Politicians speak out on Monarch rates

Posted by : admin | On : October 26, 2011

By Michael V. Hannigan

Henderson County’s representatives in Austin — Rep. Lance Gooden, and Sen. Robert Nichols — have taken their stances in the Monarch Utilities rate case, and both have come down on the side of the customers.

Monarch filed a request with the Texas Commission on Environmental Quality (TCEQ) to raise water and sewer rates this year, its second request in four years. The combined increase of about 55 percent utility-wide went into effect Aug. 1.

According to Monarch’s Notice of Proposed Rate Change, most customers using 10,000 gallons of water a month and a 5/8-inch or 3/4-inch meter used to pay $89.59 for water and $63.72 for sewer (a combined $153.31). After the increase, the same 10,000 gallons now costs $129.82 for water and $102.99 for sewer (a combined $232.81).

The company has asked for the rate hike to pay for capital improvements.

The rate has been challenged, and the first hearing with the State Office of Administrative Hearings (SOAH) judges was held earlier this month in Austin. Officials don’t expect any sort of resolution on the case until next year at the earliest.

“This rate increase would be a considerable burden to ratepayers, many who are on limited and fixed incomes,” Nichols wrote in a letter to the SOAH judges assigned to the rate case.

“One aspect that troubles me greatly is how high the base rate is with the proposed increase,” Nichols wrote. “Even if a homeowner does not use a single drop of water, their rate will be several times what most municipal water users pay in an average month. With such a high base rate, there is no incentive for conservation or any way for ratepayers to avoid large bills by altering their use.”

The rate case is also entwined with Monarch’s application to merge its eight Certificates of Convenience and Necessity, or CCNs, in Texas. A CCN is issued to a utility in order to sell water and sewer service in an area. Monarch has filed for a “sale, transfer and merger” (STM) of its CCNs.

According to state law, while the STM case is under review, Monarch is allowed to act like the merger is complete. State politicians say the current rate hike is based on that as-yet unfinished merger.

“Although statute allows for an entity to apply for a rate increase while the STM application is pending, the overwhelming opposition and referral to SOAH should halt this rate increase until Monarch’s STM status is resolved,” Gooden wrote to the SOAH judges.

In a separate announcement Gooden said, “Many of my affected constituents in Henderson County have approached me or have contacted my office concerned about the dramatic increase to their monthly water bill. In some cases people are paying over $100 per month, even when they don’t turn on the water faucet. I am working to ensure that Henderson County has a voice in this process and that citizens are not victims of an unjustified rate increase. Monarch is a monopoly and price gouging will not be tolerated.”

State Sen. Kirk Watson, D-Austin, who co-chairs an interim Senate subcommittee with Nichols that is charged with looking into investor-owned utilities, also wrote to the judges, saying, “Implementation of the rates proposed by Monarch would amount to taking without due process, and will severely hamper the customers’ ability to protest the proposed STM and the proposed rates and to achieve a reasonable, just and equitable outcome in these proceedings.”

Monarch is a division of the Southwest Water Company, which is owned by the Wall Street investment bank J.P. Morgan Asset Management, and serves 23,000 customers in about 90 small water systems. Monarch has nearly 3,000 customers in Henderson County, including around the Cedar Creek Lake Area in Beachwood Estates, Carolynn Estates, Cherokee Shores, Michael’s Cove, and the Pinnacle Club.

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