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Signed Into Law
Signed May 20, 2025Effective 2025-09-01
SB1169

Regular Session

Relating to the provision of water or sewer service by public entities operating jointly or concurrently.

Government Affairs & Regulatory Compliance Analysis

SB1169: Government Affairs Overview

SB1169 fundamentally restructures water service regionalization by designating Water Supply Corporations (WSCs) as eligible "Public Entities" within Public Utility Agencies (PUAs) and granting PUAs statutory priority in receivership proceedings. While this opens new financing avenues, it imposes rigid operational constraints on all PUA members, specifically regarding withdrawal protocols, debt assumption, and mandatory individual ratepayer notifications.

Sen. Adam Hinojosa·Senate Bill·Regular Session

Critical
Medium Cost
Effective:2025-09-01
Business Impact

Who SB1169 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: critical

Significant regulatory changes (effective 2025-09-01). Review with your legal and compliance teams to understand implications.

💧

Water

Affected business types:

  • Water utilities
  • Wastewater treatment facilities
  • Municipal water districts
  • Agricultural water users
View all water legislation

Estimated Cost Impact

mediumModerate costs expected for implementation.

Enforcing Agencies

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SB1169
Critical
Relating to the provision of water or sewer service by public entities operating jointly or concurrently.
Critical Compliance Urgency
Requires immediate attention
Cost Impact
Medium
Effective
2025-09-01
Enforcing Agencies
Office of the Attorney GeneralPUCTCEQ
Primary Author: Sen. Adam Hinojosa
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: Immediate upon effective date. Specifically, the 180-day notice requirement for withdrawal applies to any exit attempted after September 1, 2025.
  • Agency Rulemaking: The Public Utility Commission (PUC) has discretionary authority ("may") to exempt PUAs from Certificate of Convenience and Necessity (CCN) requirements. Regulatory Gray Zone: Until the PUC formally adopts these rules, PUAs must maintain and amend CCNs; do not let certifications lapse in anticipation of relief.

Immediate Action Plan

  • Update Billing Software: Immediately modify customer databases to require and validate email addresses for all ratepayers to utilize the electronic notice safe harbor.
  • Audit Participation Agreements: Identify any member entity considering withdrawal; if they do not initiate the process by March 2025 (to meet the Sept 1 effective date implications), they will be locked into the new 180-day/debt assumption regime.
  • Review Insurance Policies: Ensure General Liability and Environmental policies are amended to attach coverage immediately upon the closing date of any new asset acquisition.
  • Revise Bond Covenants: Work with bond counsel to ensure upcoming indentures reflect the statutory first lien status of O&M expenses.

Operational Changes Required

Contracts

  • Interlocal/Participation Agreements: Review all existing agreements regarding withdrawal. The statute overrides contract terms; you must now provide a 180-day notice (up from typical 90-day clauses) and obtain PUA resolution approval if your revenue secures debt.
  • Bond Indentures: New issuances must reflect that Operation and Maintenance (O&M) expenses are now a statutory first lien against pledged revenue, taking priority over debt service. Adjust cash flow waterfalls accordingly.
  • Collateral Resolutions: To use an existing facility to secure a *new* facility, you must now obtain a "Unanimous Resolution" from every participating public entity. Missing one signature invalidates the security structure.

Hiring/Training

  • Billing & Customer Service: Staff must be trained to capture and validate ratepayer email addresses immediately. The law permits electronic rate change notices; failing to capture this data will result in significant postage and printing costs.
  • Acquisition Teams: PUAs should designate a "Rapid Response" team. You now have priority to acquire failing utilities, but you must be prepared to file an application under Water Code 13.412(g) immediately upon notice of a system failure.

Reporting & Record-Keeping

  • Rate Change Notices: The Board must send individual written notices to every appeal-eligible ratepayer within 60 days of a final rate decision. General website postings are no longer sufficient compliance.
  • Asset Transfer Logs: Liability for facility management transfers strictly upon the date of ownership transfer. You must maintain precise closing records to demarcate liability for environmental or operational claims.

