Corsicana Daily Sun, Corsicana, Texas

November 17, 2013

Water rate case loses in district court

By Janet Jacobs
Corsicana Daily Sun

Corsicana — A district court has rejected the latest appeal by the Navarro County rural water companies in their lawsuit against the City of Corsicana over water rates, but the group isn’t giving up, according to their attorney.

Last week, a Travis County District Court ruled that the effect on the public wasn’t negative, so the rate case was never actually addressed. The State Office of Administrative Hearings (SOAH), which acts like an impartial trial court for issues dealing with state agencies, had already ruled on the same issue, which is why it was appealed to district court.

The lawsuit was brought by the Navarro County Wholesale Ratepayers, made up of water companies in Angus, Chatfield, Corbet, Navarro Mills, MEN, Community, Kerens, Blooming Grove and Frost. At issue was the water rate increase Corsicana instituted in 2009.

That increase was designed to lessen the impact on Corsicana homeowners, putting a greater burden on bigger customers, including the rural water supply companies.

The city’s utility fund had been losing money for years prior to the rate increase, and the city was already contemplating a new water treatment plant and some other projects that would only increase the debt for the utility fund. Under the new rate structure, wholesale customers and large water customers paid $3.25 for each 1,000 gallons of water, while smaller customers paid $3 per 1,000 gallons.

But when the group appealed their case to the Texas Commission on Environmental Quality (TCEQ), the agency sent it over to SOAH.

The group can still appeal to the appeals court, and then to the Texas Supreme Court, said Schuyler Marshall, attorney for the Navarro County Wholesale Ratepayers.

“We’re appealing because we think the facts are compelling,” Marshall said. “After they passed that rate my clients went to Corsicana and said ‘why are you doing this?’ Corsicana’s response was ‘Y’all don’t vote.’ They intentionally crafted this rate not based on higher cost, but it was purely political. So that’s what started off this case. When the mayor told that to my clients, it didn’t sit well.”

The city has spent $320,000 defending the rate hike, according to Mayor Chuck McClanahan, who sent out a letter on the issue this past week, pointing out that there was also a breach of contract suit in Navarro County District Court.

“The most important point is that today the wholesale customers on average use 50 percent of the City of Corsicana’s total water production while contributing only 40 percent of the monthly revenue,” McClanahan stated in the letter. “I again would like to remind all of the citizens of Corsicana, it is imperative that the council defend the ability to set rates as required to provide service and to plan for future water supply projects to make sure all the citizens of Navarro County have ample water. It is also essential that each customer pay a fair share of that cost. Every penny will be needed in the future to accomplish this task. Water revenue not spent on infrastructure improvements is a waste.”

The wholesale water group has about 60 days to file an appeal to the Travis County District Court decision, Marshall said.

“It’s premature for Corsicana to declare victory,” he added.

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Janet Jacobs may be reached via e-mail at jjacobs@corsicanadailysun.com. Want to “sound off” to this article? E-mail: Soundoff@corsicanadailysun.com