This document is an application filed by Texas Water Utilities, L.P. (Texas Water) with the Public Utility Commission of Texas (PUC) on October 1, 2025. Under Docket No. 58682, the company is seeking approval for System Improvement Charges (SIC) to recover costs for infrastructure investments made across its service areas.
Executive Summary of the Application
Texas Water is requesting to implement SIC riders to begin recovering approximately $81.8 million in capital expenditures made between January 1, 2024, and August 31, 2025. This total includes roughly $61.1 million for water systems and $20.8 million for wastewater systems.
The company aims to collect an additional $10.6 million in annual revenue through these charges, broken down as:
- Water SIC Revenue: $7.9 million.
- Wastewater SIC Revenue: $2.7 million.
The application is filed under Texas Water Code § 13.183(c) and 16 Texas Administrative Code § 24.76, which allow utilities to adjust charges periodically to ensure the timely recovery of infrastructure investments without waiting for a full comprehensive rate case.
Financial Breakdown and Revenue Requirements
The proposed charges are based on a 7.70% rate of return, which was approved in the company’s previous comprehensive rate case (Docket No. 56665). The total water revenue requirement of $7,912,815 is composed of several key financial elements:
- Return on Reconcilable Cost: $4,564,751.71.
- Federal Income Tax: $1,245,808.34.
- Depreciation Expense: $1,678,975.17.
- Ad Valorem Taxes: $381,737.50.
- Revenue-Related Taxes: $41,542.28.
The “Reconcilable Costs” for water improvements are calculated from a gross plant-in-service value of $61,059,050.22, adjusted for accumulated depreciation of $1,811,954.87.
Affected Service Areas
Texas Water serves over 40,000 water connections and 11,000 wastewater connections throughout Texas. The application affects retail customers outside municipal limits, as the PUC has exclusive original jurisdiction over these rates. Customers inside municipal boundaries are generally not affected unless the municipality has surrendered its jurisdiction to the PUC.+
The following table outlines the counties and specific regions identified in the filing as being part of Texas Water’s current or pending service areas:
| Region / County Group | Status | Affected Counties |
| Central/South Texas | Pending Merger (Docket 58359) | Bastrop, Blanco, Burnet, Colorado, Lampasas, Llano, Matagorda, Mills, Mitchell, San Saba, Washington, and Hays. |
| North/East Texas | Pending Merger (Docket 55157) | Grayson, Harris, Hill, Johnson, Montgomery, and Palo Pinto. |
Procedural Timeline and Legal Context
Texas Water has requested a specific procedural schedule for the approval of these charges:
- Intervention Deadline: 25 days after notice service is complete.
- Final Order Goal: Within 120 days of the application being deemed sufficient, provided no hearing is requested.
The filing clarifies that the “prudence, reasonableness, or necessity” of the costs should not be debated in this specific SIC proceeding, as these costs will be subject to a final reconciliation in the utility’s next comprehensive rate case.
Key Personnel and Witnesses
The application is supported by direct testimony from two primary witnesses:
- Brian D. Bahr (Director, Rates & Regulatory Affairs): Testifies on the SIC revenue requirements, tariff revisions, and financial calculations.
- Kristina McGee (Vice President of Engineering): Provides technical details regarding the specific capital improvement projects for which the company is seeking recovery.
Texas Water is represented legally by Spencer Fane, LLP, based in Austin, Texas.
