8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (Dec 19, 2022)

Filed December 19, 2022For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced a significant development for its wholly owned subsidiary, Illinois American Water. The Illinois Commerce Commission (ICC) has issued an order approving an adjustment to base rates, resulting in an annualized increase of $67 million in water and wastewater system revenues, effective January 1, 2023. This rate increase is primarily driven by over $1.1 billion in capital investments made since the last rate case, along with expected increases in pension/OPEB costs and production expenses. The approved rate base has also substantially increased, reflecting these investments. This decision is a positive outcome for AWK, providing a mechanism to recover significant infrastructure investments and higher operating costs. While the approved revenue increase is lower than initially requested ($67 million versus $83 million), it represents a material improvement in future earnings potential for the Illinois-American Water segment. Investors should note the updated authorized return on equity (ROE) and the substantial growth in the authorized rate base, which are key drivers for future profitability.

Key Highlights

  • 1Illinois Commerce Commission (ICC) approved a $67 million annualized revenue increase for Illinois American Water, effective January 1, 2023.
  • 2The revenue increase is primarily due to over $1.1 billion in capital investments since the 2017 rate case, along with higher pension, OPEB, and production costs.
  • 3The ICC approved an authorized rate base of $1,642 million, a significant increase from the $883.4 million in the 2017 rate case.
  • 4The authorized return on equity (ROE) was set at 9.78%, slightly lower than the previously approved 9.79%.
  • 5The approved revenue increase is less than the $83 million initially requested but represents a substantial recovery mechanism for investments and costs.
  • 6This filing provides clarity on the regulatory outcome for Illinois American Water's general rate case.

Frequently Asked Questions

The Illinois Commerce Commission (ICC) has approved an annualized increase of $67 million in water and wastewater system revenues for Illinois American Water, effective January 1, 2023.

The primary drivers are over $1.1 billion in water and wastewater system capital investments since the 2017 rate case, expected higher pension and other post-retirement benefit (OPEB) costs, and increases in production costs such as chemicals, fuel, and power.

Illinois American Water had initially requested $83 million in additional annualized revenues. The ICC approved $67 million, which is lower than the request but still a significant increase.

The ICC approved a substantially larger authorized rate base of $1,642 million, up from $883.4 million in the 2017 rate case, reflecting the significant capital investments. The authorized return on equity (ROE) was set at 9.78%, a slight decrease from the previously approved 9.79%.