The West Travis County Public Utility Agency board of directors unanimously passed a 20 percent drought surcharge for both wholesale and retail customers in all rate classes May 15.
The surcharge affects only the volumetric rate—the portion of a residential bill that is based on consumption—and not the base rate—which is charged equally to all customers, WTCPUA Rate Consultant Nelisa Heddin said. She said she believes the WTCPUA is the first Central Texas agency to implement a drought surcharge.
"Residents have control over the net impact [the surcharge will have on] them because they have control over their [water] consumption," Heddin said.
WTCPUA board members discussed implementing the surcharge because of the recent loss of revenue caused by lower water usage.
As stricter water curtailment stages were instituted residents used less water, and their bills declined, Heddin said.
The WTCPUA board's decision to enact a 20 percent surcharge was based on its 2012 tariff, which provides authority for the agency to offset the impact of lost revenue when the service area has been in Stage 2 water restrictions for at least six months. The tariff states that the surcharge can end when the board of directors decides the lost revenue deficit has been mitigated.
However, the stated guideline to later drop the surcharge is not tied to lake levels and can extend even when the drought is over, Heddin said.
Board member Bill Goodwin said he advocated tying the utility's surcharge water rates directly to the lake levels.
The tariff also permits the board to add a surcharge of up to 35 percent above posted rates during Stage 3 water restrictions—defined as severe water shortage conditions—and up to 50 percent above posted rates during Stage 4 water restrictions—emergency water shortage conditions.
The WTCPUA enacted Stage 2 water restrictions July 18, 2013, after which the agency saw a drop in average retail customer water consumption from 17,000 gallons per month to less than 15,000 gallons per month, Heddin said.
The Stage 2 restrictions—which limit users to watering one day a week—resulted in a $1 million loss in the agency's annual budget, she said. The 20 percent drought surcharge, along with other proposed budget cuts, would allow the WTCPUA to recover about $500,000, she said.
Heddin said she recommended the 20 percent surcharge become effective for customers' July bills. She said the surcharge would add between $0.76 per 1,000 gallons to the bill for lower rate tier customers and $2.56 per 1,000 gallons for higher rate tier customers.
The WTCPUA discussed multiple options before deciding on the 20 percent surcharge.
Approval of a 10 percent surcharge would not provide a surplus of funds sufficient to protect the board in the case of an emergency, Heddin said. A 15 percent surcharge would provide a $100,000 contingency allowance, and a
20 percent surcharge would provide a $200,000 contingency allowance annually, she said.
The LCRA is requiring Stage 2 water restrictions—once per week watering—until the combined levels of lakes Buchanan and Travis reach 1.1 million acre-feet, WTCPUA General Manager Don Rauschuber said.
"It's not going to be easy to get out of this [surcharge] unless the lakes fill real fast," Rauschuber said.
A May 27 Austin Water Utility financial plan draft recommends the city of Austin develop drought rate charges for all of its customers during Stage 3 and Stage 4 water restrictions.
