American Water Works, Essential Utilities $63B Merger to Maintain Current Rates
WTRG•A proposed $63 billion merger of American Water Works and Essential Utilities would give American Water shareholders a 69% stake and Essential shareholders 31%. An attorney for American Water asserted that existing water, wastewater and natural gas rates would remain unchanged and efficiency gains would limit future increases.
1. Merger Proposal Overview
In October, American Water Works and Essential Utilities announced plans to merge into a single regulated water and wastewater utility valued at $63 billion. Under the agreement, American Water shareholders would own 69% of the combined company while Essential shareholders would hold 31%.
2. Rate Impact and Efficiency Claims
American Water counsel stated that no acquisition or transaction costs would be passed on to customers and that current water, wastewater and natural gas rates would remain unchanged upon closing. Anticipated operational efficiencies from combining infrastructure and research capabilities are expected to moderate future rate increases compared with stand-alone operations.
3. Regulatory Process and Opposition
The merger application is under review by the Pennsylvania Public Utility Commission, which is holding in-person and telephonic hearings to collect public input. The state Office of Consumer Advocate and the Pennsylvania Utility Law Project representing CAUSE-PA have filed formal protests, arguing the merger fails to deliver substantial affirmative public benefits required under state law.
