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American Water (AWK) Arm Files for Rate Hike After Two Years
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American Water Works (AWK - Free Report) announced its unit, Missouri American Water, filed an application with the Missouri Public Service Commission (MoPSC), requesting an adjustment in water and wastewater rates. The rate request is based on $1.5 billion in water and wastewater system investments completed and planned from January 2023 to May 2026.
Missouri American Water’s last general rate case was filed with the MoPSC in July 2022 and post-approval new rates became effective on May 28, 2023.
Rate Hikes Essential
Rate hikes are essential as these will allow the company to recoup the capital invested and generate fresh funds for future capital projects. These projects are important to continue providing quality water, increasing fire protection and improving service reliability for customers.
If the MoPSC approves the rate request, the water bill for the average residential customer using 5,475 gallons per month will increase about $18 per month. Wastewater customers will see a monthly decrease or increase depending on the customer’s service area.
Investment Required in Water Space
Per the U.S. Environmental Protection Agency, investments of $625 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet the demand in the next 20 years. Water infrastructure, including water mains, storage tanks and purifying units, needs maintenance at proper intervals.
American Water aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in regulated businesses. AWK aims to invest in the range of $16-$17 billion from 2024-2028 and $34-$38 billion in the 2024-2033 period.
Other water utilities like Essential Utilities (WTRG - Free Report) , California Water Service Group (CWT - Free Report) and Middlesex Water (MSEX - Free Report) have well-chalked-out capital investment plans to strengthen infrastructure.
Essential Utilities plans to invest $1.3-$1.4 billion in 2024 for more than 5,000 planned projects and $7.2 billion in 2024-2028 to improve water and natural gas systems to better serve its customers with the help of improved information technology.
California Water Service plans to invest more than $380 million in capital expenditures in 2024.
Middlesex Water plans to invest $237 million from 2024-2026 to strengthen its water and wastewater infrastructure to serve the company’s customers in a safe, reliable and efficient manner.
The current dividend yield for WTRG, CWT and MSEX is 3.3%, 2.3% and 2.4%, respectively, which is better than the Zacks S&P 500 composite’s yield of 1.61%.
Price Performance
In the past three months, American Water has gained 6.3% compared with the industry’s 0.9% growth.
Image Source: Zacks Investment Research
Zacks Rank
American Water currently has a Zacks Rank #4 (Sell).
Image: Shutterstock
American Water (AWK) Arm Files for Rate Hike After Two Years
American Water Works (AWK - Free Report) announced its unit, Missouri American Water, filed an application with the Missouri Public Service Commission (MoPSC), requesting an adjustment in water and wastewater rates. The rate request is based on $1.5 billion in water and wastewater system investments completed and planned from January 2023 to May 2026.
Missouri American Water’s last general rate case was filed with the MoPSC in July 2022 and post-approval new rates became effective on May 28, 2023.
Rate Hikes Essential
Rate hikes are essential as these will allow the company to recoup the capital invested and generate fresh funds for future capital projects. These projects are important to continue providing quality water, increasing fire protection and improving service reliability for customers.
If the MoPSC approves the rate request, the water bill for the average residential customer using 5,475 gallons per month will increase about $18 per month. Wastewater customers will see a monthly decrease or increase depending on the customer’s service area.
Investment Required in Water Space
Per the U.S. Environmental Protection Agency, investments of $625 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet the demand in the next 20 years. Water infrastructure, including water mains, storage tanks and purifying units, needs maintenance at proper intervals.
American Water aims to invest $3.1 billion in 2024, with a major portion utilized for infrastructure improvements in regulated businesses. AWK aims to invest in the range of $16-$17 billion from 2024-2028 and $34-$38 billion in the 2024-2033 period.
Other water utilities like Essential Utilities (WTRG - Free Report) , California Water Service Group (CWT - Free Report) and Middlesex Water (MSEX - Free Report) have well-chalked-out capital investment plans to strengthen infrastructure.
Essential Utilities plans to invest $1.3-$1.4 billion in 2024 for more than 5,000 planned projects and $7.2 billion in 2024-2028 to improve water and natural gas systems to better serve its customers with the help of improved information technology.
California Water Service plans to invest more than $380 million in capital expenditures in 2024.
Middlesex Water plans to invest $237 million from 2024-2026 to strengthen its water and wastewater infrastructure to serve the company’s customers in a safe, reliable and efficient manner.
The current dividend yield for WTRG, CWT and MSEX is 3.3%, 2.3% and 2.4%, respectively, which is better than the Zacks S&P 500 composite’s yield of 1.61%.
Price Performance
In the past three months, American Water has gained 6.3% compared with the industry’s 0.9% growth.
Image Source: Zacks Investment Research
Zacks Rank
American Water currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.