all of the latest updates

The PUC staff weren't able to make a recommendation to the Administrative Law Judge (ALJ) on the sufficiency of the refunds, and on April 15th recommended that "Rockport be ordered to provide the number of affected customers and the calculation for the refund per customer in native format."

The ALJ deferred to the petitioners on April 18th stating "in the absence of a [petitioner] withdrawal, Rockport will be ordered to provide per-ratepayer information on refunds in the detail and format necessary for Commission Staff to provide a recommendation that the refunds are complete..."

The city's unwillingness to accept responsibility for their actions*, track record of mistakes and inability to provide refunds in a transparent manner has led the petitioners to believe the proper course of action is for the city to prove their case to the PUC staff that refunds were correctly processed. Our formal response was provided to the judge  on May 13th.

* the latest example is March 26th when the city manager told KRIS TV the city had to repeal the rate increase "because we did not send proper notification," when their own records (see the January 23rd entry) show they repealed the rate to prevent "a PUC petition from moving forward for regulatory review."

The city's poor attitude bites them again--see the January 17th update for another example. The city attorney could have simply answered the judge's prior order to prove "that refunds have been provided to affected customers for the appropriate amounts;" however, they decided instead to tell the judge she had no jurisdiction to oversee the refund process. Well, how did that work out for them?

The Honorable Goodson didn't grant the city's motion to dismiss and instead issued Order No. 4, Establishing Jurisdiction and Setting Deadlines, on February 21st, ordering the city to "file documentation demonstrating the amount that was over collected and proof that refunds have been issued" by March 14th.

Fortunately, the city's response on March 6th left out the attitude and simply answered the judge's question by stating "the affected ratepayers were refunded $103,873.85 for water service and $23,576.54 for wastewater service" and providing a declaration demonstrating the City had made the appropriate refunds. Given this response contained no new information, it will be interesting to see if the judge grants the city's motion to dismiss.

The bottom line is the city continues to waste taxpayer money with its confrontational attitude. It is past time for the city to treat its citizens, customers and stakeholders with the respect they deserve.

From page 151 of the city council agenda packet for agenda item #18: "During the 2024 budget process, the City Council decided to adjust water rates for both in-district and out-of-district customers. Recognizing the substantial opposition and the inadequacy of rate change notification, a resolution was reached to rescind the out-of-district rate increase. Direction was given to staff to engage for a rate study. There are only a few companies that perform the work we need and being that NuGen performed our previous study, Wildan was chosen for a fresh perspective. Wildan has extensive experience in this field and will do an indepth study to give us the insight we need for the next several years."

What is the consultant proposing?

• "to have preliminary recommendations for staff within 90 days of receipt of all required data from City staff" (page 154)
• "to develop a Microsoft Excel-based utility rate and financial planning model that will allow the City to test a variety of "what-if" futures, whereby the City can change and update assumptions related to growth, consumption pattens by customer and meter classifications, the capital improvement program, operational programs, and a variety of other planning, engineering, and financial variables and predict the financial outcome of that scenario and its effect on utility rates" (page 162)

Wildan goes on to state that "consulting teams and rate plans that do not recognize both the need to present information in an understandable manner and take into account the sensitivity of ratepayers and elected bodies to cost increases are doomed to fail."

Talk about a sore loser. The City of Rockport submitted a 34-page filing stating the petition was deficient and untimely while also making a motion to dismiss. Though the motion to dismiss was all that was needed given the city had repealed the rate increase, the city felt there was a need to waste more money on lawyers to argue a case they couldn't win.

We opposed the city's motion and did not leave the city's position on the petition unchallenged. We also requested "a Motion to Abate until the City has in fact repealed the water and wastewater rates (as evidenced in our utility bills) and refunded the excess charges."

Fortunately, the ruling went in our favor: "The administrative law judge grants Commission Staff' s request and delays ruling on Rockport's motion to dismiss until after the City has proven that refunds have been provided to affected customers for the appropriate amounts."

This year's rate increase for out-of-city ratepayers has been rescinded and we're going back to last year's rate! It was a 4-1 vote at last night's meeting and became official on approval of the 2nd and final reading of the ordinance at tonight's meeting. This represents a $43,000 savings per month for the out-of-city ratepayers and was only possible because of the nearly 900 people who signed the petition. Refunds for the 10% extra you paid over the last three months will be credited to your account.

What is the "sort of..." comment about? We're still paying significantly more than in-city ratepayers. Based on tonight's actions, the rate premium is now 33%. This is an improvement over the 47% surcharge approved in September and last year's 38% surcharge; however, we believe it is still too high. We look forward to the opportunity to review the city's next rate study to ensure the rates are just and reasonable for all ratepayers. That was our objective from day one of this petition effort and is why we consider tonight's outcome a success.

