U.S. District Court Judge Henry Wingate said he’s putting his decision on hold over whether to approve JXN Water’s proposed rate increase until after he finds out what happened with roughly $90 million from a settlement with Siemens.
In 2020, the city of Jackson settled its lawsuit with the German company over years of faulty metering for water services. While about a third of the $90 million went to legal fees, city officials couldn’t immediately say where the rest of those funds went during a status conference Monday.
City Attorney Drew Martin said he was working to comply with a subpoena Wingate issued last week looking for an accounting of the settlement dollars, adding that he would have those details within a day or two. While he couldn’t say for sure where the money went, Martin said the city spent about $50 million within a few months after the settlement, and that there was $8 million remaining as of 2022.
Ted Henifin, who runs JXN Water and first proposed the rate increase in February, said the increase would still be necessary even if the utility received all the money from the Siemens settlement. He said the utility’s day-to-day management is operating at a deficit, and that the $60 million from the settlement — what Jackson received after paying its lawyers — would only cover losses for the next two years.
Henifin added that he’s asking the federal government to move around its funding to the city so he can spend more of it on operations and management. Without a boost to JXN Water’s finances, he said the utility would have to stop paying its contractors.
Wingate inquired about the settlement money during a two-day status conference last month. Henifin told the judge he had no idea what the city did with the funds. Wingate explained Monday that he wanted to make sure he was aware of all possible funding for JXN Water before approving a second rate increase in as many years.
It’s unclear how soon he’ll decide. In addition to Jackson officials, Wingate issued the subpoena on July 9 to the state and federal government as well as four different law firms. The subpoena gives the parties 30 days to produce any information on where the settlement funds went.
The judge also brought up the city’s history with shutting off nonpaying customers. Martin explained that the city, under then Mayor Tony Yarber, agreed to pause shutoffs for customers who had issues with Siemens’ water meters. Jackson prepared to bring back shutoffs in 2019, he said, but put them on hold again during the COVID-19 pandemic.
