The Public Utility Commission of Texas on Friday ruled that Kempner Water Supply Corporation is not entitled to compensation from the city of Lampasas in the wake of a water battle between the two entities, Lampasas City Manager Finley deGraffenried announced in a news release late Friday.
The state commission also decided that Lampasas is entitled to provide water to its business park, which is within its city limits.
Kempner has never provided water to the business park area, which was originally in Kempner’s service area. The dispute over the business park began in 2015 when the Lampasas Economic Development Corporation requested water service from Kempner, and Kempner responded that it would cost approximately $2.4 million and take 36 months to provide service.
The EDC asked the city if it could provide the service that it needed, and the city was able to provide the same service to the business park within 90 days at a cost of approximately $128,000, according to deGraffenried’s release.
The EDC initiated a proceeding at the Public Utility Commission of Texas to have the business park removed from Kempner’s service area. Kempner opposed the request.
“Kempner intervened in the city’s PUC proceeding for approval to serve the business park, claiming it was entitled to approximately $1.6 million in compensation from the city before the city could serve the business park,” according to the Lampasas news release. The PUC held Kempner’s claims were meritless.
“The city did suggest, in writing, that we would negotiate with Kempner on compensation for the service area; they elected to continue to litigate and unfortunately they are now faced with substantial legal bills and no compensation,” deGraffenried said.
The case is one of a number of ongoing disputes between the Kempner water provider and the city.
Kempner Water Supply Corporation has raised challenges to various provisions of its 2006 contract to deliver water to Lampasas.
In January 2015, the 27th District Court in Lampasas ruled in favor of Lampasas over the meaning of the 2006 contract and stated Kempner WSC breached the contract and ordered the water company to compensate the city $117,432.27 for unauthorized charges and $333,563.00 in attorney’s fees.
“Kempner’s interpretation of the contract was rejected by the Lampasas District Court,” stated Helen Foster, attorney for the city. “The city continues to be concerned that Kempner’s communications to its members fail to accurately reflect the financial contributions the city continues to make under the contract, including significant debt service for facilities that serve Kempner’s members,” Foster added.
“The contract was thoroughly negotiated by the Kempner Board and its attorneys and also its engineers in 2006, and the Court correctly ruled they cannot change the rules just because they made a deal they don’t like today,” said deGraffenried.
Kempner has appealed the decision to the Texas Court of Appeals.