Water has been restored, at no extra charge, to all residents who had been disconnected after a sudden, unannounced billing change last month.

Finance Director Jim Mahoney on Tuesday admitted the city had erred by not notifying customers of the change. Two weeks ago, he said only customers without a record of prior disconnections would have their water restored free. “Habitual offenders” would not be afforded the same courtesy.

Mahoney changed his mind.

“I told the cashiers to remove all late or disconnect fees from the last billing period,” Mahoney told the Herald-Press. “Everyone has been reconnected, and we've gone back to the old cycle, until the council makes a decision.”

The collection cycle, which Mahoney had changed to comply with city ordinance, has been restored to 30 days. City council members, at a yet-to-be-determined date, will vote on whether to follow the ordinance of 20 days, or amend it to the full month.

Mahoney said some residents mistakenly believe they were going to be charged for every 20 days of water usage.

“It's always been thirty days of usage,” Mahoney said. “The amount of time residents have to pay their bill was what changed.”

City ordinance states residents have 20 days to pay their utility bill before accruing a three percent late fee. Service would be disconnected seven days later, if the bill was not paid, giving residents 27 days from bill to cut-off.

“Currently, everyone has 30 days to pay their bill,” Mahoney said. “On top of that, it has become standard to give an additional 10 days before service is shut off. No utility company gives 40 days to settle an account before loss of service.”

Mahoney said the city will follow whatever the council decides, and not stray from the ordinance. Doing so in the past, he said, has cost the city dearly.

Since 2006, Mahoney said, the city has lost $1.7 million in uncollected water bills, late fees, and disconnect fees. That's roughly $130,000 a year.

This year, the debt has grown. With two months left in the year, the total of uncollected fees has reached nearly $138,000 from residential and commercial customers.

“We need to collect on these fees,” Mahoney said. “It's what is supposed to pay for improvements in our water treatment plant, infrastructure, and so on. These fees are a big reason why we haven't been able to upgrade.”

Part of the problem, Mahoney said, is residents have been allowed to pay a portion of their bills without loss of service. Mahoney believes requiring payment of utility bills in full would alleviate this issue.

“Some residents have figured out how to game the system,” he said.

District 2 Councilman Mitchell Jordan disagreed.

“We have many low-income and fixed-income residents in Palestine,” he said. “Sometimes on a $100 utility bill, they can only pay $90. The balance should be able to roll over to the next bill. Water is a necessity, not a luxury.”

Mahoney said he is not without compassion, but residents should treat the water bill like any other utility.

“The electric company doesn't accept partial payments for service,” he said. “When it comes to water, we are simply a utility company that supports the city.”

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