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Rate study may be canceled

October 04, 2002|by SCOTT BUTKI

scottb@herald-mail.com

The City of Hagerstown may cancel plans for an independent study of its water and sewer rates because a state regulatory agency is examining the rates the city charges customers who live outside the city, Mayor William M. Breichner said Thursday.

Breichner's comments came following the first meeting that city and Washington County officials had with the Maryland Public Service Commission about the PSC's planned review of the city's rates.

That meeting, a PSC pre-hearing conference, took place Wednesday at the regulatory agency's offices in Baltimore.

The Washington County Water and Sewer Advisory Commission, acting with the support of the Washington County Commissioners, asked the regulatory agency in an Aug. 2 letter to review whether the rates are reasonable and justified.

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Breichner said he thinks the city rates are fair and reasonable.

The City Council on Aug. 20 gave preliminary approval to a proposal to have an outside independent consultant review the rates at an estimated cost of $75,000 to $100,000. The cost of the study would have been passed on to water and sewer systems customers both in and outside of the city as part of their water and sewer rates, Finance Director Alfred Martin said.

City officials said they did not know about the county request for a PSC review when the council took the Aug. 20 vote to hire a consultant.

Breichner said Thursday he probably will ask council members whether they think the city should still have a study done.

Under a proposed schedule accepted by the PSC, county and city officials Wednesday, the earliest the PSC would hold hearings on the rates is July 2003, PSC Hearing Examiner Dennis Sober said.

It would be at least August 2003 before a decision would be made, he said.

The hearings cannot be held sooner because city and county staff will have to conduct research, provide documentation and write responses to information provided by the other party, Sober said.

As part of its review, the county has asked the PSC to look into the city practice of having some departments make payments to the city general fund.

That payment, called a payment in lieu of taxes (PILOT), is intended to represent the amount those departments would pay to the city if they were private companies.

Washington County Commissioner William J. Wivell, who represents the county on the advisory commission, has called the PILOT program "taxation without representation."

The city's water and sewer rate structures, and the PILOT program, have been reviewed and endorsed in at least one professional study by independent companies, Breichner said.

The city rates are reviewed annually and adjusted as necessary to meet revenue requirements for the city water and sewer operations, according to a city staff report.

The basic rate differentials and structure have remained the same since a 1988 sewer fund study and a 1991 water fund study, the report said.

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