Wednesday, 19 June 2024

California Water Service Group reports on fiscal year 2008

SAN JOSE – California Water Service Group has announced net income of $39.8 million, up 28 percent or $8.6 million for the 2008 fiscal year.


Diluted earnings per share were $1.90, up 27 percent or $0.40 per share compared to $1.50 for the same period last year.


The company owns the water district in Lucerne. In 2006 Cal Water received a 121-percent increase in rate for Lucerne after initially seeking a 246-percent increase, as Lake County News has reported. Many area residents were able to receive rate reductions due to being low income.


Cal Water's revenue for 2008 was $410.3 million, increasing 12 percent or $43.2 million over revenue of $367.1 million for 2007.


Revenues for 2008 included an additional $42.0 million from rate increases and $4 million in sales to new customers.


The net effect of the Water Revenue Adjustment Mechanism (WRAM) and Modified Cost Balancing Account (MCBA), that went into effect July 1, 2008, increased revenue by $2.0 million.


Sales to existing customers declined $2.2 million while other decreases accounted for $2.6 million.


Total operating expenses increased 9 percent or $29.9 million to $352.8 million for the year. Of this amount, water production costs increased 6 percent or $7.7 million to $146.6 million.


Other operations expense increased 10 percent or $10.1 million to $110.6 million, due primarily to increases in health and welfare plan expense, professional and other outside services costs, and additional water treatment expenses.


Maintenance expense increased 3 percent or $0.6 million to $19.0 million. Depreciation increased 11 percent or $3.8 million to $37.3 million for the full year.


Net other income decreased $4.6 million for the full year primarily due to no significant property sales during the year and a negative mark to market adjustment of $3.8 million associated with long-term investment assets held by the company.


According to President and Chief Executive Officer Peter C. Nelson, California Water Service Group's greatest achievements in 2008 were those related to implementing the California Public Utilities Commission's Water Action Plan.


“Receiving recovery of reasonably incurred costs was critical to this year's results, as was implementing both a WRAM and an MCBA which allows us to promote water efficiency,” Nelson said. “We also made some key acquisitions, made important and necessary infrastructure upgrades, and continue our focus on improving the way we serve our customers.”


In July 2008, the California Public Utilities Commission approved California Water Service Co.'s 2007 General Rate Case filing, authorizing rate increases of $33.4 million for eight districts, and an additional $13.7 million in 24 districts for general office expenses.


Additionally, the company requested recovery of increases in "offsettable" expenses, including purchased water, power, and pump taxes, and others were made to recover incremental cost increases and certain capital expenses incurred in the districts in between the three-year General Rate Case cycle.


Also in 2008, the CPUC approved the company's request for a WRAM, which effectively decouples water sales from revenues, as well as a tiered rate structure for most California districts.


Having a WRAM effectively removes a major disincentive for the company to pursue and promote water efficiency and conservation.


In the same decision, the CPUC approved an MCBA, which will enable the company to capture changes in costs resulting from utilizing different sources and volumes of supply. Both mechanisms support principals expressed in the CPUC's Water Action Plan, which reflects best practices in water utility regulation.


Pursuant to the CPUC's Rate Case Plan, the company will file a General Rate Case in 2009 for all California districts, including general office, with a scheduled effective date of Jan. 1, 2011; if the decision is delayed, the company will seek interim rates and recovery of lost revenues resulting from any delay. Subsequent General Rate Cases will be filed for all California districts every three years.


The most significant growth in 2008 occurred in Hawaii, beginning with HWS Utility Services' acquisition of multiple water and wastewater operations contracts on the island of Hawaii.


In the second quarter of 2008, Hawaii Water Service Co. received approval from the Hawaii Public Utilities Commission to acquire a wastewater system serving approximately 800 customers in the community of Pukalani on the island of Maui.


In the third quarter, Hawaii Water completed its acquisition of Waikoloa Resort Utilities, Waikoloa Water Company Inc.and Waikoloa Sanitary Sewer Company Inc., which together provide water utility services to 1,970 customer accounts and wastewater services to 300 customer accounts on the island of Hawaii.


Finally, in the fourth quarter, Hawaii Water completed its acquisition of a water and wastewater system serving approximately 250 customers in Kukio on the Island of Hawaii.


Additionally, in California, the company agreed to acquire Skyline County Water District, a 465-connection system adjacent to Cal Water's Bear Gulch District, and signed an agreement to purchase the Woodside Mutual Water Co., another adjacent system serving 43 customers.


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