Updated 9:40 a.m. CST on March 25

The Lower Colorado River Authority will continue its planned Wharton County reservoir after the LCRA Board of Directors on March 19 approved $17 million for the project's next stage.

The reservoir located near Lane City could cost a total of $215 million. In a statement LCRA said the project could be finished by 2017 and would add 90,000 acre-feet per year to LCRA's water supply for municipal customers—cities north of Austin that use uninterrupted water.

"LCRA serves one of the fastest-growing areas in the country, but the area also is prone to severe droughts," LCRA General Manager Phil Wilson said in a statement. "This new reservoir will help LCRA continue to provide a reliable water supply to the communities, industries and other customers that depend on us."

LCRA in 2013 approved spending an initial $18 million to buy property and begin development.

The board remains open to customers' feedback about LCRA's proposed raise in water rates for cities' withdrawal of raw water from Lake Travis. But the proposed raises are subject to change, LCRA Public Information Officer Clara Tuma said. LCRA has said the higher rates could start in 2015 and would help fund the Wharton County reservoir.

Original story posted March 19

Cedar Park and Leander residents could see their utility bills increase starting in 2015 if the Lower Colorado River Authority chooses to raise rates for raw water starting in January.

Both cities pay fees to LCRA for water withdrawn from Lake Travis. If LCRA raises those fees—the LCRA board has proposed an 18.5 percent increase in 2015 and variable percentages of the increase through 2019—city leaders said they would need to pass along some costs. Cedar Park and Leander leaders said they are only able to estimate how customers would see those changes reflected in their water bills.

About 15 percent of an average Leander customer's water bill is spent on raw water. That could increase by 2.75 percent in 2015, Leander Finance Director Robert Powers said.

Cedar Park residents could see an extra $1.25–$1.50 on their bill every month in 2015, Assistant City Manager Sam Roberts said. By 2019, monthly bills could increase by $3.50–$4.00 from current rates—all rough estimates based on information provided by LCRA, Roberts said.

The LCRA board plans to vote on new rates by June. Until then, the board has invited feedback from LCRA's municipal customers who are firm-water customers. Unlike interruptible customers such as rice farmers, firm customers receive first claims to water.

Leander and Cedar Park leaders are also concerned about persistently low lake levels and other challenges to planning water usage in two growing communities. Leander and Cedar Park are both members of the Highland Lakes Firm Water Customers Cooperative, whose members have collectively asked LCRA to postpone its decision on higher rates. That would allow more time for city customers to share their questions and concerns, Roberts said.

Water projects

LCRA Public Information Officer Clara Tuma said LCRA's proposed rate increases would help expand the water supply in the lower Colorado River basin. Higher rates would also support LCRA's operations, conservation and flood management, she said.

"However, the board is seeking public input on these rates, [which] could change based on that input," Tuma said.

The river authority does not profit from rates and has no power to levy taxes, she said.

LCRA's board wants to fund several projects, including new groundwater wells at Lost Pines Power Park for $15 million and a new water reservoir in Wharton County near Lane City. The 40,000-acre-feet reservoir would cost $214.96 million, and it would reduce the need to release water from the Highland Lakes region to benefit customers both downstream and upstream, Tuma said.

Roberts said the reservoir would be vulnerable to symptoms of severe droughts such as evaporation. Its construction is also based on some shaky financial assumptions, he said.

"One of our concerns is that some of the assumptions in their information could lead to higher rate increases if those assumptions don't pan out," he said. "They've assumed some very low interest rates on their future borrowing for this big reservoir project."

Tuma said the new reservoir could be finished by 2017 and would help Central Texas cities.

"The new reservoir would add an average of about [a] 120,000- acre-feet [per] year increase to the combined storage of lakes Travis and Buchanan by reducing demands on the lakes," she said. "This increase then would reduce the likelihood of curtailment to LCRA's firm customers."

Firm water customers should not be forced to pay for farmers' irrigation costs, Roberts said.

"[LCRA says] that they need to recoup these costs during the years that they're not getting any revenues from the [agricultural] customers," Roberts said. "Our counter to that is that they should build those costs into the rates that they charge those customers."

City challenges

Roberts said city staffers agree that LCRA should improve its systems, but question LCRA's cost allocation in which cities pay 88 percent of the increase and agricultural customers pay 12 percent. In years of low agricultural use, cities could carry all of LCRA's project costs, he said.

Neither percentage matches the proportion of water each customer group uses, Roberts said.

"Between the year 2000 and year 2010, [agricultural customers] have used on average 70 percent of all the water pulled out of the river system," he said during a Feb. 13 Cedar Park City Council meeting.

Cedar Park Mayor Matt Powell joined other leaders in asking why city customers should pay more.

"At some point someone needs to have the courage to ask the greater question," Powell said. "With the demographics of Texas being what they are and where they're going, the realities of the varying rainfall that we've gotten is an incredibly water-intensive crop really the future here? And how many families in municipalities should have to bear those costs?

"We don't tell anyone when they move here: 'Oh, by the way, you may be facing massive water rate increases to help subsidize an irresponsible crop downstream,'" Powell said.

Leander City Manager Kent Cagle said the city already faces the cost of debt for water utility infrastructure. Leander purchases more raw water than residents need because the city has secured enough water and facilities to serve a future population of over 200,000. So far, Leander residents number about 30,000, he said.

"When we get cutbacks from LCRA and forced conservation, they're actually making us pay for water that we can't use," Cagle said. "And the latest talk of rate increase is even more difficult because our ratepayers will see nothing from this. This is to benefit downstream users."

Tuma said LCRA has kept water flowing for firm water customers during one of the worst droughts in the history of Central Texas, and so far without cutbacks.

"Interruptible water is purchased—mostly for agricultural irrigation—at a lower cost than firm water and can be cut back or cut off during severe drought," she said. "Interruptible water from the Highland Lakes was withheld for most downstream irrigation in 2012, 2013 and 2014."

Open discussions

Katherine Woerner, Cedar Park director of community affairs and city representative in the Highland Lakes Firm Water Customers Cooperative, said LCRA's board has demonstrated its openness to discuss the rate issue and willingness to share information.

"We anticipate more communication, and we anticipate being able to have a seat at the table and express our concerns about the proposal," Woerner said.

Cagle said Leander's drought solutions will not be simple even if raw-water rates stay the same.

"We'd have to go a pretty significant distance to the east to get groundwater, and I know some people are talking about that now," Cagle said. "But with the Highland Lakes right here, that made the most sense. It's easy to question it now, but we're in the middle of a very severe drought. If the lakes are managed properly, we believe they're still a reliable water supply."

Editors note: Phrasing was changed March 27 to more accurately represent Katherine Woerner's role with the Highland Lakes cooperative.