in this instance is still being tabulated. It also remains to be seen whether the school’s underbilled amount will be forgiven.

School attorney Kevin Locke did not return messages seeking comment.