SEEKING JUSTICE FOR OUR KWSC MEMBERS
As many of you are aware, Kempner Water Supply Corporation (KWSC) is currently in a legal dispute with the City of Lampasas over a wholesale water supply contract we have with the City that dates back to 2006. Our Board of Directors has instructed KWSC staff and legal counsel to pursue all available avenues to come to a solution that is fair and equitable to our members. I want to make sure you are aware of the current situation since you could be directly affected by the result of this pending litigation.
Since I joined the Kempner Water Supply Corporation (KWSC) as General Manager in January 2012, I have been committed to serving and protecting our members and customers. While reviewing existing contracts, I realized that the 2006 agreement between KWSC and the City of Lampasas was costing our nonprofit corporation – and therefore our ratepayers – a bundle. As a result of this contract, our members have been subsidizing Lampasas’ treated water service since 2010, when our water treatment plant went online, and could possibly continue to do so for another 70 years, when the contract expires.
Nearly a year ago, disputes arose between the City and KWSC concerning the contract. Many of these disputes involve the billing provisions under the contract, which resulted in the City refusing to pay for water treated at the Kempner plant. After we billed the City for water delivered from our plant, Lampasas paid KWSC certain amounts under protest and then filed suit in state court. The City has refused to pay portions of subsequent bills it has received from KWSC after filing this suit, even though they had been billed at a lower rate than our members for the water they received.
In order to protect our members, the Board of Directors and I felt we had no option but to file a counter-suit when the City filed its lawsuit. Both KWSC and Lampasas have exchanged arguments regarding the billing disputes, and a recent ruling by the trial court in Lampasas has resulted in an unfavorable result for our membership. The judge’s ruling determined that KWSC should refund Lampasas for the $117,432 they paid.
From May 2010 through September 2013, KWSC members paid roughly $805,000 to Central Texas Water Supply Corporation (CTWSC) for the sole purpose of supplying water to Lampasas. KWSC members received no benefit from these payments and instead, customers in Lampasas are receiving water at a highly subsidized rate.
All told, since our plant opened in May 2010, members have subsidized a whopping $1,161,905.05 for water delivered to Lampasas – and as written, the contract with Lampasas does not expire until 2084. By the end of the contract, including rates for Operations and Maintenance (O&M), expenses would roughly equal an additional $15,000,000 over the life of the contract. It is unfair and unfortunate that KWSC members are subsidizing water for Lampasas.
It is important for our membership to understand that the recently announced rate increase is not a result of current costs for litigation, but it is partially a result of the financial impact the contract has on the budget of KWSC and its membership. For this reason, the KWSC Board of Directors has approved pursuing all available legal measures and avenues to appeal the recent rulings in this case. The Board, Management and Staff of KWSC are committed to protecting the membership from the negative financial impact of this contract. We will continue to keep everyone up-to-date on this unfair and unfortunate situation. Please feel free to contact me for any questions you may have regarding this matter.
General Manager, Kempner Water Supply Corporation