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.
| | | | Interim Rates Appeal Heads to PUC Commissioners | |
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At their regular meeting at 10 AM on Friday, February 20th, the PUC Commissioners will consider an appeal concerning the request to set interim rates. Counsel representing the Watershed Association, Hays County, and the City of Woodcreek will present arguments in support of interim rates. This would ensure that if the rates ultimately established by the Commission are lower than Aqua’s proposed rates, customers would be entitled to refunds.
Only official parties to the case may provide comments or arguments during the meeting. However, members of the public are encouraged to attend in person or follow the proceedings via the online livestream. Aqua’s interim rates are listed as Item #7 on the agenda.
**Texas Public Utility Commission, Docket No. 58124**
Friday, February 20, 2026, 10:00 A.M.
1601 Congress Ave., Austin, TX 78701
Barbara Jordan State Office Building, Room 2.035
| | | | Texas Groundwater at a Crossroads: 
Hearing Reveals Aquifer Decline, Groundwater District Struggles, and the Search for Solutions | | |
The House Natural Resources Committee (HNRC) hearing on February 10th took place over several hours and revealed mounting threats facing Texas groundwater as investor-backed water ventures and massive corporate consolidation collide with strained local management systems. Under Chairman Cody Harris's leadership, the standing-room-only hearing examined whether Texas's groundwater framework can protect local water security while accommodating explosive growth.
The hearing followed Harris's groundbreaking July 2025 HNRC groundwater hearing that first brought widespread attention to emerging crises. "I think that we as a legislature are arriving at the apex of a discussion that has needed to happen for decades now," Harris told the packed room, setting an urgent tone for what he described as the beginning of "several hearings throughout the interim to really dive in on all aspects of water policy."
Corporate Consolidation Accelerates
The scale of corporate consolidation became starkly apparent through recent developments. Dallas businessman Kyle Bass's controversial plan to pump billions of gallons from East Texas through 43 high-capacity wells, ultimately blocked after fierce opposition and litigation, exemplifies speculative investor projects threatening rural communities.
Even more significantly, American Water Works Company announced in October 2025 a $40 billion merger to acquire Essential Utilities, the parent company of Aqua Texas. Approved by shareholders in February 2026, the deal creates a $63 billion enterprise value utility serving 4.7 million connections across 17 states when it closes in early 2027, underscoring increasing corporate control over Texas water infrastructure precisely when local groundwater districts struggle to fulfill regulatory responsibilities.
Hays County Crisis: A District on the Brink
The hearing's most urgent testimony for the Wimberley community centered on Hays County, where the crisis has reached a breaking point. Dr. Marcus Gary, hydrogeologist serving on the Hays Trinity Groundwater Conservation District board, reported that Jacob's Well Spring has rarely flowed since 2021, and district-wide water levels have dropped 40 feet below 2008 baselines, already exceeding the district's Desired Future Condition set for 2060, decades ahead of schedule. Most alarming is the speed of this collapse: in 2015, the wettest year on record in Texas, water levels were actually above that baseline, meaning the entire 40-foot decline has occurred in just the last ten years.
This is happening even though current pumping remains below permitted levels, exposing a dangerous gap between what the models said was safe to extract and what the aquifer can actually sustain. "The observed data do not reflect the model predictions, bringing into question how much water can be sustainably pumped from this region," warned Gary, a warning that cuts to the heart of how Texas plans for groundwater.
Hays Trinity Groundwater Conservation District attorney Deborah Trejo revealed the institutional breakdown: "Thirty to fifty percent of the district's budget is being spent on litigation", primarily defending against challenges from Aqua Texas and other large water users. The Hays Trinity GCD, created with severely limited revenue authority under its 2001 enabling legislation, now faces insolvency. Unlike most districts, it cannot levy production fees and relies on two capped fees that haven't kept pace with expanded responsibilities.
"Groundwater conservation districts with small staffs and small budgets now face large-scale demands from often for-profit entities seeking significant volumes of water," Trejo explained. The district lacks the legal teams and technical staff that state agencies possess, forcing them to divert scarce resources from monitoring and management to courtroom battles with well-funded corporations.
The Neches & Trinity Valleys Groundwater Conservation District in East Texas faces similar litigation pressures, with suits in Cherokee and Anderson Counties recently dismissed, though appeals remain pending, illustrating how excessive lawsuits drain district resources statewide.
Statewide Declines and Expert Testimony
Texas Water Development Board executives Brian McMath and John Dubnick presented heat maps showing dramatic water level declines from 1990 to 2023, with the most striking drops in South Central Texas (up to 250 feet in the confined Carrizo-Wilcox Aquifer) and North Central Texas in the Trinity Aquifer. East Texas water well driller Mark Calicut documented shocking field data: Cherokee County wells at 450 feet that "overnight went dry," requiring new wells drilled to 737 and 1,000 feet.
