Judges set interim rates in Monarch case

Posted by : admin | On : November 10, 2011

UPDATE: Story is updated with comments from a Monarch representative.

UPDATE 2: Updates Monarch ownership information.

By Michael V. Hannigan

This is a good week for Monarch Utilities customers; their rates are going down, at least for now.

Starting with the first meter reading after Nov. 15 – which will probably be the December bill – rates will revert back to what they were before an increase went into effect on Aug. 1 of this year. At that time Monarch customers started paying an average 55-percent more for water and sewer service.

The increase came in connection with at the same time as Monarch’s application to merge its eight Certificates of Convenience

and Necessity, or CCNs, in Texas into one. 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 or 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.

The rate case and the STM case are two separate issues being presented before State Office of Administrative Hearing (SOAH) judges. After a hearing in Austin on Tuesday in the STM case, SOAH judges ruled:

  •  The rate case was suspended while the STM case continues. That means the next steps in determining if the rate increase was correct like discovery, trial or mediation are now on hold.
  • -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.

“I am pleased with the ruling handed down concerning Monarch’s excessive rate hike,” said State Rep. Lance Gooden in a press release. “During these difficult economic times, this ruling will bring much needed financial relief to the citizens of Henderson County.”

SouthWest Water communications manager Janice Hayes released the following statment about the rates: “In the past five years, Monarch has invested nearly $70 million to tap new water sources, replace meters and replace aging water and wastewater treatment plants…. Our sizeable investment across the state means our costs are significantly higher and can no longer be sustained by the current rates.”

Moving forward, the STM case will have a large impact on where the rates are eventually set.

“If this (STM) application is approved, the consolidation would mean that Monarch could pass the costs of unprofitable systems along to the customers of systems running in the black. The idea that a customer on Cedar Creek Lake would have to pay a higher rate for the maintenance of a water system in another part of the state is not a fair practice,” said Gooden.

Hayes described the STM this way, “To better brand, enhance and simplify our customer service experience; we are merging eight of ourTexas regulated water and sewer utilities owned by SouthWest Water Company into one company – Monarch Utilities.”

The other side of the coin is if the STM case is thrown out, the rate case will also die because the higher rates were based on the merger being complete.

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.

Monarch is a division of the SouthWest Water Company and serves 43,000 customers in about 96 water systems and 15 sewer systems across 32 Texas counties. Monarch has more than 4,500 connections in Henderson County, including around the Cedar Creek Lake Area in Beachwood Estates, Carolynn Estates, Cherokee Shores, Michael’s Cove, and the Pinnacle Club.

In September 2010, on behalf of its clients, the J.P. Morgan Infrastructure Investments Group (IIG) acquired 90 percent of SouthWest Water Company. IIG, headquarted in New York, is a part of J.P. Morgan Asset Management.


Comments (2)

  1. […] Story No. 4 – Judges weigh in on Monarch rates: Last week, State Office of Administrative Hearing (SOAH) judges put a Monarch water rate case on hold and pushed rates back to their former level. A Monarch spokeswoman says the company has more than 4,500 connections in Henderson County. Why it is important: Investor owned utilities are becoming a hot topic in Austin. This is only the second time SOAH judges have set interim rates and both times involved Henderson County. Learn more: Here is a story from The Malakoff News. […]

  2. Bart Cameron said on 12-11-2011

    I sure wish they would make Monarch reimburse me for all those months I had to pay for 4000 gallons of water when I turned my water off ay the house and didn’t use a drop. What a company. They charge their customers weather they use water or not.