City leaders, JXN Water at odds over proposed rate increase

• Interim Third-Party Manager Ted Henifin says the increase is necessary for operations, maintenance and debt obligations.

Jackson leaders are at odds with JXN Water over a possible 12 percent or $9 per month on average rate increase. The city is urging cost reductions from the water entity.

During Tuesday’s city meeting, the council and mayor expressed their displeasure with the proposed rate increase, pointing out that residents saw a hike in March 2024.

On an average bill, users are currently paying $76 per month. If the rate increase is approved, users will pay about $84 a month, JXN Water’s Interim Third-Party Manager, Ted Henifin, explained.

“Is there a way to do it to help reduce the costs for the citizens of Jackson? I think the citizens of Jackson deserve more than the outcome of ‘the only way we can balance our books and get this done is by charging more.’ I think there are other ways to do that,” said Ward 6 Councilman Aaron Banks.

Mayor Chokwe Lumumba and other council members said instead of a rate increase, JXN Water should be collecting on accounts. Henifin explained that collection rates vary from month to month, noting that in October 2024, the collection rate was 92 percent, while a month later, it dropped below 50 percent.

The back-and-forth between the entities continued for approximately one hour, while Henifin showed signs of frustration.

After the meeting, Henifin called a press conference where he explained that JXN Water would struggle financially if an increase is not approved.

Henifin explained that the proposed increase is part of a February 2025 Financial Management Plan. Operating cost for JXN Water runs about $145 million per year, but under the current rate structure, the utility is only bringing in about $115 million.

Jackson has a long-standing history of underfunding water and sewage, Henifin said.

“When we took over in 2022, 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.”

Additionally, millions of dollars in federal funding diverted to support the city’s water system are slated to end this summer.

During the press conference, Henifin mentioned Jackson was required to raise rates to comply with a bond rate covenant approved by Jackson’s council in 1993. The agreement between the city and lenders is that rates would be increased when revenues do not meet operating expenses and debt liabilities.

The council asked why delinquent accounts are not being turned off. JXN Water has installed a new system to shut off water more accurately for non-paying users, Henifin said.

Additionally, he said, the water company is implementing more shut offs.

“There are about 15,000 accounts for people who got new meters, getting good bills, everything’s right, they’re just choosing not to pay,” he told the city. “And they’re thinking they are going to get away with it because there haven’t been consequences in the past. We are ramping up those severance efforts.” 

Ward 1 Councilman Ashby Foote expressed concern with the severance efforts, saying that with the rate increase last year and now the proposed 12 percent, it could be hard for some to meet their financial obligations.

“The rates we’re getting are from people who are following the rules, who are playing by the rules and doing their part and paying the rates, and now we’re going to increase the rates on the people who are playing by the rules,” he said.

The increase will be considered by the Jackson city council at its April 22 meeting.

Henifin also said that JXN Water has requested a rate study from the Public Service Commission for those customers who live outside the Jackson city limits. However, the PSC has yet to agree to the rate case.