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 timing of the 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 begin until the 21st day after the utility has mailed or electronically transmitted the customer's bill, and it must end when the customer pays all past due amounts.

The bill clarifies that these changes will only apply to fees charged on or after its effective date of September 1, 2026, meaning that any fees charged prior to this date will still be governed by the existing law. This ensures a transition period for both utilities and customers while establishing clearer guidelines for late payment fees moving forward.

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