False Collection, Do I have a case?

I live in VA. When I moved to my current residence I closed the previous utility accounts. I recieved a "closing" statement that showed the balance due as zero. It also included a refund check for overpayment. About two months later I recieved a bill for $140.43 overdue. I called and they could not explain to me why there were charges, considering we recieved a refund check. That letter was shortly followed by a letter from a collection agency threatening our credit. I made copies of everything I have and sent to both the collection agency and the power company. They wrote back saying the amount is still due. If I were to pay this amount what stops them from sending a letter in another few months stating we owe more? How can we owe them when I have a tangible piece of paper stating that the balance was zero at closing? Someone please advise me on what options I have.

Thanks,
Michelle

Send a letter to the collection agency requesting a full accounting of the charges. Upon receipt if you still do not agree that you owe the money, send a letter to the powers that be at the utility company along with a copy of everything and state why you do not feel you owe the money. Ask that they resolve the matter quickly including notifying the collection agency as well as updating the credit bureau. Make sure you request that they remove the collection and not simply indicate it as satisfied. If none of this works, then hire an attorney to send a hammer letter.