Can a Mississippi city forgive part of an under-billed water bill if the customer's water pressure was so low she barely received service?

Plain-English summary

The City of Pascagoula misconfigured a residential water meter and under-billed the customer for years. When the city tried to collect the back charges, the customer pushed back: she said her water pressure was so low for those same years that only one person could shower at a time, dishes could not be washed during a shower, and the washing machine had to be restarted multiple times per cycle. Could the city write off some or all of the unpaid balance, or did Article 4, Section 100 of the Mississippi Constitution (which forbids forgiving valid debts owed to the government) require collecting the full amount?

The AG concluded that the city could compromise the bill, but only if the city itself made the factual finding that the customer did not actually receive the benefit of the service. If the board of supervisors documented in its minutes that the water quality was so poor the customer received minimal service, the city could reduce both the usage fee and the standard meter demand fee. If the city found she effectively received no service at all, a settlement of zero dollars was permissible. The legal hook was Section 25-1-47, which authorizes municipalities to settle "doubtful claims," combined with the fact that a bill for utilities the customer never effectively received was not a clean, undisputed debt that Section 100 prevents the city from forgiving.

Currency note

This opinion was issued in 2020. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is the rule that almost stopped Pascagoula from negotiating the bill?

Article 4, Section 100 of the Mississippi Constitution. It bars a city from compromising or forgiving any valid claim it is owed, except by payment into the municipal treasury. Prior AG opinions had read that to mean utility debts cannot just be wiped out because the city made an internal billing mistake.

Why did the AG let Pascagoula compromise this bill anyway?

Because the customer's complaint about low water pressure made the underlying claim "doubtful" rather than clean. Section 25-1-47 lets a municipality settle doubtful claims. If a customer never really received the benefit of the service the city was charging for, the bill is not the kind of indisputable government debt Section 100 protects.

Could the meter "demand" fee also be reduced, or only the usage fee?

The AG said both could be reduced, but the threshold for the demand fee was higher. The demand fee is normally a fixed monthly charge tied to the size of the water line, not to actual consumption. To compromise it, the city had to find that water quality was so poor the customer received minimal utility service overall, not just less water than billed.

Who decides whether the customer "actually received the benefit" of the service?

The municipal governing authority, after weighing the facts, with the determination reflected in its minutes. The AG's office said it could not make that factual finding.

What about old back-billing that goes back many years?

The AG flagged that any reduction in a utility bill is also subject to applicable statutes of limitation, including Section 15-1-29.

Background and statutory framework

Pascagoula bills water customers in two pieces: a fixed "demand" fee tied to the meter size and a "usage" fee tied to how much water flows through the meter. The city set up a particular residential meter incorrectly, so for several years the customer was under-billed on both pieces.

When the city tried to collect the back charges, the customer responded with a quality-of-service complaint. The customer's home is at the end of a utility line, which she said produced low water pressure for years. Two people could not shower at the same time, the dishwasher and shower interfered with each other, the washing machine had to be restarted multiple times per cycle, and the tankless water heater struggled to ignite when neighbors ran their sprinklers. The city said it had largely verified the pressure problem and was working on a fix.

The legal frame was a tension between two doctrines:

1. Article 4, Section 100 of the Mississippi Constitution. The Mississippi Supreme Court and the AG's own prior opinions read this provision strictly: a municipality may not release or extinguish a valid debt owed to it except by payment into the municipal treasury. The AG had earlier told a different requestor that "a utility debt may not be adjusted or forgiven when a customer has received the benefits of the utility service, regardless of a municipality's error in billing." MS AG Op., Frieson (Sept. 7, 2018).

2. Section 25-1-47, Miss. Code. Municipalities may compromise and settle "doubtful claims." A 2008 AG opinion to Williams (and a 2011 follow-up) had identified the bridge between the two: where there is a "genuine question as to whether the customer actually received the benefit of the utility service," the claim is doubtful, and Section 25-1-47 authority controls.

The AG fit Pascagoula's facts into that bridge. Quantity-wise, the customer concededly received the water she was billed for. Quality-wise, the water pressure complaint raised a genuine question about whether she actually got the benefit of the service. That made it a doubtful claim, and the city had discretion under Section 25-1-47 to negotiate.

The AG also reminded readers that any reduction is still subject to applicable statutes of limitation, including Section 15-1-29 (Miss. Code), citing MS AG Op., Turner (Sept. 11, 2009).

The opinion is signed by Special Assistant Attorney General Ricki Janous on behalf of Attorney General Jim Hood.

