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Seeking Fair Market Value for Water in Texas

25 June 2019
Research Note

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.

 


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