News Release
February 23, 2011
Contact: Alicia Pierce
(512) 463-0103
Nichols files five bills to protect water customers

Austin — State Sen. Robert Nichols (R–Jacksonville) recently filed five bills that would provide increased protection for consumers and landowners who are served by investor-owned water and wastewater utilities.

"Because water service is one of the most basic needs, the state must diligently work to make sure private water and wastewater utilities do not take advantage of consumers," Nichols said. "These bills offer some common sense solutions and protections for those served by investor-owned utility services."

Investor-owned utilities differ from municipal and other public utilities because they are privately funded and operate for profit.

SB 572 redefines how a utility may become the exclusive provider for an area. Currently, a landowner of 25 or more acres must actively decline to join a utility's monopoly within 30 days or become part of the area by default forever. All of those who own less than 25 acres would automatically be included in the proposed area without notification. Nichols' bill would instead require the utility to get permission from those who own 10 or more acres to join the service area.

"The burden should be on the utility, not the landowner, to include land in an exclusive service area," Nichols said. "This is a property rights issue, and I support a landowner's right to choose to be in a service area or not."

SB 573 gives property owners the option to opt out of a water or wastewater provider's district if the water utility does not provide service. Currently, a utility may hold onto the exclusive right to be the sole provider for an area, even if they do not provide water and wastewater service.

"Current law makes it almost impossible for landowners to get out of an exclusive service area, even if the utility fails to provide service," Nichols said. "This bill removes those hoops, because to me it's simple: If you are not getting service for a necessities like water and wastewater service, you deserve the opportunity to find a provider who will."

SB 635 allows the Executive Director of the Texas Commission on Environmental Quality (TCEQ) to set an interim water rate while a proposed rate is challenged. Under current law, a utility can charge its proposed rate before receiving a final ruling from TCEQ. Unfortunately, rate challenges can take several years, and consumers are left paying the proposed rate until a final resolution is reached.

"Water and wastewater users shouldn't get stuck paying a higher proposed rate for years while TCEQ works to resolve the matter," Nichols said. "This bill gives the executive director the power to set a reasonable rate that is fair to both the utility and the consumer."

SB 636 clearly prohibits utilities from charging the same rates among individual systems unless those systems are substantially similar. Currently, a utility may be granted the ability to charge a universal rate even when some systems are of significantly less quality.

"This change will help guarantee a user pays for the level of service they actually receive, not the service received by someone in a different system," Nichols said.

SB 637 prohibits a water utility from charging users for legal fees incurred when a utility loses a rate challenge.

"Under current law, customers who challenge a rate increase must pay the legal fees on both sides, even if they win a rate challenge," Nichols said. "Water and wastewater utilities should not be able to pass along those cost to ratepayers when they lose the case."