A statewide rate increase sought by one of the largest private water utilities in Texas is advancing toward a negotiated settlement that does not include the customers who filed thousands of formal protests. The development follows a decision by a state administrative court to pause hearings in the case earlier this spring.
The proceeding before the Public Utility Commission of Texas (PUCT) covers Aqua Texas, which operates as Texas Water Utilities and serves customers across dozens of Texas counties. Interim rates took effect in March 2026, raising monthly bills before a final decision has been issued by state regulators.
The resolution of the case will determine how the private investor-owned utilities can recover hundreds of millions of dollars in infrastructure costs from households that have no competitive alternative for their water service.
Texas Water Utilities filed its initial application in June 2025, seeking to recover nearly $700 million spent on capital projects completed between 2004 and the end of 2024. The request reflects a 23.4% increase in water revenue and a 51.8% increase in sewer revenue compared to 2023 baseline figures. Local reporting by KXAN indicated that the proposed adjustments were on track to more than double water bills for some homeowners.
The proposal drew significant public opposition, resulting in more than 3,500 formal protests and interventions filed. To protect consumer refund rights while the case is evaluated, the PUCT voted on February 20, 2026, to implement interim rates. These temporary rates took effect in early March, meaning customers will receive a refund if final approved rates are lower than the interim charges.
On March 31, 2026, the State Office of Administrative Hearings (SOAH) granted a joint motion filed by Texas Water Utilities, the Office of Public Utility Counsel (OPUC), and PUCT staff to pause the contested case hearings while those specific parties prepare settlement documents. The customer-intervenors tracking the docket were not parties to the joint motion.
The administrative order requires the utility to file formal status reports every 30 days. The abatement followed an earlier SOAH ruling that struck significant portions of customer-intervenor testimony, which limited the scope of evidence that would have been weighed during a full hearing.
Appointed customer-intervenor representatives Anna Miller and Tyler Croft stated in a formal filing that they did not agree to the settlement terms and will continue to contest the rate hike. Miller and Croft noted that a reduced rate increase is still an increase that imposes additional charges on captive customers. The representatives listed several unresolved factual and legal disputes, including system affordability, customer financial impacts, documentation insufficiency, and the risk of the utility over-recovering or double-recovering capital costs.
In their joint motion, Texas Water Utilities, OPUC, and PUCT staff stated that they have made sufficient progress toward a settlement to justify canceling the scheduled hearings. Representatives for Texas Water Utilities have stated that the requested rate adjustment reflects long-deferred investments required to maintain and improve water and wastewater infrastructure across its state footprint..
Under the active SOAH order, the settling parties will continue assembling their materials for eventual review by the utility commissioners. Intervenor representatives state they intend to preserve all disputed issues for review by the full commission when a final order is considered. As of mid-June 2026, no final order has been issued in the docket.