Order 15607 - Newport Water Dept.: Request for Hearing by NABBCO, Inc.

 

STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS

DIVISION OF PUBLIC UTILITIES AND CARRIERS

REPORT AND ORDER

On April 23, 1997, NABBCO, Inc. d/b/a Gallagher's Bar (hereinafter "Gallagher's Bar"), filed a request for the Division to hold a hearing regarding allegations that Gallagher's Bar owed the Newport Water Department (hereinafter "Newport Water") for water usage as a result of the alleged tampering of a meter at Gallagher's Bar located at 11 Caleb Earl Street, Newport, Rhode Island. Newport Water generally alleged that due to tampering of the meter at Gallagher's Bar, there had been underbilling over a period of approximately five years and that Gallagher's Bar owed Newport Water $2,485.95. Gallagher's Bar filed a counter allegation that they had been overbilled over a period of approximately five years and were owed $2,345.00 from Newport Water.

On December 16, 1997, following an informal hearing, a decision was issued in favor of Newport Water. Gallagher's Bar thereafter requested a formal hearing pursuant to R.I.G.L. Section 39-4-3.

The Administrator determined that a full hearing was necessary and appointed the undersigned Hearing Officer to conduct said hearing. The parties were informed by the Hearing Officer that the proceeding would be a full evidentiary hearing and that the previous informal decision of December 16, 1997 would not be considered. (Transcript page 5, lines 2 through 6).

The following counsel entered appearances at the March, 6 1998 hearing:

For Newport Water:                 Joseph J. Nicholson, Esq.

For Gallagher's Bar:                  Gregory Klaiber, Esq.

Neither party offered pre-filed testimony. Newport Water presented the testimony of Roy B. Anderson, Utilities Director for the City of Newport. He testified that on November 7, 1996 he received an anonymous telephone call alleging that there had been tampering with the water meter at Gallagher's Bar. As a result he dispatched Dermot McDermott, Newport Water's meter mechanic, to Gallagher's Bar to evaluate the meter. Mr. McDermott reported back that his physical evaluation of the meter determined that the plug on the water meter head had been tampered with and was not in the proper position. He further testified that such tampering would cause a failure to register consumption because the impeller would spin on the meter with no registry of the reading. Newport Water replaced the meter at Gallagher's Bar in November 1996.

Newport Water then reviewed the history of water consumption at Gallagher's Bar and determined that there had been a precipitous drop in water consumption in 1991. Newport Water, therefore, reviewed historical water consumption and prepared an estimated bill for water consumption between 1991 and 1996. Newport Water determined that Gallagher's Bar had been charged for approximately 50,000 gallons during this time frame and had had an average consumption of 150,000 prior to 1991. It was on this basis that they calculated an underbilling of approximately $2,485.95 for water usage rates.

Mr. Anderson identified an exhibit which delineated, for the period December 9, 1981 through August 5, 1997, the meter readings, the consumption between meter readings, the consumption on an annual basis and Newport Water's calculation of the underbilling. (NW Exh.1) He testified that in preparing the exhibit he used CY 1989 and CY 1990 as a consumption baseline for Gallagher's Bar. He explained that the exhibit reflects Newport Waters' calculation of the underbilling by averaging CY 1989 and CY 1990 consumption (153,300), gallons and comparing that to the 1992 through 1995 average (41,600). Newport Water then calculated the difference in gallons for the period in dispute (586,425) multiplied it by the water rate of $3.59 per thousand gallons, added a $152.48 water quality protection charge and $147.37 sales tax to arrive at an amount owed of $2,405.12. An interest charge, from June 1997 to September 1997 at the rate of ten percent (10%), was added for a total claim of $2,485.95.

Mr. Anderson also testified that the actual consumption for 1997 (with the new meter having been in place for the full calendar year) was 78,000 gallons, 10,000 gallons less than the estimate contained in NW Exh.1. Mr. Anderson testified that, based upon his experience in the industry, the difference between the 78,000 annual gallons after the discovery of the alleged tampering and the average 153,300 annual gallons before the alleged tampering could be explained by Gallagher's Bar taking water conservation measures.

On cross-examination Mr. Anderson was asked to explain the replacement of meters and meter heads during the period covered in NW Exh.1. He stated that a new meter was installed on September 23, 1986. Less than four years later, on April 16, 1990, that meter was again replaced. Based upon a review of the Newport Water records Mr. Anderson testified that the April 1990 replacement was part of Newport Water's overall change to an automated meter reading (AMR) system. The changeover began in 1986 and Mr. Anderson believes that they were approximately fifty percent (50%) complete at the time of the change at Gallagher's Bar. Tests were not run on the meter when it was replaced. It is Newport Water's normal practice only to test meters during the regular testing every ten (10) years or at the request of a customer. Otherwise, the meters which are removed are disposed.

