Water Rate Hike Challenged:
Expert Calls Aqua Texas Filing 'Unjustified' | | |
A nationally recognized utility rate expert testified on behalf of the Watershed Association, Hays County, and the City of Woodcreek that Aqua Texas's application for a sweeping rate increase is so poorly documented and legally deficient that it cannot be reliably reviewed, and should be sent back to the company before any new rates take effect.
Aqua Texas is seeking to consolidate its roughly 400 separate water and wastewater systems into a single statewide water rate and a single statewide wastewater rate. The proposed rate change would increase water revenues by approximately $17.8 million per year, a 25% increase, and wastewater revenues by approximately $11.3 million per year, a 47% increase.
William Stannard, Chair Emeritus and Executive Vice President of Raftelis Financial Consultants, Inc., filed his prefiled direct testimony on February 11, 2026, before the State Office of Administrative Hearings (SOAH Docket No. 473-26-05377). Stannard, who has more than 40 years of experience in water and wastewater utility rate-setting, presented five central findings challenging the validity of Aqua Texas's proposed rate increases.
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Finding 1: The Application Is Disorganized and Incomplete
Stannard testified that Aqua's supporting materials are so poorly organized that a reliable, independent review is impossible. Rather than providing a clear asset register or continuing property record, Aqua initially delivered an external hard drive containing 224 gigabytes of unsearchable PDF scans. Later responses produced an Excel spreadsheet with 70,046 transactions and a large online database (Opus2) containing hundreds of thousands of invoices arranged without logical structure or project descriptions. Stannard noted that Aqua has now been criticized for this same organizational failure in two prior regulatory proceedings and has made no meaningful improvement.
Finding 2: The Rate Base Is Not Adequately Supported
Stannard found that Aqua failed to provide documentation sufficient to verify the assets it claims in its rate base. Focusing on Woodcreek utility locations with a claimed original cost of approximately $41.8 million, he found that a high number of work orders and dollar amounts were missing from the database, and that matching invoices to specific asset costs was "unreasonably time-consuming if not virtually impossible."
Finding 3: Aqua Is Improperly Capitalizing Routine Maintenance Costs
Perhaps the most significant finding involves Aqua's capitalization practices. Stannard testified that Aqua has a pattern of recording ordinary operations and maintenance (O&M) expenses, such as pipe repairs using clamps and sleeves, as capital investments. This matters enormously because only capital investments, not routine expenses, can be included in the rate base on which Aqua earns a profit for shareholders. Stannard identified 29 of the same invoices he had flagged as improperly capitalized in Aqua's prior System Improvement Charge (SIC) case, a case the Commission ultimately denied in 2025. Those same costs have now been re-uploaded into Aqua's current rate base application without any additional justification.
Stannard noted that Aqua never attempted to demonstrate how the maintenance expenses were part of any larger capital project, as Aqua claimed they were. But even if the company had followed through with that argument, he maintained, the expenses simply should not be capitalized under industry-standard practices and guidelines. If the Commission were to approve this inappropriate categorization by Aqua, it would be signing off on a disproportionately high profit for the company to the detriment of ratepayers.
Finding 4: Aqua's Proposed Rate Structure Violates Cost-of-Service Principles
Stannard also challenged the design of Aqua's proposed residential and commercial water rates. Aqua proposes a monthly fixed customer charge of $34.90 for standard meter customers, but Stannard's analysis, drawn directly from Aqua's own cost-of-service study, shows the true cost of providing that fixed service is only $20.94. The inflated fixed charge would generate approximately $14.97 million per year in excess fixed revenue collections, while simultaneously reducing per-gallon consumption charges by roughly 29%. Lower consumption charges undermine price signals for water conservation, running counter to sound utility and environmental policy and further depleting the state’s limited water resources in times of severe drought.
Finding 5: Aqua Is Seeking to Recover Costs From Its Failed SIC Case
Stannard testified that Aqua has improperly included in this rate case expenditures from its failed 2025 SIC case — costs that were never reviewed for prudency and that the Commission explicitly stated would be examined in the next base-rate proceeding. It is unfair for ratepayers to cover the costs of Aqua’s poorly organized SIC application, which wasted the public’s time and money and was ultimately denied by the Commission. Conclusion: Return the Application
Stannard concluded that because the deficiencies are so widespread and interrelated, it is impossible to calculate what Aqua's rates should properly be at this time. He recommended that the Commission require Aqua to resubmit a fully documented application and that if interim rates are imposed before a final decision, customers must be entitled to a refund.
Aqua’s proposed rates are set to take effect March 9, 2026, and a hearing on the merits in this case is scheduled for April 21-23, 2026, via Zoom at SOAH. After the hearing, the Administrative Law Judge will publish a Proposal for Decision, which the Commission will consider and decide upon at an open meeting.
| | | | Public Utility Commission Grants Interim Rate Protections for Aqua Texas Customers | |
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The PUC Commissioners voted on February 20th to grant Commission Staff's appeal in the Aqua Texas rate case (Docket No. 58124), overturning the prior administrative law judge's order denying interim rates. The Watershed Association, Hays County, and the City of Woodcreek were among the interveners that supported this outcome, and our counsel, Lauren Ice, presented oral argument to the Commission this morning.
