Request By:
George M. Hogg, Esq.
P.O. Box 535
Railroad Street
Olive Hill, Kentucky 41164
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter in which you, as counsel for the City of Olive Hill, present three questions, the first of which is as follows:
"Can a city of the fourth class publish a list of delinquent taxpayers?"
We direct your attention to OAG 78-420, copy enclosed, where we dealt with the question of whether Pikeville, a city of the fourth class [Olive Hill is, of course, a city of the fourth class, KRS 81.010(4)], could publish a list of delinquent ad valorem taxpayers. In that opinion we stated that we could not find any statutory requirement that cities of the fourth class publish a list of delinquent taxpayers. We concluded, therefore, that the city could not publish such a list of delinquent taxpayers, and at page two of the opinion said in part as follows:
"Thus, we do not believe in the absence of specific authorization to publish a list of delinquent taxpayers that the city has any authority to do so under the principles expressed in the case of Juett v. Town of Williamstown, 248 Ky. 235, 58 S.W.2d 411 (1933). In this case the Court points out that all cities are limited to those powers specifically granted or implied from some specific grant. . . ."
Your second question asks:
"Can the City who own their own utilities, as the City of Olive Hill does, pass an ordinance whereby a sum of money as a deposit to be put up by the purchaser of the utilities to the city, be worded such that if that consumer should terminate the use of that utility before the expiration of one year, could the city then label that as a deposit and return it to that consumer with interest at the legal rate and for those customers who continue to use the utility for more than a twelve month period, can the city define that advance payment as a charge or fee and it belong to the city and never returnable to the customer and therefore no interest ever owed on the same."
In OAG 77-353, copy enclosed, we cited the case of Commonwealth v. Kentucky Power & Light Co., 257 Ky. 66, 77 S.W.2d 395 (1934), where the Court construed essentially the present provisions of KRS 278.460 as requiring the public utility company to refund the service deposit with interest. This statute, requiring the public utility to pay interest on deposits required of patrons, is not applicable to municipally owned utilities under the terms of KRS 278.010(3). However, the Court in the Kentucky Power & Light Company case, supra, at page 396 of its opinion, said in part:
". . . In arriving at what the Legislature intended by this act, we must remember that the deposit of the customer was subject at all times to a demand by the customer for its return. The customer, of course, would in that contingency have to cease to be a patron of the company or make other arrangements about securing his bill. The deposit being subject to this demand for its return at all times, it partook of the nature of a demand loan. In the case of Union Light, Heat & Power Co. v. Mulligan, 177 Ky. 662, 197 S.W. 1081, this court held that if a public service company requires a deposit as here it must pay interest thereon. . . ."
Thus, as we said in OAG 77-353, although there is no specific statute requiring municipally owned utilities to refund service deposits, it would appear that such deposits must be refunded with interest under the general principle cited in Commonwealth v. Kentucky Power & Light Co., 257 Ky. 66, 77 S.W.2d 395 (1934), provided it is not necessary to use the deposits to cover delinquent accounts at the time service is discontinued. This would apply to deposits required of your city's municipal utilities regardless of the length of time with which the person did business with the utility. See also OAG 77-477, copy enclosed, at page one.
Your third question asks:
"Can the City of Olive Hill disconnect any utility it furnishes a customer in the event that customer should fail to pay his or her utility bill when the same becomes due. If the answer is in the affirmative, what procedure must a City follow and are there any restrictions on its right to so terminate. "
In McQuillin Mun. Corp. (3rd Ed), Vol. 12, § 35.35a, the author states that a municipality which owns its own plant may establish reasonable rules, the same as a private company. "Rules providing for the cutting off of a supply or service for nonpayment of charges, when due, are reasonable."
Furthermore, in Huff v. Electric Plant Board of Monticello, Ky., 299 S.W.2d 817, 818 (1957), the Court said:
"It is the generally accepted rule in this jurisdiction that a public service company may adopt and enforce regulations providing for the discontinuance of its service to any customer, who, after reasonable notice, fails to pay his bill.
* * *
This principle of law is based upon a sound public policy which recognizes that it would be highly impractical to compel a utility company to resort to an infinite number of actions at law to collect small accounts against scattered consumers. The only qualification of the rule is that the company may be liable for damages resulting from the disconnection of the current if the bill rendered is not just and correct."
In addition, we direct your attention to KRS 96.930 to 96.943 providing that reasonable sewer charges can be enforced by cities by discontinuing the water service, whether provided publicly or privately, until payment of the municipal sewer charges is made or some satisfactory arrangement is reached. See OAG 69-632, copy enclosed.
Thus, a municipal utility may discontinue service to any customer who, after reasonable notice, fails to pay his just and correct bill for services provided.