Enterprise Fund Defined

Submitted December 23, 2007 There appears to be a basic misunderstanding of the Cities operation of the water and sewer system in Fernley in regard to cost recovery. It is designed to meet NRS 354.517 definition of a “Enterprise Fund” meaning a fund established to account for operations: Which are financed and conducted in a manner similar to operations of private business enterprises, where the intent of the governing body (the council) is to have the expenses (including depreciation) of providing goods or services on a continuing basis to the general public, financed or recovered primarily thru charges to the user. Historically this has been construed to mean that if you are a user of the service you are billed for only what you actually use, no more no less. It is a common misconception that some portion of property taxes are collected and used to subsidize the operation, this cannot occur under an enterprise fund. Also, Fernley Utilities are exempt from oversight of the Nevada Public Utilities Commission as they are a municipal utility. Recently a resident had a line burst in his pasture while on an extended vacation and it was not until the owner returned that he found the problem. By this time, a very large volume of water had been consumed; in fact it approached the volume he used in the entire previous year. He in turn questioned whether he should be required to the pay the full amount per the billing schedule. He did not question the accuracy of the meter. If the meter accuracy is questioned the user can request the city to pull the meter and confirm its accuracy. If the meter proves inaccurate the city will effect an adjustment and there will be no cost to the user for pulling and verifying the meter. If the meter proves correct then the user will be billed for all costs. 99% of the time water meters fail by not recording actual full flow thru them. I will credit the gentleman for stating that he was more concerned with the impact on those who might face this same issue where the financial burden would be devastating to them.

The dilemma created when a person receives a utility bill that for what ever reason they are unable/unwilling to pay in a timely manner is, 60 days down the road the water will be shut off and to resume service they must pay all back charges plus a late fee and a hefty disconnect-reconnect charge. The city finance department that handles billings cannot do anything but abide by the fund rules. They will gladly assist any customer in informing them of any potential assistance that they may apply for. Any other action must come from a majority vote of the City Council. No matter what, any fees waived by the council, owed by the user, must then be taken from the general fund and transferred to the enterprise fund to make it whole. This in effect penalizes all city tax payers for the actions of some.

This may seem callous and unfair to some and yes, in many locations your water bill bears no direct connection to actual cost of service if, enough residents want the system changed then they need to convince the council to change it. Research shows that utility costs in Fernley are lower than many surrounding areas and in my estimation a direct result of operating under NRS354.517. W.B. Clegg Fernley