8-KOther Events

American Water Works Company, Inc. 8-K Report, Corporate Update (Aug 21, 2024)

Filed August 21, 2024For Securities:AWK

Summary

American Water Works Company, Inc. (AWK) has reported on a significant development concerning its wholly-owned subsidiary, New Jersey American Water. The subsidiary has entered into a stipulation and settlement with key regulatory bodies, including the New Jersey Board of Public Utilities (NJBPU) and the New Jersey Division of Rate Counsel, regarding its general rate case. This settlement proposes an annualized increase in water and wastewater revenues for New Jersey American Water of $79.5 million. This proposed revenue increase is a reduction from the initial request of approximately $161.7 million. The settlement is based on specific regulatory parameters, including an authorized return on equity (ROE) of 9.6% and an increased authorized rate base to $5.05 billion. The settlement is subject to final approval by the NJBPU at its September 4, 2024 meeting, with new rates expected to take effect by September 15, 2024. Investors should monitor the final NJBPU approval and the impact of these new rates on AWK's overall financial performance, particularly within its New Jersey operations.

Key Highlights

  • 1New Jersey American Water reached a stipulation and settlement in its general rate case.
  • 2The settlement proposes an annualized revenue increase of $79.5 million, a reduction from the requested $161.7 million.
  • 3Key terms include an authorized return on equity (ROE) of 9.6% and an authorized rate base of $5.05 billion.
  • 4The authorized rate base has increased significantly from $4.15 billion in the previous rate case.
  • 5The settlement is expected to be presented to the NJBPU for approval on September 4, 2024.
  • 6New rates are anticipated to become effective on September 15, 2024, if approved.
  • 7The company will continue to defer pension and OPEB expenses as regulatory assets/liabilities.

Frequently Asked Questions

New Jersey American Water has agreed to a $79.5 million annualized increase in its water and wastewater revenues, which is less than the $161.7 million it initially requested. This settlement is with the staff of the New Jersey Board of Public Utilities and the New Jersey Division of Rate Counsel.

The settlement is expected to be presented to the NJBPU for approval on September 4, 2024. If approved, the new rates are anticipated to become effective on September 15, 2024.

The authorized rate base is set to increase to $5.05 billion under the settlement, a significant rise from the $4.15 billion authorized in New Jersey American Water's last general rate case in 2022. This increase in the rate base is a key component of the agreed-upon revenue adjustment.

The settlement includes an authorized return on equity (ROE) of 9.6%, which is the same as what was approved in New Jersey American Water's previous general rate case in 2022.