Tidewater Utilities Files for Rate Adjustment

Rhea-AI Summary

Tidewater Utilities, a subsidiary of Middlesex Water Company (Nasdaq:MSEX), has filed for a rate adjustment with the Delaware Public Service Commission. This is the company's first request for a rate change in over a decade, aimed at recovering $150 million invested in critical drinking water infrastructure improvements. The investments include:

- Construction of two 1,000,000-gallon elevated water storage tanks
- Upgrades to treatment plants
- Installation of interconnections for redundant capacity
- Addition of backup generation at 30+ facilities
- Water main realignments and hydrant installations

Tidewater is seeking a total annual revenue increase of $10.3 million. If approved, the average residential customer's bill would increase by about $13.97 per month.

Positive

• $150 million invested in critical drinking water infrastructure improvements
• Enhanced water quality, service reliability, security, and resiliency
• Construction of two 1,000,000-gallon elevated water storage tanks
• Installation of backup generation at 30+ facilities
• Improved fire protection coverage

Negative

• Seeking $10.3 million annual revenue increase
• Average residential customer bill would increase by $13.97 per month if approved

Insights

Financial Analyst

Tidewater's rate adjustment filing after a decade is a significant move. The $10.3 million annual revenue increase request, if approved, would boost the company's financial position. This 6.9% increase in revenue (based on 2022 figures) could positively impact Middlesex Water Company's (MSEX) bottom line.

The $150 million investment in infrastructure over 10 years demonstrates long-term planning. While this capital expenditure has likely strained cash flows, it positions the company for future growth and regulatory compliance. The rate adjustment, if approved, would help recover these costs and potentially improve profit margins.

Investors should note the $13.97 monthly increase for average customers. While necessary for the company, it may face public scrutiny and potentially impact customer relationships. Overall, this move signals a proactive approach to financial management and infrastructure development.

Utility Infrastructure Expert

Tidewater's infrastructure investments are important for long-term sustainability. The focus on water treatment plants, storage facilities and interconnections addresses key areas of water utility management. The 1,000,000-gallon elevated water storage tanks in South Rehoboth and Millville significantly enhance supply reliability and fire protection capabilities.

The installation of backup generation at 30+ facilities is a smart move, improving system resiliency against power outages. This, combined with enhanced cybersecurity measures, aligns with industry best practices for risk management. The company's proactive approach to regulatory compliance and climate impact preparedness positions it well for future challenges in the water utility sector.

Regulatory Affairs Specialist

Tidewater's rate case filing with the Delaware Public Service Commission (PSC) is a critical regulatory process. The 10-year gap since the last filing is unusual and may complicate the review process. The PSC and Division of Public Advocate will scrutinize the $150 million in investments to ensure they were prudent and necessary.

The company's focus on regulatory compliance, water quality and infrastructure resilience aligns with current regulatory priorities. However, the 6.9% revenue increase may face pushback given its impact on consumer bills. Tidewater's ability to justify these investments and rate increases will be important for approval. The outcome of this case could set precedents for future water utility rate cases in Delaware.

First Request for Change in Rates in over a Decade Focused on Upgrades and System Resiliency

DOVER, Del., Aug. 30, 2024 (GLOBE NEWSWIRE) -- Tidewater Utilities, Inc. (“Tidewater” or the “Company”), a wholly owned subsidiary of Middlesex Water Company (Nasdaq:MSEX) filed a request today with the Delaware Public Service Commission (PSC) for new rates in order to recover prudently incurred investments made in the last ten years to support continued regulatory compliance, enhance water quality, service reliability, security and resiliency of its water utility infrastructure assets.

Since its last filing more than ten years ago, the Company has invested over $150 million in critical drinking water infrastructure improvements that are not currently reflected in customer base rates. These capital expenditures reflect construction of new and rehabilitation of existing water treatment plants, addition of standby power generation, establishment of interconnections, construction of new storage facilities and other upgrades. Specific improvements include: 

• Construction of a 1,000,000-gallon elevated water storage tank in South Rehoboth and another 1,000,000-gallon elevated water storage tank in Millville, DE to address peak hour demand and fire protection needs
• Construction and\or enhanced treatment upgrades at several plant facilities
• Installation of interconnections that provide redundant capacity and storage for peak demand and system resiliency
• Installation of back up generation at 30+ facilities to minimize service interruption and support plant resiliency
• Regulatorily required water main realignments to support state road improvement plans
• Installation of additional hydrants to provide fire protection coverage

"Ensuring safe and reliable drinking water for our customers at a reasonable cost is and continues to be our Company’s primary objective,” said Bruce E. Patrick, President of Tidewater. “Operating costs have significantly increased over the past decade and while we continue to work to control our expenses, through strategic asset planning and management, we must also upgrade our drinking water infrastructure accordingly to comply with new and ever increasing regulatory requirements, maintain the integrity of our plants, and protect our facilities against risks posed by climate impact and cybersecurity threats. These critical infrastructure investments made over the past decade protect public health, support fire protection and overall quality of life in the communities we serve,” added Patrick.

Tidewater is seeking a total annual revenue increase of approximately $10.3 million. The rate request will be reviewed by the PSC and Division of the Public Advocate. If the rate increase request is approved in its entirety, the water bill for an average residential customer with usage of 5,000 gallons of water per month, would increase about $13.97 per month.

About Tidewater Utilities, Inc.
Celebrating its 60^th year of service to Delawareans, Tidewater Utilities, Inc. serves as a trusted provider of life-sustaining high quality water service for residential, commercial, and fire protection purposes.  We invest in our people, our infrastructure, and the communities we serve to support reliable and resilient utility services, economic growth and quality of life. 

Tidewater is the largest private water supplier south of the Chesapeake & Delaware Canal in Delaware. The Company operates 175 active wells and 85 active water plants to serve approximately 57,800 customers and 800 commercial establishments in 470 separate communities in New Castle, Kent and Sussex County, DE.

Contact:
Bernadette Sohler, Vice President – Corporate Affairs
Middlesex Water Company
bsohler@middlesexwater.com

FAQ

What is the amount of rate increase requested by Tidewater Utilities (MSEX)?

Tidewater Utilities, a subsidiary of Middlesex Water Company (MSEX), is seeking a total annual revenue increase of approximately $10.3 million.

How much has Tidewater Utilities (MSEX) invested in infrastructure improvements since its last rate filing?

Tidewater Utilities has invested over $150 million in critical drinking water infrastructure improvements since its last rate filing more than ten years ago.

How would the proposed rate increase affect the average residential customer of Tidewater Utilities (MSEX)?

If the rate increase request is approved in its entirety, the water bill for an average residential customer using 5,000 gallons of water per month would increase by about $13.97 per month.

What major infrastructure improvements has Tidewater Utilities (MSEX) made in recent years?

Tidewater Utilities has made several improvements, including construction of two 1,000,000-gallon elevated water storage tanks, upgrades to treatment plants, installation of interconnections, addition of backup generation at 30+ facilities, and water main realignments.