The Salem News sat down with Salem City Administrator Ray Walden April 28 to discuss the issues plaguing the city utility department.
One of the issues that came up often during an April 26 meeting of the utility committee was a need for more transparency by city government when it comes to utility billing issues that have arisen since the city went to a new billing system in November of 2019. The city has fallen behind by three months on two occasions.
Walden explained that, as of April 28, of the 2,895 active utility accounts, the following number are the accounts behind on paying their bills.
• 505 accounts are 30 days behind with an average cost of $276.22 on the Dec.-Jan. bill. Collectively, that comes in just under $140,000 owed for that month's utility bill.
• 422 accounts are 60 days behind with an average cost of $290.99 on the Nov.-Dec. bill. Collectively, that comes in just under $123,000 owed for that month’s utility bill.
• 339 accounts are 90 days behind with an average cost of $279.23 on the Oct.-Nov. bill. Collectively, that comes in just under $95,000 owed for that month’s utility bill.
• 291 accounts are between 120 days and 11 months behind, each owing an average amount of $1,541.91. Collectively those accounts owe the city around $450,000.
• 35 accounts are more than 12 months behind. Collectively, those 35 accounts owe $24,694.
In summary, the City of Salem is $833,00 behind on collecting payment for utility services prior to Jan. 8, which is the bill mailed to utility account holders in March.
These numbers do not include the 6-week billing cycle bill sent out in April, nor do they include the subsequent billing cycles not yet sent out for the months of February – expected to be high due to extreme cold weather – March and April, meaning accounts receivable is already well exceeding the million-dollar mark.
However, according to Walden, the city is still in good financial shape due to conservative management of funds.
“Our billing has been such that it has not been a financial hardship for the city, thus far,” he said. According to Walden that’s partially due to the city’s conservative estimate of sales tax revenue for this year in light of COVID-19.
“For example, we backed off our estimates of sales tax for our general fund, backed that off about 10% off of what we budgeted for this year, just to be conservative,” he said. “Over eight months, our sales tax receipts have exceeded what we budgeted. I’d rather it be that way, than if we wouldn’t have been conservative in our sales tax projections, and we came under what we budgeted for.”
When asked what precipitated us being behind on the billing cycle for the second time in a year, Walden began clarifying by explaining how the billing cycle operates.
“For example, before AMI, unrelated to AMI,” he said. “Let’s say, Feb. 1 to Feb. 14, we’re reading meters, that bill would come out March 1 and the penalty date would be March 20. That bill would be for January consumption. According to Walden, the cut-off date – when your power would be disconnected if you hadn’t paid – would be seven days later, but the board of aldermen extended that date to the fifth of the following month.
“We’ve started out with a delay,” he said, referring to the switch to the AMI system from manually reading meters. There was already a month and a half delay built into the system. Essentially, you would receive your bill for January consumption in March and have until April to pay it.
“Our billing reflected consumption from two months ago,” said Walden. “Our system (the new AMI system) has the capability of reading for more recent consumption,” he said. Future bills that utilize the AMI system will reflect more recent consumption. Ideally, the bill received in a given month will now reflect consumption of the immediate prior month, rather than two months before. According to Walden, to continue only billing one month at a time would keep that delay in the system, making it appear to be further behind.
That doesn’t explain why the November-December utility bill wasn’t sent out until March, but it does paint a far less dismal picture than at first glance. Nor does it account for a variety of factors outside of the city’s control, like the arrival of components for installation of the new meter system being delayed due to supply chain disruption caused by COVID-19.
Walden mentioned the April 26 utility committee meeting and their decision to recommend a catch-up bill to the board of aldermen at Monday night’s meeting (see story on the meeting at thesalemnewsonline.com and in next week’s print edition).
Walden was asked what he expects from the coming months once people actually know the sum they owe on their utility bills.
“It would be our hope that things would stabilize,” he said. “We’ve worked hard to get to this point and have consistent, reliable billing. We just need the (utility) committee and the board’s input as to how they would like the bill cycle to look.”