Global Water receives rate case Recommended Opinion and Order
PHOENIX, AZ, Jan. 23, 2014 /CNW/ - GWR Global Water Resources Corp. (TSX: GWR) and Global Water Resources, Inc. ("Global Water") today announced it received the Recommended Opinion and Order ("ROO") from the Arizona Corporation Commission ("ACC") Administrative Law Judge ("ALJ") in the rate case involving seven Global Water regulated utility subsidiaries. The issuance of the ROO by the ALJ is the last major milestone before the rate case is presented to the ACC Commissioners, who must approve the settlement before it will take effect.
The ROO from the ALJ follows a proposed settlement agreement between Global Water and ACC Staff, the Residential Utility Consumers Office ("RUCO"), the City of Maricopa, and others originally announced on August 13, 2013. The ROO supports the major terms of the settlement agreement in substance, which include, but are not limited to, the following:
- An overall cumulative revenue increase of $4.3 million, or 14%, for Global Water's utilities based on 2011 test year connections, with the majority of this revenue increase phased in over two years starting with the first increase in January 2015.
- Full reversal of the imputation of Contributions in Aid of Construction ("CIAC") associated with funds previously received under Infrastructure Coordination and Financing Agreements ("ICFAs"). The imputation was required as part of Global Water's last rate case. The reversal restores approximately $60 million in rate base or future rate base, which will have the immediate impact of restoring significant shareholder equity on the balance sheet.
- Global Water will not enter into any new ICFAs. Existing ICFAs will remain in place, but a portion of future payments under the ICFAs will be used to fund Hook-Up Fees, which are accounted for as CIAC once used to fund the construction of utility infrastructure.
- A 9.5% return on common equity will be adopted.
- None of Global Water's utilities may file another rate application before May 31, 2016. Subsidiaries Santa Cruz Water Company and Palo Verde Utilities Company may not file for another rate increase before May 31, 2017.
The ACC Commissioners will now review the case and consider the ROO and proposed settlement for approval at an open meeting on February 6th and 7th, 2014. Although the ROO strengthens the likelihood that the settlement will be adopted, the Commissioners may approve the settlement as written, approve it with modifications, or they may reject the settlement.
"The Judge's recommendation for approval of the settlement is a crucial step towards a favorable conclusion of the rate case," said Trevor Hill, Chairman of the Board. "Approval of the settlement by the Commissioners will bring this case and related matters to a close including the treatment of ICFA funds, providing clarity and stability for our regulated utilities, customers, partners, and investors alike."
Global Water expects to review its dividend policy during February 2014 once it receives the final rate case decision from the ACC. As a pure-play water utility, with the divestiture of its unregulated division, and based on the rate case settlement agreement and ROO the underlying fundamentals of the Company warrant consideration of a dividend. At that time the Board of Directors will consider the Company's cash flow, earnings, working capital requirements, financial position and other relevant factors prior to making a decision on implementing a dividend.
The ROO is a public document and is posted on the Company's website and at the ACC's eDocket website, http://edocket.azcc.gov under the docket number 12-0309.
About GWR Global Water Resources Corp and Global Water
GWR Global Water Resources Corp. was established to acquire an equity interest in Global Water. Global Water is a U.S., pure-play, water resource management company based in Phoenix, Arizona, that owns and operates water, wastewater and recycled water utilities.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain forward-looking statements. These forward looking statements include, but are not limited to our plans, objectives, expectations and intentions, and other statements contained in this release that are not historical facts as well as statements identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or the negative of these terms, or other words of similar meaning. These statements are based on our current beliefs or expectations and are inherently subject to significant uncertainties and changes in circumstances, many of which are beyond our control. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors and other factors discussed under the heading "Risk Factors" in the Company's most recent Annual Information Form. We undertake no obligation to publicly update any forward-looking statement, except as required by law, whether as a result of new information, future developments or otherwise.
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