Citations

• Mississippi Constitution Article 4, Section 100
• Miss. Code Ann. Section 7-5-25 (limits on AG opinions)
• Miss. Code Ann. Section 25-1-47 (settlement of doubtful claims)
• Miss. Code Ann. Section 15-1-29 (statute of limitations)
• MS AG Op., Frieson (Sept. 7, 2018)
• MS AG Op., Williams (Jan. 21, 2011)
• MS AG Op., Williams (Sept. 12, 2008)
• MS AG Op., Stockton (Dec. 8, 2017)
• MS AG Op., Barton (Dec. 16, 2011)
• MS AG Op., Glidewell (Aug. 14, 2009)
• MS AG Op., Barton (May 15, 2009)
• MS AG Op., Horton (Aug. 24, 2007)
• MS AG Op., Amos (Feb. 3, 2017)
• MS AG Op., Snyder (March 20, 1998)
• MS AG Op., Hollingsworth (Feb. 20, 2009)
• MS AG Op., Gay (May 9, 1994)
• MS AG Op., Thomas (Sept. 4, 2007)
• MS AG Op., Turner (Sept. 11, 2009)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2020/07/M.Moore_January-3-2020-City-of-Pascagoula-Determining-Whether-Customer-Has-Received-Utility-Benefits-1.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

STATE OF MISSISSIPPI

JIM HOOD
ATTORNEY GENERAL

OPINIONS DIVISION

January 3, 2020

Michael R. Moore, Esq.
Attorney, City of Pascagoula
Post Office Box 1529
Pascagoula, MS 39568-1529

Re: City of Pascagoula - Determining Whether Customer Has Received Utility Benefits

OFFICIAL OPINION

Attorney General Jim Hood has received your request for an opinion and has assigned it to me for research and response.

Issues Presented

You inquire as to whether a municipality may negotiate a settlement of under-billed utility charges in an amount less than the value of said charges. Specifically, you provide the following:

The City of Pascagoula ("the City") has authorized me to request an official opinion regarding the following issue, which involves errors in utility billing. Generally, the City charges customers who receive water from the City both a standard meter "demand" fee and a utility "usage" fee. The demand fee is a fixed monthly charge determined by the size of the water line servicing the customer's residence or business. The demand fee is charged regardless of the amount of the customer's water usage. On the other hand, as the term suggests, the usage fee is based solely on the quantity of water used by the customer.

When the City set up the water and sewer utility meters for a particular residential customer, the set-up was performed incorrectly, resulting in the customer being under-billed for the standard meter fees. The customer has been under-billed for both fees for several years.

Addressing a similar situation, your office previously opined that "a utility debt may not be adjusted or forgiven when a customer has received the benefits of the utility service, regardless of a municipality's error in billing, as such would result in a violation of the Mississippi Constitution Article 4, Section 100." Renetha L. Frieson, Esq., 2018 WL 5115578, *1 (Miss. A.G. Sept. 7, 2018).

The situation at hand raised the question of whether the "customer has received the benefits of the utility service" such that the City may negotiate a settlement of the claim. The customer's residence is located at the end of a utility line which, according to the customer, results in low water pressure. The customer has explained that for years the water pressure has been so low at her residence that only one person can shower at a time and that dishes cannot be washed while someone is showering. She has further explained that, due to low pressure, she must restart her washing machine at least three times during a cycle. Also, if her neighbors are running their yard sprinklers, there is insufficient pressure to turn on the hot water tank or the tankless water heater. Per the customer, this has resulted in her household not being able to take hot showers in the morning. Steps are underway by the City to correct this problem, which the City has largely verified.

There is no dispute that, in terms of quantity, the customer received the utilities for which she was under-billed. However, the quality of the utilities, or on occasion a complete lack thereof, seems to raise the question of "whether the customer actually received the benefit of the utility service." See Eddie C. Williams, Esq., 2011 WL 533261, *3 (Miss. A.G. Jan. 21, 2011)(indicating that a municipality may negotiate settlement of a claim for under-billed utility services where there is "a genuine question as to whether the customer actually received the benefit of the utility service.").

Considering the foregoing circumstances, the City's questions are as follows:

(1) May the City negotiate a settlement of the customer's under-billed utility usage fees for an amount less than the face value of those fees?

(2) May the City negotiate a settlement of the customer's standard meter demand fees for an amount less than the face value of those fees?

(3) May the City negotiate a settlement of the customer's under-billed utility usage fees and/or meter demand fees for zero dollars?

Response

Pursuant to the authority granted to this office in Section 7-5-25 of the Mississippi Code, official opinions of the Attorney General are limited to questions of state law for future guidance of those officials entitled to receive them. Opinions of this office may not be issued which require our office to make factual determinations. Therefore, to the extent that your request requires this office to make determinations that exceed the limitations established in Section 7-5-25, we decline to respond with an official opinion of this office on those particular issues.

