Does a Mississippi city have to collect underbilled utility amounts from customers when the city's own error caused the underbilling?
Plain-English summary
The City of Booneville's gas department made a billing mistake in 2019. Some customers got billed too much; some got billed too little. The error specifically affected "code 15" seasonal customers between May 2019 and September 2022. The city asked: do we actually have to chase down the underbilled amounts from customers who got their bills, paid them in full as billed, and might not even know there was a problem?
The AG said yes. Mississippi Constitution Article IV, Section 100 prohibits a municipality from remitting, releasing, or postponing any "obligation or liability" owed to it. A line of AG opinions has applied this to utility billing for years: "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."
The customers received the gas. The gas had a real cost to the city. The city undercharged. The fact that the city's own error caused the underbilling does not turn the unpaid portion into a forgiven debt; it is still a real obligation, and Article IV, Section 100 says it must be collected.
How far back does the city have to go? "As far back as necessary," starting with the first date underbilling occurred. There is no AG-imposed lookback limit. (Statutes of limitations may apply as a separate matter, but the AG opinion does not analyze those, and the operating principle is collection, not amnesty.)
The flip side, not directly addressed in this opinion but logically following: customers who were overbilled are entitled to a refund of the overcharge. Article IV, Section 100 does not allow the city to keep money that was not for service rendered. (The 2024 Mitchell opinion and the 2009 Hollingsworth opinion both confirm that bills can be reduced to match actual services received.)
What this means for you
If you are a Mississippi municipal utility administrator
Two operating rules from Article IV, Section 100:
-
Collect underbilled amounts. If you find an error that resulted in customers being billed less than the actual cost of service they received, you have to collect the difference. You cannot waive it as customer service. Build the corrected bills, send them out, and offer a payment plan if the back-bill is large.
-
Refund overbilled amounts. Same constitutional principle from the other side. If the same error overcharged some customers, refund the overage. The city is not permitted to keep money that was not for service actually received.
The political pressure when a four-year-old billing error surfaces is to "let it go" because customers will be upset. That is the wrong frame. The State Auditor will see this in your audit, and "we decided not to collect" is the kind of finding that follows officials around.
If you got an unexpectedly large back-bill from your Mississippi city utility
Your city is required to collect what you would have owed if the bill had been right the first time. You have options:
- Request a payment plan in writing. Most municipalities will agree to spread the back-bill over months or years.
- Verify the calculation. Ask for a clear breakdown of the underbilled period, the corrected rates, the new total, and what you have already paid.
- If you believe the back-bill is wrong on the merits (not just unwelcome), dispute it in writing and ask the city to walk through the calculation with you. Customer-side errors get resolved on the same fact-driven basis.
If you are a Mississippi customer who was overbilled
You are owed a refund of the overcharge. Reference Article IV, Section 100 and the principle that "a utility bill may be reduced in an amount that coincides with the service a customer did, in fact, receive" (the 2009 Hollingsworth opinion). The city does not have discretion to keep your money for service you did not receive.
If you advise municipalities on utility billing
A clean policy and a meter audit cycle are the practical defenses. When errors do surface, document the discovery, the analysis, the customer notifications, and the remediation plan on the minutes. The State Auditor's Technical Assistance Division is the right resource for the mechanics of corrections.
Common questions
Q: Why can't the city just absorb the cost as a goodwill gesture?
A: Mississippi Constitution Article IV, Section 100. "No obligation or liability . . . shall ever be remitted, released or postponed, or in any way diminished by the Legislature, nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury." The constitutional provision binds municipalities and prevents writing off real debts as goodwill.
Q: Does the same rule apply to private utility companies?
A: No. Article IV, Section 100 binds Mississippi government entities (the state, levee boards, counties, cities, towns). Private utilities (a co-op, an investor-owned company) operate under different legal regimes, including their tariffs and PSC regulations.
Q: Is there a statute of limitations on the back-billing?
A: The opinion does not analyze statutes of limitations. The operating principle is "as far back as necessary, beginning with the first date that underbilling occurred." Customers facing a back-bill that goes back many years may want to consult counsel about whether some specific Mississippi statute of limitations applies (and the city should likewise consult its attorney). But the AG opinion does not provide a built-in cap.
