The Billings Heights water board voted to approve a settlement of close to 3 million dollars over a five year billings dispute. 

The billing error began in 2015 after the city switched to a different billing software. After an in-depth review in 2017, the city of Billings found an inconsistency in the water produced at the plant and bills for customers. 

The cause was due to an incorrect conversion factor in the new billing system. The County Water District of Billings Heights was underbilled by roughly 40% in late February of 2015 to December of 2017.

Once the error was corrected, the Heights water board began to pay the full amount but did not pay the undercharged amount. 

The city filed a complaint with the water district in December of 2020, stating there was a breach of contract from the unpaid amount.

The settlement was unanimously approved by the Billings City Council at the business meeting in late March.

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Full Press Release Below:

BILLINGS – The Billings Heights water board voted 4-3 Wednesday night to approve a $2.9 million settlement over a billing dispute that spanned over five years.

The dispute stems from a billing error that began in 2015 when the city converted to new billing software.

In 2017, the city performed an in-depth review of water bills and found a significant discrepancy between the volume of water produced at the water treatment plant and customer bills. The actual production was higher than what was being billed.

After ruling out a leak in the water distribution system, it was determined that the missing water was accounted for and caused by an incorrect conversion factor within the new billing software.

This problem was only an issue for the County Water District of Billings Heights due to the specific type of water meter they use, and no other customers outside of the district were affected.

From Feb. 27, 2015 to Dec. 15, 2017, CWDBH was underbilled by $2,970,599.35.

With interest, the total amount owed as of October of 2020 was approximately $3,965,327.49.

The district was underbilled for consumption by approximately 40%, but they continued to bill their customers for full consumption.

Once the error was corrected, CWDBH began paying the full amount but refused to pay for the undercharged amount.

In the settlement contract signed Wednesday night, the Heights water board agreed to pay the city $2,936,251.80 in the next 30 days.

The Billings city council unanimously approved the settlement last month during the March 28 business meeting.

In the years leading up to this settlement, both parties attempted to resolve the dispute informally in the fall of 2018, then again through formal mediation in November of 2020. Both were unable to reach an agreement and the city filed a complaint against the district in 

December of 2020, asserting breach of contract for unpaid amounts due under the contract plus interest.

Negotiations resumed after new CWDBH board members were seated.

Representatives with the city and water district met several times between October of 2021 and February of 2022. An agreement was reached that month.

Under the agreement, the city’s claim for breach of contract for the under billed amount is dismissed, along with the district’s counter claims for negligence and declaratory relief related to the underbilled amount.

Because CWDBH agreed to pay the settlement amount in full, the original amount was reduced by $34,341.55 to reflect the interest CWDBH would have earned if it had made payments over two years.