A wholly owned subsidiary of American Water Works Company, Inc. (AWK), New Jersey American Water, has filed a rate hike request with the New Jersey Board of Public Utilities (“BPU”). The petition considers the reimbursement of water and wastewater investments made by this subsidiary in the last couple of years or more.
New Jersey American Water has invested more than $775 million over this period in upgrading and replacing infrastructure systems. At the same time, the subsidiary trimmed its business operating cost by roughly $19 million.
The rate request is expected to boost revenues by $66 million and raise the bill of average residential water users by 17 cents per day. The last rate increase was approved in 2012.
The rates will come into effect after proper scrutiny by BPU, the New Jersey Division of Rate Counsel and the Office of Administrative Law. New Jersey American Water expects the new rates to take at least nine months to be implemented.
Less than a month back, another American Water unit – Maryland American Water – filed a request with the Maryland Public Service Commission asking for a hike in water rates for customers in its Bel Air system. This subsidiary has made an investment of roughly $3.6 million in the last five years to replace aging water infrastructure and the restoration and repainting of a 250,000-gallon water storage tank (read: American Water's Unit Files for Rate Hike in Bel-Air).
Apart from organic investments aimed at upgrading and maintaining existing systems, this Zacks Rank #2 (Buy) company is also keen on strategic acquisitions that will complement its business. In Dec 2014, the company completed the acquisition of Hardin County Water Company in southern Illinois as well as took over some water and sewer assets from Anna Meadows Homeowners’ Association.
In Dec 2014, another water utility Aqua America Inc. (WTR), through its Indiana unit – Aqua Indiana – entered into a partnership with City of Fort Wayne to expand its waste water service in Allen County.
Other favorably ranked water utility stocks include Connecticut Water Service Inc. (CTWS), sporting a Zacks Rank #1 (Strong Buy) and American States Water Co. (AWR), carrying a Zacks Rank #2.
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