The Portland bureau faces an extra $2.1 million in costs for a new computer system plus millions in lost revenue

Tuesday, February 13, 2001

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By Courtenay Thompson of The Oregonian staff

One year ago this month, the Portland Water Bureau fired up a $6.5 million computerized billing system and was instantly deluged with problems -- bills went missing, others were miscalculated, and as the weeks and months went by, millions in city revenue went uncollected.

A year later, city officials estimate the project will cost an extra $2.1 million, for a total of $8.6 million, and result in an extra 1 percent increase in water rates and 1.4 percent in sewer rates. The increases are sure to anger thousands of customers already frustrated over late, confusing or nonexistent bills.

The water and sewer budgets together face as much as $7.7 million in lost revenues, including lost interest earnings, bill write-offs, suspended late fees and a once-obscure 20 percent sewer credit.

And the system -- which was supposed to help the city avoid a Y2K disaster -- still isn't working right.

An estimated 8,500 customers still aren't receiving bills for their water and sewer use, and 7,000 customers on monthly billing plans are having problems. In total, 18,000 accounts -- or 10 percent of customers -- are affected.

Bureau officials, who will update the City Council Wednesday, say they are getting a handle on key problems. For example, customers who telephone the bureau no longer face 30 minutes on hold. And the exact nature of the software glitches is well defined.

"I'm feeling better, but the long nightmare of this thing is not over," said Commissioner Erik Sten, who oversees the Water Bureau.

Costs continue to climb, and officials say they don't expect to see the system problem-free until June.

That date -- and some firm timelines from the bureau and the software contractor, Houston-based Severn Trent Systems -- comes as good news to weary city officials stung by rising costs and expectations.

The final cost of the project still isn't known, nor is how much of the tab ratepayers will be expected to pick up, given that the city still plans to negotiate cost overruns with Severn Trent.

The bureau originally hoped to have the computer system ready in 1998, to replace its 15-year-old billing system well in advance of the year 2000 rollover. Officials wanted a sophisticated system able to handle water rate reform and modern billing needs for the bureau's 180,000 accounts and 19 wholesale customers. And in 1997, they thought they could get it for as little as $2 million.

Disappointments have been keen. Among them: Because the system wasn't ready until February last year, the city had to spend $350,000 to reprogram its old computer system to handle the new millennium.

"I think everyone involved feels extremely frustrated," said Doug Morgan, chairman of the Portland Utilities Review Board, a citizen watchdog panel.

Shared responsibility
Morgan, director of the Executive Leadership Institute at Portland State University, said responsibility for the computer nightmare is shared by the bureau, the City Council, the review board and the company. "Everyone has dirty hands with this."

From the start, Water Bureau officials said they needed a year to bring the project on line and work out bugs, Morgan said, but the City Council pressured the bureau to implement complicated rate reform even though the system was still a mess.

The bureau implemented the first reforms last year, lowering water bills for low-water users, but wasn't able to implement the politically hot storm-water discounts, which are now on hold until the computer problems are fixed.

"PURB raised concerns early on," Morgan said, "but we weren't as aggressive as we could have been" about asking the city to slow down.

Making the changes slower wouldn't have prevented the software problems, but it would have held down expectations. As it was, commissioners had to delay the storm-water reform repeatedly. "It puts the commissioners in a very embarrassing political situation with their constituents," Morgan said.

And it's still not over.

Bob Rieck, finance director for the Water Bureau, said the current system budget totals $7.3 million, not including $1.3 million in unanticipated cost overruns.

"We hope our ratepayers, when the day is done, won't have to absorb all of that," Rieck said. "That's a matter of negotiations."

The Water Bureau's revenue stream is also 15 percent lower than last year, with $6 million less in cash than anticipated at this point in the fiscal year. But Rieck said those numbers are improving.

The Bureau of Environmental Services, which handles storm water and sewer services, also has been hit because the Water Bureau handles sewer billing.

David Gooley, business services manager for the Bureau of Environmental Services, said his bureau anticipates revenue losses of $3.5 million this year, probably driving up sewer rates 1.4 percent.

Those increases come at a time of already soaring sewer rates, thanks to the $1 billion, 20-year project to clean up sewer discharges into the Willamette River and Columbia Slough. Gooley said the bill for sanitary and storm-water fees will go up an estimated total of 9.5 percent in July, though that could change. Water rates overall are expected to increase from 6 percent to 8 percent.

"The key right now obviously is the bills that haven't billed, and debt-recovery systems that aren't functioning," Gooley said. "What impact that will have, we won't know until those bills make their way out."

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-- Anonymous, February 13, 2001

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