In November of 1996 the meter head was replaced. The meter itself remains to this day in Gallagher's Bar. Neither the meter nor the meter head were tested prior to the hearing.

Newport Water also submitted the testimony of Dermot McDermott, who is employed as their meter foreman. He testified that in November of 1996 he went to Gallagher's Bar at the request of Mr. Anderson to determine whether the meter had been tampered. The only way to get to the water meter from the bar was to have one of the employees move a large jukebox from in front of the basement door. He was given access by one of the employees, went into the basement, identified the water meter and inspected it. From his inspection he determined that the plug had been removed. The only way, of which he is aware, to remove a plug from a meter is to do so with a screw driver, hammer or other heavy projectile. However, the person doing this has to know where to tap and how hard to hit in order to accomplish removal of the plug. Once the plug is removed, the cap can be twisted off and the meter will no longer register. He replaced the meter head but did not test it because his investigation showed that the meter had been tampered with. The AMR itself is tested every time the meter is read, which is every three months. The meters themselves are tested every ten (10) years in accordance with PUC regulations. Additionally, a visual inspection is done every time a new meter is installed.

Mr. McDermott testified that Newport Water had had a previous problem with the meter in this location. In 1991 he had been called to the location on a complaint of a stopped meter. When he investigated, he determined that the counter had been removed from the meter. He confronted a Newport Water employee (Daniel O'Loughlin) whom he believed was involved with the removal but he did not report the situation to his supervisor. With regard to the 1990 meter replacement, Mr. McDermott testified that while Newport Water was in the midst of their AMR replacement, Gallagher's Bar was put ahead of schedule at the request of Mr. O'Loughlin, who stated that the basement was unpleasant and he wished to have the AMR system installed so that meter reading could be done from the outside. AMR was installed in 1990 the meter reader no longer had to enter the building to read the meter. The meter would be read from the exterior and Newport Water employees would only enter the building if there was a problem.

Mr. McDermott testified that in his opinion the difference between the actual 1997 consumption of 78,000 gallons and the pre-1991 consumption of 153,300 could be accounted for by water conservation methods. He further testified that he had not seen any leaks on the approximately one dozen occasions that he has been in Gallagher's Bar. He does, however, recall telling employees of Gallagher's Bar in the 1980's that their reading was high and they might have a toilet running. He believes he saw an ice machine in the bar at some point, however, it is no longer at the bar.

Newport Water indicated that they wished to call Mr. Barbato of Gallagher's Bar, however, they had been informed by Gallagher's Bar's attorney that Mr. Barbato would not answer any questions on the basis of the Fifth Amendment privilege against self incrimination.

Gallagher's Bar called Matthew J. Faerber whom had been subpoenaed by them to testify in this proceeding. Mr. Faerber was a twenty-three (23) year employee of Newport Water who held the position of Deputy Utilities Director when he was terminated on November 21, 1997. It was Mr. Faerber's opinion that 102,000 gallons per year could not be saved just by putting bricks in toilets and shutting off taps. However, he did believe that with a combination of conservation measures that amount of savings could result.

With regard to inspections, in Mr. Faeber's tenure with Newport Water there were two general meter inspections at ten year intervals. However, due to the high cost of individual meter analysis (which he believes to be $70.00 per meter), they had proposed to test ten percent (10%) of the meters starting with those installed in 1987. All meters installed before 1987 will be removed through the AMR program. Based on his experience when a meter goes bad it is almost always in favor of the customer.

Gallagher's Bar called John Callahan. Mr. Callahan stated that he had been friends with Mr. Barbato for thirty years and that he has been a periodic patron of Gallagher's Bar. He began investigating the water meter at Gallagher's Bar in January 1997. He tested the meter currently in Gallagher's Bar and stated that the water measuring system is working accurately. He believes that 78,000 gallons is reasonable annual consumption for this location. This is a typical usage and would not reflect leaky faucets, running toilets or any other excessive water use. He testified that the current plumbing fixtures at Gallagher's Bar are two bathroom sinks, two commodes, one urinal and a three section sink in the bar. While he has never been behind the bar, he states that Mr. Barbato obtains his ice from outside and does not have an ice machine. He has never seen an ice machine in the bar. Since January 1997 he has found only one leak which accounted for abnormal use for approximately one week until it was repaired. He does not know of any other conservation measures taken since January 1997. He states that the bar is not open on Sundays and that there are approximately ten barstools. He has never been in the bar at night, however, when he has been there during the day approximately half of the stools are full. Gallagher's Bar does not have a kitchen and does not prepare food.

