On June 18, the Lower Colorado River Authority board of directors unanimously approved increased raw rates for firm water customers, effective January 2015.

Firm water customers include municipalities and water utilities, such as Travis County Water Control and Improvement District 17, River Place Municipal Utility District and the city of Lakeway, that have first claim on the Highland Lakes stored water supply. Interruptible customers, such as downstream rice farmers, can have their water supply interrupted during water shortages.

The new rates, an increase from $151 per acre-foot to $175 per acre-foot for firm water customers, will be temporary and include only the January 2015 through December 2015 billing cycles, LCRA Executive Vice President John Hofmann said. However, the rate hike may be reduced should the drought subside and revenues rise, he said.

"The goal [of the drought rate] is the full cost recovery of LCRA's water operations," General Manager Phil Wilson said.

The rate increase was necessary because most LCRA interruptible customers have not received any stored water the past three years due to emergency restrictions, and LCRA has been unable to recover those operation costs, he said.

"We've got to fill that hole and cover our costs," LCRA Board Chairman Timothy Timmerman said.

Burnet County Judge Donna Klaeger said two communities in her area lack a water source, and property values have decreased by almost $89 million from the low levels in lakes Buchanan and Travis. She said the local tax rate may go up 2 percent as a result of this loss in property value.

"We are in a crunch," Klaeger said.

Jo Karr Tedder, president of Highland Lakes advocacy group Central Texas Water Coalition, said that both the water rate increase of $175 and initial rate of $151 are unfair and discriminatory to firm customers who pay substantially more for water than interruptible customers.

Although the CTWC proposes that interruptible rates should be comparable to firm rates, that does not take into account that water has been cut off to interruptible customers, said Ronald Gertson, a rice farmer and chairman of the Colorado Water Issues Committee, which represents the rice farmers.

Board members also unanimously agreed to seek an order from the Texas Commission on Environmental Quality to suspend releasing water to interruptible customers for an additional 120 days beyond an existing order set to end July 25. The new order would expire in November at the end of the irrigation season for interruptible customers, Hofman said.

The LCRA is considering outsourcing the water delivery systems for its irrigation divisions, a move that is estimated to save about $6 million, he said. If the systems are outsourced and anticipated savings occur, the agency would reduce firm water customer rates back to $151 per acre foot, he said.

The city of Austin is not affected by LCRA's June 18 decision because the city and agency have a rate contract that takes precedence over the ruling, Austin Water spokesman Jason Hill said.