In a highly unusual move, the city will hold a public hearing, first reading and final reading of the utility rate ordinances within a 25-hr period. The city says these actions are needed because of their failure to provide timely notice of the rate change; however, it is clear their real intent is to invalidate the petition we submitted.

The public hearing is scheduled for December 12th at 6:30 p.m. as Agenda Item #13, after which city council will adjourn to Executive Session. They will then reconvene into open session and consider agenda items 23 through 26 to repeal and reinstate the water and wastewater rates. There have been no changes to what the city proposed last month.

Instead of waiting until their regularly scheduled council meeting in January, the city has scheduled a special meeting on the next day for the second and final reading of the ordinances. If passed, the new rates will go into effect on December 15th.

Make sure your voice is heard by filling out a citizen participation form for agenda item 13 before 4 p.m. on December 12th. Tell city council "Vote NO on agenda items 23 through 26. The larger legal issue isn't whether the city was four days late on its rate change notice, but whether the city is charging a just and reasonable rate to out-of-city ratepayers. Your "NO" vote on these four agenda items will allow the rate experts at the Public Utility Commission to determine if the 47% out-of-city rate premium is fair. If you do anything other than vote "NO," you are telling us our signatures don't count and that is a big price for us to pay for the city's mistake."

THANK YOU to all of the petition signers and to those who helped gather signatures. The petition was submitted today to the Public Utility Commission of Texas, well in advance of the December 14th deadline, which is 90 days after the effective date of the rate increase. 898 signatures were submitted; nearly double the 462 required.

Relevant updates to the filing:

1. December 4th: PUC Docket No. 55942 assigned

2. December 5th: Administrative Law Judge's Order No. 1 - Requiring Responses and Addressing Other Procedural Matters:

• Commission Staff to file comments on the administrative completeness of the petition by December 27, 2023
• City of Rockport to file a response to the petition by December 30, 2023

• Petitioners, City and Commission Staff must confer and file comments by December 27, 2023, on how this proceeding should be processed and propose a procedural schedule

City council, by a 3-2 vote, postponed the four agenda items to repeal and reestablish the water and wastewater rates, which is what we wanted as it allows city council more time to consider the matter of the late notice and it allows our petition effort to continue. Thank you to the over twenty people who let city council know they wanted their signatures to count. This was a huge help. The petition drive continues as we need more signatures before sending the petition to the Public Utility Commission.

We learned a couple of interesting points during the discussion, including the latest increase in rates for out-of-city ratepayers generates $43,000 per month in revenue for the city. We also heard for the first time what the city believes it is subsidizing from city taxes. The city manager stated the following expenses are not paid from the utility funds: supplies, training, computers, legal counsel, IT, communication, and human resources. The city manager acknoweldged a portion of the admin salary is paid from the utility fund; however, she did not explain why these other expenses have not been transferred to the utility funds, which are operated as enterprise funds, i.e., all expenses and revenues are supposed to be captured within the fund.

November 21 update: in an attempt to verify the city manager's statement, it became clear there is a disconnect between what was said and what the city showed in the August 8th budget presentation to council:

• "NO supplies, training, computers, legal counsel or anything of the sort is transferred," yet we see in the budget:
  -- $9,400 for "2001 Office" Supplies pg 59
  -- $40,600 for "40 Travel & Training" pg 59 
  -- $29,100 for "3018 Computer Supplies" pg 59
  -- $7,500 for "2016 Legal Services" pg 58

• "NO communication, comm center is paid from the utility funds," yet we see in the budget:
  -- $16,000 for "2036 Communications Services" pg 58
  -- $13,600 for "2047 Telephone" pg 58
   

That leaves IT, HR and maybe comm center that are possibly paid by city taxes; however, there is not enough detail in "10 Personnel" ($2,415,653 expense, pg 58) to verify.

Based on the city's own information, it is clear the utility fund DOES pay for supplies, training, computers, legal counsel, communications, and more, which is inconsistent with the city manager's statement to the contrary.

 The City of Rockport is flipping the bird at everyone who has already signed the petition. In yet another bad faith move, the city is planning to repeal the prior rate increase on out-of-city ratepayers and approve new rates at the Tuesday, November 14th city council meeting at 6:30 p.m. [Note: this action is postponed until December 12th]

What is the difference between the rates they approved on September 5th and what they are considering on Tuesday?

