By Moses Leos III

A settlement stabilizing water rate increases from Monarch Utilities ends a yearlong dispute between Kyle, Buda and the water utility company. 

However, Monarch customers can still expect water bills to increase, despite avoiding a proposed 14.4 percent hike. 

“I think it’s a fair settlement based upon what we were looking at,” Kyle council member and Monarch Utility customer Diane Hervol said. 

On July 1, Kyle City Council voted 6-0 to approve an ordinance adopting a settlement agreement with Monarch.They join the Buda City Council, which passed a similar ordinance 7-0 at its July 1 meeting.

Under the settlement, Monarch, which serves roughly 1,000 homes in Buda and Kyle, will increase rates in two phases. Phase I will bring a six percent rate increase beginning August 1. Phase II will add an additional six percent increase starting on January 1, 2016. 

From January 1, 2017 to January 1, 2021, any annual rate increases will be based on the Consumer Price Index (CPI) or the rate of inflation. That rate will be capped a three percent. 

After 2021, an additional five-year extension could be granted. 

“As long as the inflation stays at a low level, there’s a chance of getting a five year extension,” Jim Boyle, attorney representing the coalition of cities against Monarch’s rate increases said.

Under Phase I, the average Monarch customer using 5,000 gallons of water would pay $78.87; Phase II would increase that rate to $83.60. 

It’s a far cry from last September, when Monarch, a subsidiary of the Southwest Water Company, filed an application to increase water rates with the Texas Commission for Environmental Quality (TCEQ). 

The company originally sought a 43 percent increase to compensate for improvements and increased water costs. 

Monarch’s increase was lowered to a 14.4 percent, spanning a two-phase approach. Water rates would have jumped roughly ten dollars for the average 5,000-gallon water user within six months of 2013. 

Several cities, including Buda and Kyle, filed ordinances rejecting the utility’s rate increase. Monarch countered by submitting an appeal to TCEQ. 

Negotiations soon took place between the entities to resolve the issue. Boyle said the negotiations were professional, with all parties “responsive to each other in a good faith manner.” 

As a result of the settlement, Monarch must withdraw its appeal to TCEQ. They also cannot apply for a rate increase without approval from city council. 

For Hervol, the settlement closes a saga that saw Monarch customers go through “ungodly” rate increases. 

“(Monarch) has escalated rates by substantial levels,” Hervol said. “It’s never been five or six percent. It’s 50 or 60 percent, then we have to fight to get it back down.”

“No one likes to see rates increase for anything we consume,” Gary Rose, director of operations, Texas Utilities of the Southwest Water Company said in an emailed response. “But we must make investment in water a priority for the sake of the economy, our health and our communities.” 

Boyle said the move would give peace of mind to Monarch customers. 

“It will bring stability and predictability to water rates and it will help with economic development,” he said.