MS 2024-12-T-McKenzie-December-2-2024-Water-Billing-Errors-Underbilled-Services December 2, 2024

Can a Mississippi city forgive water bills that customers underpaid because of a city billing error?

Short answer: No. The Mississippi Constitution forbids remitting any debt owed to a municipality except by payment. So when a city's billing error or faulty meter results in underbilled accounts, the city must collect the corrected amount. Customers received the service and have to pay for it.

Disclaimer: This is an official Mississippi Attorney General opinion. AG opinions are persuasive authority but not binding precedent. This summary is for informational purposes only and is not legal advice. Consult a licensed Mississippi attorney for advice on your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original AG opinion (PDF)

Plain-English summary

McComb discovered that some of its water meters were faulty and that some customer accounts had been underbilled as a result. A selectman asked whether the city could simply write off the underbilled amounts rather than chase customers for back-charges that, from the customer's perspective, came out of nowhere.

The AG said no. Article IV, Section 100 of the Mississippi Constitution forbids any obligation owed to the state, a county, a city, or a town from being remitted, released, postponed, or in any way diminished, except by payment. The AG has applied that rule to utility debts in a long line of opinions: a city may not adjust or forgive a utility debt when the customer has received the benefit of the service, regardless of whose error caused the underbilling. The customer used the water; the customer owes for the water. The city has to bill the corrected amount and collect.

The AG cited prior opinions in Frieson (2018), Williams (2008), and Tucker (2024). The doctrine has been consistent for decades.

What this means for you

For mayors, city councils, and utility billing directors

When a billing error or meter failure produces underbilled accounts, build the back-billing process around three steps: (1) calculate the actual usage and the corrected charge for each affected account, (2) issue corrected bills with documentation of the error and methodology, and (3) offer customers a payment plan rather than a forgiveness. The plan can stretch repayment over months and ease customer hardship, but it cannot waive any portion of the corrected debt. Document the methodology on the city's minutes so an auditor can see the basis for each adjustment.

For going-forward operations: a meter calibration program and audit cycle reduces the chance of future events. The cost of an audit beats the cost of a back-billing campaign.

For city attorneys

If the council asks whether a partial forgiveness is permissible to soften customer impact, the answer is no. Article IV, Section 100 is absolute. There is no de minimis exception, no good-cause exception, no "city's-fault" exception. The State Auditor will find any forgiveness on review.

The narrow exception worth flagging: if the customer disputes the corrected calculation itself (for example, claims the meter was reading wrong and the corrected estimate overstates actual usage), that is a billing dispute, not a forgiveness. Resolve through the normal billing dispute process. Settling a disputed amount based on the actual evidence is not the same as remitting an undisputed debt.

For affected customers

If you receive a corrected utility bill from a Mississippi city for past underbilled service, the city is required to collect. The city cannot legally just write the amount off, even if the error was on the city's side. You can typically negotiate a payment plan, but you cannot expect the bill to disappear. If you think the corrected calculation is wrong, raise that as a billing dispute with documentation; that is different from asking for forgiveness.

For the State Auditor and citizens watching local finance

This is a recurring issue across Mississippi cities. When you see a council resolution that "writes off" or "forgives" utility debt for billed service that customers received, that is contrary to Article IV, Section 100 and longstanding AG guidance. Flag it on audit.

Common questions

What if it is impossible to identify which customer used how much water during the underbilling period?
The constitutional bar applies when the customer received the benefit of the service. If actual consumption can be reconstructed from any source (meter readings, comparable usage history, neighborhood averages), the city has to bill on that basis. If reconstruction is genuinely impossible for some accounts, work with your municipal attorney and the State Auditor on documenting that limitation in writing before deciding what to do.

Can the city absorb the lost revenue from the general fund instead of charging customers?
The constitutional bar is on remitting the debt. Whether the city later raises rates or absorbs costs from other sources is a separate budget decision. The point is that each customer's individual debt has to be collected.

Does the same rule apply to overbilled accounts?
Overbilling is the mirror situation. If a customer paid more than they actually owed, the city has the duty to refund the overpayment. The constitutional rule cuts both ways.

What about a small underbilling? Five dollars on an account?
The text of Article IV, Section 100 does not have a de minimis exception. As a practical matter, if the cost of collection clearly exceeds the amount, that is an administrative reality, but the city's policy still cannot say it is forgiving the debt. It can say collection is being deferred or attempted by mail.

Is there any way to get this corrected through the legislature instead?
Article IV, Section 100 is in the constitution. It cannot be changed by ordinary legislation; only by constitutional amendment.

Background and statutory framework

Mississippi Constitution Article IV, Section 100 provides:

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 provision dates to the post-Reconstruction era and was designed to prevent legislators from forgiving debts owed to public bodies. Mississippi courts and the AG have applied the principle broadly, including to utility debts.

The AG has consistently held 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. See MS AG Op., Frieson (Sept. 7, 2018); MS AG Op., Williams (Sept. 12, 2008); MS AG Op., Tucker (May 24, 2024).

Citations

Miss. Const. art. IV, § 100 (no remission of public debts except by payment)
MS AG Op., Frieson (Sept. 7, 2018) (utility debt cannot be adjusted or forgiven where service was received)
MS AG Op., Williams (Sept. 12, 2008) (same)
MS AG Op., Tucker (May 24, 2024) (same)

Source

Original opinion text

December 2, 2024

The Honorable Thomas G. McKenzie
Selectman, Ward 1, City of McComb
Post Office Box 667
McComb, Mississippi 39649

Re: Water Billing Errors; Underbilled Services

Dear Mr. McKenzie:

The Office of the Attorney General has received your request for an official opinion.

Background

According to your request, the city of McComb ("City") discovered water billing errors and faulty water meters resulting in many underbilled utility accounts. You now seek an opinion on the appropriate course of action.

Question Presented

Would it be an appropriate course of action for the City to forgive the underbilled account amounts, due to billing errors, and not bill the customers responsible for the actual water/sewer used?

Brief Response

"[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)).

Applicable Law and Discussion

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.

(emphasis added).

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); see also MS AG Op., Tucker at *1 (May 24, 2024). Accordingly, it is the opinion of this office that the City must collect underbilled account amounts.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Maggie Kate Bobo
Maggie Kate Bobo
Special Assistant Attorney General