1. Out of the fourteen base rates (7 residential and 7 commercial), the city is changing only one base rate* and that is for the 3/4" residential meter, which was $33.06 and will now be $32.86. Isn't it great to save 20 cents? No...
2. The city is making up for the above "loss" in revenue by increasing the residential usage rate by $0.05 per thousand gallons for usage up to 15,000-gallons and by $0.10 per thousand gallons above 15,001-gallons. FYI, the residential rates will now be higher than commercial rates!

*there is an obvious error in the city's new rate tables as they omitted the commercial rate for 2" taps and I am sure they don't plan on giving that service for free

What is most interesting, is these are the only two water rates that were listed on the petition page. The other relevant data points on our petition page wer the rate change was approved on September 5, 2023, and became effective September 15, 2023, and that clearly won't be valid any longer either. Coincidence? It is quite clear the city is trying to invalidate our petition and to make us start the process over.

Review the city's agenda packet (agenda items 12 through 15) and make sure your voice is heard by filling out a citizen participation form and telling city council "the unjust out-of-city rate surcharge needs to be dropped. Please vote NO on agenda items 12 through 15 or postpone the agenda items until city staff can find a way to correct its late notice without invalidating the petition protesting the out-of-city rate change. My signature should count and not be discounted by the city's mistake."

We need to show up in numbers or they won't think we care about this issue. It is even better if you can attend the meeting in person and fill out a speaker card.

What would happen to you if you paid your water bill four days late?

Apparently nothing will happen to the city for being four days late in providing the notice of the rate change. In accordance with Sec. 13.043(i) of the Texas Water Code, the city had to provide notice within 60 days of the final decision being made on the rate change. City council approved the rate change on September 5, 2023, which meant the deadline to provide notice was November 4, 2023. Notice was finally delivered by e-mail on November 8, 2023 after we contacted both the city and County Attorney about the city's noncompliance with state law.
 

Some people who receive their bills by mail may have received a 3-page pamphlet with their bill showing the new gas, water and wastewater rates; however, this notice did not fulfill the state requirement as it failed to include the effective date of the new rates.

There are two things to note about the notices provided by the city:

1. The latest notice corrects the omission of the effective date (I highlighted the text in the PDF to show what was added) and

2. The city didn't bother to share the in-city rates with the out-of-city ratepayers. It isn't required by law; however, it is information their ratepayers should know and understand. We show all of the rates on this website to make the comparison easy.

Providing proper notice is a critical step in the process of providing ratepayers the information they need and which might result in them taking action, e.g., appealing the rate change. Denying ratepayers this information should have resulted in the city refunding a portion of the rate increase instead of them simply saying "oops, we didn't know we had to follow the law."

In response to an August 31st request for "a list of all out of city limits water and or sewer customers of the city of Rockport," the city responded on September 13th with a PDF listing of 2,736 accounts.

We challenged the listing as incomplete on September 20th, providing three ratepayers as examples of accounts missing from the report, and were told the city didn't release information for accounts where the ratepayer signed the confidentiality statement, which was apparently applicable to 2,834 ratepayers.

On November 13 (two months after their initial response!), the city sent a list of 795 additional accounts stating the "Town of Fulton accounts were inadvertently left off the previous list." It is important to note two of the three accounts we provided as examples of missing information were listed on this latest report, i.e., the city could have confirmed whether the information they provided in accordance with TEX. WATER CODE § 13.043(b-1)(2) was accurate and they failed to do so. The city's mistake means we weren't able to contact these Fulton ratepayers to afford them an opportunity to participate in the petition process.

September 5, 2023 @16:18 by a 4 to 1 vote, city council approved the new water rates and @33:06 the new wastewater rates.

September 5, 2023 @17:08 and at @28:46 four citizens spoke, one in support of the rate increases and three against the rate increases.

Unlike the city staff who failed to address this topic during all of the budget and city council meetings, former Councilperson Katy Jackson addressed why she believes the city is justified in applying a surcharge to out-of-city ratepayers. She believes the utilities are not paying for six areas of city services:

1. The City Manager's time on utilities
2. The Finance Director's time on utilities, especially budget seasion
3. The Assistant to the City Manager's time for project management, grant application, development and dispersal of planned and unplanned outage messaging and other administrative functions,
4. The Asst City Secretary's time for public information requests, coordination, collection, preparation and filing of legal documents and other needs,
5. Human Resources
6. Public communications which is all the necessary emergent communications via Code Red related to water and wastewater, after hours fielding of calls and dispatching for outages and other issues for water and wastewater

Ms. Jackson failed to mention the utilities are enterprise funds (i.e., revenues and expenses are fully accounted for within the fund) and the utilities are already paying for the general city staff support she points out above through large budget transfers, such as these shown on page 61 of the August 8th budget presentation to council:

• $659,381 for “8501 Transfer to General Fund/Franchise Fee” 
• $783,000 for “8502 Transfer to General Fund in Lieu of Taxes” 
• $386,438 for “8505 Transfer to General Fund - Admin Salaries”

See the update on November 14th as the city manager finally addresses this issue, though she does so without specific dollar numbers.

