SB1169

SB1169 expands how public entities can work together through a public utility agency—a joint body formed by two or more public entities—to acquire, finance and operate water or sewer facilities. It adds water supply or sewer service corporations to the participating-public-entity definition, expressly includes acquisition among agency purposes and clarifies purchase, contract and financing powers. Participating entities may buy a qualifying utility, except an “affected county” as that term is defined in the Water Code. An agency is expressly a retail public utility, but remains excluded from the narrower statutory “utility” definition; those labels are not interchangeable. Final law, sections 1–4, 6 and 12; Water Code definitions.

The agency still may not impose a tax. It generally has no eminent-domain power, except the existing section 572.0585 provision for agencies domiciled in a county with more than 1.2 million people. That exception has its own service-area and purpose limits and does not allow condemnation to acquire underground-water rights or water or water rights. The agency restriction is distinct from participating entities’ existing acquisition powers. Final law, sections 2, 4 and 7; Existing condemnation exception; Participating-entity powers.

Financing options include anticipation notes and financing or refinancing facilities. The agency may pledge facility revenues, contracted participant revenues, assessments imposed by a public entity and provided by contract, or other agency funds. Operation and maintenance expenses retain first claim on pledged revenues. Using an existing facility itself as collateral for a new facility requires approval by resolution from each public entity participating in that joint financing; using facility revenue as security is expressly excepted from this approval rule. The act also allows a joint water-infrastructure funding mechanism with the North American Development Bank and transfers facility/management liability to the agency upon its ownership of the facilities. Final law, sections 3 and 9–10.

A participant may give an ordinance or resolution at least 180 days before a proposed withdrawal. If its revenues secure agency obligations, it cannot use that withdrawal route without the agency’s approving resolution. On withdrawal it takes the outstanding debt attributable to its proportional benefit and, without compensation from the agency, loses further agency rights, duties, obligations and service access. Withdrawal is not a way to walk away from the allocated debt. Final law, section 5.

Agency ratepayers gain an express appeal route to the Public Utility Commission (PUC). A petition under this route must be filed with both the PUC and service provider within 90 days after the rate change takes effect and signed by the lesser of 10,000 or 10 percent of eligible ratepayers whose rates changed. The agency board must notify each eligible ratepayer within 60 days after the final rate decision, stating the effective date, new rates and where to find more information; electronic notice is allowed if an email address is available. These are different decision-date and effective-date clocks. On appeal the PUC must respect the act’s revenue-sufficiency protection for operating costs, debts, reserves and related obligations. An appeal does not guarantee a lower bill. Final law, sections 8 and 13; Existing cost and debt requirements; Rate-appeal framework.

A new process lets the attorney general, at the PUC’s or Texas Commission on Environmental Quality’s request, seek appointment of a public utility agency as receiver for a utility or water supply/sewer service corporation meeting the specified abandonment or final-order/judgment-violation conditions. A receiver manages the business under court authority; this is not an unrestricted right to seize a neighboring system. The PUC must prioritize the agency receiver’s acquisition application under Water Code 13.412(g) and issue approval within 120 days after finding the application complete. A separate temporary-management route requires notice and an opportunity to be heard and one of the listed discontinued-service, receivership-referral or final-order-violation conditions. Final law, section 11; Receivership procedure; Temporary-management procedure.

The PUC may adopt a rule allowing an agency with a water supply or sewer service corporation participant to provide retail service without a certificate of public convenience and necessity—the usual service-area authorization. The act grants rulemaking discretion, not an automatic certificate exemption for every agency. Signed May 20, 2025, it took effect immediately. Final law, sections 14–15; Prior certificate requirements; Official history.