8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (Jul 6, 2021)

Filed July 6, 2021For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced via an 8-K filing on July 6, 2021, that its Iowa subsidiary received an order from the Iowa Utilities Board (IUB) concerning a general rate case. The IUB has approved an additional $2.3 million in annualized water revenues for the subsidiary. This decision is a positive development, signaling an increase in revenue potential for AWK's operations in Iowa. However, the effective date for these new rates is contingent on the resolution of a motion for clarification that the Iowa subsidiary intends to file with the IUB. This motion will seek clarification on specific accounting treatments, particularly regarding the return of excess accumulated deferred income taxes to customers. Investors should monitor the outcome of this clarification process as it will directly impact the timing and finalization of the approved rate increase.

Key Highlights

  • 1Iowa subsidiary received IUB order approving a general rate increase.
  • 2Approved annualized revenue increase of $2.3 million for the Iowa subsidiary.
  • 3The rate increase is a positive step towards enhanced profitability in Iowa.
  • 4Effective date of new rates is pending a motion for clarification.
  • 5Clarification sought regarding accounting for excess accumulated deferred income taxes.
  • 6Final rates and tariffs require further IUB approval after clarification.

Frequently Asked Questions

The primary impact is the authorization for an additional $2.3 million in annualized water revenues for AWK's Iowa subsidiary, which is expected to improve its financial performance in the state.

The effective date for the final rates is not yet determined. It is contingent on the resolution of a motion for clarification that the Iowa subsidiary will file with the IUB regarding accounting treatment for deferred income taxes.

The Iowa subsidiary intends to file a motion to seek clarification from the IUB on specific aspects of the order, particularly concerning the inclusion of a rate base offset in the return of unprotected excess accumulated deferred income taxes to customers.

These are accounting and regulatory terms related to how taxes are handled in utility rate setting. The clarification is needed to understand how a portion of taxes might be returned to customers, which could affect the net revenue the company ultimately retains from the approved rate increase.