WhitehouseTexas.com

Unhappy residents in Walnut Grove say they want lower water rates like people in Whitehouse, but the city of Tyler, which provides the service, says the town will just have to wait its turn.

Walnut Grove Water Supply Corp. board members said last week they don’t want to wait. The panel decided Thursday to adopt an ordinance emphasizing the need for timely resolution following a September rate increase.

“Basically, it says we refuse to accept the new rate, and we want to have the same rate as the other wholesalers, or let us return to our old rate and make it retroactive to September,” Hank Gilbert, Walnut Grove Water Supply board president, said Friday. “If the city won’t do it, we’re asking for an immediate release from our contract.”

Tyler Water Utilities officials said they are willing to discuss new rate options with Walnut Grove, but their priority is with working out a new service agreement with Whitehouse.

“Once we complete negotiations with Whitehouse, we will sit down with Walnut Grove and look at a possible renegotiation of its contract,” said Greg Morgan, director of Tyler Water Utilities. “If we are successful in securing a lower rate, we will make that retroactive back to Sept. 1, 2005.”

There’s a reason for the order of those priorities: Whitehouse is operating without a contract, while Walnut Grove is in the fifth year of a 20-year agreement.

Whitehouse is currently paying a lower rate - $2.57 per 1,000 gallons - because the current negotiations with the city include the possibility of a 40-year contract, Morgan said. Longer contracts mean lower rates.

Walnut Grove, however, has been paying $3.43 per 1,000 gallons of water since September, up from the previous 1,000-gallon rate of $2.87.

Morgan said negotiations with Whitehouse could be resolved as early as next month, putting the city in a better position to examine possible adjustments to Walnut Grove’s rates, which are expected to increase by about one cent a year.

Daniel Grimes of Grimes Water Works Inc., the firm that manages Walnut Grove’s water system, said he understands the city’s logic, but doesn’t necessarily agree with it - at least in principle.

“If the city allows Whitehouse to pay lower rates, we’d like to have lower rates too, at least until our contract is renegotiated,” Grimes said.

“Our argument is not against Whitehouse,” he said, but with the ongoing delay of the renegotiations, and the rate Walnut Grove must pay in the interim until Tyler and Whitehouse reach an agreement.

Although Walnut Grove has the capacity to meet its own water needs, it relies on the city of Tyler as an alternative source.

Grimes contends that since Walnut Grove and Whitehouse, operating without a contract, are the city’s only two municipal water wholesalers, there’s no reason they can’t be treated the same.

Morgan said it doesn’t work that way.

Rates are based on different criteria, including water usage, contract length and infrastructure construction, and are subject to change.

“That’s the nature of the water business,” Morgan said. “It’s a pretty costly proposition.”

The city of Tyler has invested $12 million since 1965 for rights to access water out of Lake Palestine. When that amount was paid in full during 2000, the city then spent another $52 million on capital improvements for purification, he said.

“We’ve invested 45 years and over $65 million in our water system,” Morgan said. “Water costs money and people have to realize they have to pay proportionate cost.”

That’s already happening, Grimes said, noting that Walnut Grove and Whitehouse comprise about 3 percent of the city’s daily operating load, but carry about 25 percent of the operating and maintenance costs for distribution.

Walnut Grove has already paid $279,000 for infrastructure improvements to do business with Tyler. Town officials said they want the city to recognize the town’s investment and bend a little until negotiation talks begin.

“We want to keep getting water from Tyler, but we want to be treated fairly,” said Gilbert, the Walnut Grove Water Supply board president.

“We are a nonprofit cooperative. What money is generated above our costs goes into capital improvements - we’re staring a loss in the face with this new rate.”

Morgan said that even if a new deal can be reached for lower rates, Walnut Grove customers shouldn’t expect to get the same rates as those within the city limits of Tyler, who pay $2.26 per 1,000-gallon minimum, plus city taxes. People outside the city limits and in its extraterritorial jurisdiction pay $3.39 per 1,000 gallons.

Gilbert likened the situation to Tyler’s ongoing battle with CenterPoint Energy.

“This is not that much different,” he said. “The only difference in this case is the city is acting like CenterPoint to us.”