by ANDY SEVILLA
The years-long battle pitting ratepayers against investor-owned utilities is heating up at the Texas legislature, and Hays County is backing bills that would balance the interests of those in the fray.
Hays County Commissioners unanimously voted March 26 in support of Texas Senate Bills 567 and 1164, and Texas House Bill 1457, which, according to them, would balance the interests of ratepayers and private utilities in water and sewer ratemaking proceedings.
“Many residents of Hays County live outside of municipalities and have water and sewer service through an investor-owned utility company,” Pct. 1 Commissioner Debbie Ingalsbe said. “Many of those companies have aggressively raised rates over the past few years, and the average citizen does not have the financial resources to hire lawyers and consultants to argue against those rate raises before regulatory agencies.”
Ingalsbe also said issues have been raised about erratic water service as well as discontent with the color and smell of the water.
And those issues hit close to home for about 900 residents in Kyle’s northeast corner. For years, residents who live in the Amberwood and Indian Paintbrush subdivisions have lodged complaint after complaint against the investor-owned water company, Monarch, which services their water and sewer, according to Kyle city officials.
Last summer a Kyle news release stated that Monarch, a subsidiary of the California-based SouthWest Water Co., “is not welcome in the city” and officials have taken steps to come to an agreement with the water company that would limit rate hikes and mandate quality customer and water service. In exchange, the city would not pursue dual certification, stricter regulations, or potential condemnation. That agreement has yet to be signed.
Investor-owned utilities are guaranteed monopolies in their assigned service areas by the State through Certificates of Convenience and Necessity (CCN). The certificates allow for a utility to be the lone servicer of water and sewer services to a specified region if they ensure service to everyone in their assigned area and submit to state regulations on water quality, water services and pricing.
And because of the CCNs, residents serviced through investor-owned utilities have no other recourse but to submit to the water company’s terms. Residents are able to complain to the Texas Commission on Environmental Quality (TCEQ) which oversees the CCNs, though complaints and litigation costs come at the expense of residents’ pockets.
“As I meet with homeowner associations and individuals who have their water provided by an investor-owned utility, the issue of regulatory authority is always the biggest concern,” Pct. 2 Commissioner Mark Jones said. “Move the regulatory responsibility to the PUC (Public Utility Commission) as called for in the (county’s) resolution would help level the playing field for our citizens.”
County officials say the bills they are backing at the legislature would transfer regulatory authority from TCEQ to the PUC and allow the Office of the Public Utility Counsel to represent the interests of residential and small commercial consumers. Also, officials said only 50 percent of a utility’s rate case expenses could be considered for ratemaking purposes.
“The Sunset Advisory Commission has already recommended the transfer of regulatory authority to the PUC,” Pct. 3 Commissioner Will Conley said. “As a county, we support our residents’ rights to pay a fair rate for safe water and reliable water service, and approval of these bills will help make that a reality and help end this inequity.”
Senate Bill 567 transfers functions relating to economic regulation of water and sewer service from TCEQ to the PUC, and to the duties of the Office of Public Utility Counsel regarding the economic regulation of water service, according to the county’s resolution.
Senate Bill 1164 proposes that the independent Office of Public Utility Counsel represent the interests of residential and small commercial consumers, and House Bill 1457 allows only 50 percent of “reasonable and necessary” rate case expenses to be included in ratemaking, according to the resolution.
At Kyle’s city council Aug. 21 meeting, the elected officials approved hiring Jim Boyle to lobby the state legislature for more control over private utilities.
Boyle represented Kyle and other cities in a case that settled water rate hikes for Monarch customers last Spring. The settlement called for an increase in water rates by 14 percent, much lower than Monarch’s original request of 62 percent.
In a December interview with the Hays Free Press, Kyle-area Monarch representative Gary Rose said the private utility had invested more than $72 million in its statewide water system, in an effort to service water customers and improve aging water and sewer infrastructure.
That cost, coupled with Monarch’s property and income tax costs, are passed on to customers through water rates, which amount to some of the highest costs for water in Texas, Rose said.
Testifying in front of the House County Affairs Committee in October, Boyle highlighted that Monarch has disproportionately higher water rates than several cities, and even higher rates than Aqua Texas Southwest Region – another highly criticized private utility.
Boyle showed that Monarch in October 2012 Monarch charged $71.47 for 5,000 gallons of water, compared to Houston, El Paso, Taylor and Woodville which charged $28.18, $15.49, $39.77 and $26, respectively. Aqua Texas Southwest charged $68.87 for the same amount of water.
In Kyle, customers pay an average monthly water bill of about $47, after a 20 percent water rate hike went into effect in October 2011, while those 900 residents in Kyle’s northeast corner that are serviced by Monarch paid about $74.
