California Water (CWT) Files for Rate Hike, Plans to Invest $1.6B

California Water Service Group’s CWT unit California Water Service (Cal Water) has recently submitted plans to the California Public Utilities Commission for the improvement of the water infrastructure from 2025 to 2027. This filing is part of a general rate case. The review process will take nearly 18 months and become effective after January 2026.

Cal Water plans to invest more than $1.6 billion in infrastructure development during the 2025-2027 period. Around 46% of the planned expenditure is reserved for new projects and the replacement of old pipelines to ensure reliable water supply, even during emergencies.

Cal Water plans include water quality upgrades, infrastructure replacements to help pump and deliver water reliability, utilization of generators to offset impacts of power outages, installation of solar projects to reduce dependency on the grid, physical and cyber security enhancements, and advanced water metering systems. These developments will improve the reliability of the water supply to its customers.

Rate Hike – A Dire Need

The existing water supply system and infrastructure are getting old, and the company needs to invest regularly to upgrade and replace its existing pipelines. The water rate hike at regular intervals will help CWT to continue with infrastructure development and ensure uninterrupted services to its customers.

Additionally, the company has proposed the Low-Use Water Equity Program to keep water affordable for low-income customers.

Investment In Water Industry

The U.S. water infrastructure is getting old and requires immediate replacement. A substantial investment is the need of the hour to improve the water infrastructure. Water utilities are investing to upgrade infrastructure and recoup the same through rate hike filling to continue making upgrades to the infrastructure. Several of California Water Services’ peers have also been investing in U.S. water infrastructure.  

American Water Works AWK is systematically investing across its service region in the United States. The company aims to invest $3.1 billion in 2024, a major portion of which will be utilized for infrastructure improvements in regulated businesses. AWK aims to invest in the range of $16-$17 billion from 2024-2028 and $34-$38 billion in the 2024-2033 period.

Essential Utilities, Inc. WTRG is making strategic investments to improve its water and natural gas infrastructure. The company plans to invest in the range of $1.3-$1.4 billion in 2024 for infrastructure developments and $7.2 billion by 2028.

American States Water Company AWR is investing regularly in upgrades to make its infrastructure strong and resilient. It invested $175.7 million in 2023 and aims to invest $611.4 million during the 2025-2027 period.

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Price Performance

Shares of California Water have gained 11.4% in the past three months, compared with the industry’s 9.5% growth.

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Zacks Rank

California Water Service currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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