Relating to rates for water or sewer utility service provided by certain municipally owned utilities.

HB 2506 modifies Texas Water Code rules for city-owned water and sewer utilities. It requires these utilities (in cities with over 1 million residents) to follow specific rate increase procedures when raising prices during drought contingency plans. This applies to residents living outside the city limits but served by the utility. The bill classifies such rate increases as "Class A" for regulatory hearings under water code rules. The law applies only to rate proceedings starting on or after September 1, 2025.