HB 2500

relating to certain proceedings by the Public Utility Commission of
Texas regarding water or sewer service.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 13.183, Water Code, is amended by
amending Subsection (c) and adding Subsection (c-1) to read as
(c)  To ensure that retail customers receive a higher
quality, more affordable, or more reliable water or sewer service,
to encourage regionalization, or to maintain financially stable and
technically sound utilities, the regulatory authority, by rule or
ordinance, as appropriate, may adopt specific alternative
ratemaking methodologies for water or sewer rates to allow for more
timely and efficient cost recovery.  Appropriate alternative
ratemaking methodologies are the introduction of new customer
classes, the cash needs method, and phased and multi-step rate
changes.  The regulatory authority may also adopt system
improvement charges that may be periodically adjusted to ensure
timely recovery of infrastructure investment.  If the utility
commission is the appropriate regulatory authority, the utility
commission shall enter a final order on a request for a system
improvement charge under this subsection not later than the 60th
day after the date the utility commission determines that a
complete application for a system improvement charge has been
filed.  The utility commission may extend the deadline for not more
than 15 days for good cause.  The utility commission by rule shall
establish a schedule that requires all utilities that have
implemented a system improvement charge approved by the utility
commission to make periodic filings with the utility commission to
modify or review base rates charged by the utility. Overall
revenues determined according to an alternative ratemaking
methodology adopted under this section must provide revenues to the
utility that satisfy the requirements of Subsection (a).  The
regulatory authority may not approve rates under an alternative
ratemaking methodology unless the regulatory authority adopts the
methodology before the date the rate application was
(c-1)  An application for a system improvement charge under
Subsection (c) may not be considered complete by the utility
commission unless, to substantiate each claimed eligible cost of a
utility's eligible plant that is not already included in the
applying utility's rates, the application includes:
(4)  other documentation of eligible costs.
SECTION 2.  Section 13.301(l), Water Code, is amended to
(l)  Notwithstanding any other provision of this section or
Section 13.302, the utility commission by rule shall adopt a [an
expedited] process to expedite an application for the acquisition
of the stock or ownership interest under Section 13.302, or of
assets under this section, of a utility in receivership under
Section 13.412, a utility in supervision under Section 13.4131, or
a utility in temporary management under Section 13.4132, and, if
applicable, its certificated service area, by a Class A or Class B
utility.  The applicant must have been appointed as a temporary
manager or supervisor for the utility by the utility commission or
commission or have been appointed as a receiver for the utility at
the request of the utility commission or commission before filing
the application [that allows a person appointed by the utility
commission or commission under Section 13.4132 as a temporary
manager of a utility, utility in receivership, or utility in
supervision, who is also an operator of a Class A or Class B utility
to apply for utility commission approval of the person's
acquisition of the stock, ownership interest, or assets of the
temporarily managed and operated utility, utility in receivership,
or utility in supervision, its facilities, and, if applicable, its
certificated service area].  The [expedited] process must:
(1)  waive public notice requirements regardless of
whether the person elects to charge initial rates in accordance
with Section 13.3011 or use a voluntary valuation determined under
(2)  require approval of the acquisition transaction if
the transaction is considered to be in the public interest; and
(A)  the person's appointment is considered
sufficient to demonstrate adequate financial, managerial, and
technical capability for providing continuous and adequate service
to the service area to be acquired and any areas currently
certificated to the person; and
(B)  all used and useful invested capital and just
and reasonable operations and maintenance costs incurred by the
person during the person's appointment as temporary manager and
operator of the utility, utility in receivership, or utility in
supervision to be acquired are considered to be a regulatory asset
for the person and are recoverable in the person's next
comprehensive rate proceeding or system improvement charge
SECTION 3.  Subchapter H, Chapter 13, Water Code, is amended
by adding Section 13.3021 to read as follows:
Sec. 13.3021.  SALES, TRANSFERS, AND MERGERS FOR CERTAIN
RETAIL PUBLIC UTILITIES.  (a) The utility commission by rule shall
adopt an expedited process to authorize a municipally owned
utility, a county, a water supply or sewer service corporation, or a
district or authority created under Section 52, Article III, or
Section 59, Article XVI, Texas Constitution, to acquire the stock
or ownership interest under Section 13.302, or assets under Section
13.301, of a utility in receivership under Section 13.412, a
utility in supervision under Section 13.4131, or a utility in
temporary management under Section 13.4132, and, if applicable, its
certificated service area, in the manner provided by Sections
(b)  The municipally owned utility, county, water supply or
sewer service corporation, district, or authority must have been
appointed as a temporary manager or supervisor for the utility by
the utility commission or commission or as a receiver for the
utility at the request of the utility commission or commission
before filing an acquisition application under this section.
(1)  be based on the expedited process adopted under
Section 13.301(l), except for any aspects of the process that
cannot be applied to an entity over which the utility commission
does not have original rate jurisdiction;
(2)  waive public notice requirements;
(3)  require approval of the acquisition transaction if
the transaction is considered to be in the public interest; and
(4)  provide that the municipally owned utility's,
county's, water supply or sewer service corporation's, district's,
or authority's appointment is considered sufficient to demonstrate
adequate financial, managerial, and technical capability for
providing continuous and adequate service to the service area to be
acquired and any areas currently certificated to the municipally
owned utility, county, corporation, district, or authority.
SECTION 4.  Section 13.412(g), Water Code, is amended to
(g)  Notwithstanding Section 64.021, Civil Practice and
Remedies Code, a receiver appointed under this section may:
(1)  be a person, a municipally owned utility, a
county, a water supply or sewer service corporation, or a district
or authority created under Section 52, Article III, or Section 59,
Article XVI, Texas Constitution; and
(2)  seek approval from the utility commission and the
commission to acquire the water or sewer utility's facilities and
transfer the utility's certificate of convenience and necessity.
The receiver must apply in accordance with Subchapter H.
SECTION 5.  Section 13.4132, Water Code, is amended by
amending Subsection (a) and adding Subsection (a-1) to read as
(a)  The utility commission or the commission, after
providing to the utility notice and an opportunity to be heard by
the commissioners at a utility commission or commission meeting,
may authorize a willing person, municipally owned utility, county,
water supply or sewer service corporation, or district or authority
created under Section 52, Article III, or Section 59, Article XVI,
Texas Constitution, to temporarily manage and operate a utility if
(1)  has discontinued or abandoned operations or the
(2)  has been or is being referred to the attorney
general for the appointment of a receiver under Section 13.412; or
(3)  provides retail water or sewer utility service
through fewer than 10,000 taps or connections and violates a final
order of the commission by failing to:
(A)  provide system capacity that is greater than
the required raw water or groundwater production rate or the
anticipated daily demand of the system;
(B)  provide a minimum pressure of 35 pounds per
square inch throughout the distribution system under normal
(C)  maintain accurate or properly calibrated
testing equipment or other means of monitoring the effectiveness of
a chemical treatment or pathogen inactivation or removal process.
(a-1)  For the purposes of this section, a reference to a
person includes a municipally owned utility, county, water supply
or sewer service corporation, or district or authority created
under Section 52, Article III, or Section 59, Article XVI, Texas
SECTION 6.  Section 13.183(c), Water Code, as amended by
this Act, applies only to an application for system improvement
charges received by the Public Utility Commission of Texas on or
after the effective date of this Act. An application for system
improvement charges received before the effective date of this Act
is governed by the law in effect on the date the application is
filed, and the former law is continued in effect for that purpose.
SECTION 7.  This Act takes effect September 1, 2025.