PUC calls for order to reset certain water rates

The Public Utility Commission of Texas started a process Friday that could ultimately require Austin Water to reset water and wastewater rates for a group of customers that has challenged the city.

The commission approved, with some exceptions, a proposal for decision that administrative law judges Pratibha Shenoy and Beth Bierman filed in July on a rate petition brought by four wholesale customers. It also directed PUC staff to prepare a draft legal order, with rates mostly consistent with staff’s own recommendations, for the commission to consider at a future meeting.

If passed, Austin Water would have to comply with the water and wastewater rates outlined in the forthcoming order for the customers in question and request commission approval for any future proposals to change those rates.

The petitioners – North Austin Municipal Utility District No. 1, Northtown Municipal Utility District, Travis County Water Control and Improvement District No. 10, and Wells Branch Municipal Utility District – have appealed water and wastewater rates that went into effect in 2013.

“I would adopt the proposal for decision, except I would reverse the finding that the rate should be set at the same level as the rates immediately prior to the rates that were appealed,” said Chair Donna Nelson of the order request.

“It’s likely to take a few open meetings for the order to be issued,” Nelson later noted.

In their proposal for decision, the judges wrote that the city did not meet its burden of proof under state law to “show that the water and wastewater rates it charges to Petitioners are just and reasonable” and recommended that the commission roll back their rates to 2012 levels.

The commission has instead requested an order with rates that reflect PUC staff’s revenue adjustment recommendations for all but one cost category not agreed to by the city.

That category involves the fiscal impact on rates of Austin Water’s decision to use wind power from Austin Energy’s Green Choice program. While PUC staff recommended that the city be allowed to incorporate these costs into its calculated cost of providing water and wastewater, the administrative law judges asserted the opposite, and the commission agreed.

Austin Water Assistant Director David Anders told the Austin Monitor on Friday that utility staff is not sure what PUC staff’s calculated rates will look like.

“We understood some of their comments, although it’s still somewhat confusing exactly what they’re proposing,” Anders said. “The city would await that final order and review that – once that’s passed – to know specifically the impacts or what Austin Water was directed to do.”

Anders also noted that the new rates, if the PUC adopts them, could require City Council to amend the Fiscal Year 2015-16 budget that it adopted on Thursday. Rates for the customers in question, he explained, are already rolled back to 2012 levels in the adopted budget, which goes into effect on Oct. 1.

Austin Water, Anders added, plans to begin conducting a cost-of-service study for all utility customers early next year to serve as the basis for rates that would theoretically go into effect in 2018.

Randy Wilburn, an attorney representing the petitioners, stated in a Friday press release that he and his clients believe the decision will give Council the opportunity “to pay for (the) City’s increasing budget through budget cuts or tax increases, not on the backs of water and wastewater customers.”

The commission heard oral arguments from both sides of the case in August.