American Water Works' (AWK) Hawaii Unit Files for Rate Hike

American Water Works AWK announced that its unit Hawaii American Water has filed an application to set new rates for its Hawaii Kai wastewater customers. The last rate revision request was filed in 2011 and since then, the company has invested $32 million in improving the wastewater treatment service.

If the rates are approved by the Hawaii Public Utilities Commission without any change, it will become effective around Jul 15, 2022. The monthly rate for average single family customer would increase from $67.08 to $81.27. For multi-family customers, the monthly service cost would increase from $57.08 to $69.16.

Rate hikes at regular intervals are essential and aid utility service providers to generate funds so that they can carry on with long-term infrastructure upgrade work.

Aging Infrastructure Needs Funding

The U.S. water and wastewater infrastructure is aging, and gradually nearing the end of its effective service life. Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators.

Per the Water and Wastewater Equipment Manufacturers Association, an estimated $750 billion investment is necessary to maintain and expand the drinking water and wastewater service to meet demand over the next 20 years.

The U.S. Environmental Protection Agency announced the availability of $6.5 billion in water infrastructure funding, which will provide more than $13 billion in water infrastructure projects.  The American Jobs Plan has provisions for $111 billion in water and wastewater infrastructure upgrade.

In addition to government funding, water utilities like American Water Works, Essential Utilities WTRG, California Water Service CWT and Middlesex Water MSEX, among others, are making regular investments to upgrade aging water and wastewater infrastructure. These investments are essential to provide 24x7 potable water and sewer services to customers.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

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Zacks Rank

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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