FORNEY, Texas — The cities of Garland, Mesquite, Plano, and Richardson are asking the Public Utility Commission (PUC) to review their water rates with the North Texas Municipal Water District (NTMWD).
FORNEY, Texas — The cities of Garland, Mesquite, Plano, and Richardson are asking the Public Utility Commission (PUC) to review their water rates with the North Texas Municipal Water District (NTMWD).
The PUC request comes at a time when water rates have increased by 69.8 percent since 2012 and is expected to increase by 10 percent each year for the next seven years, according to a joint press release issued by the four cities.
During a press conference last week and in the follow-up, joint press release, the mayors of the four cities called the request “an unprecedented move” after the cities say they paid a cumulative total of $178 million for water they did not use over the past several years.
In a recent NTMWD campaign, “#MoreThanWater,” however, the district says it’s not about the water usage but a combination of costs associated with the construction of infrastructure, including reservoirs, delivery, treatment, and maintenance which play a major factor in the rate structure.
“We filed this water rate review to seek a rate methodology that is equitable, encourages conservation, and serves the region’s long-term interest,” Plano City Manager Bruce D. Glasscock said.
“We are losing tens of millions of dollars at the expense of our taxpayers because the North Texas Municipal Water District’s current rate methodology is outdated and does not incentivize water conservation,” Glasscock said. “Member cities pay according to a ‘take or pay’ system that is based on our greatest single year of use. This level cannot be reduced, regardless of whether or not the city uses the entire amount of water it is paying for.”
The cities say they may never see rates lower than their greatest annual usage because of successful adoptions of water conservation efforts and strategies brought on by recent years of drought, according to their release.
Additionally, the cities claim some of the customer cities, approximately 34 who have direct contracts with NTMWD, are benefitting from the take-or-pay system and paying effective rates lower than the member cities despite a five cent surcharge per 1,000 gallons.
“We are disappointed these four Cities announced this action,” stated NTMWD Executive Director Tom Kula in response to the member cities PUC request. “For the past year, the North Texas Municipal Water District has been holding meetings with its 13 Member Cities to discuss potential alternatives for allocating the regional water system costs.”
“The District’s Board of Directors is made up of appointees from all 13 Cities,” he said. “We recognize the concerns of the four cities (Garland, Mesquite, Plano and Richardson), but the District must also consider the positions of the other nine (Allen, Farmersville, Forney, Frisco, McKinney, Princeton, Rockwall, Royse City, and Wylie).”
Although the 13 cities have not reached an agreement on a change, Kula says the district has not given up on seeking a potential solution, stating the matter would be best resolved with the 13 member cities working with the district.
“We serve some of the fastest-growing communities in the nation and remain focused on our mission of providing the highest quality water in the most cost effective manner,” stated Kula. “While water service costs have increased across the U.S., the District’s wholesale cost for treated water delivered to the Cities we serve is one of the lowest in the state at only a quarter of a penny per gallon.”
In an open letter, Frisco Mayor Maher Maso says the cities’ claiming they are paying for water they are not using is not an accurate description of the contract the member cities signed years ago.
“A more accurate narrative is those cities are paying for infrastructure they needed and used,” he said. “Now that those cities are not fully using infrastructure that was built and has to be maintained, those cities feel that someone else should pay for the debt that was partially accumulated to meet their needs.”
“Why is Take or Pay even in place? NTMWD is obligated to build the infrastructure to serve the water needs of communities,” stated Maso. “This includes water lines, pump stations, reservoirs, treatment facilities and manpower.”
“Thus, if a city, such as Plano, used 26 billion gallons of water in 2001, NTMWD had to build the needed capacity to serve that amount of usage,” he says. “In other words, NTMWD sold debt and spent large amounts of money to meet that need as well as obligated NTMWD to maintaining that infrastructure. If Plano reduces its usage, someone must pay for that debt as that infrastructure cannot be given back and still must be maintained.”
Maso does however agree with the four cities in that the current rate system does not incentive water conservation efforts.
Over the past couple of years, the City of Forney was billed, on a take-or-pay basis, for water which was ultimately not used and, most recently, surpassed the amount of water which was billed, resulting in rebates and additional billings, according to records obtained by inForney.com.
For instance, in 2013, 2014, and 2015, the City of Forney was billed for 1.625 billion gallons at $2.764 million, $3.040 million, and $3.349 million, respectively.
During those years, however, the City of Forney only used 1.389 billion gallons in 2013, 1.440 billion gallons in 2014, and 1.439 billion gallons in 2015 for which the City of Forney received a rebate in costs directly associated with electricity for delivery and chemicals for treatment of the unused water — $82,641.30 in 2013, $83,633.40 in 2014, and $95,254.23 in 2015.
In 2016, the City of Forney “benefitted,” as described by opponents of the rate methodology, in that the city was billed for 1.625 billion gallons and actually used 1.849 billion gallons. As is the case in the issuance of rebates, the NTMWD billed the City of Forney for $91,573.91 for electricity and chemicals directly related to the deliverance of the additional 223 million gallons — instead of a total rate inclusive of infrastructure debt.
The City of Forney’s 223 million gallon usage increase is partly attributed to growth and increased usage from wholesale customers as well as Forney residents who had been released of years-long drought restrictions.
Mesquite, Garland, Plano, and Richardson, which account for approximately 60 percent of the 1.3 million residents in North Texas serviced by the NTMWD, were also “beneficiaries” of the system when their cities saw periods of explosive growth before their peak usages in 2002, 2006, 2001, and 2001, respectively.
“For many years, we have been trying to rectify the disparity in the effective rates that currently exist,” Glasscock said. “We have actively participated in every possible process to seek a solution that all 13 member cities and the water district could agree upon. But it is evident that due to our lack of bargaining power with the North Texas Municipal Water District, negotiating among ourselves will not result in the much needed changes. Asking the Public Utility Commission for this review is the next step.”
“While a solution has not yet been found that is fair to all, I believe it is in the best interest of all the customers of NTMWD to continue working towards that goal,” stated Maso. “It will take some time, but I do believe a solution can be found.”
To read the complete release issued by the four cities, click here.
To learn more about NTMWD wholesale rates and contracts, click here, and to learn more about what your water rate pays for, click here.
To read Maso’s complete statement, click here.
