California Public Utilities Commission Grants California Water Service’s Request to Postpone Cost of Capital Application to May 1, 2026
California Water Service (NYSE: CWT) has received approval from the California Public Utilities Commission (CPUC) to postpone its Cost of Capital application from May 1, 2025, to May 1, 2026. The decision maintains Cal Water's current financial structure, including a 10.27% return on equity, 4.23% cost of debt, and a capital structure of 53.40% common equity and 46.60% long-term debt, with an authorized rate of return of 7.46%.
The CPUC also reauthorized the Water Cost of Capital Mechanism (WCCM), which automatically adjusts the rate of return based on Moody's Utilities Bond Index fluctuations. The next measurement date is set for September 30, 2025, with any potential changes effective January 1, 2026. The extension aims to manage workload across multiple ongoing water utility rate cases and reduce the frequency of customer rate changes.
California Water Service (NYSE: CWT) ha ricevuto l'approvazione dalla California Public Utilities Commission (CPUC) per posticipare la sua richiesta di Cost of Capital dal 1 maggio 2025 al 1 maggio 2026. La decisione mantiene l'attuale struttura finanziaria di Cal Water, che comprende un ritorno sul capitale proprio del 10,27%, un costo del debito del 4,23% e una struttura di capitale di 53,40% di capitale proprio e 46,60% di debito a lungo termine, con un tasso di rendimento autorizzato del 7,46%.
La CPUC ha anche ri-autorizzato il Water Cost of Capital Mechanism (WCCM), che adegua automaticamente il tasso di rendimento in base alle fluttuazioni dell'Indice delle Obbligazioni per Utility di Moody's. La prossima data di misurazione è fissata per il 30 settembre 2025, con eventuali cambiamenti che entreranno in vigore il 1 gennaio 2026. L'estensione mira a gestire il carico di lavoro su più casi di tariffa di servizio idrico in corso e a ridurre la frequenza delle variazioni tariffarie per i clienti.
California Water Service (NYSE: CWT) ha recibido la aprobación de la Comisión de Servicios Públicos de California (CPUC) para posponer su solicitud de Cost of Capital del 1 de mayo de 2025 al 1 de mayo de 2026. La decisión mantiene la estructura financiera actual de Cal Water, que incluye un retorno sobre el capital propio del 10,27%, un costo de deuda del 4,23% y una estructura de capital del 53,40% de capital común y 46,60% de deuda a largo plazo, con una tasa de retorno autorizada del 7,46%.
La CPUC también re-autorizó el Mecanismo de Cost of Capital del Agua (WCCM), que ajusta automáticamente la tasa de retorno según las fluctuaciones del Índice de Bonos de Servicios Públicos de Moody's. La próxima fecha de medición está programada para el 30 de septiembre de 2025, con cualquier cambio potencial en vigor a partir del 1 de enero de 2026. La extensión tiene como objetivo gestionar la carga de trabajo en múltiples casos de tarifas de servicios públicos de agua en curso y reducir la frecuencia de los cambios de tarifas para los clientes.
캘리포니아 수자원 서비스 (NYSE: CWT)는 캘리포니아 공공 유틸리티 위원회 (CPUC)로부터 자본 비용(application of Cost of Capital) 신청을 2025년 5월 1일에서 2026년 5월 1일로 연기하는 승인을 받았습니다. 이 결정은 캘리포니아 수자원(Cal Water)의 현재 재무 구조를 유지하며, 자본 수익률 10.27%, 부채 비용 4.23%, 53.40%의 자본금과 46.60%의 장기 부채의 자본 구조를 포함하고, 승인된 수익률 7.46%를 보장합니다.
CPUC는 또한 무디스 수익채권지수(Moody's Utilities Bond Index)의 변동성에 따라 수익률을 자동으로 조정하는 물가 자본 비용 기제를 재승인했습니다(WCCM). 다음 측정일은 2025년 9월 30일로 설정되어 있으며, 잠재적인 변경 사항은 2026년 1월 1일부터 시행됩니다. 이 연장은 여러 진행 중인 수자원 요금 사건을 관리하고 고객 요금 변경 빈도를 줄이는 것이 목표입니다.
