{"id":370957,"date":"2026-07-13T10:45:19","date_gmt":"2026-07-13T10:45:19","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-tx\/370957\/"},"modified":"2026-07-13T10:45:19","modified_gmt":"2026-07-13T10:45:19","slug":"corpus-christi-in-80-million-legal-fight-over-water-rate-refund","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-tx\/370957\/","title":{"rendered":"Corpus Christi in $80 million legal fight over water rate refund"},"content":{"rendered":"

Audio recording is automated for accessibility. Humans wrote and edited the story. See our AI policy<\/a>, and give us feedback<\/a>.<\/p>\n

For at least a decade, Corpus Christi sold water to a handful of large industrial plants at a steeply discounted rate, according to documents and interviews with city officials. Residents and businesses paid more than $100 million to subsidize water for some of the world\u2019s richest energy companies, the city\u2019s rate models show. <\/p>\n

\nThree years ago, Corpus Christi doubled the companies\u2019 water rates in an effort to correct the imbalance. But the companies, including Valero, Citgo and LyondellBassell, protested to state regulators, sparking a legal battle that will come to a head today as a public hearing over the matter begins in front of an independent state agency in Austin.<\/p>\n

The outcome will have major implications for Corpus Christi, which is facing an unprecedented water supply crisis<\/a>, as well as the energy companies that have long dominated its economy. If the companies prevail, Corpus could be forced to refund them tens of millions of dollars even as it desperately seeks funding<\/a> for new water projects and raises rates on the rest of the region\u2019s consumers. <\/p>\n

\u201cI\u2019m holding my breath,\u201d said Sylvia Campos, a City Council member who campaigned on raising industrial water rates. \u201cLet\u2019s hope that we don\u2019t have to pay them back.\u201d<\/p>\n

Valero, Citgo and LyondellBassell, which buy water directly from Corpus Christi\u2019s water utility to operate oil refineries and petrochemical plants just outside city limits, commented through an industry group they have formed called Affordable Water for Corpus Christi. <\/p>\n

\u201cThe issue before the Public Utility Commission is whether the City\u2019s rates were developed using a fair, evidence-based and legally compliant methodology,\u201d said Heath Armstrong, a lawyer for the group. <\/p>\n

Campos responded: \u201cThey know very well how long they\u2019ve gotten away with not paying their fair share.\u201d <\/p>\n

The industry group\u2019s arguments for lower water rates are spelled out in thousands of pages of documents<\/a> filed with the Public Utility Commission of Texas, a state regulator headed by a panel of gubernatorial appointees. In one filing<\/a>, a consultant wrote that the group\u2019s members should get a discount for water because they shouldn\u2019t have to pay for \u201cdistribution infrastructure they do not own, maintain, or benefit from in the same way as inside-city users.\u201d <\/p>\n

Kamil Taras, the city\u2019s assistant director for finance and administration, said that\u2019s not the case. Industrial facilities benefit from the entire water distribution system that the city\u2019s water utility manages, he said, not just the portion outside city limits that connects them to its treatment plant. <\/p>\n

\u201cThey just want to pay for the one single line that they\u2019re connected to, and that\u2019s it,\u201d Taras said, referring to the companies\u2019 argument. \u201cIt doesn\u2019t work like that in the municipal water world.\u201d <\/p>\n

Earlier this year, the companies demanded that Corpus Christi refund almost $80 million of their water-rate increases, according to a recent city memo that summarized the utility commission filings<\/a>. The commission\u2019s staff then looked at the evidence separately and recommended a refund of just $6 million, the city memo explains. <\/p>\n

Taras said the industry coalition led by Valero recently offered to settle the case for $4 million, but the city chose not to settle and instead to go to the next step: a public hearing that will resemble a trial at an agency called the State Office of Administrative Hearings. <\/p>\n

At that hearing, which will take place over three days this week, Corpus Christi officials and the companies will argue their respective positions in front of a state official called an administrative law judge. The judge will then make a recommendation, but the final say rests with the utilities commission. <\/p>\n

Peter Zanoni, Corpus Christi\u2019s city manager, said he hopes the city can preserve the rate increases because \u201cthe large industry is not paying their fair share\u201d for water. <\/p>\n

He added, \u201cIt\u2019s not fair to the retired family or the hardworking family that might have one parent and two, three jobs for them to support multibillion-dollar corporations and pay their water bills.\u201d<\/p>\n

Water systems face funding shortfall <\/p>\n

Even as they\u2019re being challenged on the rate increases they already implemented, Corpus Christi officials say they\u2019ll have to continue raising rates to pay for a host of new water projects<\/a>. It\u2019s a common need across Texas: The state\u2019s latest water plan<\/a>, released in May, estimated it could cost Texans $174 billion to avoid water shortages in the next 50 years.<\/p>\n

