Water rates in The Woodlands and in all other municipalities contractually involved in the San Jacinto River Authority’s Groundwater Reduction Plan are set to increase by 14 cents this September due in part to the cost of ongoing litigation between the SJRA and two cities in Montgomery County.


Starting Sept. 1, residents will pay an SJRA fee of $2.83 per 1,000 gallons of surface water used from Lake Conroe and $2.64 per 1,000 gallons of groundwater, according to the SJRA. The fee is in addition to regular utility rates charged by their corresponding municipalities or utility districts.


Last August, the SJRA filed a lawsuit in Travis County against the cities of Conroe and Magnolia, citing breach of contract after they refused to pay an 18-cent increase in water usage fees. SJRA officials said the increase was needed at that time due to a drop in demand for water because of heavy rainfall over the last few years. The SJRA spent $6 million of its $13 million in reserves in three months in mid-2016 to make up the loss in funding as water users provided less in revenue than anticipated due to the increased rainfall.


The legal battle stems from a regulatory plan adopted in 2003 by the Lone Star Groundwater Conservation District, which was created by the Texas Legislature in 2001 to regulate and reduce groundwater consumption in Montgomery County. The plan—which both Conroe and Magnolia agreed to—called for the establishment of using no more than 64,000 acre-feet of annual countywide groundwater and the shift to surface water—a more expensive option—to preserve the county’s groundwater source.


This year, however, the cost of litigation is a major factor in the reason for the proposed 14-cent increase; it represents 12.6 cents of the total 14-cent increase, said Mark Smith, SJRA’s Groundwater Division Plan manager. The city of Conroe was set to consider a new resolution in early June to oppose the increase, but no vote had been held as of press time.


The Woodlands prepares for increased SJRA water usage rates this SeptemberThe SJRA has about $1.84 million in its reserves, which amounts to less than two months of its operating cost, Smith said. He added the increase in fees will help grow the agency’s reserves back to a typical six-month supply of funds.


“I wish my reserves were healthier than they are, but they’re not,” Smith said. “If I could raise the rate enough to get the reserves where they need to be this year, that result would be way too much. We’re trying to take the measured approach to recover that reserve over a period of years.”


Representatives from the SJRA, The Woodlands Joint Powers Agency and Quadvest—another plaintiff in the lawsuit—spoke during the May 24 Woodlands Township board of directors meeting regarding the user fee increase and budget. Although the township did not take a formal stance on the rising water usage fee, several directors did express concerns regarding the fact that residents of The Woodlands are paying a higher rate than the cities involved in the lawsuit.


“If we’re going to pay a higher rate than Magnolia and Conroe are paying, [SJRA] needs to make us whole at some point,” township Director Bruce Rieser said. “It’s not enough to just get the money from Magnolia and Conroe; when this is all said and done, we need to be equalized.”


The difference in the rate amount between what the cities of Conroe and Magnolia are paying this year versus the other entities contractually involved in the SJRA Groundwater Reduction Plan is 18 cents, Smith said.


“We are charging them that but they are not paying it,” he said. “We are sending them late notices and they are accruing interest and penalties.”


Smith also said that should Conroe and Magnolia’s litigation be unsuccessful, the SJRA plans to pursue the legal costs it incurred.


“If, as I suspect, [Conroe and Magnolia’s] litigation is unsuccessful, we recover their fees because otherwise it is setting a terrible precedent,” township Director John McMullan said.


Smith also said another SJRA issue in the last year was a surface water line break on Grogans Mill Road that needed to be repaired.


Township Director Laura Fillault expressed concerns over what would happen if there was a future line break.


“This has the potential to go south quickly,” she said. “Because if you have another line break and don’t have the reserves to cover it, you say you’re not going into more debt, but I’d assume you’d have to take on more debt, which then potentially affects bond ratings, which affects interest rate, which affects [the water rate].”



Conflicting viewpoints


SJRA Executive Director Jace Houston said the conversion from groundwater to surface water is necessary because well water levels in Montgomery County continue to drop.


As water levels decline, the yield of a well drops and water demand will not be met. Over the last 15 years, water levels in the wells serving The Woodlands have dropped 200 feet, he said.


“Essentially, we have had to develop a new water supply to meet our customer demands,” Houston said. “That’s why rates are going up. We’re just covering costs, and we’re barely covering costs. We’re trying to develop a plan to get back to a healthier financial situation.”


However, Quadvest President Simon Sequeira said he believes the groundwater reduction mandated by LSGCD is not necessary due to the 180 million feet of groundwater sitting underneath Montgomery County today. The water and sewer utility company is another plaintiff in the lawsuit.


“I think the [SJRA] has several options: They can not move forward on any more expansions, they can let people out of existing contracts, [or] they can file for bankruptcy,” Sequeira said. “The government should be accountable here. If they did something that they shouldn’t have done without science, without proof, I think they should be held accountable.”


Additional reporting by Jesse Mendoza