Global Water Resources Files Settlement Agreement in Farmers Water Rate Case

Rhea-AI Summary

Global Water Resources (NASDAQ: GWRS) has reached a unanimous settlement agreement for its Global Water – Farmers Water Company (GW-Farmers) rate case with the Arizona Commission. The settlement, filed on January 10, 2025, follows the company's June 2024 rate case application, marking the first rate adjustment since GWRS acquired the utility in 2023.

If approved, the agreement will generate an additional $1.1 million in annual revenue, implemented in three phases: 50% on May 1, 2025, 25% on November 1, 2025, and 25% on May 1, 2026. The settlement includes a deferral to recover a $3 million acquisition premium in a future rate case and proposes a system improvement benefits (SIB) mechanism for timely recovery of capital costs related to distribution system improvements.

Positive

• Settlement agreement to provide $1.1 million additional annual revenue
• Phased implementation approach reduces immediate rate impact
• Inclusion of SIB mechanism enables faster capital cost recovery
• Potential future recovery of $3 million acquisition premium

Negative

• Revenue increase subject to regulatory approval
• Full revenue impact won't be realized until May 2026

News Market Reaction

-0.35%

1 alert

-0.35% News Effect

On the day this news was published, GWRS declined 0.35%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Agreement, if Approved, Provides $1.1 Million in Additional Revenue to Support Infrastructure Investment

PHOENIX, Feb. 04, 2025 (GLOBE NEWSWIRE) -- Global Water Resources, Inc. (NASDAQ: GWRS), a pure-play water resource management company, has reached a unanimous settlement agreement related to the Global Water – Farmers Water Company, Inc. (GW-Farmers) general rate case application it had filed with the Arizona Corporation Commission (ACC) on June 27, 2024. The settlement agreement was filed with the ACC on January 10, 2025, with a hearing on the agreement scheduled to begin on February 10, 2025.

This is the first rate case submitted for GW-Farmers since Global Water acquired the utility in 2023. The proposed new rates are based on 2023 test-year service connections. If approved, the new rates are expected to provide a revenue increase of approximately $1.1 million on an annualized basis. The increase would be implemented in three stages: 50% on May 1, 2025, 25% on November 1, 2025, and 25% on May 1, 2026.

“We appreciate the collaboration with the Utilities Division Staff and Residential Utility Consumer Office in reaching this unanimous settlement,” commented Global Water chief operating officer, Chris Krygier. “This rate case represents the next step in our plan to improve this utility for customers and the broader Sahuarita community.”

In addition to the rate increase, the agreement proposes a deferral of the recovery of an acquisition premium of approximately $3 million related to Global Water’s acquisition of GW-Farmers. This would enable Global Water to recover that investment in a future rate case as a regulatory asset. The agreement also proposes a system improvement benefits (SIB) mechanism that provides for the timely recovery of the capital costs associated with distribution system improvement projects.

The next step in the process is for a hearing before an Administrative Law Judge, who would then draft a Recommended Opinion and Order for the Commission’s consideration at a future Open Meeting.

About Global Water Resources

Global Water Resources, Inc. is a leading water resource management company that owns and operates 32 systems which provide water, wastewater, and recycled water services. The company’s service areas are located primarily in growth corridors around metropolitan Phoenix. Global Water recycles over 1 billion gallons of water annually with 17.4 billion gallons recycled since 2004.

The company has been recognized for its highly effective implementation of Total Water Management (TWM). TWM is an integrated approach to managing the entire water cycle that involves owning and operating water, wastewater and recycled water utilities within the same geographic area in order to maximize the beneficial use of recycled water. It enables smart water management programs such as remote metering infrastructure and other advanced technologies, rate designs, and incentives that result in real conservation. TWM helps protect water supplies in water-scarce areas experiencing population growth.

Global Water has received numerous industry awards, including national recognition as a ‘Utility of the Future Today’ for its superior water reuse practices by a national consortium of water and conservation organizations led by the Water Environment Federation (WEF). The company also received Cityworks’ Excellence in Departmental Practice Award for demonstrating leadership and creativity in applying public asset management strategies to daily operations and long-term planning.

To learn more, visit www.gwresources.com.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this press release include certain forward-looking statements which reflect the company's expectations regarding future events. The forward-looking statements involve a number of assumptions, risks, uncertainties, and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. These forward-looking statements include, but are not limited to, statements about our strategies; expectations about future business plans, prospective performance, growth, and opportunities; future financial performance; technologies; plans and expectations for capital expenditures and regulatory compliance; and other statements that are not historical facts, as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or the negative of these terms, or other words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to a number of risks, uncertainties, and assumptions, most of which are difficult to predict and many of which are beyond our control. Actual results may differ materially from these expectations due to changes in political, economic, business, market, regulatory, and other factors. Factors that may also affect future results are disclosed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our filings with the Securities and Exchange Commission (the "SEC"), which are available at the SEC's website at www.sec.gov. This includes, but is not limited to, our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings with the SEC. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements, which reflect management’s views as of the date hereof. We undertake no obligation to publicly update any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise.

Company Contact:
Michael Liebman
CFO and SVP
Tel (480) 999-5104
Email Contact        

Investor Relations Contact:
Ron Both or Grant Stude
CMA
Tel (949) 432-7566
Email contact

FAQ

What is the expected revenue increase from GWRS's Farmers Water rate case settlement?

The settlement agreement, if approved, is expected to provide GWRS with a revenue increase of approximately $1.1 million on an annualized basis.

How will GWRS implement the rate increase for Farmers Water customers?

The rate increase will be implemented in three stages: 50% on May 1, 2025, 25% on November 1, 2025, and the final 25% on May 1, 2026.

What is the acquisition premium deferral in the GWRS Farmers Water settlement?

The settlement includes a deferral of approximately $3 million acquisition premium recovery, which GWRS can recover as a regulatory asset in a future rate case.

When will the Arizona Commission hear GWRS's Farmers Water rate case?

A hearing on the settlement agreement is scheduled to begin on February 10, 2025, before an Administrative Law Judge.

What is the SIB mechanism in GWRS's Farmers Water rate settlement?

The SIB (System Improvement Benefits) mechanism is a proposed feature that allows for timely recovery of capital costs associated with distribution system improvement projects.