THE VIRGINIAN-PILOT 
              Copyright (c) 1997, Landmark Communications, Inc.

DATE: Wednesday, February 19, 1997          TAG: 9702190383
SECTION: LOCAL                   PAGE: B1   EDITION: FINAL 
SOURCE: BY JON GLASS, STAFF WRITER 
DATELINE: NORFOLK                           LENGTH:   55 lines

SEWAGE BILLING ERROR HURTS CITY'S REVENUE BIG INDUSTRIAL AND COMMERCIAL USERS HAVE BEEN UNDERBILLED BY $342,000 SINCE JULY 1.

A billing error discovered this month by the Department of Utilities has cost the city more than $342,000 in lost sewer revenues, officials said Tuesday.

Officials found that the city had under-charged nearly 1,300 of Norfolk's 63,000 sewer customers since last July 1 - all of them large industry and commercial users that produce more than 10,000 cubic feet of sewage in a month. By comparison, an average residential customer generates about 1,500 cubic feet during a two-month billing period.

``We made a mistake,'' Louis L. Guy Jr., Norfolk's director of utilities said. ``There were a whole bunch of red faces.''

The mistake occurred as the city moved into the final stages of a conversion to new sewer rates, a phased process that began nearly three years ago, Guy said. Utilities employees inadvertently entered the wrong sewer rate into a computer-billing program for customers using more than 10,000 cubic feet of sewage, Guy said.

The error came to light as city administrators began to prepare next year's budget, Guy said.

The error should not have gone undetected for seven months, said Assistant City Manager Sterling B. Cheatham.

``With the proper oversight, it could have been detected earlier,'' Cheatham said.

City Manager James B. Oliver Jr. alerted the City Council to the problem in a Feb. 7 memo.

``I think the city can't afford those kinds of mistakes,'' said Council member Herbert M. Collins Sr. ``Somebody should pay for that. Those things shouldn't happen.''

City officials indicated that the matter will be brought to council for discussion next week.

Because the city is at fault, officials said, it's unclear whether the city will attempt to rebill the under-charged customers to recover the lost money. ``We're wrestling with that right now,'' Guy said. ``That's a real can of worms.''

Cheatham said ``every penny impacts us,'' but added that the loss of $342,000 probably would not create a budget crunch in the Utilities Department. The sewer operation, which is self-sustaining from user fees, this year has a budget of $14.3 million.

Guy said: ``It has created a whole lot of embarrassment, but it really hasn't done any serious harm to us.''

Those customers should have been charged $1.34 for every 100 cubic feet up to 100,000 cubic feet of use. Then the rate dropped to $1.05. Instead, they paid $1.34 for only the first 9,900 cubic feet. They were incorrectly charged $1.05 per 100 cubic feet for sewage use over 10,000 cubic feet.

For example, a customer using 25,000 cubic feet of sewage was billed $291.21 when the correct bill should have been $335, a difference of $43.79.