Skip to main content
PUCT seal
Public Utility Commission of Texas
Page breadcrumbs and sidebar menu launch button
Skip Navigation LinksFaucetFacts CCNs
PUCT Division of Utility Outreach (DUO) page content

Certificates of Convenience & Necessity


A CCN gives a retail public utility the exclusive right to provide retail water and sewer utility service to an identified geographic area. The Texas Water Code and PUC's rules refer to this as the "certificated service area."


Who needs a CCN?

Investor-owned utilities (IOUs), Water Supply Corporations (WSCs), and affected counties are required to have a CCN.

While some municipalities and districts choose to obtain a CCN, they are not required to have one unless the district or municipality seeks to provide retail water or sewer service within an existing CCN.

An exempt utility is a water utility that provides retail water to less than 15 potential connections for compensation and that is not located in another utility's CCN service area. Exempt utilities may register with the PUC as an "Exempt Utility".


Exempt Utility Registration

Exempt utilities may register with the PUC.




The Texas Water Code, Chapter 13, and the Public Utility Commission's rules in 16 Texas Administrative Code, Chapter 24, specify the following nine criteria that the PUC must consider when granting or amending a CCN:

  1. The adequacy of service currently provided to the requested area;
  2. The need for additional service in the requested area;
  3. The effect of the granting of a certificate or an amendment;
  4. The ability of the applicant to provide adequate service;
  5. The feasibility of obtaining service from an adjacent retail public utility;
  6. The financial ability of the applicant to pay for the facilities necessary to provide continuous and adequate service;
  7. Environmental integrity;
  8. The probable improvement of service or lowering of cost to consumers; and
  9. The effect on the land to be included in the certificated area.

Opting Out

Landowners with at least 25 acres that are wholly or partially located within the proposed CCN area may elect to exclude (opt out) some or all of their property from the requested area. By providing written notice to the Commission before the 30th day after the date the landowner receives notice of an application for a CCN or for a CCN amendment.

Expedited Releases

A landowner may file a petition for streamlined expedited release of the subject property from an existing CCN if:

  1. The subject property is owned by the same property owner(s), whether through one deed or multiple deeds;
  2. The deed or deeds total at least 25 contiguous acres (not all property needs to be within the CCN as long as the total acreage is at least 25 acres); and
  3. The subject property is not receiving water or sewer service; and
  4. The subject property is located in the following counties: Atascosa, Bandera, Bastrop, Bexar, Blanco, Brazoria, Burnet, Caldwell, Chambers, Collin, Comal, Dallas, Denton, Ellis, Fort Bend, Galveston, Guadalupe, Harris, Hays, Johnson, Kaufman, Kendall, Liberty, Montgomery, Parker, Rockwall, Smith, Tarrant, Travis, Waller, Williamson, Wilson, or Wise County.



The PUC's CCN Viewer enables users to view, print and download retail water and sewer utility CCN service area boundaries. Additionally, the viewer allows users to determine if there are existing retail utility providers that hold a CCN for a particular site or area.

To help identify the water and/or sewer CCN holders in a particular area, please email the PUC's mapping staff at


Sale, Transfer, or Merger (STM)

House Bill 3542 of the 86th Texas Legislature created an optional and voluntary valuation appraisal process to determine the asset value ‐ fair market value ‐ of a water and sewer retail public utility's facilities when being acquired by an IOU with 2,300 or more connections


STM Applications

IOUs, WSCs, and political subdivisions holding a CCN must first submit an application for Sale, Transfer, or Merger (STM) of a retail public utility.



Economic Valuation Experts

The PUC maintains a list of qualified appraisers to serve as Economic Valuation Experts (EVE) to conduct economic evaluations of a retail public utility before an STM application is filed by an IOU. Qualified appraisers who are interested in joining the pool can file a resume and a letter of interest in the PUC's Interchange under Project 49818.



STM Application Qualifications

Financial Capabilities

The PUC requires that a person or entity purchasing or acquiring the water or sewer system, or retail public utility demonstrate adequate financial, managerial, and technical capability for providing continuous and adequate service to the requested area and any areas currently certificated to the person or entity.

Filed Rate Doctrine

The Filed rate doctrine in Texas allows water and sewer utilities to request use of pre-approved rates from their existing tariff for newly acquired systems. This principle fosters fairness, transparency, and regulatory compliance in the water and sewer utility sector, benefiting service providers and consumers. The Filed Rate Doctrine was added to the Texas Water Code (TWC) §13.3011 by the 87th Legislative Session under House Bill 1484. The Public Utility Commission of Texas (PUCT) is undergoing rulemaking for the implementation of the statute.

Financial Assurance

If the person or entity purchasing or acquiring the water or sewer system cannot demonstrate adequate financial capability, the PUC may require that the person or entity provide a bond or other financial assurance in a form and in the amount specified by the PUC (typically a bond) to ensure continuous and adequate utility service is provided.

Sale of a Municipally Owned Utility

The sale of a municipally owned retail public utility in Texas is subject to the regulations set forth in Texas Government Code, §1502.055, and additional language added by House Bill 3717 enacted by the 87th Texas Legislature. Typically, an election is required to authorize the sale of a municipal retail water or sewer utility system. However, there is an exception if the Texas Commission on Environmental Quality (TCEQ) issues a notice of violation to the municipally owned utility, and the municipality's governing body officially determines the municipality lacks the financial or technical capacity to restore the system to compliance. In such cases, an election may not be mandatory, and the governing body of the municipality can authorize the sale of its retail public utility system.


Additional Pages