Fees & Costs

  • Postage/Admin Costs: Budget for increased administrative costs associated with mandatory individual rate notices if digital contact data is incomplete.
  • Debt Assumption: If a member entity withdraws, they are statutorily required to assume their prorated share of *all* outstanding debt existing at the time of withdrawal.

Strategic Ambiguities & Considerations

  • CCN Exemption: Section 14 allows the PUC to exempt PUAs from CCN requirements, but does not mandate it. It is unclear if the PUC will grant blanket exemptions or require case-by-case applications.
  • Special Assessments: The bill allows PUAs to pledge "special assessments," but does not define the imposition mechanism. It is unclear if this grants new assessment authority or relies on the existing powers of member entities. Expect Attorney General clarification before pledging these revenues.
  • Revenue Sufficiency vs. Rates: The PUC is mandated to ensure PUA rates cover debt and O&M (revenue sufficiency) while also hearing ratepayer appeals. This creates a conflict where the PUC may be forced to uphold higher rates to satisfy bond covenants, despite ratepayer protests.

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JD Key Consulting specializes in Texas regulatory compliance strategy. Work directly with James Dickey—former Chairman of the Republican Party of Texas—to understand this bill's impact on your operations and develop an actionable compliance plan.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 7, 2025
Passed Senate
Apr 29, 2025
Passed House
May 7, 2025
Signed
May 20, 2025
Effective
Sep 1, 2025
TopicsUtilitiesUtilities--generalUtilities--water & SewerPublic Utility CommissionAttorney GeneralEnvironmental Quality, Texas Commission On
03

Senate Authors

Sen. Adam HinojosaRepublican · Primary Author
Coauthors (1)

House Sponsor

Rep. Ryan GuillenRepublican · Primary Sponsor

Bill Text(with markup)

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View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

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Quick Reference

Frequently Asked Questions

Common questions about SB1169

Q

What does Texas SB1169 do?

SB1169 fundamentally restructures water service regionalization by designating Water Supply Corporations (WSCs) as eligible "Public Entities" within Public Utility Agencies (PUAs) and granting PUAs statutory priority in receivership proceedings. While this opens new financing avenues, it imposes rigid operational constraints on all PUA members, specifically regarding withdrawal protocols, debt assumption, and mandatory individual ratepayer notifications.

Q

Who authored SB1169?

SB1169 was authored by Texas Senator Adam Hinojosa during the Regular Session.

Q

When was SB1169 signed into law?

SB1169 was signed into law by Governor Greg Abbott on May 20, 2025.

Q

Which agencies enforce SB1169?

SB1169 is enforced by Office of the Attorney General (receivership suits), Public Utility Commission of Texas (PUC) and Texas Commission on Environmental Quality (TCEQ).

Q

How significant are the changes in SB1169?

The regulatory priority for SB1169 is rated as "critical". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB1169?

The cost impact of SB1169 is estimated as "medium". This may vary based on industry and implementation requirements.

Q

What topics does SB1169 address?

SB1169 addresses topics including utilities, utilities--general, utilities--water & sewer, public utility commission and attorney general.

Q

What are the key dates for SB1169?

Key dates for SB1169: Effective date is 2025-09-01. Rulemaking: May adopt rules allowing a Public Utility Agency (PUA) with a Water Supply Corporation participant to operate without a Certificate of Convenience and Necessity (CCN). (Discretionary/Ongoing); Must issue orders approving acquisition applications by PUAs for failing utilities. (120 days after application completeness). Consult with leg

Q

What are the penalties under SB1169?

SB1169 establishes the following penalties: administrative/civil penalty of Receivership/Loss of Control for Abandonment of operations, violation of final PUC/TCEQ orders, or violation of court judgments by a utility or water supply corporation.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB1169?

SB1169 primarily affects utility companies and energy providers. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026