The discovery of a city water account that was under-billed for more than a decade has prompted a policy to deal with billing errors as well as an audit of water and sewer accounts in Homer.

At the Homer City Council’s Sept. 25 meeting, members went into an executive session to discuss water and sewer billing data and the city finances associated with them, according to meeting minutes. The city had recently discovered that a data entry error on one of the city’s water accounts resulted in a business being under-billed for its water for more than 10 years.

That business is Washboard, a laundromat on Ocean Drive, its owner Warren Miller confirmed.

To the best of the city’s knowledge, the mistake happened around 2005 when the city was changing out all its water meters, which City Manger Katie Koester said need to be changed out about every 10 years. When this happens, members of the Public Works Department submit a form to the city that sets up the new meter with a code number that links the meter to its account. The code determines which multiplier is used on the raw data from the city’s electronic monitoring system in order to get the rate of billing, Koester said.

In this case, recently a city employee was using the Washboard account as a reference in setting up another account, and noticed that the code associated with the meter was incorrect. Koester said the mistake could be linked to the larger-than-average influx of meter account forms submitted to the city in 2005 when all the meters were being switched out.

“It’s a human data entry error,” Koester said of the mistake.

The incorrectly-entered code for the Washboard account resulted in the business being billed one tenth of what it was supposed to be, according to the Sept. 25 meeting minutes. Miller, who bought the business in 2011, said his water bill was previously about $8,100 a year. He will now be billed at the correct rate, which will be closer to $80,000 a year.

When asked what his plans are for continuing his business under the correct rates, Miller said he’s “not sure yet.”

The council at its Monday meeting passed a resolution through its consent agenda that sets up a policy for dealing with incorrectly billed water and sewer accounts.

In the event that an account has been under-billed due to an error made by the city, the resolution states that the city has to notify the water user within 60 days of realizing the error. It also states that the city can’t charge the user for more than two months of the costs that were supposed to be charged. For example, if a water user was under-billed by the city for three months, the city could only recoup up to two months of those charges.

Koester said this resolution sets up a policy for future city managers to work off of, and that a city manager has the discretion to decide that the city could seek less than two months worth of charges, or none at all when an error in billing is made.

Had the city sought to recoup the correct charges from the last three years, Miller said that would have come out to roughly $220,000. Over 10 years, this amounts to around $730,000 in lost charges for the Washboard’s water usage — about what the city spends annually on roads maintenance.

Miller said he bought the business based on the numbers he was presented in 2011, when the Washboard was still being under-billed. Since then, he has made business decisions based on those numbers, he said. For example, he’s spent money on things to save energy rather than to save water, he said.

Miller has raised prices at the Washboard and said he’ll likely have to raise them again. He expressed remorse for his customers that the burden of the correct billing will fall on them.

After discovering the Washboard error, Koester said the city performed an audit of the rest of its 1,720 water and sewer customers. She said the city found a handful of other accounts that contained errors.

The city is gearing up to change out its meters once again, and Koester said that if there’s a silver lining in the situation, it’s that the city caught a vulnerability in its billing system beforehand and will be conscious of it this time around.

Reach Megan Pacer at megan.pacer@homernews.com.