Relating to the enforcement of drought contingency plans by water and sewer utilities and the Public Utility Commission of Texas.
Summary
SB 2662 revises Texas Water Code provisions governing drought contingency plans for water and sewer utilities and related regulatory oversight by the Public Utility Commission of Texas and municipal authorities. The bill requires drought contingency plans filed with regulators to include specific, quantified water-use reduction targets during shortages and drought, along with reasonable enforcement procedures such as fines, surcharges, service restrictions, or discontinuation of service. It also clarifies that the drought contingency plan itself is part of a utility’s tariff filing, but that a drought contingency plan provision is not a “rate” for purposes of the Water Code.
The bill also expands and clarifies when a utility may reduce or discontinue service for noncompliance with a drought contingency plan. It amends service-discontinuance provisions for certificated and non-certificated utilities, as well as certain water supply corporations, to expressly allow service interruption for drought plan violations, alongside existing grounds such as nonpayment and nonuse. In addition, the bill directs state agencies to identify nonbinding target goals and to develop and update model drought contingency programs for different types of water suppliers, intended to serve as best-practice guidance.
Impact
SB 2662 affects the Water Code provisions governing utility regulation, tariff filings, service termination, and drought planning. It gives regulators and utilities clearer statutory authority to enforce drought restrictions, while also limiting legal ambiguity by stating that drought contingency plan provisions are not themselves rates. The bill impacts water and sewer utilities, municipal regulators, the Public Utility Commission of Texas, and customers subject to mandatory water-use restrictions, especially during drought or water shortage conditions.
Sentiment
The bill appears to have been generally supported, passing the Senate unanimously and the House by a substantial margin, and it became effective immediately. The vote totals suggest broad legislative agreement that stronger drought enforcement tools were needed. The absence of committee transcript material limits insight into detailed debate, but the overall voting pattern indicates favorable sentiment toward giving utilities and regulators more explicit enforcement authority.
Contention
The main point of potential contention is the expansion of enforcement authority over customers through fines, surcharges, and service discontinuation for noncompliance with drought contingency plans. Some opposition is also suggested by the House vote, where a notable minority voted no, likely reflecting concerns about utility discretion, customer protections, or the severity of service shutoff authority. Another possible issue is the bill’s clarification that drought plan provisions are not rates, which may affect how such provisions are reviewed or challenged in rate-setting proceedings.
A bill for an act relating to certain public utilities, including the development of ratemaking principles permitted for recovery costs of certain investments in infrastructure by water and wastewater utilities and cost considerations for acquisitions of water, sanitary sewer, or storm water utilities. (Formerly SSB 3068.) Effective date: 07/01/2026