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Bill

SB 1891

Relating to test years used for ratemaking purposes by certain water and sewer utilities.

89th Legislature (2025) Introduced by Charles Perry

Modifies test year standards for Texas water and sewer utility rate calculations, affecting how utilities justify rate increase requests to regulators.

Left pending in committee
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Bill Summary · SB 1891

Legislative bill overview

SB 1891 modifies the test year methodology that Texas water and sewer utilities use to calculate their rates. The bill addresses which historical financial data period utilities can use when requesting rate increases from regulatory bodies. This affects how much customers pay for water and sewer services by changing the baseline financial performance utilities can reference.

Why is this important

Water and sewer rates directly impact household utility costs and business operations. The test year determines which costs utilities can recover from customers, so changing this methodology can either increase or decrease approved rate adjustments. This is particularly significant for smaller or rural utilities that may have limited alternatives for service.

Potential points of contention

  • Utility costs vs. consumer bills: Utilities may argue the bill restricts their ability to recover legitimate operating costs, while consumer advocates may contend it prevents unjustified rate increases
  • Rural vs. urban impact: Different utility systems face varying financial pressures, and a one-size-fits-all test year rule may disadvantage smaller systems struggling with aging infrastructure
  • Regulatory burden: Changes to ratemaking methodology create compliance costs and uncertainty for utilities, potentially affecting service quality or infrastructure investment

Compiled from official sources — confirm details with the bill’s official record.

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