According to the Legislative Budget Board, SB 2662 would result in a negative fiscal impact of approximately $878,172 to General Revenue-related funds over the 2026–2027 biennium​. The bill does not itself appropriate money but could serve as a legal basis for future appropriations necessary to implement its requirements.

The primary fiscal impact arises from new duties placed on the Public Utility Commission of Texas (PUC), which would now be responsible for collecting, storing, and enforcing drought contingency plans (DCPs) from all investor-owned water utilities, regardless of size. This expands the PUC’s oversight and enforcement obligations. To meet the increased workload, the agency would require three additional full-time employees: an Attorney III–IV for compliance and enforcement, a Program Specialist VI–VII for outreach and support, and shared staffing between an attorney and engineer for contested casework related to customer complaints. Additional costs include payroll contributions, travel, other operating expenses, and minor IT expenditures estimated at $8,100 annually​.

Meanwhile, the Texas Water Development Board (TWDB) and the Texas Commission on Environmental Quality (TCEQ), which would jointly update model DCP programs under the bill, do not anticipate significant fiscal impacts from their responsibilities​. Local governments also are not expected to experience significant financial burdens as a result of the bill.

SB 2662 seeks to strengthen drought management among investor-owned water and sewer utilities (IOUs) by requiring these utilities to file their drought contingency plans (DCPs) with the Public Utility Commission of Texas (PUC) as part of their tariff filings. The bill aims to give IOUs the legal authority to enforce water use restrictions during droughts, including the ability to fine customers, impose surcharges, restrict service, or even discontinue service altogether. It also expands the role of the PUC in regulating and overseeing drought plan compliance and requires the PUC, Texas Commission on Environmental Quality (TCEQ), and the Texas Water Development Board (TWDB) to update model DCPs every five years​.

While the bill addresses a real and growing concern about water resource management during times of drought, it substantially conflicts with key liberty principles, particularly Limited Government, Individual Liberty, and Free Enterprise. The bill notably expands the size and regulatory scope of state government by granting new enforcement authority to the PUC, requiring the hiring of three new full-time employees, and creating a projected negative fiscal impact of $878,172 to General Revenue in the next biennium​. This increase in government power and taxpayer burden is not incidental — it is core to the bill’s structure.

Moreover, SB 2662 significantly increases the regulatory burden on private utilities and individual ratepayers. Customers could face fines or lose access to essential water service for failing to comply with drought restrictions, even if they have no realistic alternatives. The ability for utilities to disconnect service based on noncompliance with water use mandates presents serious threats to individual property rights and access to essential services. These measures prioritize regulatory control over the protection of individual liberty and private enterprise.

While specific amendments could potentially make the bill more acceptable — such as adding procedural safeguards before service disconnection, limiting the PUC’s new enforcement powers, introducing sunset provisions for the new authority, and strengthening due process rights for ratepayers — the current bill cannot be supported without such significant revisions. If these or similar amendments are adopted, the legislation may warrant reconsideration at final passage. Until then, however, SB 2662 represents an unacceptable expansion of government authority at the expense of taxpayer resources, private property rights, and individual liberty. Texas Policy Research recommends that state lawmakers vote NO on SB 2662, unless amended as described above.

• The bill gives private water utilities the explicit power to penalize or cut off water service if customers do not comply with drought restrictions. Water is an essential service, and the threat of disconnection—even during a drought—raises serious concerns about individual liberty, particularly for vulnerable populations. Customers could be punished without strong procedural safeguards or meaningful recourse, directly affecting their ability to maintain basic living conditions.
• On one hand, the bill does encourage water users to take personal responsibility for conserving resources during droughts. However, it shifts much of the burden onto individuals through new penalties, rather than supporting voluntary, incentive-driven conservation efforts. By empowering utilities to enforce compliance through coercion (such as service restriction or surcharges), the bill moves away from fostering voluntary stewardship toward government-backed enforcement.
• The bill imposes additional regulatory burdens on private businesses (investor-owned utilities) by requiring them to file detailed drought plans as enforceable tariffs and submit to new layers of PUC oversight. Although utilities are ostensibly private businesses, this bill subjects them to greater government control over how they manage customer relationships and enforces drought plans. It restricts flexibility and increases compliance costs, weakening the principle of free-market operations.
• Access to water is fundamental to the use and enjoyment of property. By authorizing water shut-offs for noncompliance with drought restrictions—without requiring strong procedural protections—the bill threatens property owners' ability to reasonably use and maintain their property. Homeowners and businesses could face significant disruption without adequate due process, undermining a core principle of secure property rights.
• The bill expands the regulatory scope of the Public Utility Commission (PUC) by requiring it to oversee drought plan filings, enforce compliance, handle new complaint processes, and participate in ongoing statewide planning updates. It also grows government employment, with three new full-time agency staff needed to fulfill these duties​. This is a clear and substantial expansion of state power into an area (water conservation enforcement) that could otherwise be handled by local or voluntary community standards.

• HB 5559 (Same As)