Capital Program Planning for Texas Water Utilities

by | Oct 21, 2026

Texas · Water & Wastewater Utilities

Texas just bet $20 billion on water. Your capital plan decides whether it lands.

A supply-demand gap widening toward a drought-of-record shortfall, pipes that lose enough water every year to supply five major cities, and the largest state water investment in a generation arriving all at once. For a Texas utility CFO or capital lead, every one of those forces reshuffles the projects on your list. Invizion helps Texas utilities re-sequence a capital portfolio in a click — and defend every decision.

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The bottom line: Texas has committed roughly $20 billion to water through Proposition 4 while its supply-demand gap widens and its pipes leak 572,000 acre-feet a year. The utilities that win the decade will be the ones whose capital plans can absorb that money, and that volatility, and stay defensible.
$154B1
Texas’s identified water-infrastructure need over the coming decades — roughly $74B for drinking-water repair, $21B for wastewater, and the rest for new supply.
$1B/yr2
Sales-tax revenue dedicated to the Texas Water Fund by Proposition 4 (2025) through 2047 — about $20 billion over the period.
572K AF3
Treated water lost to leaks and breaks every year — enough to supply Austin, El Paso, Fort Worth, Laredo and Lubbock combined.
~7,0004
Public water systems TCEQ regulates in Texas — from giant metros to thousands of small and rural systems.

The Texas Landscape

Four forces are moving your project list at once

None of these is theoretical, and none of them waits for your next budget cycle. Together they mean the capital plan you approved last year may already be the wrong plan.

Supply — Drought & Aquifers

A supply-demand gap that keeps widening

The State Water Plan projects that statewide demand climbs from about 17.7 million acre-feet in 2020 to 19.2 million by 2070, while existing supplies fall roughly 18% to 13.8 million acre-feet. Without new strategies, about one-quarter of Texans could face municipal water shortages in a drought of record.5

The pressure is already local. San Antonio’s region hit Stage 4 Edwards Aquifer pumping restrictions in 2025,6 and on the High Plains the Ogallala is being drawn down far faster than it recharges — a structural threat to Panhandle communities and their utilities.7 Where your next acre-foot comes from is now a capital question, not just a resource one.

Demand — Growth

The nation’s fastest-growing state, again

Texas led every other state in numeric population growth in 2024, adding hundreds of thousands of residents in a single year.8 The metros absorbing that growth — Houston, DFW, Austin, San Antonio — are the same systems already stretched on supply.

Every new service connection is a capacity commitment. Growth-driven capital competes for the same dollars as renewal and compliance, and the sequencing between them is exactly what boards fight over.

Renewal — Aging & Resilience

Old pipe, big leaks, and a winter that exposed it

Texas water systems lose at least 572,000 acre-feet a year — roughly 51 gallons per connection every day — through leaks and breaks.3 In 2024 the City of Austin alone leaked about 9.3 billion gallons.9 The 2021 winter storm put as many as 8.7 million Texans under boil-water notices when systems lost power and pressure.10

Renewal isn’t optional: the state carries roughly $74 billion in 20-year drinking-water repair needs and another $21 billion for wastewater.1 New obligations stack on top of that backlog — they don’t replace it.

Compliance — PFAS & Lead

New federal mandates, on the same clock

Under EPA’s 2024 rule, PFOA and PFOS are limited to 4 parts per trillion, and roughly 50 Texas public water systems have already reported exceeding at least one of the new limits. Utilities must complete monitoring and treat to compliance by 2029.11

On top of PFAS, TCEQ — which holds Safe Drinking Water Act primacy in Texas — is driving lead service line inventories and replacement.12 These are funded mandates with fixed deadlines, and something on the list has to move to meet them.

Who Runs Texas’s Water

Big municipals, a long tail of small systems, and a growing private sector

Texas’s largest metros run their own water and wastewater utilities, set rates through city councils and boards, and dominate by volume. Below them sit thousands of small and rural systems, districts and a consolidating group of investor-owned providers regulated by the PUC. The pressures are shared; the accountability path differs.

Municipal & public utilities

Rates set by city council · capital approved by governing boards

San Antonio Water System (SAWS) ~2M people · 511,300 water + 457,600 wastewater customers13
Houston Public Works — Houston Water 2.3M+ residents across 671 sq mi14
Dallas Water Utilities 1.2M+ retail · 31 wholesale customers · 4,600+ mi of main15
Austin Water City of Austin · ~9.3B gal leaked in 20249
El Paso Water Kay Bailey Hutchison plant — world’s largest inland desal, 27.5 MGD16
Fort Worth Water Large North Texas retail & wholesale provider

Municipals set their own rates, but every dollar is approved in public, in front of ratepayers.

Investor-owned & small systems

Rates & capital recovery regulated by the PUC of Texas

The Texas Water Company (SJWTX) ~78,000 customers · 26,000+ connections · $150M+ invested17
Nexus Water Group / Corix Investor-owned systems across Texas
Thousands of small & rural systems Where funding and compliance gaps hit hardest4

Consolidation is accelerating — the PUC reviews investor-owned acquisitions such as The Texas Water Company’s 2024 move to acquire 3009 Water Company.17

Rate-Setting & Oversight

Every capital dollar has to be defensible

Texas splits oversight across three agencies plus local boards. Whoever you answer to, the question is the same: why this project, why now, why at this cost?

