Pennsylvania American Water Completes Acquisition of Sadsbury Township Wastewater Collection System

Rhea-AI Summary

Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK), has completed the $990,000 acquisition of Sadsbury Township's wastewater collection system in Lancaster County, serving approximately 250 customer connections. The company plans to invest over $1.5 million in system improvements over the next six years, including wastewater main and manhole replacements, technology upgrades, and lift station enhancements. The acquisition, approved by the Pennsylvania Public Utility Commission on Sept. 12, 2024, will maintain current resident rates. The township cited Pennsylvania American Water's superior financial resources and expertise in managing environmental and regulatory compliance as key factors in the sale decision.

Positive

• Acquisition adds 250 new customer connections
• Planned $1.5 million investment in system improvements over 6 years
• Strategic expansion in Lancaster County service area
• Revenue-generating acquisition at $990,000 purchase price

Negative

• Significant capital expenditure required ($1.5M) for system upgrades

Insights

Financial Analyst

The $990,000 acquisition of Sadsbury Township's wastewater system represents a strategic expansion for Pennsylvania American Water, with plans to invest $1.5 million in system improvements over six years. While relatively small compared to AWK's $26.5 billion market cap, this acquisition aligns with their growth strategy through municipal system acquisitions. The deal provides stable, regulated returns and expands their customer base by 250 connections.

The investment commitment demonstrates AWK's typical approach of modernizing acquired infrastructure, which should drive rate base growth and future earnings. The PUC's regulatory oversight ensures predictable returns on these investments, while the township's existing rate structure provides immediate revenue stability. The deal's structure and planned improvements reflect AWK's proven model of creating value through municipal acquisitions and subsequent infrastructure investment.

MECHANICSBURG, Pa.--(BUSINESS WIRE)-- Pennsylvania American Water, a subsidiary of American Water (NYSE: AWK), announced today that it has completed the acquisition of the wastewater collection system assets of Sadsbury Township, Lancaster County. The newly acquired collection system currently serves approximately 250 customer connections.

“Pennsylvania American Water couldn’t be more pleased to welcome the residents of Sadsbury Township as new wastewater customers,” said Pennsylvania American Water President Justin Ladner. “We look forward to providing this community with safe, reliable service by delivering on our technical expertise and extensive wastewater experience.”

Over the next six years, Pennsylvania American Water plans to invest more than $1.5 million in Sadsbury Township wastewater collection system improvements. These improvements include targeted wastewater main and manhole replacements, technology and control systems, and lift station upgrades.

The $990,000 purchase was approved by the Pennsylvania Public Utility Commission (PUC) on Sept. 12, 2024. In accordance with the PUC’s approval, Pennsylvania American Water will adopt the rates currently being charged to Sadsbury residents. The PUC regulates the company’s rates and rules and regulations of service; therefore, any future rate changes will require review and approval by the PUC.

“The township approved the sale for several reasons. The greater financial resources and the professional expertise of Pennsylvania American Water far surpass the ability of the township to operate and provide the much-needed investment in the wastewater system, particularly as it relates to ever-increasing environmental and regulatory compliance matters,” the Sadsbury Township commissioners said. “Additionally, the associated risks of managing a wastewater system and their unforeseen costs were a major factor in transferring the system to Pennsylvania American Water. The sale proceeds will greatly enhance the long-term financial security of the township as well.”

Pennsylvania American Water offers multiple customer assistance programs, including its longstanding H2O Help to Others Program. For qualifying wastewater customers, the program offers grants of up to $500 per year and a 37% to 85% discount on the total wastewater charges.

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 Pennsylvania American Water

Pennsylvania 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 2.3 million people.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241101069049/en/

Media Contact:

John Kelemen

External Affairs Manager

484-238-5216

john.kelemen@amwater.com

Source: Pennsylvania American Water

FAQ

How much did Pennsylvania American Water pay for Sadsbury Township's wastewater system?

Pennsylvania American Water paid $990,000 for the Sadsbury Township wastewater collection system.

How many customers does the Sadsbury Township wastewater system serve?

The wastewater collection system serves approximately 250 customer connections.

What improvements will AWK make to the Sadsbury Township wastewater system?

Pennsylvania American Water plans to invest over $1.5 million in improvements including wastewater main and manhole replacements, technology and control systems, and lift station upgrades over the next six years.

Will Sadsbury Township residents see rate changes after the acquisition by AWK?

Pennsylvania American Water will initially maintain current rates, with any future rate changes requiring review and approval by the Pennsylvania Public Utility Commission.