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Billings Heights water board approves nearly $3M settlement in billing dispute

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Posted at 2:11 PM, Apr 14, 2022
and last updated 2022-04-14 20:12:15-04

BILLINGS - The board of directors of the County Water District of Billings Heights voted 4-3 Wednesday to approve a $2.9 million settlement over a years-long billing dispute.

The dispute stems from a billing error that began in 2015 when the city of Billings converted to new billing software, according to press release issued Thursday.

In 2017, the city performed an in-depth review of water bills and found a significant discrepancy between the volume of water produced at the water treatment plant and customer bills. The actual production was higher than what was being billed.

After ruling out a leak in the water distribution system, it was determined that the missing water was accounted for and caused by an incorrect conversion factor within the new billing software, the press release states.

This problem was only an issue for the County Water District of Billings Heights due to the specific type of water meter they use, and no other customers outside of the district were affected.

From Feb. 27, 2015 to Dec. 15, 2017, CWDBH was underbilled by $2,970,599.35. With interest, the total amount owed as of October 2020 was approximately $3,965,327.49.

The district was underbilled for consumption by approximately 40%, but they continued to bill their customers for full consumption.

Once the error was corrected, CWDBH began paying the full amount but refused to pay for the undercharged amount.

In the settlement contract signed Wednesday night, the water board agreed to pay the city $2,936,251.80 in the next 30 days.

The Billings City Council unanimously approved the settlement last month during the March 28 business meeting.

In the years leading up to this settlement, both parties attempted to resolve the dispute informally in the fall of 2018, then again through formal mediation in November of 2020. Both were unable to reach an agreement and the city filed a complaint against the district in December of 2020, asserting breach of contract for unpaid amounts due under the contract plus interest.

Negotiations resumed after new CWDBH board members were seated. Representatives with the city and water district met several times between October of 2021 and February of 2022. An agreement was reached that month.

Under the agreement, the city’s claim for breach of contract for the underbilled amount is dismissed, along with the district’s counterclaims for negligence and declaratory relief related to the underbilled amount.

Because CWDBH agreed to pay the settlement amount in full, the original amount was reduced by $34,341.55 to reflect the interest CWDBH would have earned if it had made payments over two years.

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