Pursuant to Section 25-1-47 of the Mississippi Code, the City of Pascagoula may, as a part of a settlement of a doubtful claim, negotiate the amount of a customer's water usage fees to an amount consistent with the value of the service that the municipality has determined that the customer actually received. Likewise, if the municipality determines that the quality of the water was so poor that the customer received minimal utility service, the municipality may also negotiate the standard meter demand fees to an amount less than the face value of the demand fees. In the event that the municipality concludes, based on the facts, that the customer, in essence, did not receive any water service, a settlement of zero dollars may be appropriate.

Applicable Law and Discussion

Pursuant to Mississippi Constitution Article 4, Section 100, a municipality is prohibited from compromising or forgiving claims which are not doubtful and are owed to it. If a municipality is owed a lawful debt, such debt may not be released or extinguished except by payment into the municipal treasury. MS AG Op., Thomas (September 4, 2007). We have consistently opined that a municipality may only reduce a utility bill that was unreasonably increased because of unforeseen circumstances and for which the customer did not receive the benefits of the utility service. MS AG Op., Stockton (December 8, 2017); MS AG Op., Barton (December 16, 2011); MS AG Op., Glidewell (August 14, 2009); MS AG Op., Barton (May 15, 2009). Whether the customer received the benefit of the utility service is a factual determination to be made by the municipal governing authorities and reflected in its minutes. Id.

You provide in your request that there is no question as to the amount of the utilities received, but that the quality of the utilities is at issue. As referenced above, the determination as to whether a customer has actually received the benefit of a utility is a factual determination to be made by the municipality. Here, it would be incumbent upon the municipality to determine whether the customer did, or did not, in fact, receive the benefit of the water service. Assuming that the municipality concludes that, as a result of the low pressure of the water, the customer did not receive the benefit of the water, it may reduce the customer's usage water bill to reflect the value of the service actually received. See MS AG Op., Williams (January 21, 2011); MS AG Op., Williams (September 12, 2008); MS AG Op., Horton (August 24, 2007). See also MS AG Op., Amos (February 3, 2017)(as to the quality of the utility, municipality had no authority to reduce water bill of customer when, upon testing, the water had met all of the Environmental Protection Agency requirements). Any determination regarding whether the customer received the benefit of the utility service, and whether the customer is entitled to a reduction, should be made by the municipal governing authority and reflected in its minutes. MS AG Op., Barton (May 15, 2009).

In regard to the authority of a municipality to settle a claim in accordance with Section 25-1-47, a municipality may compromise claims for utility bills which are doubtful. MS AG Op., Williams (January 21, 2011); MS AG Op., Barton (December 16, 2011). In a previous opinion to Eddie Williams, we stated:

For the purpose of this opinion, when you refer to "doubtful or disputed claims" you are referring to those claims that may be settled pursuant to Section 25-1-47. You inquire about whether the under-billed/uncollected portion of the utility bill qualifies as a "doubtful and disputed claim" in which the municipality could compromise and settle, in accordance with its authority under Mississippi Code Annotated Section 25-1-47. We have previously opined that a municipality, pursuant to such authority, may satisfy any negotiated settlement of a claim for damages brought as a result of any actions of municipal officials and employees, provided that the claim is legitimate, lawful and a bonafide claim. MS AG Op., Hollingsworth (February 20, 2009); MS AG Op., Gay (May 9, 1994). However, in those instances, there was a genuine question as to whether the customer actually received the benefit of the utility service. One scenario involved broken pipes and leaks and, in the other, the customer had been charged twice for the same service. In the case at-hand, your request specifically provides that there is no dispute as to "the amount of gas used by each of the high-volume users during that period of time." See MS AG Op., Snyder (March 20, 1998)(municipality has no authority to negotiate a settlement of late fees or interest for customers who are not qualified to receive free service, unless there is a bonafide dispute as to whether fees are owed.)

MS AG Op., Williams (September 12, 2008). As you suggest, we are of the opinion that a municipality enjoys some discretion in determining whether a customer has, in fact, received the benefit of a utility service. In this instance, such discretion would be limited to the usage fees. Pursuant to Section 25-1-47, the City of Pascagoula may settle doubtful claims. Therefore, in response to your first inquiry, the municipality may negotiate the amount of the usage fees to an amount consistent with the actual value of the service that the customer received. As to your second question regarding the standard meter demand fee, if the municipality determines that the quality of the water was so poor that the customer received, in essence, minimal utility service, the municipality may also negotiate the standard meter demand fees to an amount less than the face value of the demand fees. In the event that the municipality concludes, based on the facts, that the customer essentially did not receive any water service, a settlement of zero dollars may be appropriate.

If our office may be of further assistance, please advise.

OFFICIAL OPINION

JIM HOOD, ATTORNEY GENERAL

By: Ricki Janous
Special Assistant Attorney General

[Footnote: Any reduction in a utility bill would naturally be subject to any applicable statutes of limitation, including, but not limited to, Section 15-1-29 of the Mississippi Code. MS AG Op., Turner (September 11, 2009).]