Seattle Courant

Here's a Refund, Now Give It Back

By Keith Vance
February 17, 2009 09:02PM

The issue is fire hydrants. The problem, according to the Washington Supreme Court, is that for more than 100 years, Seattle Public Utilities had been illegally charging water customers for fire hydrant service.

"It's basically an arcane accounting issue," Conlin said during the council meeting today.

According to last December's court ruling, the city should have been charging for fire hydrant service through the general fund and not the water utility. Now because of that decision, the city has to shuffle millions of dollars around, issue refunds and institute a temporary rate increase for all water customers.

At first glance, it appears that all that needs to be done is to simply move some money around. But that's not how it's going to work out because the court awarded the plaintiffs in the case 13 percent interest on the refund money - and there’s another $4 million in lawyer fees.

"No one benefits from this particular amount of money except the lawyers," Conlin said.

Here's how it will play out for the average residential water customer.

In April, city water customers might receive a refund of approximately $45, but only if they were incorrectly billed for fire hydrant service between March 2002 and December 2004. This will cost the city about $14.4 million.

Beginning March 31, everyone will have to start paying back that $14.4 million. In order to do that, for 21 months (March 31, 2009 through Dec. 31, 2010) all Seattle Public Utilities' customers will pay 10.2 percent more for their water.

So it shakes out like this. Customers who receive a refund will see an average net monthly increase of about 70 cents a month. Those who are not getting a refund (i.e. anyone who didn't live in Seattle during the timeframe in question) will see a net monthly increase of about $3.

Councilman Bruce Harrell was the only council member to vote against the rate increase. He said that the council once again missed an opportunity to look at what they're doing and to start examining where in the budget they can save money.

"Are we even trying anything unique?" asked Harrell.

--
Previous reporting on this issue can be found here and here.