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

Three years ago, Corpus Christi doubled the industrial 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 came to a head this week at a public hearing before the State Office of Administrative Hearings in Austin.

The companies, operating through a coalition called Affordable Water for Corpus Christi, are demanding that the city refund nearly $80 million in water rate increases. The Public Utility Commission of Texas staff separately recommended a more modest refund of $6 million. The industry coalition recently offered to settle for $4 million, but the city declined and proceeded to the hearing.

“They know very well how long they’ve gotten away with not paying their fair share,” said City Council member Sylvia Campos, who campaigned on raising industrial water rates.

The outcome has major implications for Corpus Christi, which is simultaneously facing an unprecedented water supply crisis. The city desperately seeks funding for new water projects and has raised rates on residential consumers. If the companies prevail, the city could be forced to refund tens of millions of dollars.

“The large industry is not paying their fair share,” said City Manager Peter Zanoni. “It’s not fair to the retired family or the hardworking family that might have one parent and two, three jobs for them to support multi-billion dollar corporations and pay their water bills.”

The companies argue in filings with the Public Utility Commission that they should not pay for distribution infrastructure they do not own or benefit from in the same way as inside-city users. The city’s assistant director for finance, Kamil Taras, disputes this, noting that industrial facilities benefit from the entire water distribution system.

The hearing, scheduled over three days, will produce a recommendation from an administrative law judge, though the final decision rests with the utilities commission — a panel of gubernatorial appointees.

The case highlights a broader tension in Texas energy communities: the economic benefits of hosting major industrial employers come with hidden costs that often fall on residents. As water scarcity becomes an increasingly urgent issue across the state, the balance between industrial water demands and residential affordability is likely to become more contested.

Sources: Houston Public Media, Public Utility Commission of Texas