Wednesday, 22 September 2021

Cal Water announces second quarter financial results

SAN JOSE – On Wednesday California Water Service Group announced net income of $10.1 million, up 31 percent from $7.7 million in the second quarter of 2007, and earnings per common share of $0.48, an increase of 30 percent over $0.37 in the same period last year.


Revenues increased by $9.8 million, or 10 percent, to $105.6 million, with rate increases adding $6 million, sales to existing customers adding $3.6 million, and water usage by new customers adding $0.2 million.


Total operating expenses for the second quarter of 2008 increased by $6.7 million to $91.1 million. Water production costs increased by $3.1 million due to water usage being higher compared to the same period last year. Administrative and general and other operations costs increased $1.3 million, due primarily to increases in outside water quality laboratory fees, purchases of chemicals and filters, conservation program costs, and uncollectable accounts.


Fewer water system repairs resulted in a $0.3 million decrease in maintenance expense, which was $4.9 million for the quarter. Depreciation expense increased $0.9 million to $9.3 million as a result of increases in 2007 capital expenditures. Taxes other than income remained the same as last year.


Other income decreased by $0.5 million to $0.4 million, declining as a result of mark-to-market adjustments associated with the market value of assets in the company's non-qualified retirement plans and a decrease in interest income.


For the twelve months ended June 30, net income was $32.2 million and dilutive earnings per share were $1.55, compared to net income of $28.3 million and dilutive earnings per share of $1.41 for the same period in the prior year. Revenues for the trailing twelve months were $378.2 million, compared to $355.8 million for the same period last year.


"In the second quarter, we continued to work diligently with the California Public Utilities Commission (CPUC) on implementation of its Water Action Plan. As the quarter ended, several key regulatory decisions became effective, including one establishing a water revenue adjustment mechanism (WRAM) and modified cost balancing account (MCBA), and another authorizing rate increases throughout California to recover prudently-incurred costs," said President and Chief Executive Officer Peter C. Nelson.


"Overall it was a busy quarter, but the changes approved by the CPUC allow us to ramp up our water efficiency and conservation efforts, which we believe is critical given the current water issues in California," Nelson said.


Rate-related matters


As a result of a decision issued by the CPUC in February 2008 (D.08-02-036), three significant changes occurred on July 1, 2008: a WRAM became effective, decoupling water sales from revenues; conservation rates (also known as tiered or increasing block rates) were established in most California districts to reward residential customers for conservation efforts; and an MCBA was instituted to track cost changes, including supply mix variations, for future recovery or refund in rates.


Also effective on July 1, the CPUC approved incremental or step increases totaling $1.1 million for four California districts.


Most recently, on July 10, the CPUC approved a settlement between the CPUC's Division of Ratepayer Advocates and Cal Water, authorizing rate increases totaling $33.4 million for districts in Chico, East Los Angeles, Livermore, Los Altos, Mid-Peninsula (San Carlos and San Mateo), Salinas, Stockton and Visalia.


The decision also authorized Cal Water to request recovery in the remaining 16 districts for company-wide cost increases, including those related to water quality, engineering, and accounting, as well as increases in administrative expenses such as health care. $13.7 million in annual cost recovery has been requested and is now reflected in rates.


Acquisitions and new business


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


Hawaii Water also signed an agreement to purchase a water and wastewater system serving approximately 250 customers in Kukio on the Big Island of Hawaii, which is pending HPUC approval. Additionally, in California, the company entered into an agreement to acquire Skyline County Water District, a 465-connection system adjacent to Cal Water's Bear Gulch District, which is now pending CPUC approval.


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