Mr. Callahan offered the opinion that the meter was defective prior to 1990. This opinion was based on the fact that the meter was replaced in 1990 as well on the basis that it is his recollection that one of the AMR dealers in the United States had a recall of meters that were defective during that time frame. His opinion that the meter was defective was also based on his opinion that the fixtures in the building could not have used 150,000 gallons annually and his conclusion that a three and one half year old meter would not be replaced unless it was defective. He has not tested the meter or the meter head that was removed in 1996.

Mr. Callahan testified that, based on his analysis of an average usage of 80,000 gallons per year, Gallagher's Bar was underbilled by 130,000 gallons (or $2,056.00) between 1991 and 1996 and overbilled by 318,000 gallons (or $4,497.00) between 1986 and 1990 for a net owed to Gallagher's Bar of $2,441.00.

Gallagher's Bar submitted a final argument memorandum which was read and considered by the Hearing Officer.

FINDINGS

1. Between 1991 and 1996 the water meter, and billings based upon those readings, were incorrect due to tampering of the meter. Even Gallagher's Bar's witness (Mr. Callahan) agreed that the water meter readings during this time period were low. The only credible evidence regarding the low water usage was given by Mr. McDermott, who examined the meter and determined that tampering had occurred. The fact that the meter was replaced in 1991 as part of an AMR program does not lead to the conclusion that the previous meter was defective. This is especially true in light of the fact that Mr. McDermott testified that Mr. O'Laughlin requested that Gallagher's Bar be placed on the replacement list ahead of schedule.

2. The only persuasive evidence of the proper water usage prior to 1996 is the comparison with earlier years provided by Newport Water. Mr. Callahan began his investigation in January of 1997 and, therefore, has no knowledge of the configuration of plumbing (other than casual twice yearly visit as a patron) or any problems which could have lead to high usage. Mr. Callahan cannot be allowed to testify to prior usage based on information provided by Mr. Barbato since Mr. Barbato refused to testify asserting the Fifth Amendment  [1 By asserting the Fifth Amendment and refusing to testify Mr. Barbato violated R.I.G.L. Section 39-4-21 which provides that no person shall be excused from testifying before the Division on the basis that the testimony may tend to incriminate him. In Pulawski v. Pulawski, 463 A.2d 151, 156 (R.I. 1983) the Rhode Island Supreme Court held that "... the general rule [is] that an inference may be drawn against a party in a civil case who declines to answer questions or to testify in a civil case." The Court directed that a refusal to testify "... may be taken into account in the process of evaluating the evidence presented by a plaintiff or other moving party." Id. See also, Tarro v. Tarro, 485 A.2d 558 (R.I. 1984); Trend Precious Metals Company Inc. v. Sammartino Inc. 577 A.2d 986 (R.I. 1990). While Mr. Callahan testified that he did not know of any changes in the plumbing configurations, he was not in a position to know, unless he received this information from Mr. Barbato. I cannot allow Mr. Barbato to testify through Mr. Callahan and at the same time refuse to answer questions posed by Newport Water. I have, therefore, disregarded any comments made by Mr. Callahan regarding the water usage of the bar prior to January 1997.]. Both witnesses called by Newport Water and one witness called by Gallagher's Bar (Mr. Faerber) indicated that the reduction in water usage in this matter could result from a combination of conservation measures.

3. There is no competent evidence that the water meter at Gallagher's Bar was defective. There is no requirement that Newport Water test either the meter or meter head upon removal, especially in light of the fact that the tampering was evident and all parties agree that the meter (which has not been removed) is currently working properly.  [2 Gallagher's Bar contends that Newport Water does not follow the DPUC rule requiring meters to be tested every ten years. I do not see the relevance of this argument to the within dispute since the meter in question was installed in April 1990 and would not, therefore, be scheduled for inspection until the year 2000.]  Mr. Callahan testified that the meter is currently working properly and there is no evidence that it was repaired after the meter head was removed. If Gallagher's Bar wished to further test the meter to prove it defective it could have done so since the meter is still in place at Gallagher's Bar and the meter head is in the possession of the Newport Police.

Accordingly, it is

(15607) Ordered:

1. Gallagher's Bar pay to Newport Water the sum of $2,485.95 representing the undercharge for water along with authorized finance charges, as a result of tampering with the water meter at Gallagher's Bar.

2. Gallagher's Bar failed to prove any overbilling on the part of Newport Water and, therefore, their counterclaim is denied..

Dated and Effective at Providence, Rhode Island on May 13, 1998.