Public Utility Commission of Texas

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Establishing a New Water or Sewer Utility

This page lists questions used in determining whether there is a need to establish a new water or sewer utility and, if the need exists, how to do so.

Before bringing water or sewer service to a new development, you must first consider the following questions:

  • Can a reliable source of water and/or sewer service be obtained?
  • Is there water available in the area to serve the establishment?
  • What financial costs and permits are required to build a water system that will supply clean, drinkable water to your customer base reliably and consistently?
  • What financial costs and permits are required for a sewer system that will effectively serve the area and discharge wastes appropriately and will provide a reliable and consistent supply to your customers?
  • Will there be sufficient revenue to maintain the utilities' equipment?
  • Is properly trained staff available to keep the system running?
  • Are rates properly designed to adequately charge for water and/or sewer utility service?

If you determine that you need to set up a new utility, you may wish to contact the Texas Commission on Environmental Quality (TCEQ) to learn which permits and/or approvals are required. TCEQ can also provide the requirements for designing and building a water or sewer system.

If, after contacting the PUC, you believe that you have the resources to establish a successful new water or sewer utility, one option available is to create a sole proprietorship or a for-profit water or sewer utility corporation (called an investor-owned utility, or IOU, under the PUC's rules). Another option is to create a nonprofit water supply or sewer service corporation (WSC). To pursue either of these options, you must:

  • Create a corporation through the Texas Secretary of State's Office.
  • Submit plans, specifications and proof of a reliable water supply for your proposed water system to the TCEQ.
  • Obtain a discharge permit from the TCEQ for the proposed sewer treatment plant or arrange to connect with a neighboring system.
  • Secure funding for the proposed utility.
  • Obtain a CCN delineating the service area.
  • Set up a tariff showing your schedule of rates and service rules.

For information about these utility types and their regulations, see Rules and Guidance for Water Utilities.

Further Guidance

Water: What is My Source

Presents options for determining whether there is an entity that provides retail water or sewer utility service to your area and, if so, who does

How to find a Water Operations Company

Provides instructions for using our database to ascertain whether a water operations company has a current registration.