American Water Works Company, Inc.
) subsidiary California American Water has provided updates on
the changes in monthly customer bills. The upward revision in
bills was due to the implementation of proposed Monterey
Peninsula Water Supply Project (MPWSP). The company has already
filed an appeal to the California Public Utilities Commission
(CPUC) for increasing the rate of monthly customer bills.
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The revision will help California American Water to reduce the
overall cost of the project. The rate hike is subject to the
CPUC's approval. Currently, a typical customer, using 74 units of
water per month or approximately 5,600 gallons per month, is
paying a monthly bill of $75.74.
If approved by the CPUC, the monthly rates will increase by
approximately 40% to $106 within a time span of 5 years, between
2013 and 2018. In 2014, the bill will increase to $79.86 per
month. Subsequently, the typical monthly customer bill will
increase to $88.42, $97.27, $97.38 and $106.73 in 2015, 2016,
2017 and 2018, respectively. The rate revisions will also impact
the bills of the customers, consuming different levels of water,
in a different way.
California American Water implemented the MPWSP project to manage
the continuing water supply crisis in the region. The company
expects to invest $295.7 - $338.4 million for the project, based
on the size of desalination plant finally approved by the CPUC.
Addition of infrastructure and upgrading the existing ones will
enable American Water to provide uninterrupted water supply to
its customers and strengthen system competence. These factors
will subsequently improve reliability, consumer confidence and
public safety while maintaining government rules on water
We believe the rate hike approval will further give confidence to
American Water to invest more for infrastructure upgrades. These
initiatives will enable the company to provide high quality water
utility services to its existing customers, thereby retaining
customers and attracting new ones.
American Water Works currently has a Zacks Rank # 3 (Hold).
However, other water utilities that are worth considering include
Connecticut Water Service Inc.
) with a Zacks Rank #1 (Strong Buy), and
Consolidated Water Co. Ltd.
), each with a Zacks Rank #2 (Buy).
Voorhees, N.J.-based American Water was founded in 1886. The
company serves around 14 million people with water and