8-KRegulation FDOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Regulation FD Disclosure (Oct 11, 2022)

Filed October 11, 2022For Securities:AWK

Summary

This 8-K filing from American Water Works Company, Inc. (AWK) announces two significant developments for its subsidiary, Pennsylvania-American Water Company. Firstly, the subsidiary has entered into an Asset Purchase Agreement to acquire the wastewater collection and treatment system assets of the Butler Area Sewer Authority for $231.5 million. This strategic acquisition aims to expand its wastewater service footprint, serving approximately 14,700 customer connections. The transaction is subject to regulatory approval from the Pennsylvania Public Utility Commission (PaPUC) and is expected to close by the end of 2023. Secondly, Pennsylvania-American Water has reached a petition for settlement in its general rate case, proposing an annualized revenue increase of $138 million. This increase is primarily driven by significant capital investments made since the last rate case, along with updated OPEB expense estimates and recovery of deferred COVID-19 costs. This settlement, pending review by an Administrative Law Judge and final approval by the PaPUC, is expected to result in new rates effective January 28, 2023, reflecting the company's ongoing investment in infrastructure and operational costs.

Key Highlights

  • 1Pennsylvania-American Water Company to acquire Butler Area Sewer Authority's wastewater system assets for $231.5 million cash.
  • 2Acquisition includes approximately 14,700 customer connections and is subject to PaPUC approval.
  • 3Expected closing of the wastewater system acquisition by the end of 2023.
  • 4Settlement reached in Pennsylvania-American Water's general rate case, proposing a $138 million annualized revenue increase.
  • 5Revenue increase primarily reflects $1.1 billion in capital investments and recovery of deferred costs.
  • 6New rates from the rate case settlement are expected to be effective January 28, 2023, pending final PaPUC approval.
  • 7The acquisition and rate case settlement are key to recovering infrastructure investments and maintaining service quality.

Frequently Asked Questions

The acquisition of the Butler Area Sewer Authority's wastewater system assets for $231.5 million is strategically important as it expands Pennsylvania-American Water's service territory and customer base by approximately 14,700 connections. This move aligns with the company's growth strategy and commitment to serving a broader community with essential wastewater services.

The petition for settlement in the general rate case proposes an annualized revenue increase of $138 million. This increase is primarily intended to recover $1.1 billion in capital investments made through December 31, 2023, as well as account for updated OPEB expenses and COVID-19 deferrals. This will allow the company to continue investing in its infrastructure.

The acquisition is subject to the prior approval of the Pennsylvania Public Utility Commission (PaPUC). The agreement allows for termination if the PaPUC application isn't filed and accepted within one year of the agreement date, or if the PaPUC doesn't issue a final action within a specified period after initiating it. Pennsylvania-American Water also has an option to extend the termination date by 90 days to secure necessary governmental approvals. The company aims to close the transaction by the end of 2023.

The settlement's terms are currently under review by an Administrative Law Judge, with a final decision expected from the PaPUC by January 2023. If approved as proposed, the new rates are anticipated to become effective on January 28, 2023.