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City wants to save money, water
By Lynn Proctor Windle, Staff Writer
Plano has no incentive to save water.
If the city saves water, it costs more money. If the city saves money, it costs more water.
Such are the terms of a 50-year-old contract that has governed the city’s relationship with the North Texas Municipal Water District, the city’s water source.
The problem with conservation is that the NTMWD has financial obligations that aren’t necessarily reduced as water consumption declines. The water district must generate a minimum amount of revenue regardless of how much or how little water is used, Jim Parks, NTMWD’s executive director, said during Monday night’s city council meeting.
Plano along with the rest of the NTMWD member cities must pay for a minimum amount of water, whether the city uses it or not. This is known in municipal circles at “take or pay.” Minimum water consumption is calculated based on the highest consumption of water year to date.
“There’s no incentive to conserve,” Councilwoman Loretta Ellerbe said.
Councilman Scott Johnson expressed concern that if cities don’t do something themselves to save water, the state will step in with mandates.
Parks agreed. “In fact, cities can be penalized for reducing water usage.”
Part of the problem is that there is no mechanism to reward one city without penalizing another, he said.
This year, the NTMWD is charging Plano $1.02 per thousand gallons. Of that $1.02, 46 cents goes toward the water district’s debt. Another 26 cents is allotted for fixed costs such as salaries and facilities operation. These costs are not flexible, according to a memo written by Rod Hogan, Executive Director of the Public Services and Operations Business Center for the city. Only 30 cents goes toward variable costs such as electricity, gas, fuel and chemicals.
“Seventy-one percent of the cost of water is fixed at this point, whether we use 20 billion or 30 billion gallons of water,” the memo said.
If a city doesn’t reach its minimum amount, it does receive a rebate for operational costs that weren’t incurred because of the reduction.
According to an outside analysis commissioned by NTMWD, Plano was charged more than $25.8 million in 2006.
With last year’s devastating drought and strong conservation measures, the city came within 1.76 percent of its “take or pay” figure, City Manager Tom Muehlenbeck said.
Despite the close call, Ellerbe said, “The recent drought proved Plano can survive with less water. It’s not a limitless supply. It’s foolish to assume the water supply is not going to be a problem.”
Consulting firm R.W. Beck, Inc., the organization hired by NTMWD to study the matter, has come up with 10 proposals for cities to consider.
Parks said the water district “would be fine” with any of the proposals because none would negatively affect its revenue. The impact of each proposal varies from city to city, but no one proposed change benefits all 13 cities.
“Only the cost responsibility between the cities is changing,” the Beck report said. “The revenue received by NTMWD cannot be significantly reduced unless the serviced provided by the NTMWD are reduced.”
Getting all 13 cities to agree to a single proposal is unlikely.
Parks said, “I couldn’t see a consensus,” he said referring to a recent meeting among member cities.
Muehlenbeck, who attended the meeting, said eight cities don’t want the contract changed. “They’re concerned with what’s happening right now, not what will happen 10 to 15 years from now,” he said.
Parks agreed. “It’s an equity issue. The newer and younger cities would like to see the same benefits as the older, more mature cities have now.”
Should the member cities agree to change the contract, the amendment still must be approved by 51 percent of the district’s bondholders, Parks said.
“Both bond holders and cities must vote on it,” he said.
Contact Lynn Proctor Windle at lwindle@acnpapers.com.
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