5 gas customers billed $867,000 after city errors

Published 12:30 pm Thursday, July 8, 2010

Billing errors dating back up to five years have resulted in five commercial customers being sent notices they owe a total of $867,000 to the City of Vicksburg’s gas utility.

Rainbow Casino is said to owe the most — $751,107.33. The Vicksburg Warren School District is second at $88,109.18.

“We intend to get every dime,” Mayor Paul Winfield said Wednesday. “Certainly, we sympathize with these customers. We’re not in a situation where we’re trying to cause any undue hardship on any residents or businesses, but we have a duty to refund any funds that are owed to the city and its taxpayers.”

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Officials said the undercharges occurred due to multiplier meters installed in recent years. To be read accurately, their totals must be multiplied by 10. That wasn’t done, so the computerized billing system charged only 10 percent of the amount actually due, said Water and Gas Administration Director Tammye Christmas.

About 30 of the city’s 792 commercial customers have multiplier meters, said Christmas. The bills of other customers with multiplier meters have been reviewed and no errors were found, she said. The errors on the five commercial bills were discovered in June during an audit by an outside company, Winfield said.

The mayor emphasized none of the city’s approximately 9,000 residential customers or its other commercial customers paid more for natural gas in recent years to make up for the $867,000.

“The city was left holding the bag on this,” he said. “It’s not a scenario where others had to carry the weight.”

Specifically, Purchasing Director Tim Smith said the shortfall in revenue has been subsidized by a fund set aside for future improvements of the natural gas infrastructure in the city.

Thus far, just one of the five undercharged customers has paid the city, Smith said. Baton Rouge-based One Source Systems, which operates on Haining Road and received the lowest of the five undercharge bills, paid its $1,027.53 invoice in full.

Rainbow Casino owes from December 2005, but is now under new ownership. Isle of Capri Casinos’ purchase of Rainbow from Bally Technologies for approximately $80 million was approved by the Mississippi Gaming Commission in May, the last month in which the casino was overcharged. Since the bills predate Isle of Capri’s ownership, spokesperson Jill Haynes said it would be up to Bally to handle the city’s request for payment. Bally spokesperson Laura Olson-Reyes said Wednesday she was not aware of the issue, but would look into it. As of this morning she had not returned calls.

Others undercharged were First Baptist Church and Big River Shipbuilders.

Big River Shipbuilders President J.O. Smith III was not available Wednesday, but did respond by letter to the city in mid-June to the invoice for a $11,455 payment for undercharges dating to April 2007.

“We have closed our books, filed and paid taxes, compensated shareholders, etc,. for the years 2007, 2008 and 2009. Your request, that we reimburse the city for YOUR error during this period, is unreasonable,” reads the letter, obtained via an open records request. “If it has taken you 37 months to determine that a multiplier was not used in the billing our account, we wonder what is the status of other larger gas accounts.”

A First Baptist Church representative did not return a call for comment. Winfield said city officials have been setting up meetings with those who were undercharged to explain the error and discuss payment options.

“We’re talking about a major expenditure here,” said Donald Oakes, interim superintendent of the Vicksburg Warren School District, which the city says owes for bills dating to May 2007. “If, in fact, we do have to pay it, we’re going to have to figure out how.”

Oakes said he has the school board’s attorney and a utilities analyst looking at the bills and meters to confirm the district was actually undercharged.

“I don’t question whether the city is right or not, but I want to be sure about it before I make a recommendation to the board. At this point it’s still being looked at, and I’m sure it will be discussed at the next board meeting,” he said.

“By law, we don’t have the authority to just write this off,” the mayor said. “But, because this was an internal problem that’s been in place for years, we’re going to work with these customers to spread the payments out if that’s what they choose or need to do.”

No employees have been found to be responsible for the billing errors, said Winfield, who added the city is still digging into the cause.

“There hasn’t been any disciplinary action yet. I would not rule it out; we’re looking into that as well,” he said. “If we do come across some employee or employees who failed to do their jobs, we will take action.”

South Ward Alderman Sid Beauman said a similar natural gas undercharge scenario occurred during the Robert Walker administration, and was discovered in 2001 after Laurence Leyens took office for his first term. In that case, he said the school district was undercharged $60,000 to $70,000. Neither Beauman nor Oakes, who was then superintendent in a full-time capacity, recalled the reason for the undercharge, but both said it was paid back.


The City of Vicksburg has informed five commercial customers of gas bill undercharges and is pursuing payments.

• Rainbow Casino – $751,107.33

• Vicksburg Warren School District – $88,109.18

• First Baptist Church – $15,387.11

• Big River Shipbuilders – $11,455.16

• One Source Systems – $1,027.53

Total – $867,086.31