City leaders, JXN Water spar over proposed rate increase

JACKSON, Miss. (WLBT) — It will likely be another two weeks before members of the Jackson City Council vote on a proposed rate increase from Interim Third-Party Manager Ted Henifin.

However, weeks after first hearing about the proposal, council members and the mayor still say they don’t want it.

“What I see is a proposal for you balancing your books by charging more. I don’t even see an attempt to balance the books by reducing costs, or by going by the lowest and best bid, by going with Jacobs [Solutions],” Ward Six Councilman Aaron Banks said. “Is there a way to do it to reduce the costs to the city of Jackson?”

Council members and the mayor on Tuesday voiced their concerns about the proposed increase, which would raise a typical residential bill by about $9 a month.

Henifin proposed the increase earlier this year as part of his February 2025 Financial Management Plan.

He said the increase is needed to help cover the utility’s operating costs, which run about $145 million. He says the most JXN Water could generate under the current rate structure is about $115 million.

“[We have] a long-standing history of underfunding water and sewage in the city of Jackson. When we took over… in 2022, in order, just $15 million was committed to run the water system, which was the balance of the budget that year,” he said. “That’s no way to operate a system successfully at that low amount.”

“{We need] enough money to keep the sewage off the streets and keep water available to everyone, which is where we’re at today.”

He also pointed out that the city was required to raise rates as part of a bond rate covenant approved by the council back in 1993. He said that the covenant, which is a promise between lenders and the city, requires rates to be increased when revenues are not enough to cover operating costs and debt coverage.

City leaders, though, say Henifin should focus on improving collections and cutting costs before implementing another rate increase.

Jackson Mayor Chokwe Antar Lumumba said part of the discussion also should be why certain residents outside the city limits continue to pay less, even after Henifin implemented his initial rate hike last year.

“We provide water to non-residents of Jackson, people outside [of the city limits.] There is a variation of rates between Jackson payers and those residents. It’s the same water, the same system. Why is there a difference in what we pay and what they pay?”

Lumumba was referring to roughly 1,500 customers who live about a mile outside the Jackson city limits.

Henifin said that state statute requires JXN Water to get approval from the Public Service Commission before increasing those rates for those customers. However, the PSC has not agreed to a rate study.

“We approached them about doing a rate case, and we haven’t been successful,” he said.

Lumumba also raised concerns about JXN Water failing to bid out its maintenance and operations contract with Jacobs, saying the contract is for $30 million.

“I’m not saying who you should contract with… My question is this: What can we do, how are we on the hook for that contract, and what ability do we have to rebid to potentially get a lower cost?”

Henifin told the mayor the city is getting the lowest cost, and that Jacobs was only awarded a long-term contract after JXN Water initially did an open-book, 12-month contract to determine costs.

“We didn’t know how much [it would take] to operate the system. You didn’t know how much, because the city had underfunded it,” he said. “That’s why it failed.”

“We did an open book [contract]… saw every funded expense, saw what they paid, and did that for the basis to negotiate the long-term contract,” Henifin continued. “I don’t think we can get any better than that.”

As for bidding out the work, Henifin said there are only three companies that do the work Jacobs is doing now. One of those is Veolia North America, which Henifin said is already “not successfully” running the Savanna Street Wastewater Treatment Plant.

Lumumba and several council members also questioned why rates needed to go up when the utility is still maintaining a less than 60-percent collection rate, with the mayor asking what the plans were to increase collections.

“What are the changes happening there, because many residents want to know… How do we plan on balancing operations, without taxing them more and reaching the apex of affordability for residents?”

Ward Two Councilwoman Tina Clay voiced similar concerns, agreeing with the mayor that Henifin also should increase fees for the 1,500 outside the city limits.

“I realize it’s only 1,500 people… That 1,500 would make a difference,” she said. “That’s one thing. The collection rate, that would also make a difference.”

Henifin said the collection rate is improving and is now around 70 percent. Regardless, he said JXN Water is planning to ramp up collections and shutoffs for nonpayment now that a new electronic work order system is in place.

The system would allow JXN Water the ability to increase the number of work orders to shut off water for nonpayment and turn it back on once payments are made.

“We just went live with the work order system to allow us to increase the shutoff pace,” he said. “The trend is moving correctly, but the trend is going in the right direction.”

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