Judge sets water rate

Posted by : admin | On : September 9, 2010

By Michael V. Hannigan

An administrative law judge on Tuesday lowered interim water and sewer rates for customers of Lakeshore Utility Company while a rate protest moves forward.

Experts in Texas water rates said the action is the first of its kind in the state.

In a press release announcing the decision, Mathew Thigpen, attorney for Texans Against Lakeshore’s Excessive Rates (TALER), called the interim rates “a significant and unprecedented accomplishment.” {{more}}

Judge Craig R. Bennett dropped the minimum water rate from $69 to $45 and the sewer rate from $53 to $44. Other rates such as cost per gallon and rates for larger connections will remain the same.

The new rates will go into effect with the next billing cycle.
Lakeshore serves 26 subdivisions around Cedar Creek Lake plus two in Tyler.

TALER President Charles Seawright said, “I am sure you will agree that this provides a much needed relief for hardworking people in Henderson and Smith counties. I also think much of the credit should go toward the Ladd Thigpen Law Firm as they have accomplished a first in the water rate making process.”

Lakeshore attorney Skip Newsome said he hadn’t talked to his client as of Wednesday morning, but said, “This is an interim rate, and so the standards are not nearly as stringent as the final hearing. We are preparing for the final hearing to prove our case.”

Lakeshore announced the rate hike in December 2009 in a letter to customers, saying the increase was necessary because of rising operating costs and capital improvements.

The grassroots group TALER formed soon after and started collecting data to fight the rate hike through the Texas Commission on Environmental Quality (TCEQ).

Based on that data, Thigpen filed a motion to set interim rates and Bennett heard oral arguments in August. Both TALER and the TCEQ told the judge that Lakeshore did not account for developer’s contributions and that there were errors in operating capital calculations and expenses reported by the utility.
Bennett agreed.

In his order reducing the rates the judge wrote, in part, “… Lakeshore failed to include these contributions in its rate change application and does, in fact, seek to recover a return on some or all of them. This, coupled with the incorrect calculation of working capital and the inclusion of an incorrect amount for rate case expenses, shows that Lakeshore’s rates are higher than will likely be justified at the conclusion of this hearing. Thus, the current rates are unjust and/or unreasonable …”

According to the judge’s order, Lakeshore admits that it “incorrectly calculated its working capital amount, and that its receipts for rate case expenses are less than included in its rate change application.”

However, Lakeshore said although it did receive developer contributions, but said that money was intended for operation expenses and not capital improvements.

Not according to Bennett, who wrote, “From reviewing many of the contractual documents, it is obvious that such developer contributions were intended for purposes of construction and should be considered as such.”

Although the rates have been lowered for now, the rate case isn’t complete.

“This lower interim rate does not guarantee the final costs for customers,” according to TALER’s press release. “It often takes up to two years before a decision is set and more information will be considered prior to and during the final hearing.”

Lakeshore ratepayers wishing to join or make donations to TALER may email for further information.

Comment (1)

  1. […] -Interim rates were implemented, which were the original rates. SOAH judges do have the authority to set interim rates in these cases, but it has only been done once before. That was last year, also in Henderson County, when a SOAH judge sided with customers in the Lakeshore Utility Company rate case. […]