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

From the Filing

0001410636-24-000126.txt : 20240723 0001410636-24-000126.hdr.sgml : 20240723 20240723170542 ACCESSION NUMBER: 0001410636-24-000126 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20240722 ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20240723 DATE AS OF CHANGE: 20240723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: American Water Works Company, Inc. CENTRAL INDEX KEY: 0001410636 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] ORGANIZATION NAME: 01 Energy & Transportation IRS NUMBER: 510063696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34028 FILM NUMBER: 241135359 BUSINESS ADDRESS: STREET 1: 1 WATER STREET CITY: CAMDEN STATE: NJ ZIP: 08102-1658 BUSINESS PHONE: 856-955-4001 MAIL ADDRESS: STREET 1: 1 WATER STREET CITY: CAMDEN STATE: NJ ZIP: 08102-1658 8-K 1 awk-20240722.htm FORM 8-K - PENNSYLVANIA AMERICAN WATER GENERAL RATE CASE ORDER awk-20240722 July 22, 2024 0001410636 false 0001410636 2024-07-22 2024-07-22 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 22, 2024 American Water Works Company, Inc. (Exact name of registrant as specified in its charter) Commission File Number: 001-34028 Delaware 51-0063696 (State or other jurisdiction of incorporation) (IRS Employer Identification No.) 1 Water Street Camden , NJ 08102-1658 (Address of principal executive offices, including zip code) ( 856 ) 955-4001 (Registrant’s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common stock, par value $0.01 per share AWK New York Stock Exchange Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 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 ,