PUC Water Rate Review
Water Rates by City of Mesquite Mayor Stan Pickett
Many residents have recently voiced their concerns over increased charges on their water bill. On October 1, rates will once again increase. These increases are directly the result of increasing costs passed onto the Citizens of Mesquite by our wholesale water supplier, North Texas Municipal Water District (NTMWD). On behalf of the entire City Council, I want to tell our citizens and businesses that we hear you and we empathize with you on this issue of increasing water rates. Most importantly, Mesquite is fighting for your rights to fair and equitable rates.
What is Mesquite doing about this? In December 2016, the City of Mesquite joined Garland, Plano, and Richardson in requesting the Public Utility Commission of Texas (PUCT) conduct a review of the water rates charged by the NTMWD to its member cities. The State Office of Administrative Hearings (SOAH) heard the case in October 2018, and in March of 2019, a two-member judicial panel of SOAH found that the NTMWD’s wholesale water rates adversely affect the public interest, supporting Mesquite’s position. SOAH’s findings were forwarded to the PUCT for final action. The matter is currently pending before the PUCT.
Water rates will continue to rise. It is important to note, whatever the outcome of the appeal is, water rates will continue to rise. Rates have increased more than 70 percent since 2012 to maintain the infrastructure needed to get the water to current customers and build new capacity for the new residents and businesses coming to the North Texas region. The cost of water supply and treatment will only continue to increase. However, we also need water rates that are fair and equitable.
Fairness and equity. Those are the reasons Mesquite appealed the rates to the PUCT on behalf of its residents and businesses. The rates set by the NTMWD under a 60-year-old water supply contract are not in the public interest. Mesquite feels that the rates charged by the NTMWD are discriminatory and inconsistent with water conservation. For example, as of December 2016, Mesquite, Garland, Plano, and Richardson calculated that, collectively, they had paid a total of $178 million for water that they did not use.
How did we arrive at that total? The NTMWD member cities pay for water based on a rate system termed “Take or Pay.” Essentially, it means Mesquite and all member cities pay for water based on a single year of that city’s highest historical annual water use. So, despite highly successful efforts by citizens and businesses to conserve water, Mesquite is charged based on one year’s worth of water use which occurred sometime in the past. For Mesquite, Garland, Plano, and Richardson, the greatest water use took place over 15 years ago, prior to the need for water conservation. Years of drought and successful water conservation strategies (some at the request of the NTMWD) have reduced the amount of water used by residents and businesses. The way water is used has changed, but the way water rates are charged has not changed. That seems unfair.
Other facts compound the lack of fairness and equity. Mesquite is one of 13 member cities that comprise the NTMWD. In addition to the member cities, NTMWD sells water to approximately 34 customer cities, each with a different contract. It is our opinion that the rates charged to the customer cities do not accurately reflect the cost of NTMWD providing the service.
In closing, forcing Mesquite and other member cities to pay continually increasing rates for a fixed quantity of water, regardless of actual consumption, is unfair. We promise to continue our efforts to make the rates you pay for service from the NTMWD more fair and equitable. The PUCT process and ongoing dialogue with the other member cities presents hopeful opportunities to achieve a better rate structure for all NTMWD members. Our residents deserve a quality water system, but should not pay more than their fair share.
Cities of Mesquite, Garland, Plano and Richardson request review of NTMWD water rates
This action was taken because the rates set by the NTMWD under the six-decade old water supply contract are discriminatory, are inconsistent with water conservation and are not in the public interest. As a result, the four cities have paid a total of $178 million for water they did not use.
For Garland, Mesquite, Plano and Richardson, the greatest use took place during a time when water conservation was not anticipated. Years of drought and the successful adoption of water conservation strategies have changed the amount and way water is used; and it is unlikely the cities will ever again use the minimums that were set by their greatest annual usage.
"As a result of this current structure, Mesquite has paid 36 million dollars over the past 14 years for water it did not use. A number of Mesquite citizens have expressed concern about these rates during our City Council meetings, and we have an obligation to these residents and businesses to be responsible financial stewards," Pickett said.
The NTMWD is composed of 13 NTMWD member cities and includes approximately 34 NTMWD customer cities. The customer cities have individual contracts with the NTMWD and some of their effective rates are lower than some of the member cities. At the same time, the cost of water is rising as the NTMWD has raised rates 69.8 percent since fiscal year 2012. Additionally, it plans to raise rates by approximately 10 percent per year for the next seven years.
"Forcing member cities to pay continually increasing rates for a fixed quantity, regardless of actual consumption, has locked us into a rate model that cannot be sustained," said Pickett. "It is inconsistent with conservation initiatives and is contrary to the public interest."