Appeal brief filed in water rate dispute

An appeal brief has been filed in response to a July 2017 ruling finding the City of Mountain Home did not breach its contract by overcharging for water it sells to the Northeast Public Water Authority.

The appeal brief in response to Baxter County Circuit Judge Gordon Webb's decision was filed Tuesday.

Karen Hopper has the story.



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The water authority, which provides water to about 1,800 residents, filed a lawsuit in November 2015 contending the city had overcharged for water it sold to the authority under the terms of an agreement updated in 2012.

In his ruling Judge Webb wrote the city did not breach its agreement with the water authority and the price charged by the city for water purchases was permitted by the agreement and was appropriate.

The contract between the city and Northeast Public Water Authority calls for the city to sell potable water in an amount not to exceed 250,000,000 gallons a year under a formula establishing the per-one-thousand gallon purchase price for the water. The formula takes a number of factors into consideration, including the buyer’s share of expenses the city incurs in connection with the production and delivery of water.

Just what expenses are to be counted in arriving at the wholesale purchase price is at the heart of the appeal.

In the appeal, Attorney Keith Billingsley of Little Rock maintains agreements between the city and the authority in 1982 and 2012 are quite different with respect to wording and terms, with the later version specifying Northeast is to be charged only the actual expenses incurred in connection with the production and delivery of water.

Since the execution of the 2012 contract, Northeast has been charged a pro rata share of the salaries and expenses of the Mountain Home City Council, Planning Commission, four city officials, two departments and other expenses including maintenance on hundreds of miles of water lines.

Attorney Billingsley says water to Northeast comes from the treatment plant to the Wallace Knob tank, a distribution line constituting 1.4 percent of the total water system. During a 7-hour daily window when the plant is offline, the city contends Northeast obtains water from the entire system, which the attorney says is an effort to legitimize its charges.

Billingsley also maintains in the nine-page document that while Northeast has consistently received annual increases, residential and commercial customers of Mountain Home have not received a bump in charges since 2009. He asks if the contract states the purchase price will be equal to Northeast's share of the actual expenses, how can its rates rise while Mountain Home's do not.

In the appeal, Northeast maintains its damages as a result of the improper calculation of the water charges exceeded $650,000 through January 2017. It further maintains these damages are ongoing on a monthly basis as a result of the city's collection of expenses associated with the entire water system versus the share for production of the water purchased by Northeast.

Court records indicate a reply brief by the City of Mountain Home is due by February 22nd.

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