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? The opinion holds the City "shall go as far back as necessary, beginning with the first date that underbilling occurred." It does not impose a lookback limit and does not analyze any statute of limitations.

The opinion was asked only about the underbilled customers. It does not address the customers the same error overbilled, and it does not opine on refunds.

What this means for you

If you are a Mississippi municipal utility administrator

The opinion holds 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." It rests on the rule 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."

If you got an unexpectedly large back-bill from your Mississippi city utility

The opinion holds the City is required to collect what was underbilled, even where you paid the original bill in full as issued, because Article IV, Section 100 bars the City from remitting or releasing the obligation. It does not address payment plans or dispute procedures.

If you are a city attorney advising on a billing correction

The opinion grounds the duty to collect in Article IV, Section 100 and the Frieson and Williams opinions. It holds the collection reaches back "as far back as necessary, beginning with the first date that underbilling occurred," and does not analyze any limitations period.

Common questions

Q: Why can't the city just absorb the cost as a goodwill gesture?
A: The opinion relies on Article IV, Section 100: "No obligation or liability . . . shall ever be remitted, released or postponed, or in any way diminished . . . nor shall such liability or obligation be extinguished except by payment thereof into the proper treasury." It reads that to mean a utility debt cannot be forgiven where the customer received the service.

Q: Does it matter that the city's own error caused the underbilling?
A: No. The opinion holds the 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."

Q: Does the city have to collect even from customers who already paid their bill in full?
A: Yes. The opinion holds 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."

Q: How far back can the city collect?
A: The opinion holds the City "shall go as far back as necessary, beginning with the first date that underbilling occurred." It does not analyze any statute of limitations.

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 opinion applies this provision to utility billing through prior AG 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 (quoted in the present opinion).
• Tucker (May 24, 2024): the present opinion, applying the rule to multi-year underbilling caused by a city's own error and holding the City must collect "as far back as necessary, beginning with the first date that underbilling occurred."

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