California Water Service (NYSE: CWT) a reçu l'approbation de la California Public Utilities Commission (CPUC) pour reporter sa demande de Cost of Capital du 1er mai 2025 au 1er mai 2026. La décision maintient la structure financière actuelle de Cal Water, qui comprend un rendement sur fonds propres de 10,27%, un coût de la dette de 4,23% et une structure de capital de 53,40% de fonds propres et 46,60% de dettes à long terme, avec un taux de rendement autorisé de 7,46%.
La CPUC a également réautorisé le Mécanisme de Coût du Capital de l'Eau (WCCM), qui ajuste automatiquement le taux de rendement en fonction des fluctuations de l'Indice des Obligations des Services Publics de Moody's. La prochaine date de mesure est prévue pour le 30 septembre 2025, avec tout changement potentiel entrant en vigueur le 1er janvier 2026. L'extension vise à gérer la charge de travail dans plusieurs affaires de tarification des services d'eau en cours et à réduire la fréquence des changements de tarifs pour les clients.
California Water Service (NYSE: CWT) hat die Genehmigung der California Public Utilities Commission (CPUC) erhalten, seinen Antrag auf Cost of Capital vom 1. Mai 2025 auf den 1. Mai 2026 zu verschieben. Die Entscheidung erhält die derzeitige Finanzstruktur von Cal Water aufrecht, einschließlich einer Eigenkapitalrendite von 10,27%, Fremdkapitalkosten von 4,23% und einer Kapitalstruktur von 53,40% Eigenkapital und 46,60% langfristigen Schulden, mit einer genehmigten Rendite von 7,46%.
Die CPUC hat auch den Water Cost of Capital Mechanism (WCCM) erneut genehmigt, der den Zinssatz basierend auf den Schwankungen des Moody's Utilities Bond Index automatisch anpasst. Der nächste Messzeitraum ist auf den 30. September 2025 festgelegt, wobei potenzielle Änderungen ab dem 1. Januar 2026 wirksam werden. Die Verlängerung zielt darauf ab, die Arbeitsbelastung in mehreren laufenden Wassergebührenfällen zu verwalten und die Häufigkeit von Tarifänderungen für Kunden zu verringern.
- Maintains favorable 10.27% return on equity through December 2026
- Stable capital structure with 53.40% common equity
- Reauthorization of WCCM provides automatic rate adjustment mechanism
- Reduced regulatory burden due to postponement
- Potential ROE adjustment risk based on WCCM trigger in September 2025
Insights
The CPUC's decision to extend Cal Water's Cost of Capital application has substantial implications for the company's financial stability. The maintenance of a 10.27% ROE and 7.46% authorized rate of return through 2026 provides important predictability in earnings. The 53.40%/46.60% equity-to-debt capital structure is well-balanced and aligns with industry standards for regulated utilities.
The reauthorization of the Water Cost of Capital Mechanism (WCCM) acts as a protective buffer against market volatility. This automatic adjustment mechanism linked to Moody's Utilities Bond Index helps maintain financial stability without requiring frequent regulatory interventions. The September 2025 measurement date could trigger ROE adjustments if significant bond market changes occur, providing both protection and flexibility.
For investors, this regulatory decision reduces uncertainty and supports stable dividend capabilities. The postponement also allows Cal Water to focus resources on their 2024 General Rate Case and Infrastructure Improvement Plan, which are more critical for long-term growth and operational efficiency.
This regulatory decision strengthens Cal Water's investment profile in several ways. First, maintaining the current 10.27% ROE in today's interest rate environment is favorable, as new rate cases might have resulted in ROE adjustments given market conditions. The postponement effectively locks in these attractive returns for an additional year.
