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LCRA staff proposes 2026 interruptible irrigation rates, cites surcharges and use of ag reserve funds
Summary
LCRA staff told the Operations Committee it will propose a 2026 interruptible irrigation rate built from FY2025 actuals, recommending a 3% increase for Gulf Coast and Lakeside (relative to last charged rates), a projected ~9% decline for Garwood, and tiered surcharges for customers that exceed contracted duties. Farmer meetings and a January board decision were scheduled.
LCRA staff told the Operations Committee on Nov. 12 that it will present formal interruptible irrigation rates for calendar year 2026 based on FY2025 actuals and known adjustments, and that the proposal seeks to balance cost recovery with short‑term affordability.
John Hoffman, LCRA staff, said the methodology starts with last year’s actuals and applies measured adjustments for labor (about 4%), electricity, materials and a full year of Arbuckle operations. He told the committee that the agency allocates river‑management operating costs with a 78.7% share assigned to firm customers and 21.3% to interruptible customers. "We start with a test year — last year's actuals — and then make any known and measurable adjustments," Hoffman said.
The staff proposal would show a 3% rate increase for Gulf Coast and Lakeside relative to the last rates that were actually charged (in calendar year 2022). Hoffman explained that the business‑plan rate shown on earlier materials was a placeholder and that the 3% reflects a real charge customers would see. "This was a paper rate; now it's real," a board member (Speaker 5) said in the discussion.
Garwood is treated differently: because Garwood's deliveries were not curtailed, staff said Garwood's billing units were higher and its projected cost‑recovery rate is down about 9% compared with prior planning numbers. Hoffman noted Garwood does not pay river‑management costs under its negotiated agreement; irrigation customers in Garwood instead pay delivery and lift‑related charges tied to where they divert water.
Staff also described surcharge tiers that apply when a customer exceeds its contracted duty: a 40%, 80% and 120% adder (explained as practical multipliers producing 140%, 180% and 220% of base when applied beyond the contracted duty). The program includes contractual and administrative levers to deter nonpayment and overuse: staff said interruptible customers face low nonpayment rates because LCRA can withhold water the following year and place liens if bills remain unpaid.
Hoffman said ag reserve funds will be used to smooth bills in Gulf Coast and Lakeside "to make those rates more affordable for our downstream irrigators." He also noted interruptible customers' share of Arbuckle operations is projected at about $219,000; no new debt is included in that figure.
Board members pressed staff on acres and revenue uncertainty. Hoffman said the most accurate acreage estimates come from signed contracts in March; earlier intentions can be overstated. To gather customer input and improve estimates, staff will hold farmer meetings in each division in December, post draft rate documents for public review in mid‑December and bring the recommendation and public comment to the January board meeting.
The committee did not take a final vote on rates during the meeting; staff will return with formal rate documents and public comments for board consideration in January. "When we see people actually sign a contract — that's when we have the best estimates of how many acres we're actually going to have in production," Hoffman told the committee.
What’s next: farmer meetings in December, draft materials posted for public comment mid‑December, and a January board agenda item with staff recommendations and summarized public input.
