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LCRA, coalition still at odds over sale of West Travis water utilities

Tuesday, November 29, 2011 by Michael Kanin

The Lower Colorado River Authority (LCRA) appears to be taking a step back from allowing a coalition of Central Texas municipalities to purchase several West Travis County water utilities. LCRA General Manager Becky Motal has rejected a revised memorandum of understanding that would have framed negotiations between the agency and the coalition.

 

In response to an inquiry from In Fact Daily on Monday, Motal said via email, “Last week, we received significant revisions to the Memorandum of Understanding on some major issues of concern to LCRA. Pending evaluation of those issues, I could not and did not sign it.”

 

Still, the memorandum appears to have played a role in a recent filing in a rate case brought against LCRA by four West Travis County entities. Last Wednesday, LCRA attorneys filed a document that indicates that the parties in that case will take no action for 60 days. The document, known as an abatement, was one of the conditions that the coalition had to satisfy in order to continue negotiations with the LCRA. 

 

Motal’s letter comes on the heels of resolutions from the LCRA’s board of directors that instruct the organization’s staff to negotiate agreements with Vancouver-based private utility Corix and the coalition, formally known as the Coalition of Central Texas Utilities Development Corporation. Under those instructions, Corix could purchase the bulk of the LCRA’s current water and wastewater systems. The resolutions also leave room for Corix to acquire the West Travis County utilities if the LCRA and the coalition fail to reach an agreement.

 

Despite efforts by the coalition to broaden its purchase, LCRA staff was instructed to negotiate with the coalition for the purchase of only the West Travis County utilities.

 

A memorandum of understanding between Corix and the LCRA has already been signed. According to that document, negotiations between the two parties must be completed by Feb. 21. However, the LCRA and Corix both have specific options to execute an agreement for the sale of the West Travis utilities before Dec. 31, 2014.

 

The county utilities make up a grouping collectively known in LCRA parlance as the West Travis County Regional Water System and the West Travis County Wastewater System. Those systems include supply sources for the City of Bee Cave, Dripping Springs, as well as wholesale customers from a handful of Municipal Utility Districts and Water Control and Improvement Districts in the border regions of Hays and Travis counties.

 

Bee Cave is part of a lengthy, ongoing rate case brought against the LCRA (see In Fact Daily, Nov. 22, 2011). In its draft of the memorandum of understanding between itself and the coalition, the LCRA made those negotiations contingent on the abatement of that case by this past Wednesday. According to that document, the case would have to be dismissed with prejudice by the completion of the agreement with the coalition in mid-January.

 

That clause became one of the issues for the coalition. In her letter, Motal notes that the coalition attempted to change the terms of the rate case conclusion. “The term sheet calls for negotiation of a settlement (emphasis Motal’s) agreement with parties appealing West Travis County rates…although the term sheet does not specify what those settlement terms may be,” she writes.

 

“The coalition has been well aware that we have been offering retail ratemaking authority to the coalition as part of the proposed…agreement,” Motal continues. “Given that, dismissal with prejudice of the current rate case when…an agreement is completed is appropriate.”

 

President of the coalition’s board of directors Pix Howell fired back in a letter of his own on Monday morning. In it, he told Motal and LCRA board chair Tim Timmerman that the coalition “feels it is appropriate that LCRA work out the details of the rate case settlement with the actual rate case parties.”

 

Howell adds that “as noted in our Term Sheet, the rate case appellants are agreeable to an abatement of the rate case, and, in fact, LCRA’s attorney executed a joint motion for abatement which was filed on November 23, 2011 for the purposes of allowing the LCRA and (the coalition) to continue negotiations on an Installment Purchase Agreement.”

 

LCRA spokesperson Clara Tuma confirmed that such a document had been filed. She told In Fact Daily that “the motion means the parties in the rate case have agreed to not take any action in the rate case for a period of 60 days.” She added that those parties are the “LCRA, West Travis County MUDs 3 and 5, and the city of Bee Cave.”

 

The letters and negotiations represent the end-stages of a year-long selection process by the LCRA to determine the ultimate purchasers of its water and wastewater utilities. The organization first announced its intention to sell the utilities in November, 2010.

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