Agua SUD board rejects plan to increase water and sewer rates

The Agua Special Utility District board rejected a plan to increase water and sewer rates last week.

During a meeting on July 1, the utility board voted 3-2 not to implement the third year of a five-year plan to increase rates.

“When I ran back in 2016, one of the things that I promised the people was to lower the water meter prices. And I did,” said utility board President Homer Tijerina. “And this time, when I ran, I promised the people to lower the rates.”

Tijerina, utility board Director Ivan Sandoval and utility board Director Cesar Rodriguez Jr. voted not to implement the third year of rate increases.

Two other members of the utility board, Director Maribel Diaz and Director Esmeralda Solis, voted not to interfere with the planned rate increases. They didn’t respond to requests for comment.

Director Lloyd Loya and Director Adolfo Arriaga didn’t attend the meeting.

The board hired a consultant, Jeff Snowden of Frisco-based Capex Consulting Group, to review water and sewer rates.

Snowden presented the utility board with a draft in August 2018, when the board held a workshop on South Padre Island, and returned with a revised proposal that November.

“If you don’t do anything with your rate structure, your system will continue to operate with a positive cash flow. But by 2023 you’ll start to have deficits,” Snowden told the board in November 2018. “So now is the time, as you grow, to start to gradually make changes to your rates. You don’t want to give your customers rate shock, but you do want your revenues to keep ahead of your expenses.”

Under the plan, both the base rate and the per-thousand-gallon consumption charges would increase every year.

The base rate for a water customer with a three-quarter-inch meter would increase from $16.53 per month to $17.75 per month by 2023 — about 24 cents per year, according to the plan.

Customers would also pay more for water.

The charge for using 8,000 to 10,000 gallons would increase from $2.36 to $2.75 — nearly 8 cents per year, according to the plan.

“And at the end of that transition, you’ll still have some of the lowest residential rates in the Valley, and your cash flow will pay your debt and pay your operations, and leave you a buffer for the end for the year,” Snowden said in November 2018. “But you will not be a big generator of cash. You’ll still have a lean system.”

After holding public hearings, the utility board voted 5-2 to approve the plan in April 2019. Tijerina and Sandoval voted against it.

Tijerina, who became president of the board after the November 2020 election, said the utility district should reduce costs before increasing rates.

“I feel that, these past couple of months, we’ve been working diligently to cut expenses,” Tijerina said.

The utility district eliminated unnecessary consultants, refinanced debt at lower interest rates and found ways to save money on construction projects.

Snowden, however, recommended the utility board stick with the plan.

“This rate adjustment is very modest,” Snowden said on July 1. “For the majority of your customers, this would represent a $1 increase in the monthly bill for water-only customers. For an 8,000-gallon-a-month water customer.”

Palmview residents with sewer connections would pay slightly more.

“For the sewer customers that are coming online now, that will flow to Mission, there’s a $1.27 increase for that average residential bill,” Snowden said. “And that revenue is pretty critical to allowing you to fund the debt and operations — and then also to pay Mission the wholesale treatment charges for the new sewage flow.”

Sandoval motioned not to proceed with the planned rate increase. Tijerina seconded the motion.

“I’m looking out for the people, the constituents,” Sandoval said. “Especially the elderly people who live paycheck by paycheck.”