Aqua America Inc.
) has welcomed the enactment of a new law, the House Bill 710,
which will allow proper recovery of costs incurred by the
utilities for the upgrade of water and sewer systems in North
Carolina. The bill will enable utility providers to recoup their
infrastructure investments from customers via a surcharge on
AMER WATER WORK (AWK): Free Stock Analysis
AMER STATES WTR (AWR): Free Stock Analysis
MIDDLESEX WATER (MSEX): Free Stock Analysis
AQUA AMER INC (WTR): Free Stock Analysis
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As per a report published by the U.S. Environmental Protection
Agency earlier this month, the U.S. based utilities need to
invest $384 billion through 2030 to refurbish and upgrade
drinking water systems. Another report from Economic Development
Research Group Inc. suggests an alarming gap between water
infrastructural requirement and actual investments projected for
the coming years. The gap is expected to reach $84 billion in
2020 and widen to $144 billion in 2040. The report also revealed
that without proper renewal or replacement, nearly 44% of the
existing pipelines will become too weak for operation by 2020.
To overcome this situation, most of the water utility providers
spend substantial amount on their ageing infrastructure. Aqua
American Water Works Company Inc.
) spent $101 million for the completion of its Pittsburg System
Aqua America invested $59.2 million during first-quarter 2013
under its capital spending program for improving regulated
infrastructure including pipe replacement and plant upgrade. In
2013, the company intends to invest $325 - $340 million in
various projects to ensure the safety and reliability of its
The infrastructure upgrade program will enable Aqua America 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 water quality regulations.
It is evident from Aqua America's capital spending program that
the company currently expands its water distribution assets
through improvement of existing operation, installation of modern
systems and acquisitions. In Mar 2013, the company acquired the
water and wastewater system assets of Total Environmental
Previously, North Carolina did not have a constructive recovery
mechanism for water utility providers. With the introduction of
this bill, the regulated utility providers can effectively recoup
their earlier invested funds. Also, we believe the bill will
further give confidence to the utilities to invest more for
infrastructure upgrades. These enhancement initiatives will
enable the company to provide high quality water utility services
to its existing customers, which will lead to customer retention
and also attract new customers.
Aqua America currently has a Zacks Rank #3 (Hold). We however
Middlesex Water Co.
) with a Zacks Rank #1 (Strong Buy), and
American States Water Company
) with a Zacks Rank #2 (Buy).