\u201cThe only thing that\u2019s keeping Texas from meeting its water needs is money,\u201d Republican state Sen. Charles Perry<\/a>, chair of the Senate Water, Agriculture and Rural Affairs Committee, said during a hearing in May<\/a>.<\/p>\n

Perry made it clear that many communities need to be prepared to pay a lot more for water, maybe even \u201cdouble what we\u2019re paying. But that\u2019s the cost of new water in Texas,\u201d he said. <\/p>\n

Corpus Christi city officials say that\u2019s exactly what they\u2019ve been trying to do. And they\u2019ve focused on large industrial users because those companies were for years paying a far lower rate for water than most residential and business consumers.<\/p>\n

In 2016, for instance, the companies \u2014 collectively referred to as \u201cOCL (outside city limits) large-volume customers\u201d \u2014 paid about $2 per 1,000 gallons of water, while many other residential and commercial customers inside the city paid three times that rate. All the rates went down slightly over the next few years, city data show, but the disparities persisted. <\/p>\n

In 2023, the city commissioned a study to determine if those rates were an accurate reflection of the amount of money Corpus Christi spent sending water to different types of customers. The city wanted to know: Is it actually cheaper to provide water to the large industrial plants, which could justify their lower rate? <\/p>\n

The answer was a resounding no. In a presentation to City Council members, the study\u2019s authors wrote<\/a> that \u201cLarge Volume was under-recovering its cost of service\u201d by $15 million. In other words, the city was losing $15 million a year providing water to its biggest industrial users. Smaller commercial businesses, on the other hand, were overpaying for water by about $9 million, the study found. <\/p>\n

For Zanoni, the study confirmed what he had long suspected \u2014 even from his days in San Antonio, where he worked before becoming Corpus Christi\u2019s city manager. <\/p>\n

\u201cFolks told me in San Antonio that one issue in Corpus Christi is that the large industry is not paying their fair share,\u201d he said. \u201cAnd the residents and the commercial accounts are paying the burden for water for industry.\u201d<\/p>\n

So in the fall of 2023<\/a>, Corpus Christi\u2019s City Council agreed to double water rates for the select group of large-volume users that had long enjoyed a discount. The change \u201cbasically corrected that under-collection,\u201d according to Tamas, the city\u2019s assistant finance director. <\/p>\n

The new rates raised Valero\u2019s annual water bill from $9 million to $18 million, Taras said.<\/p>\n

The vote by City Council was 8-to-1 in favor, notable in a city where industrial giants loom large over local politics. Six months later, the companies filed their protest<\/a>. <\/p>\n

Council Member Roland Barrera, who cast the sole vote against, said in an interview he agreed that the industrial water rate needed to rise, but not so steeply and suddenly.<\/p>\n

\u201cMy objection was to the drastic increase that we implemented one year to another,\u201d he said. \u201cIf we want to remain a manufacturing community, which we\u2019ve been for over 70 years, we have to have some level of predictability.\u201d<\/p>\n

Barrera said the discounted industrial water rates were intended, in part, to help Corpus Christi attract investment from companies that build thirsty facilities like refineries or chemical plants. Otherwise, he said, they might have chosen to locate in larger petrochemical complexes of regions with more abundant water, like Houston or Louisiana.<\/p>\n

The companies have argued that they deserve the discount because they\u2019re in much closer proximity to Corpus Christi\u2019s water treatment plant and therefore don\u2019t use as much of its distribution system as other consumers. <\/p>\n

But that\u2019s not how water delivery works, Zanoni said. \u201cThe entire city grid is interconnected,\u201d he said. If something were to malfunction in the water distribution pipes at one end of the city \u2014 say, at a water tower far away from Valero \u2014 the water pressure all the way at the other end, at the company\u2019s oil refinery, would also be impacted. <\/p>\n

Corpus Christi\u2019s new industrial water rates reflect an equitable distribution of costs, Zanoni said, and remove the burden on small businesses that have historically subsidized the big corporations.<\/p>\n

\u201cWe\u2019re getting sued because we\u2019re trying to charge a fair rate to the big industry,\u201d Zanoni said. \u201cIndustry in this case is not being a good partner with the city.\u201d<\/p>\n

Avery Thompson contributed to this report.<\/p>\n

Disclosure: Valero has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in The Texas Tribune\u2019s journalism. Find a complete\u00a0list of them here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Audio recording is automated for accessibility. Humans wrote and edited the story. See our AI policy, and give…\n","protected":false},"author":2,"featured_media":370958,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[17242,4916,155,157,156,451,2424,6748],"class_list":["post-370957","post","type-post","status-publish","format-standard","has-post-thumbnail","category-corpus-christi","tag-charles-perry","tag-citgo","tag-corpus-christi","tag-corpus-christi-headlines","tag-corpus-christi-news","tag-energy","tag-republicans","tag-well-b-homepage"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/370957","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/comments?post=370957"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/370957\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media\/370958"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media?parent=370957"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/categories?post=370957"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/tags?post=370957"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}