Iowa City overbilled $531,000 by MidAmerican for electricity

Company reimbursed full amount last month; funds will go to street light project

Gregg Hennigan
Published: January 3 2014 | 12:05 pm - Updated: 29 March 2014 | 1:35 am in
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IOWA CITY – The city of Iowa City paid $531,405 more than it should have on its electricity bill for streetlights since 2004 because of a data-entry error.

MidAmerican Energy, the city’s electric utility, reimbursed the amount in full last month when the discrepancy was discovered during a light audit, City Manager Tom Markus said.

“I think they settled  it as equitably as they could,” he said.

The overbilling was for a certain wattage of the city’s more than 3,000 streetlights.

Markus said his understanding was that in 2004, the city added two 150-watt high-pressure sodium streetlights, giving it 420 in all. Instead of creating a new total of 420, MidAmerican added 420, doubling its count of that type of light.

The city pays per light, broken down by wattage, rather than for actual electricity usage, which Markus said is common practice.

MidAmerican spokeswoman Julie White said the company has implemented new internal procedures to prevent the mistake from occurring again. She declined to elaborate on what those are.

The city is reviewing its procedures, Markus said. Ultimately, catching such an error comes down to human detection by someone noticing a large increase in the bill, he said. He started with city in 2010 and did not want to speculate on why the mistake was not caught in 2004.

White said what happened with Iowa City was an isolated incident and she is not aware of other cities being overcharged.

Markus said the utility company is only required to go back five years with the reimbursement but chose to pay the full amount.  By law, the city cannot collect interest on the sum.

The city must put the $531,405 in its road-use tax fund, where the money originally came from. City officials have been studying converting streetlights to light-emitting diode, or LED, lights, and will use the money to fund that project.

It will cost up to $350,000 to make the switch, and Markus said that amount will be made up in a little more than three years from the 30 percent cost savings in the more efficient LED lights.

The city will start with a pilot project to see what the lights look like and get feedback from the public.

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