  • TCEQ holds Safe Drinking Water Act primacy for roughly 7,000 public water systems — setting the compliance capital agenda for PFAS, lead service lines and system reliability.412
  • Public Utility Commission of Texas (PUC) regulates rates, capital recovery and Certificates of Convenience & Necessity (CCNs) for investor-owned water and sewer utilities.18
  • Texas Water Development Board (TWDB) writes the State Water Plan and administers the state’s low-interest financing — the body a utility’s capital plan ultimately has to satisfy to draw funds.5
  • City councils & utility boards set rates and approve capital for the big municipals — SAWS, Houston, Dallas, Austin, El Paso — in open, ratepayer-facing meetings.

Funding On The Table

The money is moving — can your plan absorb it?

Texas utilities have more capital funding available than they’ve had in a generation. The constraint is no longer only dollars — it’s readiness: which projects are shovel-ready, which qualify, and how the timing lines up with everything else on the list.

  • State Revolving Funds — ~$505M drinking water + ~$583M clean water could be made available for SFY 2026 through the TWDB, including roughly $198.5M and $112.6M in IIJA supplemental capitalization.1920
  • Proposition 4 (2025) — up to $1B/yr in dedicated sales-tax revenue flows to the Texas Water Fund from 2027 through 2047, roughly $20 billion in all.2
  • Proposition 6 (2023) — $1B Texas Water Fund seeded the effort, with at least $250M carved out for the New Water Supply for Texas Fund (desalination, produced water, aquifer storage).21
  • EPA WIFIA loans are landing for Texas systems — including a $156M loan to Pflugerville and a $17M loan to Sharyland Water Supply Corporation.22
  • USDA Rural Development continues to fund small-town systems — over $45M in a single recent round of rural Texas water and wastewater projects.23

Where Invizion Fits

Turn a moving Texas picture into a defensible capital plan

Invizion is scenario-based capital portfolio optimization built for water utilities. When the supply picture shifts, a mandate lands, or a grant comes through, you don't re-plan by hand for weeks — you model it and decide with a record you can stand behind.

1

Model the “what-if” before it's forced on you

A new mandate, a failed main, a grant with a deadline — build the scenario and see the impact on the whole portfolio, side by side with today's plan.

2

Re-sequence 500 projects in a click

When priorities move, Invizion re-orders the portfolio automatically — accelerating, stretching, or deferring projects against the constraints you set, not weeks of spreadsheet surgery.

3

Give regulators or your board a defensible record

Every prioritization and trade-off is captured. When you're asked “why this project, why now,” the answer is documented — not reconstructed after the fact.

Texas Water, In Brief

Questions Texas utility leaders are asking

Short, sourced answers — the same facts we’ll dig into on a call, in the context of your system.

How much is Texas investing in water through Proposition 4?
In November 2025, Texas voters approved Proposition 4, dedicating up to $1 billion a year of sales-tax revenue to the Texas Water Fund from 2027 through 2047 — about $20 billion over the period. It builds on the $1 billion Texas Water Fund created by Proposition 6 in 2023. Most of it flows as low-interest loans through the Texas Water Development Board, so the constraint for utilities is having qualified, sequenced projects ready to draw on it.221
How much water does Texas lose to aging pipes?
At least 572,000 acre-feet a year — roughly 51 gallons per service connection every day — enough to meet the annual municipal needs of Austin, El Paso, Fort Worth, Laredo and Lubbock combined. The City of Austin alone leaked about 9.3 billion gallons in 2024. That loss is the clearest signal of the state’s roughly $74 billion in 20-year drinking-water repair needs.391
Who regulates water utility rates in Texas?
It depends on ownership. The Public Utility Commission of Texas sets rates and CCNs for investor-owned water and sewer utilities. Big municipals — SAWS, Houston, Dallas, Austin, El Paso — set their own rates through city councils and boards. Across all of them, TCEQ enforces drinking-water quality for about 7,000 public water systems, which drives much of the compliance capital.184
What are Texas’s State Revolving Fund levels for 2026?
For state fiscal year 2026, the TWDB projected roughly $505 million available under the Drinking Water SRF and about $583 million under the Clean Water SRF for all financing options — including roughly $198.5 million and $112.6 million in IIJA (Bipartisan Infrastructure Law) supplemental capitalization, much of it as principal forgiveness for disadvantaged communities.1920
What PFAS rules do Texas water utilities face?
EPA’s 2024 drinking-water rule caps PFOA and PFOS at 4 parts per trillion, with limits on three other PFAS. About 50 Texas systems have already reported exceedances of at least one limit. Utilities must finish initial monitoring and treat to compliance by 2029 — a fixed deadline that competes directly with renewal and growth projects for capital.11
How does Invizion help Texas water utilities plan capital programs?
Invizion is scenario-based capital portfolio optimization for water utilities. It lets you model how a drought restriction, a Prop 4 or SRF award, or a PFAS deadline reshuffles your whole project list, re-sequence the portfolio automatically, and keep a defensible record of every decision for the PUC, the TWDB, your board, or ratepayers. The best next step is a short first meeting to look at it against your own program.

