MiddletownJournal.com

HAMILTON — As far as they can figure, it started in 1988 with a rule that changed how Butler County Environmental Services charges companies for sewer service.

A mistake, it seems, was made then that opened the door for 208 companies to be undercharged for sewer service. Though there's evidence county officials knew about the mistake, the county didn't recoup any money until February this year.

In the meantime, the problem grew, resulting in the county's largest sewer customer being under-charged roughly $856,510 for sewer service.

The 1988 rule change required new businesses to purchase additional equivalent residential units (ERUs) for every 12,000 gallons of sewer water they use over the initial ERU they get. If they don't purchase these units and go above their allotted amount, they are charged a "peaking" penalty.

The mistake

The resolution didn't apply to 208 existing customers due to a "short-sightedness," said Environmental Services Director Sue Vance, so they were never levied a peaking fee.

No one did anything about it for 19 years until Vance learned of the error in August 2006, she said.

In a February 2007 e-mail from Vance to then-county administrator Derek Conklin, she said, "It is obvious that previous administrations were aware of this no-peaking problem."

"We found evidence that both (former utility directors) Graham Rich and Tony Parrott stumbled upon the fact that some of the people were not subject to peaking, but they never researched it and brought it to resolution."

At some point, Pierre Foods was taken off the no-peaking list. But in 2003, it was put back on.

Vance and other officials say this mistake likely occurred when a new meter was installed and someone changed the setting in the billing system. But in her e-mail to Conklin, Vance theorizes that someone thought Pierre was being treated unfairly because it was paying peaking and other companies — namely Shepherd Color Co. in West Chester Twp. — weren't, due to the 1988 mistake.

After learning of the problem, Vance said it was like detective work assembling all the bills and finding which ones weren't paying peaking. They then interviewed former employees and sorted through records, but the cause of the Pierre mistake was never found.

"I don't think it was anything intentional, or malice aforethought," said Commissioner Gregory Jolivette. "I think it was just a mistake that happened and that was unfortunate and we did our best to let Pierre Foods know what the problem was, how it occurred and how to move forward."

Commission President Charles Furmon agreed. "It was an unfortunate incident but we handled it as well as we could," he said.

The fix

The county decided not to bill 207 of the companies for the mistake. They never determined how much this would've amounted to, officials said, but it would've been minor because most of the companies never went over their allotted amount.

"It's not fair to back-bill them to 1988 because it's not their fault," Vance said.

They did back-bill Pierre Foods $194,497 for the period from March 2006 to February 2007, as their policy allows them only to collect 12 months back for a billing error. The company also bought 700 more ERUs at the 1988 cost of $1,190 each, totaling $833,000, to prevent future peaking.

Vance said the 1988 rate was extended to all 208 customers because they felt it was unfair to penalize them for the county's error. At the 2007 listed rate of $3,780 per unit, this would have cost Pierre Foods roughly $2.6 million.

"At the end of the day, we collected more than a million dollars from them," said Environmental Services Deputy Director Bob Leventry. "From that standpoint, I would say the county is made whole."

The total price tag was placed on the company's tax roll, and will be paid off in August 2012.

Pierre now has 1,428 ERUs. It's the utility's largest sewer customer by far, using about 16.7 million gallons of water in 2007 — 5.5 times that of Amylin Pharmaceutical, the county's third largest user.

County officials say the company — one of the county's largest, which recently filed for Chapter 11 bankruptcy — shouldn't be penalized for the county's error. This is why the company has five years to repay a portion of the money.

"I have concerns that they're in trouble, and we don't like to see any Butler County business in trouble and we'll do whatever we can to work with them to make sure they can stay in business in Butler County and make sure we protect our ratepayers," said Jolivette.

Contact this reporter at (513) 820-2175 jsweigart@coxohio.com.