In the black: Monarch means to stay in Kyle


For years, tensions have been high against Monarch water company, as Kyle residents serviced by the water company lodge complaint after complaint. In May, Kyle issued a news release proclaiming their dislike for Monarch and city officials have gone so far as saying their goal is to kick them out of town.

“The utility is not welcome in the city,” stated the May 16 city news release.

Monarch, however, says they are in it for the long haul and have no plans of leaving Kyle.

The unwelcome Monarch, that services about 900 customers in the northeast corner of Kyle, says that though their fire hydrants are painted black, they want customers to know that they do have adequate fire flow to protect homes during a blaze.

Monarch representatives also said the city’s pursuit of dual certification under the water company’s guaranteed monopoly will ultimately produce higher water prices for all its customers outside the city limits.

Monarch Utilities, a subsidiary of the California-based SouthWest Water Co., is in negotiations with Kyle to iron out details, such as caps on water rate increases, for a service agreement aimed at appeasing the city, the water company and its customers.

Last month, the Hays County Emergency Service District (ESD) No. 5, which services Kyle, rejected a Memorandum of Understanding (MOU) that Monarch presented in which they would color-code fire hydrants capable of providing adequate water pressure to extinguish fire emergencies in their service area, so long as it was understood the water company was not guaranteeing fire flow.

After the ESD’s rejection of the MOU, Monarch kept their fire hydrants black in the neighborhoods they service in Kyle, only exacerbating city and residents’ tensions with the water company.

Monarch’s representative in the Kyle-area, Gary Rose, said that though the fire hydrants are black in both the Amberwood and Indian Paintbrush neighborhoods, they do provide adequate fire flow, as proven in their testing of the infrastructure.

Rose said that under Monarch’s tariff with the TCEQ (Texas Commission on Environmental Quality), it is specifically stated that the water company is not responsible for providing fire protection, and that specification coupled with Texas House Bill 1717 – which mandates water companies paint their fire hydrants black if they do not guarantee fire protection – is the reason why their fire hydrants will remain black.

“The State Health Department and the TCEQ have determined that investor-owned utilities are not in the business of providing fire protection. Probably because if you tried to do that, often in all these little rural systems (investor-owned utilities service), the expense of it would be too much for the residents to bear,” Rose said.

Kyle has threatened Monarch with pursuit of dual certification in the water company’s Certificate of Convenience and Necessity (CCN) if they fail to agree to a service agreement that would cap water rate increases and require a customer service telephone line, resolution to customer service issues, compliance with TCEQ standards for public water systems, adequate fire flow, resolution to quality of service and water quality issues, and annual reviews.

Rose said all complaints lodged against them are investigated, addressed and followed up on by the water company.

“On the last TCEQ inspection of the system, it was found to be totally compliant. The last couple of calls that have gone to the TCEQ from a resident, they’ve come out and investigated and they found everything to be totally compliant. The water meets all state and federal primary drinking water standards,” Rose said.

A CCN guarantees water companies a state-backed monopoly if they service everybody in a designated area and meet state regulations.

Rose said dual certification is a “slippery slope” and an “expensive proposition” for the city, as the city would have to run water infrastructure in an area where it already exists, “particularly since driveways, streets, landscaping and everything else is already there.”

Rose said the second negative impact with dual certification is that Monarch’s infrastructure already is in place and that capital investment inevitably is passed on to customers through water rates, and if Kyle steps in to take customers away from the water company, those increased costs will then be passed along to other customers.

“Just in Plum Creek, for instance, we have 2,250 customers, 900 of them are in the city of Kyle, so is the city of Kyle going to take care of those 900 and push that extra expense back on the remaining 1,350 customers? That’s essentially what would be happening,” Rose said.

The Kyle City Council hired Jim Boyle, who successfully represented Kyle and other cities serviced by Monarch in reducing a proposed water rate increase of 62 percent down to 14 percent this year, to lobby the state legislature in implementing legislation facilitating dual certification in CCNs, among other water issues.

In an October testimony in front of the House County Affairs Committee, Boyle said investor-owned utilities are usually located in rural areas, outside the boundaries of municipalities, where service customers are typically senior citizens, economically disadvantaged, and are forced to pay “extremely high water and sewer rates.”

In a presentation to the committee, Boyle highlighted that Monarch has disproportionately higher water rates than Houston, El Paso, Baytown, Taylor, Athens, Woodville and even Aqua Texas Southwest Region, another investor-owned utility.

Boyle showed that Monarch charges $71.47 for 5,000 gallons of water, while Houston, El Paso, Taylor and Woodville charge $28.18, $15.49, $39.77 and $26, respectively. Even the other investor-owned water company charges $68.87 for the same amount of water.

Kyle was not included in Boyle’s comparisons, but an average monthly water bill for city customers is around $47, after a 20 percent water rate hike that went into effect this fiscal year.

Rose said more than $72 million has been invested in Monarch’s water system statewide to service water customers and improve aging water and sewer infrastructure.

That cost, he explained, along with the water company’s property and income tax costs, are passed on to customers via water rates and that amounts to the disparity in pricing between the investor-owned utility and municipalities.

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