8-KOther EventsExhibits & Filings

American Water Works Company, Inc. 8-K Report, Corporate Update (Mar 4, 2024)

Filed March 4, 2024For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) announced a significant regulatory development for its West Virginia subsidiary. The West Virginia Public Service Commission (WVPSC) has approved a substantial increase in base rates, resulting in an $18.4 million annualized revenue uplift for water and wastewater systems, separate from existing infrastructure surcharges. This approval is based on the company's capital investments through February 2024, an authorized return on equity of 9.8%, and a significant rate base. Furthermore, an additional $5.9 million in annualized revenue has been approved through improvement charge filings to support planned capital investments from March 2024 through December 2024. These rate adjustments, effective retroactively in some cases, are primarily driven by substantial capital investments made by West Virginia American Water to modernize its systems, alongside increased operating costs such as pension, OPEB, chemicals, fuel, and power. This regulatory approval is a positive development, allowing the company to recover its investments and operate with improved financial stability in West Virginia.

Key Highlights

  • 1WVPSC approves $18.4 million annualized increase in base water and wastewater revenues for West Virginia American Water.
  • 2Approved return on equity (ROE) is set at 9.8%.
  • 3Authorized rate base reflects $886 million in capital investments through February 2024.
  • 4An additional $5.9 million in annualized revenue approved for distribution system and wastewater system improvement charges (DSIC/WSIC).
  • 5DSIC/WSIC approval supports $67 million in planned capital investments from March 2024 through December 2024.
  • 6New base rates effective February 25, 2024; DSIC/WSIC rates effective March 1, 2024.
  • 7Revenue increases are driven by significant capital investments and rising operational costs.

Frequently Asked Questions

The WVPSC approved an $18.4 million annualized increase in base water and wastewater revenues, plus an additional $5.9 million in annualized revenue for distribution system and wastewater system improvement charges (DSIC/WSIC). This brings the total annualized revenue impact from these specific approvals to $24.3 million.

The rate increases are primarily driven by approximately $220 million of capital investments made by West Virginia American Water since its last rate case, along with increases in operating costs such as pension and other post-employment benefits (OPEB), chemicals, fuel, and power. An additional $67 million in planned capital investments are also being supported by the DSIC/WSIC.

The new base water and wastewater rates became effective as of February 25, 2024, and the new DSIC/WSIC rates became effective March 1, 2024.

The WVPSC authorized a rate base of $886 million, reflecting capital investments through February 2024, and an authorized return on equity (ROE) of 9.8%.