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Penalties and Surcharges

Reference Number: MTAS-840
Tennessee Code Annotated
Reviewed Date: April 20, 2020
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Penalties or Late Charges
Normally, utility billings specify a date by which the bill should be paid. Customers can be encouraged to make payment by this date through the use of a penalty or late charge. (Sometimes late charges are referred to as forfeited discounts.) If the billing is not paid by the due date a charge (typically 5 to 10 percent) will be added to the amount due. Utilities, as all other businesses need to maintain a steady cash flow in order to pay their bills. The late charge will help keep the cash flowing, and, when it is necessary to add the penalty, help offset the extra cost of collecting past due accounts.

Some city sewer systems have industrial customers that inject large amounts of industrial waste into the sewer. If these pollutant levels exceed the levels considered as "normal domestic sewage" the customer may be charged a surcharge to offset the cost of treating this higher strength wastewater. A surcharge also may encourage industrial customers to develop pre-treatment facilities to treat these types of wastes before they enter the city sewer system. The purpose of surcharges is to recover some costs that otherwise would have to be paid by all customers through higher rates. MTAS can provide the city with operational technical assistance to help determine surcharges.


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