Relating to the structuring of water rates by retail public utilities to promote water conservation; authorizing a fee.

HB 1424 allows Texas municipalities and water utilities to implement tiered water rates where customers using more water pay higher costs per unit, directly affecting residential and commercial water users. It authorizes utilities to establish an "excessive use fee" for customers whose consumption exceeds a set percentage of typical users in their area. The bill amends local government and water codes to require these rate structures promote conservation, with provisions applying to retail public utilities not covered under existing rules. The policy change takes effect September 1, 2025, aiming to incentivize reduced water usage through pricing mechanisms.