Round Rock City Council agreed to mediation with several Municipal Utility Districts at a Jan. 26 meeting, seeking to resolve yearslong litigation over water rates.

In a nutshell

The mediation, scheduled for Feb. 29, aims to facilitate an agreement between five municipal utility districts, or MUDs, and the city. The focus of the sit-down is to address and reach a consensus on the wholesale water and wastewater rates charged by the city for servicing the following neighborhoods:
  • Paloma Lake, MUD No. 1
  • Paloma Lake, MUD No. 2
  • TeraVista, Williamson County MUD No. 10
  • TeraVista, Williamson County MUD No. 11
  • Vista Oaks MUD
Mayor Craig Morgan voiced concerns that mediation would make Round Rock an “easy target," by setting a precedent that the city is quick to lower or negotiate rates.

Some context

The city updated their rates in 2017 after conducting a wholesale rate study. The study was conducted by Raftelis Financial Consultants Inc., a local government and utility management company.

Dating back over five years, the initial conflict stemmed from local MUDs questioning rate increases from the city, filing an appeal of their wholesale rates to the Public Utility Commission of Texas, or PUCT, in October 2018.

COVID-19 shutdowns and leadership changes in the Public Utility Commission of Texas led to a delay in the city’s filing their defense case in November 2022, according to city documents.

Due to the prolonged litigation process, the city had to allocate additional funds for legal fees, approving an additional $170,000 and bringing the total expenditure for the case to $486,256.

If the mediation concludes with an agreement from all parties, the affected areas can anticipate a rate change by April 2025. However, if no settlement is reached, the case may extend into 2025, as either party has the option to appeal the final ruling.

“We're still confident in our rates that we charge our wholesale customers,” said Michael Thane, Round Rock director of utilities. “They are a part of our community. We feel confident we've done everything we need to do to make the rates good. Our retail rates are low, which means our wholesale customer rates are too.”