BILL ANALYSIS Senate Research Center S.B. 2160 89R12292 SCR-F By: Flores Water, Agriculture and Rural Affairs 4/9/2025 As Filed AUTHOR'S / SPONSOR'S STATEMENT OF INTENT In December of 2020, the residents of the Hamilton Creek Ranchettes, located outside the city limits of Marble Falls, were hit with a 50 percent rate increase on water and sewer services provided to them by the city. Shocked by the sudden increase, the residents looked for whatever recourse was available to appeal this decision. They found that cities maintain original jurisdiction for water and sewer rates outside the incorporated limits of the municipality, despite Section 13.042(e), Water Code, suggesting original jurisdiction should be placed with the Public Utility Commission of Texas (PUC). The only method for recourse available to them was an unbalanced appeals process that only awards expenses incurred during the process to the municipality, no matter the outcome. Original jurisdiction for water and sewer utility rates is generally given to the PUC when the customers of a water system have no public oversight over the utility provider, as is the case with investor-owned utilities (IOU). Customers of a municipal water supply who live within the corporate limits of a municipality have oversight over the rates being set through their ability to vote in municipal elections. That same privilege is not extended to customers who live outside the city limits, giving them no legitimate public oversight regarding water rates. Customers of an IOU and municipal water customers residing outside of city limits are very similar in practice. Neither customer class has direct public oversight over their water supply, and are subject to unfair rate increases without state oversight. However, IOU customers have state oversight, and that same privilege should be extended to municipal water customers residing outside of city limits. S.B. 2160 places original jurisdiction for water and sewer utility rates for municipal water customers residing outside of the city limits of the municipality with the PUC. As proposed, S.B. 2160 amends current law relating to the jurisdiction of the Public Utility Commission of Texas over municipally owned utility water and sewer service outside the corporate limits of a municipality. RULEMAKING AUTHORITY This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Sections 13.042(e) and (f), Water Code, as follows: (e) Requires the Public Utility Commission of Texas (PUC) to have exclusive original jurisdiction over the rates, operations, and services of a water and sewer utility for water or sewer utility service provided outside the corporate limits of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in Chapter 13 (Water Rates and Services) and of a municipally owned utility for water or sewer utility service provided outside the corporate limits of the municipality. Deletes existing text requiring the PUC to have exclusive original jurisdiction over water and sewer utility rates, operations, and services not within the incorporated limits of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in this chapter. Makes nonsubstantive changes. (f) Provides that Subchapter C (Jurisdiction) does not give the PUC power or jurisdiction to regulate or supervise the rates or service of a municipally owned utility, rather than a utility owned and operated by a municipality, directly or through a municipally owned corporation, within its corporate limits or to affect or limit the power, jurisdiction, or duties of a municipality that regulates land and supervises water and sewer utilities within its corporate limits, except as provided by the Water Code. SECTION 2. Amends Section 13.043(b), Water Code, as follows: (b) Deletes existing text authorizing ratepayers of a municipally owned utility, if the ratepayers reside outside the corporate limits of the municipality, including a decision of a governing body that results in an increase in rates when the municipally owned utility takes over the provision of service to ratepayers previously served by another retail public utility, to appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the PUC. Makes nonsubstantive changes. SECTION 3. Makes application of this Act prospective. SECTION 4. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 2160
89R12292 SCR-F By: Flores
Water, Agriculture and Rural Affairs
4/9/2025
As Filed
Senate Research Center
S.B. 2160
89R12292 SCR-F
By: Flores
Water, Agriculture and Rural Affairs
4/9/2025
As Filed
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
In December of 2020, the residents of the Hamilton Creek Ranchettes, located outside the city limits of Marble Falls, were hit with a 50 percent rate increase on water and sewer services provided to them by the city. Shocked by the sudden increase, the residents looked for whatever recourse was available to appeal this decision. They found that cities maintain original jurisdiction for water and sewer rates outside the incorporated limits of the municipality, despite Section 13.042(e), Water Code, suggesting original jurisdiction should be placed with the Public Utility Commission of Texas (PUC). The only method for recourse available to them was an unbalanced appeals process that only awards expenses incurred during the process to the municipality, no matter the outcome.
Original jurisdiction for water and sewer utility rates is generally given to the PUC when the customers of a water system have no public oversight over the utility provider, as is the case with investor-owned utilities (IOU). Customers of a municipal water supply who live within the corporate limits of a municipality have oversight over the rates being set through their ability to vote in municipal elections. That same privilege is not extended to customers who live outside the city limits, giving them no legitimate public oversight regarding water rates.
Customers of an IOU and municipal water customers residing outside of city limits are very similar in practice. Neither customer class has direct public oversight over their water supply, and are subject to unfair rate increases without state oversight. However, IOU customers have state oversight, and that same privilege should be extended to municipal water customers residing outside of city limits.
S.B. 2160 places original jurisdiction for water and sewer utility rates for municipal water customers residing outside of the city limits of the municipality with the PUC.
As proposed, S.B. 2160 amends current law relating to the jurisdiction of the Public Utility Commission of Texas over municipally owned utility water and sewer service outside the corporate limits of a municipality.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Sections 13.042(e) and (f), Water Code, as follows:
(e) Requires the Public Utility Commission of Texas (PUC) to have exclusive original jurisdiction over the rates, operations, and services of a water and sewer utility for water or sewer utility service provided outside the corporate limits of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in Chapter 13 (Water Rates and Services) and of a municipally owned utility for water or sewer utility service provided outside the corporate limits of the municipality. Deletes existing text requiring the PUC to have exclusive original jurisdiction over water and sewer utility rates, operations, and services not within the incorporated limits of a municipality exercising exclusive original jurisdiction over those rates, operations, and services as provided in this chapter. Makes nonsubstantive changes.
(f) Provides that Subchapter C (Jurisdiction) does not give the PUC power or jurisdiction to regulate or supervise the rates or service of a municipally owned utility, rather than a utility owned and operated by a municipality, directly or through a municipally owned corporation, within its corporate limits or to affect or limit the power, jurisdiction, or duties of a municipality that regulates land and supervises water and sewer utilities within its corporate limits, except as provided by the Water Code.
SECTION 2. Amends Section 13.043(b), Water Code, as follows:
(b) Deletes existing text authorizing ratepayers of a municipally owned utility, if the ratepayers reside outside the corporate limits of the municipality, including a decision of a governing body that results in an increase in rates when the municipally owned utility takes over the provision of service to ratepayers previously served by another retail public utility, to appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the PUC. Makes nonsubstantive changes.
SECTION 3. Makes application of this Act prospective.
SECTION 4. Effective date: September 1, 2025.