Testimony also came from TCEQ's Kim Nigrin, Edwards Aquifer Authority General Manager Roland Ruiz, consulting hydrogeologists William Hutchinson and Wade Oliver, and the Texas Alliance of Groundwater Districts.
Leah Mortensen, testifying for the Environmental Defense Fund, framed the challenge: "Aquifers are infrastructure, and we need to treat and protect them as such." She advocated making the $7.5 million groundwater research grant program recurring rather than one-time funding, investing in improved groundwater availability models, and providing dedicated funding for the joint planning process that GMAs currently must self-fund.
The Path Forward
Committee members, Representatives Buckley, Ashby, Zwiener, Garcia, Villalobos, Bell, and Fairly, demonstrated exceptional engagement, pressing witnesses on managing aquifers when unregulated "white areas" impact neighboring districts, whether export fees adequately fund mitigation, and what happens when districts become insolvent.
Harris announced his intention to make data center water usage a specific interim charge with dedicated hearings. Committee members expressed clear determination to advance comprehensive groundwater reforms in the 2027 legislative session, reforms that would modernize Texas's framework before more districts reach Hays County's crisis point and before investor-driven consolidation further threatens local water security.
| | Wimberley Addresses Water Challenges Through 
Comprehensive Resiliency Plan | | |
The Wimberley Resilient Communities Program (RCP) is a comprehensive planning initiative funded by the Texas General Land Office to help the City of Wimberley prepare for future challenges while preserving its unique character. The plan focuses on evaluating development regulations to better protect against natural hazards, incorporating extensive community input, and establishing resiliency goals and objectives. Community survey results showed over 80% of respondents identified Wimberley's environmental resources and natural beauty as critical assets requiring protection.
Over 70 residents attended the recent town hall at the Wimberley Community Center to learn more about the Comprehensive Plan. The Watershed Association and Nick Dornak of Doucet Engineering answered questions in an open forum and incorporated comments and community feedback into the ongoing study.
The One Water Study, a significant component of the RCP, is designed to help the city better understand its water source challenges and what future scenarios may look like. The key findings tell a clear story: the valley's water system is fragmented and vulnerable; groundwater alone cannot meet current and future demand; and diversification through rainwater collection and on-site reuse is essential. Rainwater collection and conservation-based development are key to the One Water Plan and the city's broader resiliency strategy, providing sustainable ways to reduce groundwater use and support responsible growth.
Among the recommendations, several stand out as priorities. Protecting the Middle Trinity Aquifer is foundational through multiple strategies, including curtailment and enforcement of over-pumping, while aligning land-use practices with water availability. By adopting a conservation mindset and engaging the community, particularly around outdoor water use during the summer months, we can begin to stabilize groundwater supplies.
The study also explores alternative water supply sources, outlining their benefits and limitations, and provides an overview of potential future infrastructure investments. Ultimately, success will depend on stronger regional collaboration among public agencies, private entities, and the community.
The city is currently in the preliminary plan revision phase.

Residents are encouraged to submit comments and feedback as the city works toward final approval of the plan. Community input is essential to ensuring the plan reflects the values and priorities of Wimberley residents while building resilience for future generations.
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Community Pushback Prevails:
Data Center Rezoning Voted Down (For Now)
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San Marcos City Council met on Tuesday, February 17th, and saw a record turnout for a contentious vote on whether to amend the 'Preferred Scenario Map' of the city's Comprehensive Plan, potentially rezoning a parcel from 'conservation cluster' classification to 'light industrial' for a new data center.
Over five hundred residents took over the outside lawn, grilled hot dogs, painted signs, and set up speaker systems to broadcast the almost 8 hours of public comments, which were overwhelmingly opposed to the project. After nearly a year of making its way back and forth from Planning and Zoning to City Council, it is clear that local leaders remain dissatisfied with the unanswered questions at the core of the issue.
Developer John Mayberry, of Highlander LLC, claimed that since last summer, they had an existing water permit, which was recently debunked by their water provider as being 'for residential, not industrial' in a public hearing last month. Council raised concerns about the Water/Energy nexus, a notoriously gray area in the data in Texas.
Given that the project would use 2.5x the electricity every day as the whole City of San Marcos during their peak summertime use, and that power requires significant amounts of fresh water to produce, the Council voted down rezoning.
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Amplify Austin Day takes place March 4th and 5th, but you don’t have to wait to make an impact. Early Giving is now open!
We’re excited to share that every dollar donated, up to the first $20,000, will be matched dollar for dollar by a generous donor, doubling the impact of each contribution!
Visit the link below to give early and learn more about our 2026 goals, including Watershed policy, education, and ongoing initiatives to protect our water resources.
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|   Join us for a Volunteer Day at Cypress Creek Preserve. We will be clearing brush, making trails, and planting seeds. We hope to see you there!
Please bring your work shoes, a hat, and a water bottle. | |
Feb 20, 2026 08:00am - Feb 20, 2026 10:00am
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Cypress Creek Preserve
501 Old Kyle Road, Wimberley, TX 78676
View on map
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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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