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LCRA Board raises rates for water customers through 2015

Thursday, June 19, 2014 by Jenny Blair

Water along the Colorado River Basin will get pricier, at least for customers who can still turn on the tap. The Lower Colorado River Authority’s Board of Directors voted unanimously Wednesday to raise rates for water customers.


The rate increase does not affect the City of Austin, which prepaid $100 million in 1999 as part of a contract with LCRA.


The news dismayed other municipal customers, irrigators, and conservationists.


“This drought rate is needed to cover our costs during drought when we are selling less water,” said the authority’s general manager Phil Wilson during a committee meeting Tuesday.


Beginning in January 2015, “firm” customers like the cities of Pflugerville, Cedar Park, Dripping Springs, Leander and Marble Falls, who receive a certain amount of water no matter what, will pay a new “drought rate” of $175 per acre-foot. The reservation rate for water that customers reserve but do not use will be $87.50. The inverted block rate, or what customers pay for using more than they reserved, will be $350.


Currently, those rates are $151, $75.50, and $302, respectively. The new rates will cover the authority’s water operations costs for 2015.


If the authority finds itself with extra water to sell to its interruptible customers, it would adjust the new rates downward. It may also outsource its irrigation operation and maintenance costs and pass along $6 million in savings to firm customers.


The new rates apply to 2015 only.


Austin Water Utility Assistant Director Daryl Slusher said the city’s 1999 deal with LCRA locks up supplies long term.


“We prepaid that $100 million and as part of the deal for that, the city doesn’t have to pay for water from LCRA until we reach 201,000 acre feet for two consecutive years,” he said “We are nowhere near that and don’t plan to be any time soon.”


Rates for the Garwood irrigation service area are changing, too, and they are also being calculated differently. While before a complex formula determined what Garwood paid for its interruptible supply, starting in January, a simple volume-based rate of $39.37 per acre-foot will apply. A similar rate based on the old formula is effective immediately and extends retroactively to January 2014.


The new rate represents about a 20 percent hike compared with what Garwood paid in 2013, according to Tim Hammond, a quantitative analyst with the authority.


The Lakeside and Gulf Coast irrigation divisions won’t face rate changes because, as Wilson put it Tuesday, “we currently have no water to sell them.” That’s been the case since 2012. If and when water does become available, the authority would figure out new rates at that time.


Everyone who testified about the proposal Wednesday thought it was unfair.


“We feel that it (the proposed pricing) should be spread across the basin, not just to firm water customers,” said Burnet County Judge Donna Klaeger, whose county contains a number of cities who are firm-water customers. “However, I’ve been coming to these meetings for 11 years, and I know you’ve already made your mind up.”


According to Klaeger, properties in Burnet County have lost almost $89 million in value because of low water levels in Lakes Travis and Buchanan. The community of Spicewood Beach in Burnet County has relied on trucked-in water since January 2012, though a new water-treatment plant is about to begin operation there after months of delay.


Also in defense of firm-water customers, the Central Texas Water Coalition’s Jo Karr Tedder called the $175 rate unfair and discriminatory. That group has argued that firm-water customers upstream bear the brunt of the cost to provide irrigators’ canal systems, while the irrigators themselves have long been undercharged for their interruptible supply.


On the interruptible-water side of the argument was Ron Gertson of the Colorado Water Issues Committee, which defends rice farmers. He took issue with the coalition’s contention that irrigators underpay. Low water pricing for interruptible customers, he argued, reflects how intermittent and unreliable that resource is.


“The value of water for economic development is proportional to its reliability,” Gertson said. “To price interruptible water beyond the interruptible water market’s ability to pay is to kill the market.” 


Conservation biologist Kirby Brown testified on behalf of the Lower Colorado River Basin Coalition, a group that wants more outflow downstream of Longhorn Dam in Austin, both for healthy fish and wildlife habitats and for the health of local economies along the basin.


“The issue isn’t rice farmers versus the Highland Lakes. Nor has it ever been,” Brown said. “To achieve balance, sacrifice must be shared from the Colorado watershed above the Highland Lakes to Matagorda Bay.”


But for the time being, the new pricing stands, and customers will have to figure out how to live with it next year.


“We are in a crunch,” said Klaeger, who said her county is working with grants and developers to try to address water issues. “We rode it (the drought) out as long as we could.”

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