Surface Water and Ground Water Pricing Strategies

Summary As with many regions in the United States, San Jacinto River Authority (SJRA) has had to develop and implement alternative water strategies and manage a portfolio of water resources in order to reduce usage of groundwater. SJRA is in the process of updating its Groundwater Reduction Plan (GRP) Division's groundwater and surface water rates, including determining an appropriate and defensible rate differential between the two rates. Introduction SJRA's GRP Division provides groundwater and surface to over 145 customers (GRP Participants). Its goal is to conserve groundwater usage from the Gulf Coast Aquifer. The GRP's requirements to reduce future groundwater usage meet the requirements of the Lone Star Groundwater Conservation District. One of the ways it reduces the amount of groundwater pumped by utilities in Montgomery County is by providing treated water to blend with pumped groundwater for some of the GRP Participants. To comply with GRP Division requirements, SJRA constructed a treated surface water system, and the cost to construct, operate, and maintain that system is borne by all GRP Participants, even if they do not receive any surface water. Demand Forecasting SJRA retained Carollo Engineers, Inc. (Carollo) in 2023 to conduct a GRP Rate Study and Model Update (Study). As part of this Study, Carollo developed ground water and surface water demand projections for each of the GRP Participants for a 10-year period. Forecasting the demands for each of the GRP participants is of particular importance, as it will aid in revenue projections and predictability, rate development, and the flexibility to plan for any number of scenarios. Rate Differential Groundwater and surface water GRP rates are uniform rates per 1,000 gallons. The rate differential is currently based on the avoided costs associated with pumping less groundwater. Carollo reviewed the appropriateness and defensibility of that approach and recommendations are forthcoming as part of the cost-of-service analysis currently in progress. Rate Transparency Carollo will provide a multi-year rate schedule for ground water and surface water. While GRP rates are uniform, Carollo will distinguish the different components of each of the rates, showing how much of the rates are related to debt and plant operations. This level of transparency will help GRP Participants better understand the rates they are charged and plan for future rate adjustments. Conclusion The Study is not yet complete, but as we engage stakeholders, including staff, the GRP Review Committee, and the SJRA Board of Directors, we anticipate considerable feedback cost allocations between groundwater and surface water. Study recommendations will be finalized and presented by December 2023.