R2004-138 08-23-04 RESOLUTION NO. R2004-138
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS, SUSPENDING THE WATER UTILITY RATE INCREASE
PROPOSED BY WALKER WATER WORKS, INC. (WATER CCN NO.
11862).
WHEREAS, Walker Water Works, Inc. ("Walker") is a water utility that serves
1,122 residential customers (approximately 60 customers in the City's incorporated
limits),
WHEREAS, Walker has filed a Water Utility Rate Change Application with the
City and the Texas Commission on Environmental Quality ("TCEQ"),
WHEREAS, pursuant to Chapter 13 of the Texas Water Code, the TCEQ has
exclusive original jurisdiction over retail water and sewer rates all of Walker's
customers residing outside the City limits while the City has exclusive original
jurisdiction over the rates of the customers residing in the City,
WHEREAS, pursuant to Section 13.187 (e) of the Water Code, the City must
conduct a hearing on the proposed rate change if at least ten percent (10%) of the
customers located in the City formally complain regarding the proposed rate increase,
WHEREAS, the City has received complaints from more than half of the
approximate 60 customers located in the City, thus requiring a public hearing to be
scheduled within 120 days after the effective date of the proposed rate change,
WHEREAS, pursuant to Section 13.157 (k) of the Water Code, the City is
entitled, pending the public hearing and decision to temporarily suspend (for up to 90
days) the proposed rate increase.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
RESOLUTION NO. R2004-138
Section 1. That the proposed rate increase contained in the Water Utility Rate
Change Application submitted to the City by Walker Water Works, Inc., is hereby
suspended for ninety (90) days form the date it otherwise would have been effective.
PASSED, ADOPTED this the 23rd day of
August
APPROVED and
, A. D.,2004.
TOM REID
MAYOR
ATTEST:
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
KELLY, HART & HALLMAN
(A PROFESSIONAL CORPORATION)
ATTORNEYS AT LAW
301 CONGRESS,SUITE 2000
AUSTIN,TEXAS 78701-2944
TELEPHONE (512)495-6400 201 MAIN STREET,SUITE 2500
TELECOPY(512)495-6401 FORT WORTH,TEXAS 76102-3194
WRITER'S DIRECT DIAL NUMBER TELEPHONE(817)332-2500
TELECOPY(B 17)878-9280
1512J 495-6413
July 2, 2004
Mr. Bill Eisen
City Manager
City of Pearland City Hall
3519 Liberty Drive
Pearland, Texas 77581
Re: 2004 Water Utility Rate Change Application of Walker Water Works, Inc.
(Water CCN No. 11862)
Dear Mr. Eisen:
Enclosed please find an original and four copies of the water rate/tariff change
application of Walker Water Works, Inc. ("Walker")being filed with the City of Pearland
pursuant to Texas Water Code § 13.042(a). As I discussed with you last week by phone, Walker
provides retail water service to two small subdivisions (containing a total of about 60 customers)
located within the city limits of the City of Pearland. Pursuant to Texas Water Code § 13.042(e),
an identical application is being simultaneously filed with the Texas Commission on
Environmental Quality ("TCEQ") which has exclusive original jurisdiction over the retail water
and sewer rates of all of Walker's other customers residing outside the city limits of a
municipality. Walker has a total of 1,122 residential water service customers.
Walker is requesting that the City of Pearland and TCEQ approve identical and uniform
utility-wide rates and tariffs as reflected in the enclosed application pursuant to Texas Water
Code § 13.082(c) in exempt areas (inside the City of Pearland) and non-exempt areas (the
remainder of Walker's service area outside the city limits of any municipality). If the City of
Pearland fails or refuses to approve the uniform utility-wide rates requested herein, Walker will
appeal the city's rate order and move to consolidate the appeal with the TCEQ's environs rate
proceeding (i.e., the rate case for the remainder of Walker's service area in non-exempt areas).
Please advise me in advance of the scheduling of this matter for consideration by the City.
Notices of the rate change were sent out to all of Walker's customers, including the
customers residing in Pearland, on July 1, 2004. A copy of the notice sent to the Pearland
customers is included as part of the enclosed rate change application. The notice provides a
comparison of the current rates with the new rates as well as a billing comparison showing water
bills under assumed consumption levels of 10,000 gallons and 30,000 gallons. The notice directs
646606 I
Mr. Bill Eisen
July 2, 2004
Page 2
the Pearland customers to file any protests of the rate change with the City of Pearland City
Secretary.
There are several key elements of this rate change application which we would like to
highlight for the City's consideration:
1. The last water and sewer rate increases occurred in 1999. Since 1999, Walker has invested
about $500,000 in improvements to the water systems and about$244,000 in improvements
to the sewer systems. In fact, these recent investments in water and sewer system
improvements and upgrades now constitute about 55% of the net book value of Walker's
entire water and sewer utility rate base. The primary need for this rate increase is to help the
Company begin to recover its investment in utility rate base infrastructure.