August 30, 2023 @2:22:00 City council approved the first reading of the ordinance for the new water rates and @2:26:03 the new wastewater rates. The rates included increases on the previously proposed in-city residential and commercial rates.

August 30, 2023 @1:56:25 six citizens protested the rate increases and asked council to set just and reasonable rates.

August 22, 2023 @1:02:49 Because of overwhelming input from citizens about the rate increase, Councilperson Hattman motions to postpone agenda items 8-13 to discuss the utility rate increases at a workshop. The motion passes 4-1 with mayor voting no.

August 22, 2023 @36:00 Councilperson Hattman asked "in that [rate] study is there a chapter in there that just specifies what extra cost it is to us to do the outside City Limits and deliver this water to them?" The city manager responded "they set an in-city rate and an out-of-city rate in the NewGen study and the two rates are the cost to provide capital for the system. Now, does it break it out to the level that I think you're asking me, probably not."

"Definitely not" would have been the appropriate answer. You can review these rate studies to confirm there is no analysis to distinguish costs, only what revenue would be created with a rate surcharge: June 11, 2007, August 11, 2009, November 8, 2011, August 14, 2012*, August 13, 2013, August 26, 2014, August 11, 2015, August 9, 2016, August 22, 2017, July 10, 2018, August 3, 2020, August 10, 2021, and August 9, 2022. The only clarity I received from reviewing the rate studies is the city is content with using the out-of-city rate surcharge to plug deficits in its budget.

*It is interesting to note the surcharge jumped from 29% to 40% to close a large projected deficit in 2013. Once again, no analysis, which shows the city is willing to balance its budget at the expense of out-of-city customers. This will not be a good look in front of the Public Utilities Commission.

To gain an understanding about rate setting, you can review the first ten or so pages of a presentation made by the City of Dallas and watch a 43-minute video presentation from the Public Utility Commission titled "The Utility Rate Setting Process in Texas" (watch the first few minutes, skip over the Investor-Owned Utilities section and resume at 26:36 for information on public utilities. A description of the appeal process begins at 30:37).

August 22, 2023 @32:57 Councilperson Hattman wanted legal interpretation of concerns raised by citizens. After dismissing the majority of the citizens' statements, the City Attorney acknowledged "there is relief granted to them if there is a belief the rates are not accurately set."

The "relief" he means is in the Texas Water Code Sec. 13.043. APPELLATE JURISDICTION. "(b) Ratepayers of the following entities may appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the utility commission: (3) a municipally owned utility, if the ratepayers reside outside the corporate limits of the municipality." The section goes on to state: "(j) In an appeal under this section, the utility commission shall ensure that every appealed rate is just and reasonable. Rates shall not be unreasonably preferential, prejudicial, or discriminatory but shall be sufficient, equitable, and consistent in application to each class of customers."

Our position is a 47% surcharge for out-of-city ratepayers is neither just nor reasonable. Where is the city's rate study to support the rate increase? It is clear city staff and city council do not believe they need this data to increase our rates. We believe the Public Utility Commission will say differently and this petition effort provides them the authority to do so.

We need your signature on the petition to make this a success.

August 22, 2023 @6:14 eleven citizens protested the rate increases and asked council to set just and reasonable rates.

August 8, 2023 @35:09 Councilperson Hattman asked "what was the reasoning for the increase on the rate?" The new proposal for the water rate is to increase the base rate in-city from $21.74 to $22.04 and out-of-city from $29.95 to $33.06. The City Manager said "the stated reason, I believe, was that they don't pay city taxes..." She was in part referring to the mayor's comments on August 3rd when he stated "the city has administrative costs for [managing the utilities] and it would only be right if people outside the city paid for it." Council went on to pass the First Reading of the water rate ordinance @49.12 by a 4 to 1 vote.

The city manager's and mayor's statements fail to recognize the utilities are enterprise funds (i.e., revenues and expenses are fully accounted for within the fund) and the utilities are already paying for general city staff support through large budget transfers, such as these shown on page 61 of the August 8th budget presentation to council:

• $659,381 for “8501 Transfer to General Fund/Franchise Fee” 
• $783,000 for “8502 Transfer to General Fund in Lieu of Taxes” 
• $386,438 for “8505 Transfer to General Fund - Admin Salaries”

The updates on September 5th (citizens to be heard) and November 14th provide more information on this topic.