Q: Does the city have to collect from customers who have moved away or died?
A: The opinion does not address that. Practically, customers who can no longer be located or who have died present collection issues separate from the legal authority to collect. A reasonable approach is documented effort to collect, with non-collection only when the obligation is no longer reasonably collectible (and the State Auditor will look at the analysis).
Q: What if the city signed an agreement promising not to back-bill?
A: Those agreements are likely void as against public policy, because they would compromise an obligation that Article IV, Section 100 says cannot be compromised. The constitutional limit overrides contractual concessions a city might make.
Q: Can customers refuse to pay back-bills and force the city to sue?
A: They can refuse, but the city is required to pursue collection. The municipality has the same collection tools available for any unpaid utility debt: late fees, service termination procedures, civil suit. Refusing to pay does not make the debt go away; it forces the city to escalate.
Background and statutory framework
Mississippi Constitution Article IV, Section 100 is the core provision:
No obligation or liability of any person, association, or corporation held or owned by this state, or levee board, or any county, city, or town thereof, shall ever be remitted, released or postponed, or in any way diminished by the Legislature, nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury; nor shall such liability or obligation be exchanged or transferred except upon payment of its face value.
The AG has applied this provision to utility billing in a consistent line of opinions:
- Williams (Sept. 12, 2008): a utility debt may not be adjusted or forgiven when the customer received the service.
- Frieson (Sept. 7, 2018): reaffirmed the rule.
- Tucker (May 24, 2024): the present opinion, applying the rule to multi-year underbilling caused by a city's own error.
The complementary side of the doctrine (refunds for billing-not-for-service) shows up in Hollingsworth (Feb. 20, 2009) and Mitchell (April 8, 2024). Together, the two sides of the doctrine: collect what is owed, refund what was not for service received.
Citations
- Miss. Const. art. IV, § 100
- MS AG Op., Frieson (Sept. 7, 2018)
- MS AG Op., Williams (Sept. 12, 2008)
Source
- Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
- Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/05/D.Tucker-May-24-2024-Municipalitys-Ability-to-Correct-Natural-Gas-Billing-Error.pdf
Original opinion text
May 24, 2024
Daniel K. Tucker, Esq.
Attorney, City of Booneville
Post Office Box 430
Booneville, Mississippi 38829
Re: Municipality's Ability to Correct Natural Gas Billing Error
Dear Mr. Tucker:
The Office of the Attorney General has received your request for an official opinion.
Background
According to your request, sometime during the year 2019, a mistake was made within the municipal gas department resulting in the underbilling of some customers and overbilling of others. This error specifically affected seasonal customers referenced as "code 15 customers" between May 2019 and September 2022. The city of Booneville ("City") requests an opinion on whether it must collect the subject underbilled amounts from code 15 customers.
Questions Presented
1. Is the City required to collect underbilled amounts from code 15 customers who did receive a bill and did pay the amount that was billed to them?
2. If the answer to question one is yes, how far back can the City go in collecting the underbilled amounts?
Brief Response
1. Yes. "[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 at 1 (Sept. 7, 2018) (citing MS AG Op., Williams at 1 (Sept. 12, 2008)).
2. The City shall go as far back as necessary in collecting the underbilled amounts.
Applicable Law and Discussion
You first ask if the City must collect underbilled amounts from code 15 customers who received gas services, were billed, and paid the billed amount. Article IV, Section 100 of the Mississippi Constitution states:
No obligation or liability of any person, association, or corporation held or owned by this state, or levee board, or any county, city, or town thereof, shall ever be remitted, released or postponed, or in any way diminished by the Legislature, nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury; nor shall such liability or obligation be exchanged or transferred except upon payment of its face value.
Accordingly, this office has consistently concluded 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 at 1 (citing MS AG Op., Williams at 1). Accordingly, it is the opinion of this office that the City must collect underbilled amounts from code 15 customers, including those who received a bill and paid the amount that was billed to them.
You next ask how far back the City can go in collecting underbilled amounts from code 15 customers. It is the opinion of this office that the City shall go as far back as necessary, beginning with the first date that underbilling occurred.
If this office may be of any further assistance to you, please do not hesitate to contact us.
Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Maggie Kate Bobo
Maggie Kate Bobo
Special Assistant Attorney General