What does this mean for you?
Aqua Texas is seeking a sweeping rate increase, a 25% increase in water revenues, and a 47% increase in wastewater revenues, affecting over 100,000 customer connections across Texas. Aqua's proposed rates were set to take effect on March 9th. Without interim rate protections, those rates could have gone into effect without any guarantee of a refund if the Commission ultimately determined they were too high.
By granting today's appeal, the PUC has established that the rates Aqua collects beginning March 9th will be considered interim rates, meaning if the Commission's final order sets lower rates than what Aqua proposed, customers will be entitled to refunds of the difference.
Why this matters:
As we shared in our last newsletter, a nationally recognized rate expert testified that Aqua's application is so poorly documented that a reliable independent review is nearly impossible. Staff and intervener testimony have recommended revenue requirements well below what Aqua is requesting. Today's ruling ensures that ratepayers are protected while that careful review continues.
The hearing on the merits is scheduled for April 21–23, 2026, before the State Office of Administrative Hearings (SOAH). We will continue to fight for a fair outcome for the communities we serve.
| | | | Barton Springs Edwards Aquifer Conservation District (BSEACD) Fines Aqua Texas $70k for Drought Violations | | |
The Barton Springs Edwards Aquifer Conservation District (BSEACD) recently voted unanimously to fine Aqua Texas more than $70,000 after the utility repeatedly exceeded groundwater pumping limits during a declared drought.
The violations occurred across several Aqua Texas systems, including Onion Creek Meadows, Shady Hollow Estates, and the Bliss Spillar systems, drawing from the Trinity Aquifer. Investigators found that pumping exceeded drought limits in multiple months, sometimes by significant margins.
Under district rules, enforcement is triggered when a system exceeds its monthly drought pumping limit by 5% or more on two occasions within six months. Once that threshold is crossed, staff may recommend penalties based on the severity of the violations, past compliance history, and whether steps were taken to address the issue.
In this case, regulators determined that repeated over-pumping warranted enforcement. The final penalties were approved as follows:
- $38,400 for the Shady Hollow system
- $20,000 for Onion Creek Meadows
- $12,000 for Bliss Spillar (Middle Trinity)
- $9,000 for Bliss Spillar (Lower Trinity)
District officials noted that some systems had a history of compliance issues, which contributed to higher penalty ranges.
The case highlights the importance of groundwater management during drought conditions, particularly in regions that rely on the Edwards and Trinity aquifer systems for drinking water and ecosystem health.
| | Water in the Desert: What West Texas Is Teaching Us About the Future of Our Watersheds | | |
Back in February, we sought out knowledge in the far reaches of West Texas. The Water in the Desert conference at Sul Ross University brought together nearly 350 water professionals and experts, as well as land managers, conservation lawyers, and policymakers from across the state. It was also the first major public event of the newly launched Meadows Research Institute for West Texas Water, an institute born directly out of the momentum of the first Water in the Desert gathering in 2024.
This year, the Watershed Association and several of our partners from the Texas Hill Country showed up strongly to represent our approach to land management and policy work as part of a broader effort to steward and rewild watersheds in arid climates.
Over multiple days, we attended a wide range of panels and conversations, some deeply familiar and others entirely new. Many of the leading legislators and county judges who have driven major water-protection efforts across the state were present to share pivotal moments in their careers, especially when they faced difficult decisions. Former head of the House Natural Resources Committee, Tracy O. King, described the value of institutional memory during watershed moments.
King walked the audience through the political history of Texas groundwater districts, including why so many were formed as single-county entities even when aquifers clearly crossed county lines. His answer was not romantic. It was politics. That was what could pass. He also pointed to a lesson learned over time: a groundwater district with no money and no staff can be nearly as ineffective as having no district at all. Recognizing that history helps the current generation think more honestly about what must change next.
Local hero Robert Mace presented on the depth, or lack thereof, of Texas water law. He pushed the audience to think about “fair share” and correlative rights. In plain terms, if groundwater is privately owned, should every landowner have a more clearly defined share of the common aquifer rather than living under a race-to-pump system? In the context of current East Texas conflicts and growing legislative attention, the session did not feel abstract. It felt like a preview of the next major fight in Texas water law.
One of the most compelling threads running through many presentations was the emerging threat of data centers. A panel titled “The Data Deficit on Water Use in Data Centers”, featuring our own Hays Trinity Groundwater Conservation District board member and local hydrogeologist Marcus Gary, was intended to clarify how much water data centers typically use. Instead, it underscored how difficult it is to obtain reliable information about the speculative tech industry and how obfuscation has become standard practice in these developments. This lack of transparency has serious implications for regional planning, water planning, power planning, and local governance. We received valuable advice from county judges and commissioners with direct experience confronting data center proposals, whether to offer incentives, how tax abatements work, and how to assert limited local powers at the county and city levels.
