PA PUC Approves $105M Rate Increase for American Water Subsidiary

TL;DR

PA regulators OK'd $105M rate hike for AWK's PA unit, less than the $125M asked.

AI Summary

On July 22, 2024, American Water Works Company, Inc. (AWK) announced that its subsidiary, Pennsylvania American Water, received a final order from the Pennsylvania Public Utility Commission (PUC) regarding its general rate increase request. The order approves a $105 million increase in annual operating revenues, which is $20 million less than the $125 million initially requested by the company. This adjustment is expected to be effective for bills issued on or after July 26, 2024.

Why It Matters

This regulatory decision directly impacts Pennsylvania American Water's revenue and profitability, affecting the company's ability to fund infrastructure investments and potentially influencing future dividend payouts or share buybacks.

Risk Assessment

Risk Level: medium — Regulatory decisions on rate increases are inherently subject to negotiation and can result in outcomes that differ from a company's initial requests, impacting financial performance.

Key Numbers

• $105M — Approved Rate Increase (Annual operating revenue increase granted by PA PUC)
• $125M — Requested Rate Increase (Amount Pennsylvania American Water initially sought)

Key Players & Entities

• American Water Works Company, Inc. (company) — Registrant
• Pennsylvania American Water (company) — Subsidiary of American Water Works Company, Inc.
• Pennsylvania Public Utility Commission (company) — Regulatory body
• $105 million (dollar_amount) — Approved annual operating revenue increase
• $125 million (dollar_amount) — Initially requested annual operating revenue increase
• July 22, 2024 (date) — Date of the report and earliest event
• July 26, 2024 (date) — Effective date for new rates

FAQ

Key Financial Figures

• $0.01 — ich Registered Common stock, par value $0.01 per share AWK New York Stock Exchange
• $99.3 million — 023. In its order, the PaPUC approved a $99.3 million annualized increase in Pennsylvania Ame
• $20 m — recovered infrastructure surcharges of $20 million, b ased on (i) an authorized retu
• $5,823.8 m — .45 %, (ii) an authorized rate base of $5,823.8 million, which reflects, as requested and
• $1 billion — in the general rate case, approximately $1 billion in capital investments to be made throu

Filing Documents

• awk-20240722.htm (8-K) — 31KB
• exhibit991-pennsylvaniapre.htm (EX-99.1) — 13KB
• image.jpg (GRAPHIC) — 87KB
• 0001410636-24-000126.txt ( ) — 317KB
• awk-20240722.xsd (EX-101.SCH) — 2KB
• awk-20240722_def.xml (EX-101.DEF) — 14KB
• awk-20240722_lab.xml (EX-101.LAB) — 25KB
• awk-20240722_pre.xml (EX-101.PRE) — 15KB
• awk-20240722_htm.xml (XML) — 3KB

01. Other Events

Item 8.01. Other Events. Entry of Order by Pennsylvania Public Utility Commission (the "PaPUC") Approving General Rate Case of Pennsylvania-American Water Company ("Pennsylvania American Water") On July 22, 2024, the PaPUC released an order approving the adjustment of base rates requested in a general rate case filed by Pennsylvania American Water, a subsidiary of American Water Works Company, Inc. (the "Company"), on November 8, 2023. In its order, the PaPUC approved a $99.3 million annualized increase in Pennsylvania American Water's water and wastewater system revenues, excluding previously recovered infrastructure surcharges of $20 million, b ased on (i) an authorized return on equity of 9 .45 %, (ii) an authorized rate base of $5,823.8 million, which reflects, as requested and included in the general rate case, approximately $1 billion in capital investments to be made through mid-2025 , (iii) a common equity ratio of 55.30%, and (iv) a long-term debt ratio of 44.70%. Certain acquisitions that remain pending, including the previously-announced acquisition of the wastewater collection and treatment system of the Butler Area Sewer Authority, were excluded from authorized base rates. The new rates will take effect on August 7, 2024, except that new wastewater rates for two recently acquired systems, including the City of York, will take effect during the first half of 2025 in accordance with the terms of the relevant acquisition agreements. As part of its approval of this rate adjustment, the PaPUC initiated an investigation into certain reported water service and water quality issues in Pennsylvania American Water's Northeastern service territory, which reports had been provided during public input hearings convened in the general rate case. A copy of the press release issued by Pennsylvania American Water on July 23, 2024, has been filed as Exhibit 99.1 hereto and is incorporated herein by reference. References and links to websites and other information cont

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits. The following exhibits to this Current Report have been provided herewith as noted below: Exhibit No. Description 99.1* Press Release, dated July 23, 2024, issued by Pennsylvania American Water. 104 Cover Page Interactive Data File (the cover page XBRL tags are included and formatted as Inline XBRL). * Filed herewith. 2

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN WATER WORKS COMPANY, INC. Dated: July 23, 2024 By: /s/ JOHN C. GRIFFITH John C. Griffith Executive Vice President and Chief Financial Officer 3

View Full Filing

View this 8-K filing on SEC EDGAR