East Pointers owe city due to underbilling

By April Hunt

The Atlanta Journal-Constitution

East Point homeowners owe the city $487,305 for electric service because of chronic underbilling for years.

But whether the south Fulton County city can recover the money, which adds up to about 1.5 percent of the city's electric fund, is the subject of fierce debate. The city manager recommends collecting the money. Residents argue the city was at fault for the underbilling and should write off the loss.

And the eight-member city council has indicated it may not be able to vote on what to do. More than half of the council's members removed themselves from a recent discussion because they participate in the budget billing program that created the debt.

"This is a mess that's going to require serious review," said Frank S. Alexander, a law professor at Emory University who specializes in state and local government law. "It's a puzzle with more questions than answers."

The electric bill issue came to light after months of resident complaints about the city's budget billing process. Budget billing is designed to allow customers to pay a set amount for service every month, based on the previous year's consumption instead of actual use. A customer who used $1,200 worth of electricity last year, then, would pay $100 a month under the program.

At the end of the year, electric officials were supposed to review actual consumption and adjust payments for the coming year. They didn't.

Instead, East Point gave customers the next 12 months to pay off whatever balance they had accumulated. But the monthly base payment was never adjusted to reflect actual use.

The result: customers grew deeper in debt to the city, even as monthly bills showed they were current. The average debt is $250, though one customer whose bill the city admits it never examined owes $5,000.

"I want to know if I'm paying my bill every month, how they can come up with balance," said Beverlyn Grant, who the city says has run up a debt of about $100. "It just doesn't make sense."

The system has confused even some city officials. Mayor Joe Macon said he met with a resident who owed $3,000 but didn't realize it until the last electric bill tallied the debt.

Councilman Greg Fann said he had trouble explaining the system to his wife, or why the couple had been paying their bills all along but now are told they are among those who owe money. His family's total: $1,200.

"The city was getting paid, but the bottom line is, I owe," said Fann, who was among those who later removed himself from the debate. "We need to make adjustments so people can pay what they owe."

Just how much of that six-figure debt the city can collect, even if it votes to, is questionable. City manager Crandall O. Jones is urging the council to recover the money, though he admits he hasn't seen one of the contracts that would show that the city has the right to reclaim any of the money after a year of service.

State statute won't allow collections for debt more than four years old. And a 2000 Georgia Supreme Court ruling allows customers to argue "equitable estoppel" for chronic underbilling.

"In other words, you can say it isn't fair if you paid your bill every month to later be told you owe more," said John McArthur, the Athens attorney who won the case that gives utility customers the right to defend themselves. "I think a jury would identify with the customer in that scenario."

Alexander, the Emory law professor, said it may be that the city can collect part of the money owed, since the budget billing is done yearly. So anyone in debt from the last year could still be liable to pay their debt.

Jones said he has assigned staff members to review dates of service and to find contracts, to see what he is able to recover. The city is just now emerging from a long-standing debt of its own and can't afford to zero out any debts, whether in the $36 million general fund or the $32 million electric fund.

"It still represents service that was provided," Jones said. "That amount is owed. The budget is tight, but the ultimate decision on how to handle it will fall to the city council."

Residents will get an opportunity to voice their opinions on the matter in the next month at a special called meeting of the city's utility advisory commission. No date for that public hearing has yet been set, though the matter is expected to return to city council by year's end.