The Administration & Regulatory Affairs Department (ARA) recommends that City Council adopt an ordinance denying Aqua Texas, Inc.’s (Aqua Texas) application to change rates and maintain current rates in effect for customers within the Houston city limits. Within Houston’s jurisdiction, Aqua Texas provides water service to approximately 93 residential and 2 commercial customers, and wastewater service to approximately 62 commercial customers. State-wide, Aqua Texas serves approximately 76,000 water and 25,300 wastewater customer connections. The City of Houston (City) exercises original jurisdiction over the rates, tariffs, operations, and services of Aqua Texas under the provisions of the Texas Water Code (TWC) for customers inside city limits.
On June 20, 2025, Aqua Texas filed an application to change rates with the City for customers within Houston’s jurisdiction. Aqua Texas filed a similar application with the Public Utility Commission of Texas (PUC or Commission) for customers in unincorporated (environs) areas. The proposed rate change impacts Houston customers served by the Oak Manor, Brittmoore – West by Northwest, Walraven, Summer Lakes Ranch, and The Commons systems. According to the utility’s initial application, Aqua Texas seeks approval of a consolidated statewide tariff and is requesting a total (consolidated system) revenue increase of approximately $17.8 million (water) and $11.4 million (wastewater) for retail customers. The specific rate impact to Houston customers will vary by system, meter size and gallons used (a comparison between current and proposed consolidated rates is attached).
Aqua Texas planned for the proposed rates to go into effect July 25, 2025 — 35 days after Aqua Texas filed its application with the City. However, the City identified certain issues with the application, and the City did not accept the application until Aqua Texas corrected those deficiencies. Aqua Texas proposed a new effective date of September 2, 2025. On August 26, 2025, City Council approved Ordinance No. 2025-699, suspending the effective date of the rate change for 90 days to December 1, 2025. City Council approved the rate suspension to provide the City the time necessary to review the request and prepare a final recommendation for consideration by the Mayor and City Council. The City engaged an outside rate expert to conduct a comprehensive review of the rate application and provide a recommendation regarding the reasonableness of the rate request. During the suspension period, the City also held an informal public hearing on October 27, 2025, to allow ratepayers the opportunity to provide public comment on the proposed rates and service.
Based on the recommendation of the City’s experts, ARA, in consultation with the City Attorney’s Office, recommends that City Council adopt an ordinance (1) denying Aqua Texas’ application to change rates, including the proposed rate increase and (2) maintaining existing rates in effect for Aqua Texas’ Houston customers. City Council must make a final determination regarding the rate request no later than December 1, 2025, otherwise the rate increase will go into effect for Houston customers.
Aqua Texas will likely appeal the City’s decision to the PUC. The City anticipates that the appeal of the City’s decision will be consolidated into the parallel case proceeding at the Commission. The City will participate in the Commission proceeding.
Departmental Approval Authority:
_______________________________________ __________________________________________
Tina Paez, Director Other Authorization
Administration & Regulatory
Affairs Department