Austin leaders reached a deal with their largest water customers Thursday evening that will reduce water costs across rate classes — for residents and businesses alike.
Additionally, the utility will keep rates flat for the next two years, its staff said. It won’t be able to raise rates again without the input of an independent hearing examiner, after the City Council agreed to an amendment from Council Member Ellen Troxclair.
The average homeowner will see a $2.40 drop in the monthly water bill, Austin Water Director Greg Meszaros said. That will be effective May 1.
“This recommendation brings all of our customer classes to cost-of-service,” Meszaros said. “We haven’t always had that, so this is a positive step.”
City staffers said no one can remember a time Austin Water has lowered water rates in at least the last 30 years.
The move follows a rate study that found commercial businesses were “overpaying” about $4.4 million last year, based on what it costs to provide water service to them, while homes and apartments paid about $2.1 million less.
Samsung alone was paying $568,414 annually in water fees above the cost of its service, the review found. The University of Texas was overpaying by about $76,025.
While those large entities fought for reductions, the city, reluctant to lower rates just for the largest clients, opted to find reductions for everyone.
The council approved the rate reductions 9-0, with Council Members Delia Garza and Greg Casar away from the dais. Troxclair’s amendment to require a hearing examiner for any future rate increases passed 7-2, with Council Members Kathie Tovo and Sabino “Pio” Renteria opposed.
Meszaros added that the utility would also improve its customer assistance program to help low-income residents with service repairs, leak repairs and appliance modernization.
The city said it was able to find the savings through a management plan that uses developer connection fees to pay down the utility’s debt. Those fees have increased for builders connecting new projects to city pipes, and the revenue has grown from $8 million in 2013 to a projected $30 million this year.
City Council members approved the rates Thursday after a lengthy discussion including, among other issues, concerns Tovo raised over whether Samsung was adequately charged for increasing ammonia-nitrogen levels in Walnut Creek since 2011. The city will be adding a surcharge to customers whose operations produce ammonia, mostly Samsung, which will even out the $3.2 million the city expects to spend next year removing those chemicals.
Todd Davey, a representative of NXP Semiconductors, thanked Austin Water for the process so far, but added that he’d still like to see a third-party review of the cost of service model. Austin’s rates are still significantly higher than many peer cities, he said.
But Bobby Levinski — an attorney, activist and candidate running against Troxclair for the council seat in Southwest Austin’s District 8 — urged the council to think twice about lowering the rates.
“I understand that it’s great to lower water rates,” he said, but added that unexpected droughts can quickly make rates volatile and keeping extra money in the utility could keep them stable.
How is your City Council member voting on the issues that matter most to you? Look up decisions on dozens of topics at statesman.com/votetracker .