Texas

Energy and Environment Reporting for Texas

Big Switch for Water Regulation in Texas Dominates Hearing at the Capitol

Photo by EPA/LARRY W. SMITH /LANDOV

The water tower in Groesbeck, Texas, in December 2011.

Lawmakers had rocketed through more than a dozen bills before they arrived at Rep. Charlie Geren’s complex and controversial water bill, HB 1307.

Then things slowed down at the House Natural Resources Committee meeting at the Capitol today.

Other bills, including one that would expand the water supplies a waste disposal authority could tap and sell to fracking companies, were heard. But Geren’s legislation garnered the most attention this morning.

The bill would transfer water regulation duties from the Texas Commission on Environmental Quality (TCEQ) to the Public Utility Commission (PUC). The switch would affect how rate increases are handled, among other things.

Why change the duties from the TCEQ to the PUC? asked Rep. Eric Johnson, D-Dallas.

“The PUC just does a better job with the ratemaking, as we know going through the electric ratemaking,” Geren said.

The PUC has controlled ratemaking — or the setting of prices — in parts of Texas’ electricity market since the mid-1970s.

The components in Geren’s bill are mostly Sunset Commission recommendations that were not passed during the last legislative session.

Larry Westfall, who represented the Kerrville South Community Action Group, testified in favor of the bill. He said the current ratemaking system leaves small communities, like his just outside the town of Kerrville, fighting rate increases against large corporations like Aqua Texas without the necessary resources.

Westfall – who said he is not a lawyer, CPA, economist or engineer – said his community couldn’t afford legal representation in the matter and a judge in the State Office of Administrative Hearings appointed him as a representative in the litigation process of protesting the rate increase.

“No one represents the public interest in ratepayers,” Westfall said. “The bottom line is: we give and the corporate stock holders receive,” he added later.

Charles Profilet, Managing Director of Texas Utilities with Southwest Water Company, the parent company of Monarch Utilities, testified against the bill. He said the new law would require utilities to provide “much more financial data” with a rate application to the PUC than the TCEQ currently requires.

“I just want to be vocal and lay out expectations that our rate case expenses could be significantly higher than a customer sees today,” Profilet said.

Rate case expenses could double or triple, and the last rate case expense his company incurred was $300,000, he said.

The bill would also cost the state more money. The PUC would have to take on additional employees to cope with the new procedures. The increased costs are estimated at nearly $600,000 per year through 2016, then $1.65 million per year for the next three years, according to the fiscal note attached to the bill.

“We will encourage everyone to remember that in two years,” said Bryan Lloyd the Executive Director of the PUC, speaking to the committee. He testified as neutral on the bill.

Water for fracking

Another bill, HB 3871, by Rep. Wayne Smith, R-Baytown, would allow the Gulf Coast Waste Disposal Authority to obtain and sell more types of water than treated wastewater.

Ricky Clifton, General Manager of the disposal authority, said they are now selling reused water to fracking companies in West Texas near Odessa. That, he said, offsets about two million gallons of fresh groundwater that would be used instead.

If this bill passed, the disposal authority would be able to develop new sources of water, specifically marine and brackish groundwater, to sell to fracking companies across Texas, Clifton said.

But members of the committee said the language in the bill would allow for the disposal authority to use much more than just those two types of “non-traditional” water sources.

“Would you agree that with this legislation you can do just about anything you want to with water?” asked Rep. Allan Ritter, R-Nederland, Chairman of the committee.

“Yes sir, essentially,” Clifton said. He also said the disposal authority is not looking for freshwater.

Rep. Smith said in his closing remarks that Gulf Coast Waste Disposal Authority “is a very good operation and (he) served on their board for four years or six years.”

Both bills were left pending in committee.

David Barer is a reporting intern with StateImpact Texas.

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