Several bills being considered in the Texas Legislature could have an impact on how water and sewer rates are set by utility companies throughout the state. Proposed bills include SB 567—which transfers water rate regulation responsibilities from the Texas Commission on Environmental Quality to the Public Utility Commission—and HB 1456—which gives counties the right to intervene in the ratemaking process by engaging rate consultants and conducting investigations.

These proposals come on the heels of an ongoing dispute between the organization Texans Against Monopolies' Excessive Rates and various independently owned utilities, including Monarch Utilities. Monarch, a subsidiary of the Califonia-based SouthWest Water Company, provides water to 32 counties in east Texas and more than 1,100 households in unincorporated Magnolia.

A dispute between Monarch and its customers over a proposed 62.3 percent water rate increase was quelled after the company agreed to bump it down to an 8.7 percent increase in June 2012, followed by a 4.2 percent increase in January 2013. However, TAMER board member Bill Hudgins said the overall problem of utility companies having too much power has not been addressed.

"Even if every bill we support was passed, it still wouldn't solve the problem," Hudgins said. "It would just give us the opportunity to defend ourselves. As of now, we are nearly defenseless."

SB 567 passed the Senate unopposed and was sent to the House on April 4. By transferring rate regulation to the PUC, Hudgins said water customers can begin to challenge the IOUs on a more level basis.

"TCEQ is great at monitoring environmental quality, but they don't have the money or the expertise in rate setting to challenge unjust rate increases," he said. "[The IOUs] have all these expenses—and it is very expensive—but nobody ever checks the records. They can almost set any rate that they want for their equipment and services."

Chuck Profilet, vice president with SWWC, said the company supports the idea of OPUC representation for all customers, but is opposed to the SB 567 because of how it is written.

"The bill moves ratemaking to PUC based on the ratemaking process for electricity," he said. "We support a similar process, but we have a much smaller number of customers than electricity companies, so the ratemaking expense per customer is going to be much higher."

SWWC supports the addition of a process known as streamlined ratemaking to the bill. Streamlined ratemaking would cut costs by simplifying the ratemaking process, Profilet said. However, opponents of streamlined ratemaking say it gives utility companies too much power.

HB 1456, which is still being heard by the House, is most significant for the increased access to legal council it will provide to customers when rate disputes arise, Hudgins said.

"Right now, it's up to us as individuals to collect money to hire attorneys," he said. "With this bill, we can provide the attorneys, but the county would provide the income to hire them."

Profilet points out that, under this bill, money spent by the county in hiring attorneys, experts and consultants would be refunded by the IOUs and ultimately passed on to the customers through rate increases.

In regards to current rates, Profilet said SWWC is committed to charging fare rates based on the cost of supplying water. He also acknowledged a new SWWC program in Montgomery County offering monthly bill assistance to customers whose combined monthly income does not exceed 125 percent of the federal poverty line.

Hudgins said he is glad to see these issues getting attention from state representatives.

"What [the IOUs] are doing is legal, but the way the legislature originally wrote the laws just kind of makes you wonder," he said. "These are not the kinds of things that are going to reverse the water rates, but it's encouraging to see this being addressed."