Illinois American Water Granted New Rates by Illinois Commerce Commission

Rhea-AI Summary

Illinois American Water received approval from the Illinois Commerce Commission for new water and wastewater base rates, effective January 1, 2025. The change is driven by $557 million in capital investments planned for 2024-2025, including $421 million for water infrastructure and $136 million for wastewater systems.

The approved increase will result in a $110.6 million annualized revenue increase. Projects include replacing 44 miles of aging pipelines, upgrading treatment plants, and improving storage tanks, wells, pumping stations, and fire hydrants. Typical residential customers will see monthly increases of approximately $16 for water service and $8.50 for wastewater service. The company is also expanding its income-based discount tariff for eligible customers.

Positive

• Secured regulatory approval for $110.6 million revenue increase
• Major infrastructure investment of $557 million approved for 2024-2025
• Expansion of income-based discount tariff program approved

Negative

• Significant rate increase for customers: $16/month for water, $8.50/month for wastewater
• Substantial capital expenditure requirements of $557 million over two years

Insights

Financial Analyst

The ICC's approval of $110.6 million in annualized revenue increase for Illinois American Water represents a significant development for AWK's financial outlook. The $557 million capital investment program, split between $421 million for water and $136 million for wastewater infrastructure, demonstrates a substantial commitment to system upgrades. The monthly rate increases of $16 for water and $8.50 for wastewater services provide a predictable revenue stream to support these investments. This regulatory approval is particularly important as it allows for cost recovery and maintains the utility's financial health while funding critical infrastructure improvements. The expanded income-based discount tariff, while socially responsible, has been structured to maintain revenue stability.

Utility Infrastructure Expert

The approved infrastructure investment plan addresses critical needs across Illinois American Water's system, including 44 miles of pipeline improvements. The comprehensive scope encompasses essential upgrades to treatment plants, storage tanks, wells, pumping stations and fire hydrants, positioning the utility to enhance service reliability and meet regulatory requirements. The lead service line replacement initiative aligns with growing environmental and public health priorities. The two-year implementation timeline (2024-2025) represents an aggressive but achievable capital deployment schedule. These improvements should significantly reduce system vulnerabilities, lower maintenance costs and improve operational efficiency.

Increase Driven by Approximately $557 Million in System Investments

BELLEVILLE, Ill.--(BUSINESS WIRE)-- The Illinois Commerce Commission (ICC) issued an order Thursday approving new water and wastewater base rates for Illinois American Water, driven primarily by $557 million in capital investments in 2024 and 2025. The rate change request was filed on January 25, 2024.

“By making prudent, ongoing necessary investments to maintain and upgrade our water and wastewater systems, Illinois American Water is committed to the safety and reliability of our water and wastewater systems in the communities we serve,” said Rebecca Losli, Illinois American Water president.

The new rates will be effective January 1, 2025. The approved increase will result in a total annualized revenue increase of approximately $110.6 million and will support continued investment in critical water and wastewater infrastructure throughout the state, including the replacement, lining and installation of approximately 44 miles of aging water and wastewater pipelines. Investments also include upgrading water and wastewater treatment plants to maintain and meet regulatory compliance, storage tanks, wells, pumping stations, fire hydrants, meters and manholes across the state and ongoing replacement of customer lead service lines.

The rate order covers $421 million in water system infrastructure improvements and $136 million in wastewater system infrastructure improvements to be made over two years, from January 2024 to December 2025.

The amount of the rate change customers will experience will vary among the company’s operating districts. The monthly water service bill for the typical residential customer using 3,500 gallons per month with a 5/8-inch meter will increase approximately $16 per month and the typical residential wastewater bill will increase approximately $8.50 per month.

In addition, the ICC approved Illinois American Water’s request to expand the income-based discount tariff. Qualifying income-eligible customers will need to apply for the discount and provide the required income information when the expanded program is implemented.

Information about the program will be communicated to customers. Illinois American Water also offers customer assistance through the company’s non-income-based H₂O Help to Others program, payment plans and budget billing. More information can be found on the company’s website here.

Customers will receive information about the new rates on their Illinois American Water bill. Information will also be available on the company’s website at amwater.com/ilaw, under Customer Service & Billing, Your Water and Wastewater Rates.

About American Water

American Water (NYSE: AWK) is the largest regulated water and wastewater utility company in the United States. With a history dating back to 1886, We Keep Life Flowing® by providing safe, clean, reliable and affordable drinking water and wastewater services to more than 14 million people with regulated operations in 14 states and on 18 military installations. American Water's 6,500 talented professionals leverage their significant expertise and the company’s national size and scale to achieve excellent outcomes for the benefit of customers, employees, investors and other stakeholders.

For more information, visit amwater.com and join American Water on LinkedIn, Facebook, X and Instagram.

About Illinois American Water

Illinois American Water, a subsidiary of American Water, is the largest regulated water utility in the state, providing high-quality and reliable water and wastewater services to approximately 1.4 million people. American Water also operates a quality control and research laboratory in Belleville.

AWK-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20241206903491/en/

MEDIA

Anna Kubas

Senior Manager, External Communications

Illinois American Water

Anna.Kubas@amwater.com

Source: Illinois American Water

FAQ

When will Illinois American Water's (AWK) new rates take effect?

The new rates will take effect on January 1, 2025.

How much will Illinois American Water's (AWK) residential water bills increase?

Typical residential customers using 3,500 gallons per month will see an increase of approximately $16 per month for water service and $8.50 per month for wastewater service.

How much is Illinois American Water (AWK) investing in infrastructure for 2024-2025?

The company is investing $557 million in total, with $421 million for water infrastructure and $136 million for wastewater system improvements.

What is the approved revenue increase for Illinois American Water (AWK)?

The Illinois Commerce Commission approved an annualized revenue increase of approximately $110.6 million.