Global Water rate case settlement approved by Commissioners
PHOENIX, AZ, Feb. 10, 2014 /CNW/ - GWR Global Water Resources Corp. (TSX: GWR) and Global Water Resources, Inc. ("Global Water") today announced approval of the rate case settlement agreement by the Arizona Corporation Commission ("ACC"), involving seven Global Water regulated utility subsidiaries. At an open meeting on February 6th, the settlement agreement was unanimously approved by the five ACC Commissioners. This vote signifies the final milestone in the rate case, with the settlement agreement becoming effective immediately following the final Decision and Order which should be completed by the ACC within a week.
The settlement agreement, which was wholly approved by the Commissioners, includes the following major terms:
- 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, beginning 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.
"Approval of the settlement by the Commissioners, with the full restoration of shareholder equity that was imputed in the last rate case, is a significant accomplishment that has considerable and immediate benefits for our company and customers," said Trevor Hill, Chairman of the Board. "With the rate case finalized, we can now move forward to accelerate our simplified, regulated utility strategic plan."
With the final approval of the rate case, Global Water is now reviewing its dividend policy. As a pure-play water utility, with the divestiture of its unregulated division, and based on the final rate case decision, the underlying fundamentals of Global Water warrant consideration of a dividend. 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.
Once available, the final Decision and Order will be posted on the Company's website and at the ACC's eDocket website, http://edocket.azcc.gov under the docket number 12-0309. The settlement agreement is currently already posted in both locations.
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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