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March 23, 2017 More Questions Answered

Explain the lawsuit in plain English.

On September 24, 2013, the City of Lampasas (Lampasas) filed suit against Kempner Water Supply Corporation (KWSC) concerning billing under the water supply agreement between KWSC and Lampasas.  Lampasas alleges that it has overbilled by KWSC in an unspecified amount. 

 Who initiated the lawsuit and why?

Lampasas initiated the lawsuit. Lampasas interpretation of the contract is that they only have to pay 37% of the Operations and Maintenance (O&M) costs for Central Texas Water Supply Corporation (CTWSC) metered water. KWSC sent Lampasas a bill for $55,094.83 calculated from May 2010 through July 2013 not paid for by Lampasas that went through the city points of delivery meters. Lampasas interpretation of the contract, Lampasas did not pay for 63% of their water, KWSC was to pay 63%, and Lampasas only pay 37% for water going through the city points of delivery meters. Lampasas filed a lawsuit against KWSC in 2013.

 Note: The $55,094.83 bill to Lampasas did not include the over $580,000 KWSC already paid by KWSC members for Lampasas water during that same time, yet the lawsuit alleged KWSC overbilled Lampasas.  The Lampasas courts ruled in January 2016, KWSC pay $117,432.27 to Lampasas.

 The cost to our members, this past fiscal year, for the financial benefit of Lampasas was $633,912.00, while Lampasas only paid $383,160.00 for their purchase of wholesale water. They have taken advantage of KWSC by not cooperating in resolving the subsidy, you the member pay 63% for their purchase of water.  The subsidy will more than likely continue until another agreement is reached. This is a huge cost for KWSC members to absorb.

 The fact that the contract doesn't expire until 2084, using the annual cost from just last year, equals over 42 million dollars ($42,000,000.00). The O&M prices will go up, and KWSC’s 63% will be more as costs go up and Lampasas grows. The more water Lampasas uses, and the more Lampasas grows, the more it costs KWSC.

 The heart of KWSC board, management, and staff are not only for current members but how badly this contract will affect our grandchildren and great, great grandchildren through the life of the contract.   

 All we ask for is a contract that is fair for both the City of Lampasas and KWSC members. KWSC wants nothing more than to work out a fair contract with Lampasas that will result in Lampasas paying for 100% of their water cost and we pay for 100% of our water cost.

 What is the current water rate in Kempner? $62.50 Base Rate and $3.15/1000

What is the proposed rate? $67.50 Base Rate and $3.15/1000 (no change in /1000)

What is the reasoning behind the rate increase?

There are many reasons for the rate increase including annual increases in the cost of business and to improve the water supply system but the expenses incurred through the Lampasas contract take away capital that would otherwise be used to support the KWSC members.  The rate increase offsets the following:

1) Under district court ruling, KWSC is responsible for 63% of the O&M costs for water to Lampasas. 

2) Rise in Chemical and Electric Costs 

3) Rise in health care costs for employees

4) Construction and project costs – Project to help reduce Trihalomethanes (TTHM’s). Project to ensure pressure, flow and minimal chlorine residuals in the Northwest part of KWSC service area.

 How much money will be raised? We can assure you the rates are not based on any profit to KWSC. We are a non-profit, bound by contracts. Our rates are based on American Water Works Association (AWWA) rate standards. KWSC had an independent study conducted.

 The letter says Lampasas is getting water from the KWSC treatment plant. How much per month? Why is Lampasas getting this water? Lampasas purchases water from the CTWSC plant, not from KWSC.  KWSC owns the distribution system that takes the water to Lampasas.  Prior to KWSC building a plant we also purchased water from CTWSC.KWSC water blends with Central Texas Water Supply Corporation (CTWSC) water then delivered through distribution mains to KWSC and Lampasas Customers. The judge made it clear KWSC is to pay for 63% of Lampasas water with no use of KWSC plant. KWSC has not been delivering water from KWSC water treatment plant because Lampasas would get 100% free KWSC water plus KWSC would pay the 63% from CTWSC. It would not be cost effective for KWSC to deliver water from their plant to Lampasas.

 When was the initial lawsuit? Where was it heard?

2013 - The initial lawsuit was heard in Lampasas District Court

 When was the appeal filed? When do you think it will be heard? In what court?

January 2017 - KWSC filed the appeal in the 3rd court of appeals, setting in Austin. The Supreme Court transferred the setting to the 13th court of appeals, in Corpus Christi. Note: The Texas Supreme Court periodically transfers cases to equalize dockets. We cannot determine when our appeal will be heard.

 Was there also a suit with the City of Copperas Cove? If so, what is the basis of that suit?

There is no lawsuit; however, there was a contract signed between the City of Copperas Cove (City) and KWSC in 2005 for the City to take 30,780 acres of service area after paying KWSC 357.00/acre for the service area. KWSC stands to lose a lot of revenue from the loss of service area. The contract expired May 15, 2015. The evening of May 14, 2015, the City sent a request to KWSC for 2037 acres. The City did not include all the documentation needed for the request, so it is simply a declaratory judgment for clarification as to whether they have met the qualifications, under contract for the purchase of KWSC service area.