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City wins ruling on water, sewer rates

March 18, 2005|by GREGORY T. SIMMONS

gregs@herald-mail.com

HAGERSTOWN - The Maryland Public Service Commission in a recent decision ruled in favor of the City of Hagerstown on a challenge over rates the city charges its water and sewer customers outside city limits.

The commission said the way the city determines its rates is "fair and reasonable," according to the March 10 order.

The order ends the PSC's review of the city's rate-setting system unless it is appealed to state courts.

An appeal would have to be lodged by April 11, or the order would become final, said Michael Dean, a PSC staff attorney.

The City of Hagerstown has spent about $76,000 in the dispute. Washington County officials have spent nearly $35,000.

The challenge was initiated in 2002 by the Washington County Water and Sewer Advisory Commission, a branch of Washington County government.

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The city's water and sewer system not only serves homes and businesses inside the city, but it reaches beyond city lines into the county.

The city charges customers outside city limits more than it does customers inside city limits.

The county agency contended that because the city had not reviewed its rate-setting system since the early 1990s, there was no proof that the rates the city charged were fair to customers in the county.

Had the PSC ruled against the city, it could have taken rare steps to set rates for the city.

County Attorney Richard Douglas said Thursday that while the county's position did not prevail, county officials are pleased that the city has undertaken a rate study since the case was initiated.

The city embarked on the new study last year, and the results are expected within the next few weeks, City Finance Director Alfred Martin said.

The city must file the results of that study with the PSC by July 1, according to the March order.

While the action was not taken to court, both the city and the county used legal resources and experts to support their arguments.

Martin said Thursday that the city's costs in the dispute were $76,033. That money paid for services rendered by a rate consultant and the City Attorney's Office, which is an outside law firm that contracts with the city.

Martin said the money will be paid by the city's water and sewer funds, which are supported by customers of the city's water and sewer systems. The two funds are accounted separately from taxpayer-supported portions of the city budget.

The money that city officials spent in the dispute does not include the cash paid to perform the rate study that is nearing completion, Martin said.

Douglas said the county's costs in the dispute were $34,952. That money paid for an outside legal consultant and an outside rate consultant. He said the expenditures were approved by the County Commissioners.

Douglas said that his office, unlike the City Attorney's Office, is part of Washington County government, and he does not track time or costs spent by his office on legal work. However, he said most of the legal work for the case was done by the outside consultant.

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