2. Walker is requesting recognition of its investments in used and useful plant in service (rate
base)through the establishment of detailed asset and account-specific Findings of Fact which
can serve as a starting point or baseline in future rate cases.
3. This application requests consolidation of all water utility facilities under uniform rates in a
single water tariff and all sewer utility facilities under uniform rates in a single sewer tariff.
The consolidation of all water and sewer facilities under single tariffs is consistent with the
current consolidated tariffs, although because of the recent enactment of§ 13.145, this
application provides the required justification for consolidation of more than one system
under a single tariff(see pages 5 and 6 of the enclosed application). The proposed rates and
tariffs reflect the fact that Walker is a single regional utility operating one commonly owned
group of used and useful water and sewer utility assets to serve a single regional customer
base.
4. As of 2002, the Walker water and sewer systems and the Southwest Utilities, Inc.
("Southwest") water and sewer systems were brought under the common ownership of the
American Water nationwide system of water and sewer utilities. Because of this common
ownership, the Walker and Southwest utilities have been able to access the capital resources
and management experience of American Water,realize economies of scale through
centralized administrative functions, and provide more effective and efficient customer
service.
5. Although at some in the future it is likely that both Walker and Southwest will be merged
into a single utility entity to reflect the common ownership and management under American
Water, the present rate cases for Walker and Southwest are being submitted and handled as
separate applications. Nevertheless, in order to prepare the way for the eventual
consolidation of the Walker and Southwest water and sewer systems under a single entity and
under single water and sewer tariffs, the proposed rate designs and tariffs have been prepared
with the objective of moving toward uniformity of treatment among all Walker and
Southwest customers.
646606-1
Mr. Bill Eisen
July 2, 2004
Page 3
6. In order to minimize customer rate shock while maintaining minimum cash flows needed to
pay ongoing operating expenses, the proposed rates do not recover the full costs of service to
which Walker would be entitled under the TCEQ's ratemaking rules. To the extent
reductions are made to the proposed costs of service during the processing of this case,
Walker reserves the right to increase its requested returns to compensate for the lost
revenues. Of course, in no event will the final rates exceed the proposed rates as noticed to
customers except for rate case expense and other surcharges approved by TCEQ. No capital
improvement surcharges are being proposed to fund the extensive and ongoing capital
improvement program the Company has been engaged in over the past seven years.
I am the attorney of record for Walker in this case. Therefore, please send me copies of
all notices, discovery and information requests, and other communications at the address
indicated on this letterhead as well as to Chuck Loy of GDS Associates, Inc. as the designated
contact for Walker in this case as shown in the application.
Please feel free to contact me or Chuck Loy at any time if you have any questions about
this rate/tariff change application.
Very truly yours,
Cd2
Stephen C. Dickman
SCD:ow
Enclosures
cc: Mr. Doug Holcomb, TCEQ Water Supply Division, Utilities &Districts Section
Chuck Loy, GDS Associates, Inc. (w/o enc.)
Mike Merka, General Manager, Walker Water Works, Inc. (w/o enc.)
Jim Harrison, American Water(w/o enc.)
646606-1
r c..L•C.l V` 0
CITY rrr:CITY r�(�- ,,a, L`F ICE
NOTICE OF PROPOSED WATER RATE CHANGE `
20C4 JUN -9 P1l 5: 0q
Walker Water Works, Inc. 1862
Company Name CCN Number
has submitted a rate change application to the City of Pearland (the City). The proposed water rates listed on
the next page will apply to service received on or after the first day of a billing cycle occurring on or after the
effective date provided below. If the City receives protests to the proposed increase from 10 percent of the
ratepayers- or from any affected municipality before the 91 st day after the proposed effective date, a public
hearing will be scheduled to determine if the proposed rates are reasonable. Protests should be mailed to:
City Hall-Attn: City Secretary
City Hall
3519 Liberty Drive
Pearland,Texas 77581
Unless protests are received from 10 percent of the ratepayers or the City schedules a hearing, no hearing will
be held and rates will be effective as proposed. Please read the following information carefully:
Water System Name TCEQ PWS ID# a
Sharondale Sterl Sterling Estatesd sion 200363 '200258 � 4 d ✓� I
Subdivisions or Systems Affected by Rate Change
(for customers residing within the city limits of the City of Pearland)
P.O. Box 907 El Campo TX 77437 979-543-5244
Company Address City State Zip Telephone
46.00% July 1 ,2004
Annual Revenue Increase Date Customer Notice Mailed
05/19/99 4 cycles: 3rd,7'h, 13t',and 18th of month
Date of Last Rate Change Date Meters Typically Read
EFFECTIVE DATE OF PROPOSED INCREASE: September 1,2004
REQUEST FOR FINDINGS OF FACT ON RATE BASE: In this rate change application,the Company is
requesting the Commission to establish detailed rate base asset and account-specific Findings of Fact regarding
the Company's investment in used and useful plant-in-service (rate base). These Findings of Fact may
constitute a baseline or starting point for the valuation of rate base in future rate cases.
