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California Water Service Group files proposal to invest $1.02 bn in its California water systems

  • California Water Service Group files proposal to invest $1.02 bn in its California water systems

About the entity

California Water Service Group
California Water Service Group (NYSE:CWT) is the third-largest publicly traded water utility in the United States, providing high-quality water and wastewater services to about two million people in more than 100 communities through four subsidiaries

As part of its commitment to provide a reliable supply of safe, clean water and affordable service to the communities it serves, California Water Service (Cal Water) — the largest subsidiary of California Water Service Group — has submitted its 2022-2024 infrastructure improvement plans for all of its California districts in its General Rate Case (GRC) filing with the California Public Utilities Commission (CPUC). The proposal also contains proposed new rate designs, which seek to balance revenue stability with reduced customer impacts, especially for low-income and water-saving customers. The CPUC will analyze the infrastructure improvement plans, operating budget proposals, and rate designs to establish water rates that reflect the actual cost of service, effective no earlier than January 2023.

Cal Water proposes to invest $1.02 billion over the period of 2022-2024. Included in the proposal are $913.1 million of newly proposed capital investments along with continued funding for capital projects begun in 2021 or earlier. Almost half of Cal Water’s proposed new infrastructure improvements are to replace aging water pipelines, which will enhance reliability and augment water supplies to support customers’ and firefighters’ needs. The plans also include, among others, upgrades to withstand power outages and Public Safety Power Shutoff events, protect customers from known and emerging water contaminants, and expand water supplies to ensure sustainability and wildfire hardening. The cost of these upgrades are expected to be offset by the utility’s continuing refinements to its operating model to improve service and reduce costs.

In another part of the filing, Cal Water proposed rate design changes that would improve revenue stability but provide a discounted unit rate to the first six units of water per month (approximately 150 gallons per day) for residential customers. In the proposal, this block of usage would be charged at 25% of the average rate. The CPUC has recognized this six-unit block as essential for basic needs.

“We remain steadfast in our commitment to protect our customers, and we have prepared these multi-year, proactive infrastructure improvement plans to ensure customers continue to have safe, clean water and reliable service, both during normal and drought years,” said Martin A. Kropelnicki, President and CEO. “Additionally, our proposed rate design returns us to a reasonable amount of revenue stability without the Water Revenue Adjustment Mechanism, while offering customers discounted volumetric charges for lifeline needs. We won’t cut corners on our customers’ health and safety, and we are committed to doing everything we can to maintain affordability and provide quality, service, and value.”

The required filing begins an approximately 18-month review process by the CPUC, an independent state agency, during which it determines approved projects and sets rates for the following three years. Any changes in customer rates would become effective no sooner than January 2023. Cal Water has proposed to the CPUC to increase revenues by $80.5 million, or 11.1%, in 2023; $43.6 million, or 5.4%, in 2024; and $43.2 million, or 5.1%, in 2025 to support these investments. If approved as filed, this would cost the average residential customer less than an additional $5 per month in all of Cal Water’s service areas.

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