Go Deeper

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About the Author

GB

Guy Barlow

President, Invizion

Guy Barlow leads Invizion, a capital lifecycle management platform for water and wastewater utilities. He has spent two decades at the intersection of utility capital programs, funding, and analytics, helping utilities make faster, more defensible capital decisions.

Start The Conversation

See what a defensible capital plan looks like

Book a 20-minute first meeting. We'll talk through the forces reshaping your capital program and show how Invizion helps you keep the plan current and defensible — no slides, no pressure.

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This briefing was last reviewed September 2026.

Sources

  1. Texas 2036, “Texas’ Water Infrastructure Funding Needs” — ~$154B total need; ~$73.7B drinking-water and ~$21.1B wastewater 20-year repair; $112B funding gap, 2023–2025. texas2036.org
  2. Texas Water Foundation, “Voters Approve Prop 4 — Dedicating $20B to Water Infrastructure” — up to $1B/yr of sales tax to the Texas Water Fund, 2027–2047, November 2025. texaswater.org
  3. The Texas Tribune, “What to know about Texas’ looming water crisis” — systems lose at least 572,000 acre-feet/yr (~51 gal per connection/day), March 2025. texastribune.org
  4. Government Technology, citing EPA/TCEQ — Texas has ~7,000 regulated public water systems; 310+ with unaddressed quality problems. govtech.com
  5. Texas Comptroller, Fiscal Notes (citing the State Water Plan) — demand rises to 19.2M AF and existing supply falls to 13.8M AF by 2070; ~one-quarter of Texans face municipal shortages in a drought of record, September 2023. comptroller.texas.gov
  6. Texas Public Radio, “Stage 4 aquifer pumping restrictions declared for San Antonio area” — Edwards Aquifer drought restrictions, August 2025. tpr.org
  7. Stateline, “Agriculture built these High Plains towns. Now, it might run them dry” — Ogallala Aquifer depletion in the Texas Panhandle/High Plains, January 2024. stateline.org
  8. Houston Chronicle, citing U.S. Census Bureau — Texas led the nation in numeric population growth again in 2024. houstonchronicle.com
  9. KXAN Austin, “City of Austin pipes leaked 9.3 billion gallons in 2024.” kxan.com
  10. NPR, Winter Storm Uri live updates — 8.7 million Texans under boil-water notices, February 2021. npr.org
  11. Texas Public Radio / The Texas Tribune, “Dozens of Texas water systems exceed new federal limits on ‘forever chemicals’” — ~50 systems; 4 ppt PFOA/PFOS; compliance by 2029, April 2024. tpr.org
  12. Texas Commission on Environmental Quality (TCEQ), “PFAS in Drinking Water” — Safe Drinking Water Act primacy, PFAS monitoring, lead service line inventory. tceq.texas.gov
  13. San Antonio Water System, “About SAWS” — ~2M people served; 511,300 water and 457,600 wastewater customers. saws.org
  14. Houston Public Works, “About” — serves 2.3M+ residents across 671 square miles. houstonpublicworks.org
  15. Dallas Water Utilities — 1.2M+ retail customers, 31 wholesale customers, 4,600+ miles of water main. dallascityhall.com
  16. El Paso Water, Kay Bailey Hutchison Desalination Plant fact sheet — 27.5 MGD, world’s largest inland desalination plant. epwater.org
  17. Herald-Zeitung / SJW Group — SJWTX (The Texas Water Company): ~78,000 customers, 26,000+ connections, $150M+ invested; 2024 filing to acquire 3009 Water Company. herald-zeitung.com
  18. Public Utility Commission of Texas, “Faucet Facts — Certificates of Convenience & Necessity” — PUC regulates rates and CCNs for investor-owned water and sewer utilities. puc.texas.gov
  19. Texas Water Development Board, Drinking Water SRF SFY 2026 Intended Use Plan — ~$505.5M available, incl. ~$198.5M IIJA general supplemental. twdb.texas.gov
  20. Texas Water Development Board, Clean Water SRF SFY 2026 Intended Use Plan — ~$583.0M available, incl. ~$112.6M IIJA supplemental. twdb.texas.gov
  21. Underground Infrastructure / TWDB — Proposition 6 (2023) created the $1B Texas Water Fund and a $250M New Water Supply for Texas Fund (desalination, produced water, aquifer storage). undergroundinfrastructure.com
  22. U.S. EPA — WIFIA loans to Texas: $156M to Pflugerville and $17M to Sharyland Water Supply Corporation. epa.gov (Pflugerville) · epa.gov (Sharyland)
  23. USDA Rural Development, “USDA Announces Over $45 Million for Infrastructure Projects in Rural Texas” — water and wastewater loans and grants. rd.usda.gov