FERNDALE, Wash. — A recent annual audit by the Office of the Washington State Auditor discovered the City of Ferndale had been underbilling members of a water association due to utilizing a billing method different from what had been agreed to back in 2004.
Northwest Water Association serves about 120 customers in neighborhoods in south Ferndale east of I-5 via a water service intertie with the city. City Spokesperson Riley Sweeney told Whatcom News that the due to the agreement between the city and the association, the city bills the customers on behalf of the association.
During our most recent state audit (2022), the state found that we had been underbilling them. In short, we had been billing that intertie as a standard utility customer rather than the specific language of the contract which utilized a different method for calculating the cost. The state audit located this discrepancy and is requiring us to collect the unpaid amount of $57,026.68, which when you divide it up amongst the customers, it is approximately $475 per household. City of Ferndale Spokesperson Riley Sweeney (May 9, 2023)
Sweeney added that the city has informed the water association and expects the next step will be to work out payment arrangements.
According to state law, when a utility discovers it has undercharged a customer, it generally must collect the amount of the undercharge for at least two reasons. First, to do otherwise could be considered an improper gift of public funds. Second, waiving or foregoing collection of utility undercharges may violate the public policy against rate preferences as stated in Housing Authority v. NE Lake Washington Sewer & Water Dist. 784 P.2d 1284, 1288 (1990). City of Ferndale Spokesperson Riley Sweeney (May 9, 2023)
When asked if there were any other over/under billings being dealt with because of the audit, Sweeney said, they were not aware of any but they had yet to meet with the auditors for the audit review.