In December, LCRA underwent a hearing by the Sunset Commission to review its overall performance and mission. The commission then adopted recommendations for the Legislature to consider in January.
Erick Fajardo, Sunset Commission senior policy analyst, said the commission looked at the LCRA’s land trust, Highland Lakes operations, water regulatory programs and community development grant program. While 93 percent of the LCRA’s revenue comes from electricity, the review was restricted to reviewing its water operations.
Fajardo said the commission found some of the biggest issues centered on LCRA’s financial transparency.
According to Fajardo, the red flags came from questions by stakeholder groups. Fajardo said several stakeholders believed LCRA’s water revenue was diverted to support electric operations when the opposite occurred. An allegation claimed LCRA’s downstream releases from the Highland Lakes were unrelated to downstream customers and created income for electric operations.
“Even though it’s a small component, it’s a small portion of their revenue,” Fajardo said. “That allegation was made throughout the review.”
LCRA provides financial reports, but Fajardo said the 72-page financial document is not easy to decipher.
“It takes a lot of connecting the dots and a lot of digging for somebody to really understand how the finances work,” he said.
The Sunset Bill goes into effect in September, 2019, at which point LCRA will have to adopt the new policies and recommendations.
Bill recommendations direct the LCRA to provide detailed financial information in public documents and clarify money transfers and reserve funds. The commission also recommends that LCRA separate revenues between wholesale, term and interruptible water.
The Sunset Bill will also require LCRA to adopt public engagement policy for water-supply projects. LCRA must also develop, maintain and act on complaints made available through its website.
“We agreed with the Sunset Commission’s recommendations and are looking forward to working with the Legislature to make sure the recommendations are incorporated into statute,” said Bill Lauderback, LCRA executive vice president for Public Affairs, in an email statement.
An LCRA representative said the authority could not comment further.
The Central Texas Water Coalition, a nonprofit advocating for water conservation in Central Texas, met with the Sunset staff several times throughout the process.
CTWC President Jo Karr Tedder said she was pleased with the commission’s attention to transparency, but many of the concerns regarding LCRA’s checks and balances and oversight adequacy could not go any further.
“If you look at the process, it turns into policy,” Tedder said. “We focused on the process, but nonetheless those were not areas they could delve into.”
LCRA is expected to implement the commission’s recommendations before the next legislative session.