HB 2712 Texas House · 89th Legislature (2025)

Relating to test years used for ratemaking purposes by certain water and sewer utilities.

HB 2712 establishes new rules for how Texas water and sewer utilities select the "test year" used to calculate rate changes. It requires utilities to choose a 12-month period that includes past, future, or combined data, starts on a calendar/fiscal quarter, and fits within specific timing windows (18 months before to 18 months after filing for rate changes). This affects Class A, B, C, and D water and sewer utilities by standardizing the timeframe for rate calculations. The law mandates that regulators base rates on this selected test year to ensure utilities earn a fair return on their investments while maintaining financial stability. The bill became effective September 1, 2025.

Bill status signed all 5 stages cleared

Introduction

Mar 2025

Committee Review

May 2025

House Passage

May 2025

Senate Passage

May 2025

Signed into Law

Jun 2025

Introduced Mar 18, 2025 Signed Jun 20, 2025

Maddy AI version diff · 2 comparisons

What changed between versions

Engrossed → Enrolled · 5 edits · May 31, 2025

MODERATE

This bill establishes a new test year framework for water and sewer utility ratemaking, requiring utilities to select test years that include historic, future, or combined data within specific timeframes relative to rate filing. It also updates definitions for net income, depreciation, and construction work in progress, while adding new reporting requirements for utilities using projected future test years. The changes aim to improve rate accuracy and financial integrity while allowing municipalities to use alternative ratemaking methodologies.

Scope change

The bill applies to Class A, B, C, and D water and sewer utilities and expands the regulatory framework to include future test years with specific reporting requirements.

REQUIREMENT

New Section 13.1831 establishes test year selection criteria requiring utilities to choose consecutive 12-month periods beginning no later than 18 months after filing rate change intent and ending no earlier than 18 months before filing.

Utilities using fully projected future test years must file statements within 30 days after the last quarter of the test year describing actual results and providing data to demonstrate estimate accuracy.

DEFINITION

Section 13.184 was amended to clarify net income calculation and add subsections for facilities projected to be in service through the end of the test year.

Section 13.002(22) was repealed as part of the legislative cleanup.

TIMELINE

Public Utility Commission must adopt implementing rules by September 1, 2026, with the Act taking effect September 1, 2025.

Floor votes · Senate May 23, 2025 · House May 6, 2025

How they voted

25–5

Passed

Total votes 30

May 23, 2025

D Democratic10

9 Yea 1 Nay

90% Yea

R Republican20

16 Yea 4 Nay

80% Yea

Vote distribution

All Yea All Nay Mixed No data

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 31, 2025

Upper · Passed

Signed in the Senate

upper

May 30, 2025

Lower · Passed

Signed in the House

lower

May 28, 2025

Introduced

House concurs in Senate amendment(s)-reported

upper

May 28, 2025

Introduced

Text of Senate Amendment(s)

lower

May 28, 2025

Introduced

House concurs in Senate amendment(s)

lower

May 24, 2025

Introduced

Senate Amendments Analysis distributed

lower

May 24, 2025

Introduced

Senate Amendments distributed

lower

May 24, 2025

Lower · Passed

Senate passage as amended reported

lower

May 23, 2025

Upper · Passed

Passed

upper

May 23, 2025

Upper · Passed

Passed to 3rd reading as amended

upper

May 23, 2025

Upper · Passed

Amended

upper

May 23, 2025

Introduced

Amendment(s) offered

upper

May 13, 2025

Upper · Passed

Committee report printed and distributed

upper

May 13, 2025

Upper · Passed

Reported favorably w/o amendments

upper

May 12, 2025

Upper · Passed

Vote taken in committee

upper

May 7, 2025

Committee

Referred to Water, Agriculture, & Rural Affairs

upper

May 7, 2025

Introduced

Read first time

upper

May 6, 2025

Introduced

Received from the House

upper

May 6, 2025

Lower · Passed

Passed

lower

May 5, 2025

Lower · Passed

Passed to engrossment as amended

lower

May 5, 2025

Lower · Passed

Amended

lower

Apr 22, 2025

Lower · Passed

Committee report sent to Calendars

lower

Apr 21, 2025

Lower · Passed

Committee report distributed

lower

Apr 9, 2025

Lower · Passed

Reported favorably w/o amendment(s)

lower

Apr 2, 2025

Lower · Passed

Left pending in committee

lower

Apr 2, 2025

Lower · Passed

Testimony taken/registration(s) recorded in committee

lower

Mar 18, 2025

Committee

Referred to Natural Resources

lower

Mar 18, 2025

Introduced

Read first time

lower

2 primary · 0 co-sponsors