BILL ANALYSIS Senate Research Center S.B. 2161 89R13872 CS-D 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 Water Code 13.042(e) 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. The current appeals process under Water Code 13.043 allows recovery of reasonable expenses incurred during the appeal only by the retail public utility, win or lose. In practice, this disincentivizes rate payers from pursuing an appeal further than the mediation process. Using the example of the Hamilton Creek Ranchettes residents, they felt it was in their best interest to settle for a smaller rate increase during the mediation process instead of pursuing the appeal further. The threat of being liable for the reasonable expenses incurred by the municipality was the sole reason cited for settling in mediation. S.B. 2161 balances the appeals process for both parties by allowing the recovery of reasonable expenses for both parties. Specifically, a party who alleges existing rates are excessive and is the prevailing party may recover reasonable expenses. If the PUC finds that an action brought under Water Code 13.043 was groundless, the PUC may allow recovery of reasonable expenses by the retail public utility. As proposed, S.B. 2161 amends current law relating to expenses incurred in the appeal of rates for water or sewer service charged to certain customers. 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 Section 13.043, Water Code, by amending Subsection (e) and adding Subsections (e-1) and (e-2), as follows: (e) Deletes existing text authorizing the Public Utility Commission of Texas (PUC), in an appeal under Subsection (b) (relating to authorizing ratepayers of certain entities to appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the PUC), to allow recovery of reasonable expenses incurred by the retail public utility in appeal proceedings. Deletes existing text authorizing the PUC to consider only the information that was available to the governing body at the time the governing body made its decision and evidence of reasonable expenses incurred by the retail public utility in the appeal proceedings. Makes a nonsubstantive change. (e-1) Authorizes any party represented by counsel who alleges that existing rates are excessive or that rates prescribed by a governing body are excessive and who is a prevailing party in proceedings for review of a governing body decision to in the same action recover reasonable fees for attorneys and expert witnesses and other costs incurred by the prevailing party before the PUC. Requires that the amount of the attorney's fees be fixed by the PUC. (e-2) Authorizes the PUC, on a finding by the PUC that an action under Subchapter C (Jurisdiction) was groundless and brought in bad faith and for the purpose of harassment, to award to the defendant retail public utility reasonable attorney's fees. SECTION 2. Makes application of this Act prospective. SECTION 3. Effective date: September 1, 2025.
BILL ANALYSIS
Senate Research Center S.B. 2161
89R13872 CS-D By: Flores
Water, Agriculture and Rural Affairs
4/9/2025
As Filed
Senate Research Center
S.B. 2161
89R13872 CS-D
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 Water Code 13.042(e) 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.
The current appeals process under Water Code 13.043 allows recovery of reasonable expenses incurred during the appeal only by the retail public utility, win or lose. In practice, this disincentivizes rate payers from pursuing an appeal further than the mediation process. Using the example of the Hamilton Creek Ranchettes residents, they felt it was in their best interest to settle for a smaller rate increase during the mediation process instead of pursuing the appeal further. The threat of being liable for the reasonable expenses incurred by the municipality was the sole reason cited for settling in mediation.
S.B. 2161 balances the appeals process for both parties by allowing the recovery of reasonable expenses for both parties. Specifically, a party who alleges existing rates are excessive and is the prevailing party may recover reasonable expenses. If the PUC finds that an action brought under Water Code 13.043 was groundless, the PUC may allow recovery of reasonable expenses by the retail public utility.
As proposed, S.B. 2161 amends current law relating to expenses incurred in the appeal of rates for water or sewer service charged to certain customers.
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 Section 13.043, Water Code, by amending Subsection (e) and adding Subsections (e-1) and (e-2), as follows:
(e) Deletes existing text authorizing the Public Utility Commission of Texas (PUC), in an appeal under Subsection (b) (relating to authorizing ratepayers of certain entities to appeal the decision of the governing body of the entity affecting their water, drainage, or sewer rates to the PUC), to allow recovery of reasonable expenses incurred by the retail public utility in appeal proceedings. Deletes existing text authorizing the PUC to consider only the information that was available to the governing body at the time the governing body made its decision and evidence of reasonable expenses incurred by the retail public utility in the appeal proceedings. Makes a nonsubstantive change.
(e-1) Authorizes any party represented by counsel who alleges that existing rates are excessive or that rates prescribed by a governing body are excessive and who is a prevailing party in proceedings for review of a governing body decision to in the same action recover reasonable fees for attorneys and expert witnesses and other costs incurred by the prevailing party before the PUC. Requires that the amount of the attorney's fees be fixed by the PUC.
(e-2) Authorizes the PUC, on a finding by the PUC that an action under Subchapter C (Jurisdiction) was groundless and brought in bad faith and for the purpose of harassment, to award to the defendant retail public utility reasonable attorney's fees.
SECTION 2. Makes application of this Act prospective.
SECTION 3. Effective date: September 1, 2025.