On 10 June 2019, the Texas Legislature passed HB 3542, which will enable regulated water companies to pay a fair market value (FMV) for the purchase of water and wastewater systems in the state. Prior to this legislation, water & wastewater system values were determined by their depreciated original cost.
Texas is the tenth state to enact an FMV policy, underpinning a wider acceptance, if not stimulation, of municipal utility consolidation in the water & wastewater sectors. In the absence of a more sweeping Federal infrastructure investment bill, state policies, such as FMV legislation, will continue shaping the investor-owned utility landscape.
In this Research Note, Bluefield analyzes the states adopting FMV policies, mapping the landscape and M&A activity.