Total operation and maintenance (O&M) expenses for the three months ended Sept. 30, 2012, were $355.1 million, an increase of $14.8 million, or 4.3 percent, compared to the same period in 2011. Total O&M expenses for the nine months ended Sept. 30, 2012, were $992.7 million, an increase of $14.4 million, or 1.5 percent, over the comparable period in 2011.
Net cash provided by operating activities for the nine months ended Sept. 30, 2012, was $735.0 million, compared to $576.0 million for the same period in 2011, which was primarily driven by the increase in operating revenues and changes in working capital.
American Water anticipates investing approximately $925 million in construction and other capital projects in 2012 to help ensure reliable water and wastewater services. The company’s capital expenditures for the nine months ended Sept. 30, 2012, were $680.4 million, compared to $621.9 million for the same period in the prior year. The increase was mainly attributable to increased spending on infrastructure replacement projects in the first quarter due to the milder winter weather, expenditures associated with the company’s business transformation project to new IT platforms, the replacement of a 1920s era water treatment facility in Milburn, N.J., and a $101 million capital project in Pittsburgh, Pa.
Regulated OperationsAmerican Water’s Regulated Businesses’ revenues in the third quarter increased by $68.4 million, or 10.0 percent, over the prior year’s period, mainly driven by new rates needed to deliver reliable services, increased consumption in the company’s Eastern and Midwestern states, and additional revenues associated with its acquisition of seven water systems in New York. The Regulated Businesses’ O&M expenses increased $11.6 million, or 4.0 percent, over the prior year’s period, which is primarily attributed to increased consumption and incremental operating costs associated with the phase one launch period of the company’s business transformation project. The company’s continued focus on cost management and improving operational efficiency was also reflected in the third quarter results. The Regulated Businesses’ O&M efficiency ratio (a non-GAAP measure), improved to 40.9 percent from 44.9 percent for the 12 months ended Sept. 30, 2012. American Water’s Regulated Businesses continued to prudently invest dollars to upgrade and maintain their water systems. During the third quarter, the company received a general rate case authorization in Illinois for additional annualized revenues of $17.9 million. Also during the third quarter, a regulatory decision was received in California American Water’s cost of capital application, generating an additional $4.4 million in annualized revenue. Subsequent to the quarter, a settlement agreement was approved for the company’s Tennessee general rate case, which allows for an additional $5.2 million in annualized revenues.
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