SUBJECT:
Leon Springs Utility Company, Inc. Rate Authorization Request
SUMMARY:
On September 12, 2013, City Council approved Ordinance 2013-09-12-0639 that that allows the Texas Commission on Environmental Quality (TCEQ) to exercise exclusive jurisdiction over the Leon Springs Utility Company's rates, operations, and services within the City of San Antonio. TCEQ has requested that the Ordinance be revised to allow it to exercise jurisdiction over all privately owned water and wastewater utilities within the city limits. Council had previously approved this request; however, the language in the signed Ordinance only indicated that the Council had allowed the TCEQ to exercise authority over the Leon Springs Utility Company.
BACKGROUND INFORMATION:
A law firm representing the Leon Springs Utility Company contacted City staff regarding a proposed rate adjustment by the utility. The attorney inquired whether COSA desired to retain jurisdiction over the rate adjustment process or if it would elect to have the Texas Commission on Environmental Quality (TCEQ) exercise that jurisdiction. Section 13.042 of the Texas Water Code states that the governing body of a municipality by ordinance may elect to have the TCEQ exercise exclusive jurisdiction over the utility rates, operations, and services of utilities, within the incorporated limits of the municipality.
Leon Springs is a privately-owned wastewater utility that serves approximately 960 residential customers in the Dominion development and 10 commercial customers. According to the company, it has not adjusted its rates since July 1996 and it is proposing new rates that would be equal to those currently charged by the San Antonio Water System (SAWS). An average residential Leon Springs customer currently pays $19.45 for 6,000 gallons of wastewater and the current SAWS charge is $26.24 for this volume of wastewater. The company indicated that it collects approximately $460,000 per year in wastewater treatment charges from its customers. SAWS provides billing services on behalf of Leon Springs.
After discussions with the City Attorney's Office, it was determined that it would be appropriate for the City to allow the TCEQ to review the proposed rate adjustment. In addition, COSA would not seek to enter into a franchise agreement with Leon Springs because it primarily operates in the Dominion subdivision and uses little, if any, City right-of-way. Representatives of Leon Springs have signed an agreement which binds them to follow applicable provisions in City ordinances (i.e., Fats, Oils, and Grease) relating to wastewater utility operations and services.
According to the database on TCEQ's website, there are two additional investor owned wastewater utilities with active Certificates of Convenience and Necessity that are not currently providing services to any customers and seven investor owned water utilities providing service to approximately 1,100 customers within Bexar County.
Chapter 13 of the Texas Water Code allows the governing body of a municipality that surrenders its jurisdiction to the TCEQ to reinstate its jurisdiction by ordinance at any time after the second anniversary of the date on which the municipality surrendered its jurisdiction to the TCEQ unless a rate case is pending before the TCEQ.
ISSUE:
The proposed Ordinance allows the Texas Commission on Environmental Quality to exercise exclusive jurisdiction over the utility rates, operation, and services of the Leon Springs Utility Company and all other privately owned water and wastewater utilities within the incorporated limits of the City of San Antonio.
ALTERNATIVES:
City Council could elect to not to relinquish its authority to regulate privately owned water and wastewater utilities to the TCEQ and could authorize City staff to initiate rate reviews upon request.
FISCAL IMPACT:
The approval of this item will not result in a fiscal impact to the City.
RECOMMENDATION:
City staff recommends approval of the proposed Ordinance.