8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (Aug 17, 2022)

Filed August 17, 2022For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) has announced a significant development concerning its wholly owned subsidiary, New Jersey-American Water Company, Inc. (NJAWC). The New Jersey Board of Public Utilities (NJBPU) has approved a stipulation and settlement resolving NJAWC's general rate case. This settlement allows for an annualized increase in water and wastewater revenues of $45.5 million, effective September 1, 2022. This increase is less than the $94.7 million initially requested by NJAWC but represents a positive step towards cost recovery.

Key Highlights

  • 1NJBPU approved a $45.5 million annualized increase in water and wastewater revenues for NJAWC, effective September 1, 2022.
  • 2The approved revenue increase is a settlement, lower than the $94.7 million originally requested by NJAWC.
  • 3The authorized return on equity (ROE) remains at 9.6%, consistent with the previous rate case.
  • 4The authorized rate base has increased to $4.15 billion from $3.57 billion in the prior rate case, reflecting infrastructure investments.
  • 5NJAWC will defer pension and other post-employment benefits (OPEB) expense differences as a regulatory asset or liability for a two-year period starting January 1, 2023.
  • 6NJAWC withdrew its request to recover COVID-19-related regulatory assets in this general rate case, opting for a separate proceeding.

Frequently Asked Questions

The order allows NJAWC, a subsidiary of AWK, to increase its water and wastewater revenues by an annualized $45.5 million, effective September 1, 2022. This is a key component of AWK's overall revenue generation and profitability.

No, NJAWC had initially requested an increase of $94.7 million. The approved $45.5 million increase represents a settlement between NJAWC, regulatory staff, and other intervenors.

The authorized ROE remains at 9.6%, which is the same as was approved in NJAWC's last general rate case in 2020. While the ROE did not increase, the authorized rate base has significantly grown.

This provision allows NJAWC to defer the difference between actual pension/OPEB expenses and those included in base rates. This can help stabilize earnings by managing the impact of fluctuating benefit costs over a two-year period or until the next rate case.