Aqua America Chairman and CEO Nicholas DeBenedictis said, “The company’s solid second quarter financial results reflect management’s focus on investing for growth and environmental improvements, while diligently working to control operating costs. Also, I am very pleased with our ability to implement our portfolio rationalization by simultaneously completing the sale of our New York operation and successfully integrating 57,000 new Ohio customers in an efficient manner.”
In May, Aqua America completed the purchase of all of American Water Works Company, Inc.’s (NYSE: AWK) regulated operations in Ohio and simultaneously sold its regulated operations in New York to American Water. Aqua is now the largest investor-owned water utility in Ohio. This is the latest of five successful transactions Aqua America has completed in a one-year period to consolidate and grow its customer base in fewer states, improving its operating efficiency, while pruning assets in areas that do not present those opportunities. Since May 2011, Aqua America has sold its Missouri operations to American Water; purchased American Water’s Texas operations; and sold its Maine operations to Connecticut Water. “Transactions like these are consistent with Aqua America’s strategy to leverage greater economies of scale and customer growth opportunities in states that demonstrate a positive regulatory environment,” said DeBenedictis.
DeBenedictis added, “Through the first half of 2012, management was diligent in working to control operating costs. I am confident in Aqua’s ability to continue to improve the operations and maintenance expense-to-revenue ratio on a year-over-year basis, which at 37.3 percent for the trailing 12 months ending June 30, 2012 compares favorably to 37.8 percent during the same period of 2011.”
To date in 2012, the company has received rate awards in New Jersey, Pennsylvania, Ohio, Illinois, and Florida, and infrastructure surcharges in various states estimated to increase annualized revenues by approximately $41.3 million. The company still has $9.3 million of rate cases pending before two state regulatory bodies in Texas and Virginia. Additionally, state subsidiaries are expected to seek rate relief by filing rate requests or surcharges of more than $13.5 million later in 2012. The primary driver of these filings is the recovery of capital (infrastructure) investments and increased expenses since the companies’ previous rate filings in those states. The timing and extent to which rate increases might be granted by the applicable regulatory agencies will vary by state.