Mississippi Advisory Opinions August 07, 1998: AGO 98-0385 (August 07, 1998)

Advisory Opinion Text

Gary P. Snyder, Esq.

P.O. Box 456

8925 E. Goodman Road

Olive Branch, Mississippi 38654

Re: Municipalities furnishing utility services to non-residents

Dear Mr. Snyder:

Attorney General Mike Moore has received your request for an opinion and has assigned it to me for research and response. Your letter states, in part:

The northern boundary of the City of Olive Branch also constitutes the northern boundary of the State of Mississippi. The Mayor and Board of Aldermen have been approached by certain Tennessee residents who reside in close proximity to the boundary of the City and State and who are in need of various utility services.

I have been asked to advise the Mayor and Board with regard to whether the City has authority to provide utility services to areas outside the boundaries of the State of Mississippi, but within five (5) miles of the municipal boundaries.

In response, Miss. Code Ann. Secs. 21-27-11, et seq., set forth provisions governing municipally-owned utilities. Miss. Code Ann. § 21-27-39 authorizes municipalities to supply utility services to “consumers residing outside of and within five (5) miles of the corporate limits of the municipality.” We find no statute which expressly authorizes the municipality to provide such services outside the State of Mississippi. And municipal “home rule” offers no authority since by its express provisions, it grants the governing authorities of every municipality of this state “the care, management and control of the municipal affairs and its property and finances.” Miss. Code Ann. § 21-17-5 . (Emphasis added).

Miss. Code Ann. § 77-3-1 provides that municipal public utilities shall not be subject to regulation by the Mississippi Public Service Commission (“the Commission”) “except as to the extension of utilities greater than one (1) mile outside corporate boundaries . . . .” Thus, utilities extended to consumers residing greater than one mile and up to five miles outside of a municipality would ordinarily be subject to regulation by the Commission. However, the regulatory jurisdiction of the Commission is set forth in Section 77-3-5, which provides:

Subject to the limitations imposed in this article and in accordance with the provisions hereof, the public service commission shall have exclusive original jurisdiction over the intrastate business and property of public utilities. . . .

The Mississippi Supreme Court has ruled that this section gives the Commission jurisdiction only over intrastate utility business and property and not interstate pipeline companies. United Gas Pipeline Co. v. Mississippi Pub. Serv. Com'n ., 241 Miss. 762, 133 So.2d 521, 525 (Miss. 1961); American Tel. & Tel. Co. v. Purcell Co ., 606 So.2d 93, 99 (Miss. 1990). See also , MS AG Op., Hebert (December 6, 1995). Thus, a municipal utility supplying services to consumers located greater than one mile outside the municipality but across state lines would thereby be outside of the regulatory jurisdiction of the Commission.

The Mississippi Supreme Court has found it reasonable that those municipal utilities being operated more than one mile outside a municipality were placed under regulation by the Commission while those being operated within the municipality were not. In Mississippi Public Service Commission v. Jackson , the Court opined:

This is an apparent effort by the Legislature to give the utility customers outside the city protection against arbitrary and excessive rates. Those inside the municipality have the ballot to protect themselves from excessive rates. But if municipal utilities, operating in areas outside the corporate boundaries, are unregulated, the customers will have no effective political means of assuring reasonable rates. These are probably the considerations that caused the Legislature to place municipal utilities under the Act as to extensions greater than one mile outside corporate boundaries after March 29, 1956.

Following this line of reasoning, out of state residents would obviously have neither the protection of regulation by the Commission nor the ballot in local elections to assure them of reasonable utility rates.

In summary, although Section 21-27-39 authorizes utility services to be extended beyond the municipal corporate limits, it is our view that this provision has no application beyond the boundaries of the State of Mississippi. We find no authority which would permit a municipality to furnish utility services to out-of-state consumers residing within five miles of the municipal corporate limits.

Very truly yours,

Mike Moore Attorney General

Patricia F. Aston, Special Assistant Attorney General