M.Moore_January 3, 2020 – City of Pascagoula – Determining Whether Customer Has Received Utility Benefits

STATE OF MISSISSIPPI [LOGO] 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 Dear Mr. Moore: 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. 550 HIGH STREET - POST OFFICE BOX 220 - JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 - FACSIMILE (601) 359-5025 Michael R. Moore, Esq. January 3, 2020 Page 2 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 the customer’s neighbors run their yard sprinklers, there is not enough pressure to turn on the hot water on the customer’s 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? 550 HIGH STREET - POST OFFICE BOX 220 - JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 - FACSIMILE (601) 359-5025 Michael R. Moore, Esq. January 3, 2020 Page 3 (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. 550 HIGH STREET - POST OFFICE BOX 220 - JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 - FACSIMILE (601) 359-5025 Michael R. Moore, Esq. January 3, 2020 Page 4 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 reduce¹ 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 prior opinion to Eddie Williams, we opined the following: We assume, for the purposes of this opinion, that 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 ¹Any 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). 550 HIGH STREET - POST OFFICE BOX 220 - JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 - FACSIMILE (601) 359-5025 Michael R. Moore, Esq. January 3, 2020 Page 5 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: Leigh Triche Janous Leigh Triche Janous Special Assistant Attorney General 550 HIGH STREET - POST OFFICE BOX 220 - JACKSON, MISSISSIPPI 39205-0220 TELEPHONE (601) 359-3680 - FACSIMILE (601) 359-5025