Tyrone Borough is considering an increase of up to 65 percent for the American Eagle Paper Mill’s sewage rate.
Mill officials had asked the borough to have a cost of services study done before making a decision. Last night, borough council decided against having the study done while holding off on any decision to increase the mill’s rate. Mill representative John Ferner said the company was willing to pay 34 percent of an estimated $14,000 for the cost of the study. Ferner said the 34 percent figure was based on the mill’s usage of sewage capacity.
The borough and the mill currently have an agreement that caps the facility’s costs at $429,000 per year. That agreement is due to expire at the end of the year.
The borough is seeking an increase of up to 65 percent that would raise the costs for the paper mill to $953,000 per year as part of a proposed five-year agreement. The amount reflects the increase and about $45,000 per year to allow the borough to recoup money the borough would have received the last two years had a cap not been place. Without the $429,000 cap the borough would have taken in additional $229,000 from the mill based on actual usage.
Previously, the borough had passed on a 65-percent increase to residential and commercial users that took effect in 2004. The mill had attempted to extend the original agreement and increase its capacity earlier this year, but the borough turned down the request.
In an October meeting, the Borough’s engineer Ray Myers noted the mill mentioned a cost-of-service study regarding sewage had been done in 1990 when the facility operated under different ownership. Both parties used different consultants and Myers said, “there was a meeting of the minds” that resulted in a sewage rate ordinance. Current mill officials suggested another such study be conducted.
At last night’s meeting, solicitor Larry Clapper told council and Ferner that the borough was under no legal obligation to have another cost of services study completed. Mill officials contended the ordinance required it.
Clapper said that wasn’t the case since the borough did not plan to change rate structures. The proposed increase for the mill would be the same percentage as what was already passed on to other customers. The mill escaped that increase because of the “cap” agreement that was in place.
Clapper further explained the ordinance was no longer valid since the borough had turned the operation of the sewage facilities over to the Tyrone Borough Authority. He said the authority is the governing body in charge of rate changes while the borough and its council can only make recommendations.
A motion was made not have the study completed and council passed it unanimously.
