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Establishing a New Water Utility

Basic steps to follow to determine whether there is a need to establish a new water or sewer utility and, if so, how to do so.

To bring water service to a new development, you must first overcome a number of challenges. Among them are:

  • Obtaining a reliable source of water
  • Building a system that will supply clean, drinkable water to your customer base reliably and consistently
  • Ensuring sufficient revenue to maintain equipment
  • Having properly trained staff available to keep the system running

If you think you need to set up a new utility, start by reading The Feasibility of Regionalizing Water and Wastewater Utilities (TCEQ publication RG-357). If, after working through this guidance, you believe that you have the resources to establish a successful new water utility, one option is to create a sole proprietership or a for-profit water or sewer utility corporation (called an investor-owned utility, or IOU, under TCEQ rules). Another is to create a nonprofit water supply or sewer service corporation (WSC). To pursue either of these options, you must:

  1. Work through the Secretary of State's Office to create a corporation.
  2. Submit to the TCEQ the plans and specifications along with proof of a reliable water supply for your proposed water system.
  3. Obtain a discharge permit for the proposed wastewater treatment plant or arrange to connect with a neighboring system.
  4. Secure funding for the proposed utility.
  5. Obtain a CCN, which delineates the service area.
  6. Set up a tariff, which is your schedule of rates and service rules.

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

Staff Contact

If you have any questions about setting up a water utility you may e-mail your questions or comments to You can also call our main Water Supply Division line at 512-239-4691.