H.B. No. 2867 introduces new regulations regarding late payment fees charged by municipally owned water utilities in Texas. The bill adds Section 552.916 to the Local Government Code, which stipulates that a municipal utility cannot impose a late payment fee that exceeds certain thresholds based on the duration of the late payment. Specifically, fees before the 11th day of the late payment period cannot exceed $5 or 2% of the amount due; fees from the 11th to the 20th day cannot exceed $5 or 5%; and fees after the 20th day cannot exceed $5 or 10%. Additionally, the late payment penalty period cannot commence until 21 days after the utility has mailed or electronically transmitted the customer's bill, and it must conclude when the customer pays all past due amounts.

The bill also clarifies that the changes will only apply to fees charged on or after the effective date of the Act, which is set for September 1, 2026. Fees charged prior to this date will continue to be governed by the existing law. This legislation aims to provide clearer guidelines and protections for consumers regarding late payment fees associated with water and sewer services.

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