Courts Reduce Requested Rate Increase: Fid-Bau Portal

Courts Reduce Requested Rate Increase

The Antlers Public Works Authority (APWA) was established as a public trust in 1962 by the town of Antlers, Oklahoma. The town then leased its water plant to APWA for 40 years. The lease provided in part that APWA could fix uniform and nondiscriminatory rates. In 1967, APWA contracted to sell water to the predecessor of the Rural Water District No. 3. The contract allowed rate modification every two years based on performance cost but not on increased capitalization of APWA's system. In 1991, APWA sought to increase the rate from $0.85 to $1.10 per 1,000 gal. The district refused to pay the increase and sued, claiming the proposed increase violated the contract because APWA included in its cost calculations depreciation of a water plant built in 1975. APWA argued that the contract's modification‐of‐rates clause was unconstitutional because the state constitution did not authorize a town to lend its credit for any corporation. Specifically, APWA maintained that the restriction in the contract prevented APWA from recovering all of its production costs, effectively resulting in an unlawful loan or subsidy for the district's water purchases. The trial court ruled against APWA and reduced its requested rate increase.