MILESTONE IN PROTECTING RATEPAYERS AS STATE AGENCY RECOMMENDS DENIAL OF AQUA TEXAS’ $8.8 MILLION RATE INCREASE
FOR IMMEDIATE RELEASE November 14, 2024
Contact: David Baker davidbaker@watershedassociation.org
WATERSHED ASSOCIATION ACHIEVES MILESTONE IN PROTECTING RATEPAYERS AS STATE AGENCY RECOMMENDS DENIAL OF AQUA TEXAS’ $8.8 MILLION RATE INCREASE
WIMBERLEY, TX – The Watershed Association (WA), along with the Woodcreek Property Owners Association and Trinity Edwards Springs Protection Association, achieved a major victory this week for ratepayers as Administrative Law Judges (ALJs) recommended that the Public Utility Commission deny Aqua Texas’ request for an $8.8 million annual rate increase through its system improvement charge (SIC) amendment.
The investor-owned utility is seekingt to recover $86 million in claimed infrastructure improvements by increasing water rates by $4.7 million and sewer rates by $4.1 million annually. However, the ALJs found that Aqua Texas failed to properly document and justify its expenditures, could not demonstrate which expenses were legitimate capital improvements versus routine maintenance, and did not comply with regulatory requirements that would allow the Commission to reliably calculate an appropriate SIC. Thus, the ALJs recommended that the application be denied.
“This recommendation would protect ratepayers from unjustified rate increases by requiring Investor Owned Utilities to clearly prove their infrastructure investments benefit customers before passing on costs,” said David Baker, the Executive Director of the Watershed Association. “Aqua Texas wanted customers to pay millions more without properly documenting how these charges would improve service.”
Lauren Ice, an attorney with Perales, Allmon & Ice, PC, represented the protesting associations in this matter. “The ALJs’ analysis was extremely thorough and fair,” Ice said. “Despite numerous opportunities, Aqua failed to justify the expenditures it would like to pass onto its ratepayers. Simply put, the legal standard demands denial.”
Key findings by the ALJs included:
- Aqua failed to adequately describe eligible projects and explain how they improved service, as required by Texas Administrative Code
- The utility could not distinguish between capital improvements and routine maintenance costs, failing to prove the eligibility for raising rates.
- Documentation was disorganized and difficult to verify, violating a prior Commission order requiring assets to be well-organized by project.
- Many work orders and invoices were either missing or impossible to match to claimed expenses, failing to sufficiently support eligible costs.
The recommendation would require Aqua Texas to:
- Refund or credit any overcharges collected through interim rates since August 8, 2024 with interest, and
- File a comprehensive rate case by September 26, 2025 and thoroughly justify its capitalization policy in that proceeding.
This recommendation case sets an important precedent, signaling that private investor owned utilities must provide transparent documentation and clear customer benefits before receiving approval for SIC rate increases. Ratepayers who believe they were overcharged should monitor their bills for refund credits in coming months and the Commission’s docket for the final order.
The Proposal for Decision will be considered by the Public Utility Commission at its open meeting on January 31, 2025, starting at 9:30 AM. The meeting will be in Austin and is open to the public. It will also be live streamed. . The Commission can approve, modify, or reject the ALJs’ recommendations. The Watershed Association is encouraging everyone who is interested in the outcome of this important matter or affected by Aqua’s proposed rates to attend.
Following the Commission’s final order, Aqua Texas will have to comply with any directives, such as issuing refunds for overcharges and filing a comprehensive rate case next year.
In addition to the case at hand, the Watershed Association will continue monitoring Aqua Texas’ operations and advocating for ratepayer protections as the utility prepares its required comprehensive rate case filing next year.
To learn more about the history of this case, the PUC complaint filed by TESPA and the Federal Lawsuit Aqua Texas filed against the Hays Trinity Groundwater Conservation District please go to to www.ourwaterourtexas.com