The final day of the conference was defined by a morning field trip. The visit took place on Mimms ranch outside Marfa, designed to demonstrate rangeland grazing techniques that restore watersheds, reduce erosion, and improve the sheeting of water across the landscape. We have much to learn from these climates, even more extreme than ours in Central Texas.
We left the conference with strong connections across the state, deeper relationships with our colleagues in the water world, and a clear sense that a rising tide of momentum is building toward meaningful groundwater policy reform for generations to come. Together with Project Bedrock’s Elizabeth McGreevey and Jenna Walker from the Meadows Center, we significantly expanded our network and vision for a thriving Hill Country.
| | Volunteers Keep Watch on Wimberley Waters: Community Science Helps Protect the Blanco River and Cypress Creek | | |
Every month, a small group of dedicated volunteers walks down to Cypress Creek and the Blanco River carrying sampling bottles. Their mission is simple but vital: measure bacteria levels and track the health of the waters that define life in Wimberley.
On March 9th, 2026, volunteers with the Wimberley Water Advisory Group (WAG) collected water samples from monitoring sites along Cypress Creek and the Blanco River.
At the time of sampling:
- Jacob’s Well flow: 0.4 cubic feet per second
- Blanco River flow at Fischer Store Road: 3.3 cubic feet per second
Results from the laboratory analysis showed generally low E. coli concentrations
across most monitoring sites, indicating good water quality for early spring conditions.
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Two sites recorded NR (no reading) due to sampling limitations.
Most results remain well below EPA concern levels, although the 125 colonies detected below the Square bridge illustrate how bacteria levels can increase downstream, where recreation activity, wildlife, pets, and runoff are more concentrated.
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A 40-Year Community Science Collaboration
The Wimberley Water Advisory Group's bacteria monitoring program began in 1984, created to help ensure safe swimming conditions in Cypress Creek and the Blanco River.
Today, the program is managed by the Watershed Association, but its success still depends on the dedication of local volunteers who collect water samples each month.
Those samples are analyzed by the Edwards Aquifer Research and Data Center (EARDC) laboratory at Texas State University, ensuring results meet Clean Water Act monitoring standards.
This partnership between community volunteers and professional scientists allows Wimberley to maintain one of the longest continuous citizen-science water quality datasets in the Texas Hill Country.
The program was initiated and guided for many years by Pete Anderson, whose leadership helped establish the sampling network still used today.
Equally important behind the scenes is Dorothy Gumbert, who has carefully managed and maintained the monitoring data for decades, ensuring the information collected by volunteers remains organized and valuable for understanding long-term trends.
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Land & Water in our Valley:
Understanding the Current State of Hill Country Water
Water shapes everything here in the Hill Country: our landscapes, our livelihoods, and our sense of home. This session invites our community into a grounded, big-picture conversation about where our water comes from, how it’s changing, and what those changes mean for the Wimberley Valley right now.
This Land Water Connection offering will ground participants in the current reality of water in the Hill Country, from drought conditions and aquifer health to the fragile thresholds that sustain our springs. We’ll explore the systems and forces shaping our future, including rapid development, governance challenges, and the growing pressure of corporate water interests, specifically the role of Aqua Texas and the ongoing rate case. Together, we’ll unpack what’s at stake, what may surprise you about how our water system works, and where the greatest risks are unfolding. We’ll close with tangible ways to engage, from everyday stewardship to collective policy action, so each of us can play a role in protecting water for the long term.
The community is encouraged to bring questions. We will take a deep dive into understanding our Watershed and leave you with a clear path to stewardship in our Valley.
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Join us for Volunteer Days on the first Friday of every month at Cypress Creek Nature Preserve!
Most workdays focus on ongoing habitat restoration efforts, including removing invasive plants, girdling invasive trees, trimming invasives away from native vegetation, and planting native seeds.
Please come prepared for a bit of adventure! We’ll be hiking through thick brush!
Volunteer Requirements
- Must be 18 years or older
- Comfortable with physical activity and lifting 10+ pounds
- Ready to get a little dirty
What to Bring:
- Comfortable clothing, long pants, and sturdy shoes
- Work gloves (extras available)
- Water bottle
Be sure to keep an eye on the weather, and feel free to share this invitation with anyone who may be interested! Together, we can help protect and restore the natural beauty of Cypress Creek.
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Shop the new collection of Watershed Merch!
Every purchase supports the protection of Texas land and water, helping sustain the springs, creeks, and rivers that define the Hill Country and nourish our communities. Your contribution fuels education, art, conservation science, and the ongoing work to safeguard the places we all love.
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