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Lavaca-Navidad River Authority to design, build and operate a desalination facility. Though the proposal assumes that the LNRA will maintain its existing water rights, US Filter has recommended a financing structure that includes the creation of a local government corporation to oversee construction, act as owner and oversee operations of the plant. US Filter has proposed that the local government corporation secure 'Take- or- Pay' contracts. Some adjustments have been made to Texas law to facilitate acquisition of retail public utilities by private companies. In 1999, for example, pursuant to SB 1 passed by the 75th legislature (1997), TNRCC amended Chapter 291 of its water rate rules to allow financial recovery for certain system acquisition costs.36 There is still dispute, however, over whether state procurement laws37 require competitive bidding for privatization of municipal water and wastewater services.38 Acquisition of Water Utilities In Texas by Private Industry There is every indication that private investor-owned utilities, both water and electric utilities, are stepping up their acquisitions of small Texas investor-owned utilities. This trend seems to be common throughout the United States where large utilities are trying to get a foothold in the market and/or expanding. According the House Research Organization, over the last several years large utility companies have begun to acquire numerous small privately-owned water and wastewater utilities, particularly those utilities that serve rural and unincorporated areas? AquaSource, based in Pennsylvania and a subsidiary of DQE electric power company, entered the Texas market in about 1997, and is now the largest investor-owned utility in the state. The Texas Natural Resource Conservation (TNRCC) has regulatory jurisdiction over investor-owned utilities (IOUs). The private-investor owned utility, even when it buys an existing utility, must submit to the TNRCC an application for a certificate of convenience and necessity, which designates the area in which the utility is allowed (and required) to provide service. The TNRCC must also approve the IOUs rate structure, which is set according to certain criteria established by the TNRCC.4o Because of its expanding customer base in Texas, AquaSource's record in the state is worth examining. Since 1997, AquaSource has acquired 240 water and 26 wastewater treatment facilities in 45 counties in Texas serving 35,000