The City of Marble Falls adopted utility rates for out-of-city utility customers on November 17, 2020, following a comprehensive Water and Wastewater Rate Study and Financial Plan. In response to the out-of-city rate implementation, the Hamilton Creek Ranchettes filed a petition with the Public Utility Commission appealing the rate increase.
On May 28, 2021 the State Office of Administrative Hearings referred the matter to mediation at the request of the Hamilton Creek Ranchettes ratepayers. On November 19, 2021, the city participated in mediation resulting in an agreement reducing the surcharge on water rates for outside of city limit utility customers. On May 12, 2022, The Public Utility Commission entered an Order approving the agreement which serves as a withdrawal of the appeal by the Hamilton Creek Ranchettes ratepayers.
The City mediated in good faith with Hamilton Creek Ranchettes in an effort to settle the appeal and avoid costly litigation for both parties. At no time did the City request Hamilton Creek Ranchettes pay the City’s legal fees for litigation brought against the City by Hamilton Creek Ranchettes or plan to assess a surcharge to outside of city ratepayers for the expenses associated with litigation. The City worked within the confines of the legislative process to both assess utility rates and settle the appeal by the outside city ratepayers.
“We are glad to have the litigation behind us after reaching what we believe to be an amicable agreement. We feel the outcome justified our process and the fee structure we implemented for customers inside and outside the city limits is fair and just. We do not operate the city utility for profit, rather, to keep the system viable into the future.” – Mike Hodge, City Manager
Out of city water rates are an industry standard and in effect in surrounding central Texas communities including Fredericksburg, Granite Shoals, Horseshoe Bay, Johnson City and Burnet.
The City’s rate consultants prepared a comprehensive cost of service study that showed that the average cost of serving an outside customer is 61.8% greater than for inside customers. This cost is due, in part, to the fact that inside city customers are owners of the utility system and therefore are liable for the system. In addition to the higher cost of service for these customers, the City of Marble Falls has expended approximately one million dollars in the outside city water systems in order for them to meet both Texas Commission on Environmental Quality (TCEQ) standards as well as City standards. Outside city customers are not owners and bear no financial responsibility for the system. This results in the inside city customer subsidizing the outside city customer. The new rate structure was implemented to lessen this subsidy. Additionally, outside customers do not pay property taxes that fund city services which support the water system. Therefore, the higher rate offsets not only the risk of serving customers outside the city limits but also the lack of contribution to support services.