San Jacinto River Authority outlines possible rate increase scenarios for FY 2020-21

Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)
Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)

Lawsuits over surface water in Lake Conroe have led to increased water rates. (Community Impact Newspaper staff)

Updated 2 p.m. April 27: This story has been updated to include comments from the city of Conroe.

Depending how lawsuits pan out, the San Jacinto River Authority may increase its rates next fiscal year by up to 14.5% from fiscal year 2019-20.

The SJRA has been paying legal fees associated with a lawsuit against private utility provider Quadvest and the cities of Conroe and Magnolia over water rates, an antitrust case filed against the SJRA by Quadvest, and a water line leak case.

The current groundwater pumpage fee is $2.73 per 1,000 gallons, and the current surface water fee is $3.15 per 1,000 gallons. At its April 20 meeting, SJRA Deputy General Manager Ron Kelling presented four scenarios on possible rate increases based on outcomes of the legal proceedings. The rates will be set on May 26 and approved, along with the FY 2020-21 budget, on June 22.

In 2016, Conroe and Magnolia refused to pay increased surface water rates by the SJRA. According to the SJRA, the city of Conroe would owe the SJRA a total of $5.66 million—including short pay and late fees—by Aug. 31, while Magnolia would owe $237,387.

Mayor Pro Tem Duke Coon, who serves as Conroe’s representative on the SJRA’s Groundwater Reduction Plan Review Committee, attended the meeting but did not comment on the rate case. City officials have previously said the SJRA rate increases are unduly high and place an unfair burden on residents.


In Scenario A as outlined by Kelling, Conroe and Magnolia pay all their past dues from FY 2019-20 and begin to pay the full SJRA rate; the rate case is dropped; the anti-trust case is dismissed; and the water line case is dropped. In this scenario, rates would increase by 0.4%, or about 1 cent.

“If you could close your eyes and think of a world where there are no lawsuits ... that scenario is basically ... you could operate as a normal utility without all this other stuff going on,” Kelling said.

Scenario B is the same as Scenario A, except the Quadvest rate case—sans Conroe and Magnolia— is seen through trial, and the antitrust case goes through discovery. In a nutshell, the Quadvest antitrust lawsuit alleges the SJRA created a monopoly on water supplies in Montgomery County through its GRP by purchasing all available surface water resources in the region.

“Both of those [cases] are going to be expensive,” Kelling said. “The best estimate I could squeeze out of our attorneys for now is that the Quadvest ... rate case to go through trial is going to cost $700,000. Just for the Quadvest antitrust case to go through discovery, $700,000 also.”

In Scenario B, rates would increase by 3.7%.

Scenario C is the “status quo,” Kelling said.

In this situation, none of the lawsuits are dropped or settled, and Conroe and Magnolia continue paying 2016 rates. In Scenario C, rates would increase by 14.5%.

A fourth scenario was also presented that involved reducing production of the surface water facility and would lead to an 11.5% increase in rates.

“Let those numbers sink in,” Kelling said. “We need ... all of our participants to chew on these numbers and chew on these scenarios.”

In response to the meeting, Conroe City Attorney Marcus Winberry told Community Impact Newspaper

"The council expects to continue paying the SJRA surface water and pumping fees at the frozen levels and will continue to hold the difference for future payment when the rate dispute is settled. The city is unlikely to release any portion of the disputed amount without a comprehensive settlement."
By Eva Vigh
Eva Vigh joined Community Impact Newspaper in 2018 as a reporter for Spring and Klein. Prior to this position, she covered upstream oil and gas news for a drilling contractors' association.


MOST RECENT

Slightly more than 7,000 COVID-19 cases remained active in Montgomery County as of Jan. 27. (Community Impact staff)
Montgomery County's active COVID-19 case count hovers just above 7K; 5 new deaths reported since Jan. 22

Montgomery County's active COVID-19 case count was just above 7,000 as of Jan. 27, and five new deaths have been reported since last week.

Fort Bend County commissioners discussed vaccine distribution at a regular court session Jan. 26. (Courtesy Adobe Stock)
Fort Bend County to open new vaccination sites and more Houston-area news

Read the latest business and community news from the Houston area.

Various city departments will be housed, with room for growth. (Andy Li/Community Impact Newspaper)
Newly renovated building to house city of Conroe departments

The $1.37 million renovations were cheaper than the cost to purchase a new building, according to the city.

Commissioners discussed vaccine distribution at a regular court session Jan. 26. (Courtesy Adobe Stock)
7 updates on COVID-19 vaccine distribution in Montgomery County

Two more hubs slated, call center in the works and registration process may be nixed: seven updates you do not want to miss.

Montgomery County commissioners unanimously approved the creation of a new court at law Jan. 26. (Ben Thompson/Community Impact Newspaper)
Montgomery County commissioners unanimously approve new court at law

The aim of the new court, once established, is to help the county prepare for future growth.

Owner Ronald Harry Keyser entered the restaurant business in 1979. (Eva Vigh/Community Impact Newspaper)
GuadalaHarry’s Bar & Grill: Waterfront diner is a melting pot of Cajun, Tex-Mex, seafood

GuadalaHarry’s Bar & Grill, located on the waterfront of Lake Conroe in Willis, is inspired by a fictional character named Harry.

Texas Medical Center offers coronavirus updates

More than 118,000 people have received their first shot.

With the last Montgomery County mobility projects funded by a 2015 road bond underway and updates still pending for the county’s Major Thoroughfare Plan, area officials are looking to shape a new set of transportation priorities in 2021.(Courtesy Adobe Stock)
New Montgomery County transportation priorities coming this year

With the last Montgomery County mobility projects funded by a 2015 road bond underway and updates still pending for the county’s Major Thoroughfare Plan, area officials are looking to shape a new set of transportation priorities in 2021.

Montgomery County's two COVID-19 vaccine hubs received allocations of around 2,000 doses each this week. (Courtesy Adobe Stock)
Montgomery County's 2nd vaccine hub set in The Woodlands; Conroe hub, public health district to get more doses

The Woodlands hospital hub now offers vaccines on an invitation-only basis, and those interested in future vaccination may join the hospital's waitlist.

The Lone Star Groundwater Conservation District regulates groundwater usage in Montgomery County. (Community Impact Newspaper staff)
New groundwater rules in Montgomery County abolish previous restrictions

The new rules allow for cutbacks if needed in the future. However, some are concerned Montgomery County could pump an excessive amount of groundwater.

Preregistration does not guarantee an appointment. (Courtesy Adobe Stock)
UPDATED: Montgomery County COVID-19 vaccination preregistration full in 30 minutes; Conroe hub plans Jan. 25 registration

The Montgomery County Public Health District's initial preregistration for COVID-19 vaccinations filled in less than 30 minutes after the program's launch Jan. 25.