Can a Mississippi city refund a late fee on a utility bill if the city contributed to the billing dispute?

Plain-English summary

The City of Batesville got tangled up in a billing dispute with a new commercial utility customer. The first two utility bills had errors caused partly by the city, partly by the customer. The city did not charge late fees on those two bills because it shared blame. While that mess was being sorted out, a third bill came due. The third bill was correct, but the customer refused to pay it (along with the first two) until the earlier dispute was resolved. After everything was straightened out, the customer paid all three bills, including a late fee on the third one. The customer then asked for a refund of that third late fee.

The AG said the city has discretion to refund the late fee, but only because of how the dispute connected to the late payment. Mississippi Constitution Article IV, Section 100 prohibits a municipality from forgiving any "obligation or liability" owed to it, except by payment into the treasury. So a city cannot just write off real, undisputed debts. But when a billing dispute is what caused the late payment, and the city contributed to that dispute, the late fee is not really compensation for services rendered; it is a charge tied to a problem the city helped create. Refunding it is not "forgiving a lawful debt," it is correcting for a charge the customer would not have incurred but for the dispute.

What this means for you

If you run a Mississippi municipal utility

The opinion holds a lawful debt owed to the municipality may not be disposed of except by payment into the treasury (Article IV, Section 100), but that if the city determines the late fee resulted from the overall billing dispute and that but for the dispute the customer would have paid the third bill on time, the city may, in its discretion, refund the late fee, because that is not a refund of the cost of services actually received.

If you are a utility customer fighting a charge

On these facts, the customer paid all three bills in full, including the late fee, and then requested a refund. The opinion holds the city, in its discretion, may refund a late fee that resulted from a billing dispute the city contributed to, but it may not forgive a lawful, undisputed debt.

If you advise municipalities

The opinion frames the refund as turning on the nature of the late fee, whether it compensated the city for services rendered or resulted from a city-involved billing dispute, rather than as forgiveness of a debt barred by Article IV, Section 100. It notes that under Section 7-5-25 the office opines only prospectively and cannot validate or invalidate past actions.

Common questions

Q: Can a Mississippi city forgive a customer's overdue utility bill as a goodwill gesture?
A: No. Article IV, Section 100 of the Mississippi Constitution bars a municipality from releasing or postponing any "obligation or liability" owed to it, except by payment into the treasury. Real, undisputed debts have to be collected.

Q: When can a city legitimately reduce a utility bill?
A: When the bill does not match the service actually provided. If a meter misread or a billing error charged the customer for service they did not receive, the city can adjust the bill to match the actual usage. That is not "forgiving" a debt; it is correcting the bill.

Q: Does the opinion address fees other than the utility late fee?
A: The opinion concerns a municipal utility late fee. Its constitutional analysis rests on Article IV, Section 100, which it reads to bar a municipality from forgiving claims that are not doubtful and are owed to it.

Q: Who decides whether the dispute was real and the city contributed to it?
A: The opinion treats the refund as a discretionary determination for the city, conditioned on the city finding that the late fee resulted from the billing dispute and that but for the dispute the customer would have paid on time.

Background and statutory framework

Mississippi Constitution Article IV, Section 100 is the operating constraint here. Its language is broad: "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." The AG has read that to mean municipalities cannot compromise or forgive non-doubtful claims.

Two earlier AG opinions frame the boundaries. Williams (Jan. 21, 2011) is the source for the rule that Article IV, Section 100 prohibits forgiving claims that are not doubtful. Hollingsworth (Feb. 20, 2009) is the opening: a municipality may reduce a utility bill in an amount that coincides with the service the customer actually received. The Mitchell opinion extends that opening one notch further: when a billing dispute caused the late fee, refunding it is more like reducing a bill for service-not-rendered than forgiving a debt.

The opinion also reaffirms that the AG only opines prospectively. The first paragraph of the discussion notes that to the extent the request asked about past actions, the AG cannot validate or invalidate them under § 7-5-25.

Citations

• Miss. Const. art. IV, § 100
• Miss. Code Ann. § 7-5-25
• MS AG Op., Williams (Jan. 21, 2011)
• MS AG Op., Hollingsworth (Feb. 20, 2009)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/04/C.Mitchell-April-8-2024-Authority-to-Refund-Utility-Bill-Late-Fees.pdf

Original opinion text

April 8, 2024

Colmon S. Mitchell, Esq.
Attorney, City of Batesville
Post Office Drawer 1586
Batesville, Mississippi 38606
Re: Authority to Refund Utility Bill Late Fees

Dear Mr. Mitchell:
The Office of the Attorney General has received your request for an official opinion.

Background
Your request states that two utility bills the city of Batesville ("City") sent to a new commercial customer contained errors resulting from actions of both the City and the customer. While the City and the customer were working to resolve the issues with these two bills, another billing cycle rolled around, and the City sent a third utility bill to the customer. All three bills covered different time periods of utility service. There was no overlap. While the third bill was ultimately determined to be correct, the customer unilaterally chose not to pay any of these bills until the issues with the first two bills were resolved to the customer's satisfaction. Late fees on the first two bills were not charged since the City contributed to the problems with those two bills. After the issues were resolved, the customer paid all three bills including a late fee added to the third bill, which the customer protested. After paying the bill in full, the customer requested that the City refund the late fee to the customer.

Question Presented
May the City refund a late fee to the customer on a utility bill for what was ultimately determined to be an undisputed amount?

Brief Response
A lawful debt owed to the municipality may not be disposed of except by payment into the proper treasury. However, if there is a dispute as to the amount owed for the services rendered, the City, in its discretion, may reduce the bill to be consistent with the amount owed for the services rendered.

Applicable Law and Discussion
As an initial matter, to the extent your request deals with past actions taken by the City, this office cannot by official opinion validate or invalidate past actions. Official Attorney General's opinions are issued on prospective questions of state law pursuant to Mississippi Code Annotated Section 7-5-25.

Article IV, Section 100 of the Mississippi Constitution provides, in pertinent part:

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.

We have consistently opined that Article IV, Section 100 of the Mississippi Constitution prohibits a municipality from compromising or forgiving claims which are not doubtful and are owed to a municipality. MS AG Op., Williams at 2 (Jan. 21, 2011). If a customer owes a lawful debt to a municipality, such debt may not be released or extinguished, except by payment into the municipal treasury. Id. However, when asked about a billing dispute, we have previously said that a municipality may reduce a utility bill in an amount that coincides with the service a customer did, in fact, receive. MS AG Op., Hollingsworth at 2 (Feb. 20, 2009). If the City determines that the late fee resulted from the overall billing dispute between the City and the customer, and but for that dispute, the customer would have paid the third utility bill in a timely manner, then the City, in its discretion, may refund the late fee, which would not be a refund of the cost of services actually received.

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/ Abigail C. Overby
Abigail C. Overby
Special Assistant Attorney General