The capital structure with 53.40% equity provides adequate financial flexibility while the 4.23% cost of debt is relatively competitive. The overall authorized return of 7.46% supports stable cash flows and dividend sustainability. The WCCM provides a safety net against significant interest rate movements, protecting both the utility and ratepayers from extreme market conditions.
From a workload management perspective, this postponement allows Cal Water to concentrate on their General Rate Case, which typically has a more substantial impact on future earnings. This strategic prioritization should benefit operational efficiency and regulatory outcomes.
SAN JOSE, Calif., Jan. 15, 2025 (GLOBE NEWSWIRE) -- (NYSE: CWT)—The California Public Utilities Commission (CPUC) has granted the request of California Water Service (Cal Water) and three other utilities to postpone their Cost of Capital applications from May 1, 2025 to May 1, 2026. The decision effectively maintains the current
The CPUC also reauthorized the Water Cost of Capital Mechanism (WCCM). Among other provisions, the WCCM automatically adjusts the rate of return when the Moody’s Utilities Bond Index fluctuates between Cost of Capital applications. The ROE will remain
"We appreciate the CPUC's agreement to grant us an additional one-year extension on our Cost of Capital proceeding," said Martin A. Kropelnicki, Chairman and CEO. "There are several ongoing water utility rate cases currently before the CPUC, including our 2024 General Rate Case and Infrastructure Improvement Plan, that require the resources of staff, the utilities, and other parties to the proceeding. The extension will help manage this workload and also help reduce the frequency of rate changes for our customers.”
About California Water Service Group
California Water Service Group is the parent company of regulated utilities California Water Service, Hawaii Water Service, New Mexico Water Service, and Washington Water Service, as well as Texas Water Service, a utility holding company. Together, these companies provide regulated and non-regulated water and wastewater service to more than 2.1 million people in California, Hawaii, New Mexico, Washington, and Texas. California Water Service Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available online at www.calwatergroup.com.
This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (PSLRA). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" treatment established by the PSLRA. Forward-looking statements in this news release are based on currently available information, expectations, estimates, assumptions and projections, and our management's beliefs, assumptions, judgments and expectations about us, the water utility industry and general economic conditions. These statements are not statements of historical fact. When used in our documents, statements that are not historical in nature, including words like will, would, expects, intends, plans, believes, may, could, estimates, assumes, anticipates, projects, progress, predicts, hopes, targets, forecasts, should, seeks, commits, maintains or variations of these words or similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements in this news release include, but are not limited to, statements describing Cal Water’s authorized return on equity, cost of debt, rate of return and capital structure. Forward-looking statements are not guarantees of future performance. They are based on numerous assumptions that we believe are reasonable but are subject to uncertainty and risks. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause actual results to be different than those expected or anticipated include, but are not limited to: governmental and regulatory commissions' decisions; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions' policies and procedures; the outcome and timeliness of regulatory commissions' actions concerning rate relief and other actions; changes in water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; the impact of opposition to rate increases; our ability to recover costs; availability of water supplies; issues with the implementation, maintenance or security of our information technology systems; civil disturbances or terrorist threats or acts; the adequacy of our efforts to mitigate physical and cyber security risks and threats; the ability of our enterprise risk management processes to identify or address risks adequately; changes in customer water use patterns and the effects of conservation; the impact of weather, climate change, natural disasters, and actual or threatened public health emergencies; the impact of market conditions and volatility on unrealized gains or losses on our operating results; risks associated with expanding our business and operations geographically; and other risks and unforeseen events described in our Securities and Exchange Commission (SEC) filings. In light of these risks, uncertainties and assumptions, investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other reports filed from time-to-time with the SEC. We are not under any obligation, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
Media Contact
Yvonne Kingman
ykingman@calwater.com
310-257-1434
FAQ
What is CWT's current return on equity (ROE) after the CPUC decision?
When will CWT's next Cost of Capital application be due?
What is CWT's current authorized rate of return?
When could CWT's return on equity potentially change under the WCCM?
What is CWT's current capital structure?
