SB740

SB740 changes how Texas handles failing water and sewer systems, infrastructure-related rate charges, and wholesale service disputes between cities. Signed June 20, 2025, it generally took effect September 1, 2025, but specified system-improvement-charge changes apply to applications received on or after September 1, 2026. Final act; Official history.

For a system improvement charge—a charge for infrastructure investment—the Public Utility Commission must issue its final order within 60 days after it determines an application is complete, with up to 15 additional days for good cause. The act requires cost documentation for eligible plant costs not already in rates and a standard application form. The 60-day rule and new documentation subsection apply to applications received from September 1, 2026; rules defining completeness and the form are due by that date. The clock does not start merely when the utility files. Sections 4 and 9; Earlier rate law.

The act also prohibits treating an application as complete before day 30 after filing. Applicants must send the Office of Public Utility Counsel a copy when filing; the office must be allowed to comment by day 30 and receive the commission’s related data electronically without charge, with confidentiality preserved. These new subsections are not among those expressly assigned the September 2026 application transition. Sections 4, 9 and 10.

The law revises an expedited acquisition route for Class A and B utilities and adds one for municipal utilities, counties, water supply or sewer service corporations, public utility agencies, and specified constitutionally created districts or authorities. Before applying, the buyer must already have been appointed temporary manager or supervisor by the PUC or environmental agency, or receiver at an agency’s request. The transaction must be in the public interest; public notice is waived, and the appointment establishes operating capability for this process. The public-entity route omits features incompatible with entities outside the PUC’s original rate jurisdiction. The act also expressly permits the listed entities to serve as receivers and temporary managers; it does not authorize any unappointed buyer to skip ordinary acquisition review. Sections 5–8; Earlier expedited route; Existing receivership safeguards.

Finally, the PUC jurisdiction and appeal provisions amended here exclude wholesale water or sewer service decisions by one municipality for another municipality. The water-rate jurisdiction change in Section 12.013 concerns wholesale water, while the appeal exclusion in Section 13.043 covers wholesale water or sewer service. This is not a general removal of all water-rate regulation. Sections 1 and 3; Earlier appeal provision.