Minnesota Power says the city of Pierz owes $62,000 for power used over a course of about 18 months; the city says “no” it doesn’t.
The Council also said “no” Monday to a counter offer made by Minnesota Power, in which the city would pay $50,000 instead of $62,000.
The counter offer was made after City Attorney Tom Jovanovich advised the Council not to agree to pay the $62,000 and sent a letter to Minnesota Power, reviewing several items he found questionable in the city’s contract.
The attorney questioned the language in the contract with the city, as it relates to a current transformer (CT) that was damaged at some unknown point and the calculations Minnesota Power used to determine the amount to be back billed.
Since the exact date of the CT malfunction is in question, and per its contract with the city, Minnesota Power may only have the right to back bill the city for six months.
The city purchases electrical energy wholesale from Minnesota Power and resells it to city residents.
City Administrator Anna Gruber said she contacted Minnesota Power in January 2011, when she first noticed a discrepancy in the power being billed to residents by the city, and the amount being charged to the city by Minnesota Power.
Minnesota Power, at that time, blamed the city’s meters, or calculations by its computer software. City staff continued to look for the problem on the city’s end, but didn’t find one.
It wasn’t until May, 18 months after the company had been contacted about a problem, that a field test was done and a CT was found to be working abnormally. Because it wasn’t working correctly, Minnesota Power said it registered 30 – 45 percent below what it was supposed to be recording for energy use.
Minnesota Power staff met with the Council in June, and said it would back bill the city for one year with no interest, to be billed in 12 monthly installments or $5,200 each month.
“I think we have quite a way to go as far as I’m concerned,” said Mayor Toby Egan of the counter offer by Minnesota Power. “After talking to residents, they feel the same way.”
Gruber said it was very disappointing from a customer service standpoint, since the faulty equipment was due to what she called the wholesaler’s negligence.
“We do not feel we should pay for their negligence. We did them a favor by finding the issue,” she said.
The Council was unanimous in its decision not to accept the counter offer.
Pierz City Council Briefs
In other business at Monday’s meeting, the Pierz City Council:
• Approved a building permit for Bernie Brisk for a single family dwelling on Peter Avenue; and
• Tabled approval for a hotel addition for Hillbilly Haven because the property lines between the hotel and Bootleggers Bar had not been located.
The next meeting for the Pierz City Council will be held Monday, Sept. 10, at 7 p.m.