Tuesday, 15 June 2021

California Water Service Group announces third quarter 2020 results

California Water Service Group (NYSE: CWT) announced net income of $96.4 million or $1.94 earnings per diluted common share for the third quarter of 2020, compared to a net income of $42.4 million or $0.88 earnings per diluted common share for the third quarter of 2019.

The $54.0 million increase in net income was due to the company’s determination that the Oct. 14 proposed decision in the California 2018 General Rate Case, or GRC, was sufficient evidence to record regulatory assets and associated revenues for interim rate recovery as well as benefits balancing accounts and the decoupling mechanisms.

In the third quarter of 2020, the company recorded revenues of $37.6 million related to interim rate recovery regulatory assets, balancing account net revenue increases of $37.0 million, and customer refunds for 2017 excess deferred federal income taxes, or TCJA, of $7.1 million.

Included in the amounts above were third-quarter interim rate recovery regulatory assets of $18.9 million, balancing account net revenue increases of $11.5 million, and $3.0 million of 2017 TCJA refunds to customers.

These increases were partially offset by increases in depreciation and amortization of $2.4 million, employee wages costs of $2.2 million, income taxes of $1.6 million, bad debt expenses of $0.9 million, and outside service costs of $0.7 million.

Additionally, certain factors outside the company’s immediate control decreased net income $1.2 million, including a $2.6 million reduction in accrued unbilled revenue, partially offset by a $1.2 million increase in unrealized gain on certain benefit plan investments.

The proposed decision for Cal Water’s California GRC is subject to adoption by the California Public Utilities Commission, or CPUC, which can occur no earlier than the CPUC’s Nov. 19, 2020, meeting.

Both California Water Service Co. and the CPUC's Public Advocates Office have provided feedback on the proposed decision. If adopted as proposed, the decision would approve the settlement reached in October of 2019 by Cal Water and the CPUC’s Public Advocates Office, allow Cal Water to continue its decoupling balancing accounts through 2022, and allow Cal Water to retain its Pension Cost Balancing Account and Health Cost Balancing Account.

According to President and Chief Executive Officer Martin A. Kropelnicki, the Oct. 14 proposed decision helps enable the company to continue to provide safe and reliable water service to customers.

“I’m pleased with the Oct. 14, 2020, proposed decision for our California GRC. It fully supports our goal of providing customers with the highest quality water service and reflects the Commission’s support of our operations during the challenging COVID-19 pandemic health crisis,” he said.

“I’m also pleased with the solid progress we’ve made on our 2020 infrastructure improvement investment program, making improvements totaling $221.3 million during the first nine months of 2020, despite the continuing pandemic. A top priority for the remainder of the year is to continue doing everything we can to keep our employees healthy and take care of our customers during this unprecedented time,” he added.

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