Title
Conduct a public hearing and consider approving an ordinance on second reading with the caption reading: AN ORDINANCE OF THE CITY OF PFLUGERVILLE, TEXAS, REVIEWING THE RATE INCREASE REQUEST OF MONARCH UTILITIES I, L.P.; ADOPTING A FINAL DETERMINATION DENYING THE REQUESTED INCREASE IN RATES; FINDING THAT THE APPLICATION TO INCREASE RATES IS IN VIOLATION OF LAW AND UNREASONABLE; ORDERING THAT NO INCREASE IN RATES OCCUR; REQUIRING THE REIMBURSEMENT OF RATE CASE EXPENSES; ESTABLISHING AN EFFECTIVE DATE FOR THIS ORDINANCE; CONTAINING A SAVINGS CLAUSE; PROVIDING FOR SEVERABILITY; PROVIDING FOR PUBLIC NOTICE PURSUANT TO THE TEXAS OPEN MEETINGS ACT; ESTABLISHING THAT THIS ORDINANCE SHALL GOVERN OVER PREVIOUSLY ADOPTED RESOLUTIONS; MAKING SUCH OTHER FINDINGS AND PROVISIONS RELATED HERETO.
Summary
At a special City Council meeting on October 18, 2011, the City Council held a public hearing and approved the ordinance on first reading denying the requested rate increase. The City Council will hold an additional public hearing and consider approving the ordinance on second and final reading at a special City Council meeting on November 1, 2011 to be held at the First Baptist Church Pflugerville, 801 West Pecan Street, at 7:00 p.m. The City of Pflugerville has invited representatives of Monarch Utilities and the Texas Commission on Environmental Quality to attend and participate at the meeting. The City of Pflugerville invites and encourages interested members of the public to attend and participate in the hearings.
Background
This rate case involves the residents of the City of Pflugerville who reside in the Windermere Utilities area - primarily the Heatherwilde and Windermere subdivisions. Windermere Utilities is part of Monarch Utilities, the operating portion of SWWC which is the holding company. Monarch Utilities is requesting a rate increase on a system-wide basis of 62.3% for water and 33.6% for sewer. If a customer uses no water, they would be charged $106.41 per month per this rate increase request. The water usage rate will be $7.00/thousand gallons. The sewer usage rate will be $5.64/thousand gallons.
The City Council approved a resolution on August 23, 2011 to allow the City of Pflugerville to participate in a coalition of cities which would be the negotiating arm for this rate case. Other cities that may participate include Kyle, Buda and Blue Mound. The cost of this action will be paid by the utility company. In addition to the rate case, Monarch Utilities is asking for the sale/transfer/merger (STM) of a number of certificates of convenience and necessity (CCN's) that are currently held by various utility companies throughout the State of Texas, including Windermere, to the Monarch CCN. This would theoretically make it easier to increase rates across their system in the future. The approved resolution authorized the City to participate in the STM process with the Texas Commission on Environmental Quality (TCEQ) and authorized a contribution of $5,000. The cost of this procedure is not reimbursable by the utility and is estimated at a maximum cost of $25,000.
State legislators including Senator Kirk Watson and Representatives Mark Strama and Dawnna Dukes have expressed concern about the limited state oversight associated with investor-owned utilities. City of Pflugerville staff is providing information about this rate case and any City actions related to it to their offices.
Deadline for City Council Action
The deadline for action is January 1, 2012, per the previous settlement agreement.
Projected Future City Council Action
The City Council is expected to take action on the ordinance on second and final reading at the special meeting on November 1, 2011.
Fiscal Impact
The approved resolution provided $5,000 as a contribution for participating in the sale/transfer/merger action of the Windermere CCN to a proposed Monarch CCN. The City does purchase a small amount of water from Windermere for several irrigation meters and one facility. The proposed rate would increase the City's monthly bills from $707.88 to approximately $1,023.78.
Staff Recommendation
Conduct the public hearing and take action as appropriate.
Drafter
Lauri Gillam, Assistant City Manager