A federal court is reviewing proposed alternatives to a rate increase for customers in Jackson, home to one of the most historically troubled water and sewer systems in the country and where over 1 in 4 people live in poverty.

JXN Water, the city’s third-party, court-appointed interim manager, argues it has no choice but to raise rates as it owes money to contractors doing daily upkeep of the infrastructure.

Over the past year U.S. District Court Judge Henry Wingate — who appointed JXN Water’s Ted Henifin to the role of third-party manager — has held a dozen hearings to interrogate that assumption.

Wingate chased several leads to uncover other revenue: What happened to the Siemens settlement funds? What if the city fixed the leaks at the zoo? What about the thousands of people still not paying or being billed?

At each turn, JXN Water gave the judge the same response: None of those avenues would change the need to increase rates. The utility says it needs about $20 million more a year to afford its daily operations as well as pay off debt the city of Jackson took on prior to the 2022 federal takeover.

Still, Jackson officials and a group of intervenors in the case — a team of lawyers from Forward Justice, the Center for Constitutional Rights, and ACLU of Mississippi — argue JXN Water should hold off on raising rates.

On Friday, the intervenors submitted to the court a report from a utility expert arguing there are other ways to produce the revenue JXN Water says it needs. Brendan Larkin-Connolly, a Maryland-based economist with a focus on utility finances, prepared the study.

The report’s main suggestion was to restructure the billing system so that those who use more water contribute a higher percentage to JXN Water’s collections.

The average three-person household uses about 10 hundred cubic feet, or CCF, per month, the report says. JXN Water, though, bills everyone who consumes 0 to 50 CCF at the same rate, making it harder for those who use less water to save money. By creating a new tier for those who use more than 10 CCF a month, JXN Water could balance charging lower-usage customers less while charging higher-usage customers more.

In the utility’s response Monday, JXN Water attorney Paul Calamita panned the report as “late to the game” and “unhelpful.”

“We would have welcomed a silver bullet that mooted the need for a rate increase,” Calamita wrote in a court filing. “Alas, because Intervenors’ Rate Report offers no viable alternative to raising the revenue that JXN Water needs today to remain financially viable and to pay the City’s debt service, we urge the Court to approve the proposed rate increase.”

While Larkin-Connolly’s study shows how this would help JXN Water collect more revenue, his projections also rely on two other avenues — which JXN Water says it’s already pursuing — to fill the $20 million gap.

One of those is collecting money from the roughly 4,000 properties that receive water but don’t get billed or have a meter. But while the utility is going through those properties, doing so will take time because a worker needs to visit each property to add them to their billing system, Calamita said.

The other is to charge more to the 4,200 customers outside the city limits, such as in Byram, who not only pay a lower rate for consumption but who also aren’t charged the $40 a month fixed fee many in Jackson see. While JXN Water says it plans to phase in equal billing for those customers, Calamita said it will take 12 to 18 months to get approval through the state Public Service Commission.

Moreover, increasing charges for higher-usage customers could disproportionately impact renters, he added. Because apartments in the same building often share a meter, their consumption is billed altogether rather than for each unit.

Jackson City Attorney Drew Martin wrote on Monday that the city needs more time to review Larkin-Connolly’s analysis, while adding that the suggestion to create a new rate tier “seems to make more sense.”