First, Cape May overcharged West Cape May by nearly $700,000 for water it never delivered, said West Cape Mayor Pam Kaithern. Now, the city is stalling on giving the borough a credit to settle the matter.
A four-year-battle between West Cape May and Cape May showed no signs of being settled recently, despite West Cape May's belief that it has clear evidence it was overbilled through a faulty meter. West Cape May buys water from Cape May's desalination plant.
The amount is significant for individual customers. Research by Kathy Gallagher of the West Cape May Taxpayer's Association found each metered customer in the borough paid $396 for water they did not receive in 2009 and $402 in 2010.
Kaithern said West Cape May has made every attempt to settle the matter. She said at one point a settlement offer was made to Cape May. The borough also offered to have a state mediator hear the case. She said every overture has been ignored.
"We're at wit's end with the water issue. Cape May is doing the old stall-and-drag. We don't want to sue. All that does is take money from Cape May and West Cape May residents," Kaithern said.
Cape May Mayor Ed Mahaney said City Council met on the issue this week in closed session and is following an agreement it made with West Cape May to study the issue. He said that work was underway.
"It will be done in a timely and detailed fashion with respect to our ratepayers and theirs," said Mahaney. "We have been cooperating earnestly, and at quite an expense, to figure out what the problem is, the cause of the problem and if any adjustments should be made."
Kaithern said Cape May has refused to supply documents in spite of the borough making a request under the Open Public Records Act. She also said an offer was made to Cape May to take 15 percent off the amount allegedly owed, from $696,997 to $592,000, and have the difference applied as credits over eight years.
"It sounds fair to me," Kaithern said.
Mahaney, in an Aug. 9 letter to Kaithern, said the study Cape May is having done ran into delays "beyond the city's control." He said the report was due July 15 but is late. West Cape May attorney Frank Corrado submitted an OPRA request July 23 for the report and other documents related to the issue.
"We got nothing," said Kaithern. "They keep talking about open and transparent government, but they're not sharing information."
The issue arose in 2009, when the West Cape May Taxpayer's Association did some research and said it found 121 million gallons of water, worth almost $700,000, was unaccounted for between 2003 and 2009.
Initially there was concern water was being stolen through illegal connections or leaking out of the system. In 2010, West Cape May hired Eden's Revenue Recovery Associates of Philadelphia to study where the water went. It traced the losses to the 12-inch meter used to measure the water transported to West Cape May. Corrado, in a letter to Cape May, said the meter was "grossly oversized" and did not properly measure low volumes. Corrado likened the faulty meter to putting an airplane speedometer in a car. He said what was actually being measured was unused water being returned from West Cape May back to Cape May users.
Kaithern said the meter was turned off in 2011, and the losses disappeared. She said a second meter on Canning House Lane was also a problem. Those losses "were favorable to us," but minor, she said.
"As soon as the meter was shut down, the loss is gone. There was no loss. The water was going to Cape May. In January 2011, our expert's report was hand-delivered to Cape May. It's going on 2014. The reality is, they owe us money," Kaithern said.
Cape May replaced the faulty meters before the summer of 2012 and hired an expert to do a report but wants to look at one full year of data collected from them. Mahaney's letter to Kaithern said until that report is concluded the city is unable to "engage in any further discussions which involve the acceptance of financial responsibility for the water loss."
City Solicitor Tony Monzo sent Corrado a letter Sept. 7 that said state mediation would be premature at this point. Corrado had even found a mediator, the state Office of the Public Defender's Office of Dispute Settlement.
If an agreement is reached, it remains unclear how the money would be returned to customers, as some have moved out of the borough. It could possibly be used to reduce water rates, which went up in 2009, though the water losses were not stated as a reason to raise rates at that time.
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