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American Water's (AWK) Unit Files for Rate Review in Iowa
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American Water Works (AWK - Free Report) announced that its unit, Iowa American Water has filed a request with the Iowa Utilities Board (“IUB”) today to adjust its rates in the communities it serves across the state. The rate review request takes into consideration $87 million in water system improvements in Clinton, Blue Grass and the Iowa Quad Cities from October 2016 to June 2022.
The rate review process to get approved from IUB takes nearly 10 months from the date of filing of the review request. So, if the new rates are approved by the IUB, it will not take effect before mid-2021, nearly four years post the last increase in rates. If the rates are approved by IUB as requested, it will increase the water bill for a typical residential customer in Clinton and Quad Cities districts using 4,000 gallons per month by 14.6% or $5.44 on a monthly basis to $42.70.
The pandemic outbreak highlighted the importance of water, as it continues to play a very crucial role in controlling the virus spread. Washing hands properly with soap at regular intervals is the primary way of not getting infected and breaking the chain of the infection.
Investment to Upgrade Water Infrastructure
Per the finding of Utah State University, between 250,000 and 300,000 line breaks occur every year in the United States due to aging of the existing water infrastructure, which results in the wastage of huge volumes of potable water each day. According to the American Water Works Association, an estimated $1 trillion investment is necessary to maintain and expand the drinking water service to meet demand over the next 25 years.
American Water has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade. A major portion of the planned capital investment will be directed to upgrade and strengthen the aging water, as well as wastewater infrastructure. Rate hikes at regular intervals are quite essential to recoup the expenditure and continue with the ongoing projects to deliver high-quality potable water services to customers.
In addition to American Water, Essential Utilities (WTRG - Free Report) is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen the existing water and natural gas pipeline systems. Another utility, Middlesex Water Company (MSEX - Free Report) decided to invest $298 million in the 2020-2022 time period to strengthen its water infrastructure.
Price Performance
Shares of the company have gained 10.6% in the past year against the industry’s 2.6% decline.
The company’s long-term (three to five years) earnings growth is currently pegged at 4.9%. Its Zacks Consensus Estimate for 2020 earnings has moved 0.9% upward in the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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American Water's (AWK) Unit Files for Rate Review in Iowa
American Water Works (AWK - Free Report) announced that its unit, Iowa American Water has filed a request with the Iowa Utilities Board (“IUB”) today to adjust its rates in the communities it serves across the state. The rate review request takes into consideration $87 million in water system improvements in Clinton, Blue Grass and the Iowa Quad Cities from October 2016 to June 2022.
The rate review process to get approved from IUB takes nearly 10 months from the date of filing of the review request. So, if the new rates are approved by the IUB, it will not take effect before mid-2021, nearly four years post the last increase in rates. If the rates are approved by IUB as requested, it will increase the water bill for a typical residential customer in Clinton and Quad Cities districts using 4,000 gallons per month by 14.6% or $5.44 on a monthly basis to $42.70.
The pandemic outbreak highlighted the importance of water, as it continues to play a very crucial role in controlling the virus spread. Washing hands properly with soap at regular intervals is the primary way of not getting infected and breaking the chain of the infection.
Investment to Upgrade Water Infrastructure
Per the finding of Utah State University, between 250,000 and 300,000 line breaks occur every year in the United States due to aging of the existing water infrastructure, which results in the wastage of huge volumes of potable water each day. According to the American Water Works Association, an estimated $1 trillion investment is necessary to maintain and expand the drinking water service to meet demand over the next 25 years.
American Water has plans to invest $8.8-$9.4 billion in the 2020-2024 time period and $20-$22 billion in the next decade. A major portion of the planned capital investment will be directed to upgrade and strengthen the aging water, as well as wastewater infrastructure. Rate hikes at regular intervals are quite essential to recoup the expenditure and continue with the ongoing projects to deliver high-quality potable water services to customers.
In addition to American Water, Essential Utilities (WTRG - Free Report) is also making regular investments in water and wastewater systems. Its long-term plan is to invest $2.8 billion in the 2020-2022 time period to rehabilitate and strengthen the existing water and natural gas pipeline systems. Another utility, Middlesex Water Company (MSEX - Free Report) decided to invest $298 million in the 2020-2022 time period to strengthen its water infrastructure.
Price Performance
Shares of the company have gained 10.6% in the past year against the industry’s 2.6% decline.
Stock to Consider
A better-ranked stock in the same industry is American States Water Company (AWR - Free Report) , having a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s long-term (three to five years) earnings growth is currently pegged at 4.9%. Its Zacks Consensus Estimate for 2020 earnings has moved 0.9% upward in the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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