New Jersey American Water Granted New Rates by New Jersey Board of Public Utilities

Rhea-AI Summary

New Jersey American Water has been granted new rates by the New Jersey Board of Public Utilities (BPU), resulting in a total annualized revenue increase of approximately $79.5 million. The rate increase, effective September 15, 2024, is primarily driven by over $1.3 billion in infrastructure investments since the company's last rate filing. For most water customers with a 5/8" meter using 5,642 gallons per month, bills will increase by about $5.33 per month. Wastewater customers will see an average increase of $5.68 per month.

The BPU also approved a new Universal Affordability Tariff, which will provide discounts on monthly fixed service and usage charges for income-eligible customers. This tariff will be incorporated into the company's H2O Help to Others assistance program, demonstrating New Jersey American Water's commitment to affordability.

Positive

• Approved revenue increase of $79.5 million annually
• $1.3 billion invested in infrastructure improvements
• New Universal Affordability Tariff approved to assist income-eligible customers
• Water and wastewater services remain among the lowest household utility bills despite rate increase

Negative

• Average water bill increase of $5.33 per month for most customers
• Average wastewater bill increase of $5.68 per month

Financial Analyst

The $79.5 million revenue increase for New Jersey American Water is a significant development. This 5.9% rate hike, effective September 15, 2024, is primarily driven by $1.3 billion in infrastructure investments. For investors, this represents a positive outcome, as it allows the company to recover costs and maintain profitability. The average bill increase of $5.33 for water and $5.68 for wastewater customers seems reasonable and unlikely to cause significant customer churn. The approval of the Universal Affordability Tariff demonstrates the company's commitment to balancing profitability with social responsibility, which could enhance its reputation and regulatory relationships. Overall, this rate increase should contribute positively to the company's financial performance and long-term stability.

Utility Industry Expert

The approval of New Jersey American Water's rate increase reflects a broader trend in the utility sector towards infrastructure modernization. The $1.3 billion investment in treatment systems and distribution upgrades is important for maintaining service reliability and regulatory compliance. This proactive approach to infrastructure management can lead to reduced operational costs and fewer service disruptions in the long term. The incorporation of the Universal Affordability Tariff is a strategic move, aligning with increasing regulatory focus on affordability and equity in utility services. This could potentially serve as a model for other utilities, positioning New Jersey American Water as an industry leader in balancing infrastructure investment with customer affordability.

Environmental Policy Analyst

The approved rate increase for New Jersey American Water has significant environmental implications. The $1.3 billion investment in infrastructure upgrades is important for addressing challenges posed by climate change and aging water systems. Improved water treatment and distribution systems can lead to reduced water loss, better water quality and increased energy efficiency. The company's emphasis on regulatory compliance and reliability amidst climate challenges demonstrates a forward-thinking approach to environmental stewardship. However, the rate increase may raise concerns about water affordability, particularly for low-income households. The Universal Affordability Tariff is a positive step, but its effectiveness in ensuring equitable access to water services will need to be closely monitored.

Increase Driven by System Investments; New Affordability Tariff Approved

CAMDEN, N.J.--(BUSINESS WIRE)-- The New Jersey Board of Public Utilities (BPU) today approved a settlement between New Jersey American Water and the N.J. Division of Rate Counsel and BPU Staff for new water and wastewater rates for New Jersey American Water. The approved rates represent a total annualized revenue increase of approximately $79.5 million.

The company’s rate request was filed on January 19, 2024, and was primarily driven by more than $1.3 billion in infrastructure investment in treatment system and distribution upgrades since its last rate filing.

“We are committed to making appropriate investments to continue to provide safe, reliable services, while maximizing efficiencies to balance the impact to customers,” said Mark McDonough, President, New Jersey American Water. “Our effective capital planning helps keep water and wastewater services compliant with state and federal regulations, reliable amidst the challenges of climate and other impacts, and affordable for the 2.9 million people we serve.”

The new rates will become effective September 15, 2024. With the approved rate increase, the average bill for most water customers with a 5/8” meter using 5,642 gallons per month will increase approximately $5.33 per month. The bill for an average wastewater customer will increase approximately $5.68 per month, depending on the service area. Even with the new rates, the cost of high-quality, reliable, water and wastewater service will remain among the lowest household utility bills.

The company’s proposed Universal Affordability Tariff was also approved as part of this rate filing and will be incorporated into the company’s H2O Help to Others assistance program. Underscoring the company’s commitment to affordability, this new tariff will provide discounts on both the monthly fixed service charge and the monthly usage charge for income-eligible customers. More information about this and other assistance programs can be found at www.newjerseyamwater.com under Customer Service & Billing, Bill Paying Assistance.

Customers will receive information about the new rates in their next New Jersey American Water bill. Information will also be available on the company’s website at www.newjerseyamwater.com under Customer Service & Billing, Your Water and Wastewater Rates, or by calling 800-272-1325, Monday through Friday, 7 a.m. to 7 p.m.

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 New Jersey American Water

New Jersey American Water, a subsidiary of American Water, is the largest regulated water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 2.9 million people. For more information, visit www.newjerseyamwater.com and follow New Jersey American Water on LinkedIn, Facebook, X, and Instagram.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240904101922/en/

Media:

Denise Venuti Free

Senior Director of Communications and External Affairs

denise.free@amwater.com

Source: American Water

FAQ

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

New Jersey American Water's new rates will take effect on September 15, 2024.

How much will New Jersey American Water's (AWK) average water bill increase?

The average water bill for most customers with a 5/8" meter using 5,642 gallons per month will increase by approximately $5.33 per month.

What is the total revenue increase approved for New Jersey American Water (AWK)?

The New Jersey Board of Public Utilities approved a total annualized revenue increase of approximately $79.5 million for New Jersey American Water.

How much has New Jersey American Water (AWK) invested in infrastructure since its last rate filing?

New Jersey American Water has invested more than $1.3 billion in infrastructure improvements since its last rate filing.