August 8, 2023 @17:27 and @20:46 four citizens protested the rate increases and asked council to set just and reasonable rates. 

August 3, 2023 @1:12:21 the city manager told council "in the Austin area, out-of-district rate is 1.5 times, so it is 50% higher" and she went on to say "if you want to pay 50% less, I got an annexation form for you" to which staff and council reacted with laughter.

The surcharge in the "Austin area" is closer to 20% not 50%. The City of Austin doesn't have a  surcharge for its out-of-city ratepayers and Leander, Mansfield, Robinson and many other cities limit their surcharge to 10% or less.

August 3, 2023 @52:43 staff and council talk about shifting part of in-city rate increase to out-of-city ratepayers

City Manager: "Let's talk about water. We're at $21.74 and we're proposing to go to $22.73, a little less than a dollar increase."

[unidentified person]: "The current water is $29.95 out-of-district."

City Manager: "Okay about a 99 cent increase here [in-city]. We can do the 99 cent increase out-of-district or we can raise that higher if you like... Keep in mind 20 cents of that is San Pat's increase."

Councilperson Rangel: "Can we extend the 20 cents [to the in-city rate] and offset the 79 [cents] out of district?"

City Manager: "Yea, we can give them a higher one, the balance."

August 3, 2023 @41:41 the city staff and council pull a natural gas rate surcharge out of the air (no data on cost to deliver) purely to keep the in-city rate as low as possible.

Councilperson Brundrett: "My wish or want would be to keep the rate as low as possible for in-district while maintaining our Corolla-Camry. Out-of-district, increase that unfortunately to those residents, but they also don't pay the city tax. So let's increase that rate to them..."

City Manager: "Here's what I'll propose. I'll propose we go up $2 in, $9 out. We'll look at the revenue at mid-year, and we'll come back and talk to you then."

Councilperson Rangel: "If the difference between the rates right now is only $9, why would you do $9 increase out, $2 in?"

City Manager: "Perfect we'll do $11. If we do $2 in, then we need to do [$9 above that] to put them about $9 more than us."

August 3, 2023 @33:49 staff and council demonstrate a clear willingness to have out-of-city ratepayers subsidize the rates of in-city ratepayers when discussing the natural gas rate.

Councilperson Rangel: "what about out of District rates?"

City Manager: "I want to do a whole out of district rate across the board. We don't currently have that. If y'all want to adopt that in the fees, we can do it but we got to work. I can't have it done by Tuesday. I'm so sorry."

Councilperson Brundrett: "Do we have to have that by Tuesday?"

City Manager: "Well you're going to adopt your rates on Tuesday, I get, no, no, you can come back and adopt an out of District rate."

Councilperson Brundrett: "I think there should be a separation for a city taxpayer versus a non-city taxpayer."

City Manager: "100 agree"

Councilperson Rangel: "Would an increase on the out-of-district rates help to alleviate some of the increase on our in-district rates so that we could bring those rates down?"

City Manager: "Absolutely. That's why you have two [rates], is to subsidize the in."

[unidentified person]: "So we don't have inside-city and outside city [rates]?"

[unidentified person]: "There is, but they're identical" [for natural gas rates]

City Manager: "Tell me what you think this rate should be, even if you want to keep it the same, and on Tuesday I will propose an out-of-district rate with the number of taps we have, that hits the balance, and then if y'all want to lower that out-of-district rate you can do that Tuesday."

Councilperson Brundrett: "I don't know what that number, I mean you've come back, the staff has come back with the $39.64 to to cover ourselves so I don't know what the number between today's rate the $30.08 and $39, I don't know what that should be in order for us to"

City Manager: "But I'm telling you I'll make it up with the out-of-district rate. So if you say we want to keep the city rate, the stat, okay that's fine but the out of district rate may go up fifteen dollars."

The discussion continues with comparisons of in-city and out-of-city rates for the water and wastewater utilities.

August 3, 2023 @32:17 the city manager appears to be willing to let one utility subsidize another despite each utility being set up as an enterprise fund, i.e., they are supposed to stand alone with respect to revenues and expenses.

Councilperson Brundrett stated "and that is with the departments working together, the water, wastewater and gas guys all work together."

Someone added "and street."

The City Manager stated "then those funds are subsidizing [the gas utility], and that's okay, that's why I'm saying we can lower this [the proposed $39.64 base gas rate] as long as you know that those other funds, the labor and stuff, is going to subsidize this."