8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (Jul 5, 2022)

Filed July 5, 2022For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced on July 5, 2022, through its subsidiaries California-American Water and Missouri-American Water, the filing of applications for significant rate increases with state regulatory commissions. California-American Water is seeking revenue increases totaling $99.0 million over 2024-2026, with an initial $57.1 million increase requested for 2024. If approved by the California Public Utilities Commission (CPUC), these new rates would take effect in January 2024. In parallel, Missouri-American Water has requested an annualized incremental revenue of $116.2 million from the Missouri Public Service Commission (MoPSC), based on a requested return on equity of 10.5%. These new rates are expected to be implemented by mid-2023, pending approval. Both filings exclude proposed reductions related to Excess Accumulated Deferred Income Taxes (EADIT) stemming from the Tax Cuts and Jobs Act of 2017. Investors should monitor the regulatory approval processes and the ultimate outcomes for these rate case filings as they are crucial for future revenue growth and profitability.

Key Highlights

  • 1California-American Water filed for rate increases with the CPUC, seeking $57.1 million in 2024 and $99.0 million over 2024-2026.
  • 2New rates for California-American Water, if approved, are expected to be effective January 1, 2024.
  • 3Missouri-American Water filed for rate review with the MoPSC, requesting $116.2 million in annualized incremental revenue.
  • 4Missouri-American Water's requested rates are expected to take effect in mid-2023, subject to approval.
  • 5Both rate increase requests exclude proposed reductions related to Excess Accumulated Deferred Income Taxes (EADIT).
  • 6The filings are subject to regulatory approval and potential adjustments by the CPUC and MoPSC.
  • 7The company includes a cautionary statement regarding forward-looking statements and various risks that could impact actual results.

Frequently Asked Questions

The filings indicate significant potential increases in revenue for two of American Water's key subsidiaries. California-American Water is seeking to increase revenues by $57.1 million in 2024 and $99.0 million in total over the 2024-2026 period. Missouri-American Water is requesting an annualized incremental revenue of $116.2 million. These increases, if approved, are expected to positively impact the company's top-line growth and potentially its profitability.

For California-American Water, the proposed new rates are set to take effect on January 1, 2024, if approved by the California Public Utilities Commission (CPUC). For Missouri-American Water, the requested new rates are expected to be implemented in mid-2023, pending approval from the Missouri Public Service Commission (MoPSC).

Yes, both filings explicitly exclude proposed reductions related to Excess Accumulated Deferred Income Taxes (EADIT) resulting from the Tax Cuts and Jobs Act of 2017. California-American Water is seeking to exclude $1.3 million in 2024 and $3.7 million over 2024-2026, while Missouri-American Water proposes to exclude $11.1 million for EADIT.

The primary risks for investors revolve around the regulatory approval process. The actual rates approved by the CPUC and MoPSC may differ from the requested amounts, potentially impacting the magnitude of revenue increases. There are also risks related to the timing of implementation and any potential legislative or regulatory actions that could affect the water and wastewater industries. The company has included cautionary statements about forward-looking statements and refers investors to its SEC filings for a more comprehensive list of risks and uncertainties.