BILLING COMPARISON
Water:
5/8"x Existing 10,000 gallons: $37.79 /mo Existing 30,000 gallons: $68.39 /mo
3/4"
Proposed 10,000 gallons: $58.08 /mo Proposed 30,000 gallons: $129.28 /mo
The proposed rates will apply to all water service rendered on or after=the first day of a billing cycle occurring on or after the effective
date and will be reflected on the bill you receive approximately 30 to 45 days after the effective date. In the event that the application
is set for hearing,the specific rates requested by the utility may be decreased or increased by order of the City. If the City orders a
lower rate to be set,the utility may be ordered to refund or credit against future bills all sums collected during the pendency of the rate
proceeding in excess of the rate finally ordered plus interest. You may inspect a copy of the rate change application at your utility's
office or at the City of Pearland City Hall or at the Texas Commission on Environmental Quality's(TCEQ) office at Park 35-Building
F, 12015 Park 35 Circle, Suite 3101. Austin, Texas, west side of IH-35, south of Yager Lane. Additional information about the
application can be obtained by contacting the TCEQ Utilities and Districts Section at 512/239-6960. Information about how oou can
participate in the rate setting process can be obtained by contacting the TCEQ Public Interest Counsel at 512/239-6363.
TCEQ-10423:Application for a Rate/Tariff Change -sr— Page 1
Walker Water Works,Inc. �L
WALKER WATER WORKS, INC.
P.O. Box 907
El Campo, TX 77437
To: Customers of Walker Water Works,Inc.
Subject: Water and Sewer Rate Change
Date: July 2, 2004
Enclosed is a Notice of Proposed Rate Change filed with the Texas Commission on Environmental
Quality(TCEQ) on July 2, 2004.1 This notice is part of our application to increase rates we currently
charge for water and sewer service. The new rates will become effective on September 1, 2004,
which is after most of the high-use summer watering season.
The last water and sewer rate increase occurred in 1999. The five years since the last rate increase
is a lengthy period of time as compared to the frequency of rate increases by other retail water and
sewer utilities some of which increase rates every year.
These rate increases are primarily due to the substantial costs of improvements in the water and
sewer systems made by the Company since the date of the last rate increase. During the last five
years, the Company has invested about$500,000 to make the improvements needed to the water
system and about$244,000 to make the improvements needed to the sewer system in accordance
with TCEQ regulations.
Under the Company's new water rates, most customers of Walker that use an average of 1,000
gallons of water per month will see a$2.02 increase in their monthly bill. There would be a$12.17
increase for customers that use an average of 6,000 gallons of water per month.2 Monthly sewer
service bills for customers that use an average of 6,000 gallons of water would increase$6.74 under
the new sewer rates.3 However, reduction in the amount of water used each month will also reduce
monthly sewer bills for customers receiving both services.
Please review the enclosed notice carefully and feel free to contact me to discuss any questions you
might have about this change in rates.
Sincerely,
r fQ
Mike Merka
. General Manager
Enclosure
For those customers of the Sharondale and Sterling water systems residing inside the city limits of the City of Pearland,
the application was filed with the City of Pearland which has original jurisdiction over rates for water service within the
city.
2 These water rate increases would be different for customers of V$Iage Trace,Hastings and Ashley mobile home park
because these customers currently pay rates different from those paid by the rest of Walker's water customers. See the
enclosed Notice for examples of water bills at assumed levels of 10,000 gallons per month and 30,000 gallons per month
for the various classes of Walker's residential meter customers.
3 The sewer rate increase would be different for customers of Village Trace and Calico Farms because these customers
currently pay rates different from those paid by the rest of Walker's sewer customers. See the enclosed Notice for
examples of sewer bills at assumed levels of 10,000 gallons per month of water usage and 30,000 gallons per month of
water usage for the various classes of Walker's residential meter customers.
July 7,2004
City Hall
Attn: City Secretary
City Hall
3519 Liberty Drive _
Pearland, TX 77581
A copy of the proposed water rate change letter sent to me. The following Protest the
proposed increase for the rate base from Walker Water Works, Inc., CCN Number 11862.
Water System Name TCEQ PWS ID#
Sharondale Subdivision 200258
Sterling Estates 200363
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