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Water costs ebb, flow by tens of millions

Scope of bureau's troubles may be well defined, but repair bill isn't

How much will the Portland water bureau's troubled computer billing system cost Portland ratepayers? Anywhere between zero and more than $80 million, depending on who's talking.

City Commissioner Erik Sten, who is in charge of the bureau, says the answer could be little or nothing. Sten hopes that the city can recover most or all of the cost overruns and potential revenue losses from the system's manufacturer, Severn Trent Systems of Houston.

'In a nutshell, ratepayers will not pay for the problems associated with this system,' Sten said in a May 1 letter to Mayor Vera Katz and the rest of the City Council.

But if Severn Trent won't pick up the tab, estimates vary about the potential final bill.

The city attorney's office has prohibited city officials from offering a total figure until the legal liability issues are resolved. Figures culled from previously released public reports suggest that the additional costs and losses could be as much as $29 million, a figure that Sten does not dispute.

Other sources say the total will be far higher, however.

Computerworld magazine set the figure at $40 million late last year.

In a Nov. 5 opinion piece, senior news columnist Frank Hayes said most of the cost Ñ $30 million Ñ would come from 'lost cash flow.'

John Wish, a member of the Portland Utilities Review Board, thinks that the total could be $41.4 million, not counting Hayes' 'lost cash flow' figure. Instead, Wish thinks that the final cost figure should include the salaries of additional bureau employees who have been reassigned to run the system (up to $6 million), higher future costs of deferred maintenance projects ($2 million) and higher future costs of deferred capital construction projects ( $4.4 million).

But Mike Miliucci, who is running for the City Council against Sten, says the total could be twice Wish's estimate. In an April 29 memo titled 'Total Impact of Portland Water Bureau Fiasco,' Miliucci pegged the potential costs and losses at $81.4 million.

Miliucci's memo includes all of the figures offered by the city, Hayes and Wish, plus an additional $23 million to repair the system's remaining problems. That figure was first offered by TMG Consulting, an Austin, Texas, firm retained by the city to evaluate the system.

Rich Rodgers, Sten's liaison to the water bureau, says the city already has decided against spending that money. He also dismisses Hayes' $30 million lost-cash flow figure as unrealistically high.

But even Sten says the system will have to be replaced in a few years, and the water bureau estimates that cost at about $30 million Ñ bringing the city's total unexpected cost and revenue loss projections up to $59 million.

It could take years to learn who's right. The city attorney's office has only just begun negotiations with Severn Trent about who should pay Ñ whatever the final figure turns out to be.