Liberty Utilities customers questioning proposed rate hike

Liberty Utilities, which operates as Woodmark Sewer and Tall Timbers Sewer in Smith County, is seeking a total annual revenue increase of just over $3 million by March 1, 2017.

The Arizona-based company proposes to generate this revenue through two rate hikes, the first on Nov. 1 and the second on March 1, 2017.

Liberty Utilities serves almost 3,800 customers in Smith County through Liberty Woodmark and Liberty Tall Timbers. 

Customers of single-family residences served by Liberty Utilities in Tyler would see their monthly rate for wastewater services go from $27.75 per month to $76.54 on Nov. 1 and $96.38 on March 1, 2017. The November rate would be more than double the current rate. The March rate would be more than triple.

Smith County homeowners served by Liberty Utilities outside the Tyler city limits would see their rates increase by up to 75 percent next March depending upon where they live. Other rates might go up 44 percent by March. 

Though the numbers provided here focus on single-family homes, rates for apartments, mobile home parks, businesses, schools and any other building serviced by this company in Smith County also would be affected.

The company is justifying the change by citing increased operating expenses and past and future capital improvement projects. According to the company, the Tyler rate hasn't changed since November 2002, and the rates for areas outside of the city went into effect in 2010 and 2013.

"Since 2002, Liberty Utilities has invested millions of dollars to ensure these sewer systems are up to state and federal regulatory standards and to improve customer service," the company states in its application for the rate change to the Public Utility Commission of Texas.

The company states the rates are designed to recover the full cost of service in the two-phase increase.

"The second phase will be tied to completion of a Liberty Woodmark wastewater treatment plant expansion project and Liberty Tall Timbers line relocation/hydraulic improvement projects for the benefit of both systems and their service areas," the application read.

But customers aren't convinced. The proposed rate change document mailed to customers Friday does not include the detailed explanation the company provided to the state. It simply cites increased operating expenses and capital improvements.

Tyler resident Frank Barat, 30, an attorney who lives with his wife and child in the Blue Mountain neighborhood near Jack Elementary School, said there is not enough information provided for him to judge if this is reasonable.

He said there are appropriate ways for the company to seek funds, and it seems if the company is using the rate increase to pay for capital expenses, those projects will be paid for at some point, but there was no indication the rate increase would be temporary.

If the increase goes through, Barat will be paying $1,200 a year for sewer service, which he said is more than he pays for water.

Barat said he had a previous issue with the company when, a year after he and his family moved in, they received a bill for a year's worth of sewer service from Liberty. Barat, who was under the impression that the city of Tyler was providing all of his services when he moved in, said it was fair for him to pay, but it was the company's mistake and it was inconvenient to have to pay it all at once.

He said many residents were discussing the issue online Tuesday in an online neighborhood group. For his part, he planned to mail his protest form to Tyler City Manager Ed Broussard and already contacted City Councilmember Linda Sellers.

The proposed rates will become effective unless the Public Utility Commission of Texas or the City of Tyler modifies or suspends the utility provider's proposed increases. The commission and the city have jurisdiction over rates in different areas.

Greg Morgan, city of Tyler director of utilities and public works, said the city is analyzing Liberty Utilities' rate application for customers inside city limits.

The City Council can reject the proposed rate or establish its own proposed rate for those customers inside city limits, Morgan said.

However, the utility company can appeal that rate to the Public Utility Commission of Texas.

Morgan encouraged all affected customers to review the information they have received from the utility company and file a protest if they so desire.

Customers inside the city limits should send their protests to City Manager Ed Broussard, and customers outside the city limits should send their protests to the Public Utility Commission of Texas. Protest forms were included in the information sent to customers.

For the Liberty Utilities customers living outside Tyler city limits in Smith County, the Public Utility Commission of Texas has original jurisdiction over the rate application.

The commission must set a hearing if its receives protests from either 1,000 affected customers or 10 percent of affected customers, whichever is less, within the first 90 days after the effective date of the proposed rate change.

Even if the commission does not receive the required number of protests, it can decide to set a hearing at any time within 120 days after the effective date of the rate change.

Terry Hadley, Public Utility Commission of Texas spokesman, said if this rate case goes to a full hearing, it's a process that could take several months.

That process could be shortened if parties reach a settlement, meaning they agree on an accepted rate.

If the case goes to a full hearing, the State Office of Administrative Hearings would conduct that and issue a nonbinding recommendation that the three Texas Public Utility commissioners would then have to approve, reject or modify.

If the commission ultimately approves rates lower than the proposed rates, customers would be eligible for refunds for bills paid at the proposed rates.

Twitter: @TMTEmily

Staff writer Faith Harper contributed to this report.