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California Water (CWT) Removes Water Tank, Adds Booster Pumps

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California Water Service Group (CWT - Free Report) retired its old 100,000 gallon elevated water tank from service as it did not meet the new seismic standards. Fixing the existing overhead tank and heavily investing to make it comply with the standards will be very expensive, which in turn, may put the customers at disadvantage. Thus, the company introduced a more reliable and economical pressure system to increase and regulate water pressure to serve its customers efficiently. The new system will use well and booster pumps to move water from the existing tanks within the service area.

Investments in Infrastructure

To ensure its credibility with high-quality water and wastewater services, the company is focused on revamping its weathered infrastructure. The primary objectives of the investments are to enhance resilience of total operations and increase the water flow for customers as well as firefighting.

Earlier this month, the company’s unit California Water Service had filed an application with the California Public Service Commission, seeking approval for $1.02-billion infrastructure improvement program for the 2022-2024 period. This includes $913.1 million of newly proposed capital investment and a continued funding for capital projects that began in 2021 or earlier. The proposal also contains new rate designs. If the commission approves the new rates without any changes, the same will become effective January 2023 and increase the  average residential customer bill by less than an additional $5 per month in all its service areas.

In June 2021, the utility initiated a water main replacement project in central Los Altos and the Rolling Hills Estates besides concluding a similar project in the eastern part of Bakersfield. In the same month, it completed a water pipeline replacement project in central Salinas. The utility is actively working to maintain and upgrade its infrastructure to avoid any interruption in its services.

Peer Moves

A stable water infrastructure is essential to ensure proper water flow in the pipelines. However, the U.S. water and wastewater infrastructure is aging and regular investment is needed to preserve the high quality of potable water and sewage services for customers. Per the findings by the American Society of Civil Engineers, water main breaks occur every two minutes in the United States. Pipeline breaks induce the wastage of 6 billion gallons of potable water each day and aggravate the loss of water utility operators. This increases the cost of water services and exposes the life-sustaining natural resource to possible contamination.

The only way to resolve this issue is to make steady investments in the aging water infrastructure to repair and expand the same. Per Water and Wastewater Equipment Manufacturers Association, an estimated $750-billion investment is necessary to conserve and increase the level of drinking water as well as improve wastewater services to fulfill demand for the next 20 years.

Large water utilities are making investments to overhaul their infrastructure. American Water Works (AWK - Free Report) has plans to invest $10.4 billion between 2021 and 2025 and $22-$25 billion in the next decade. Essential Utilities (WTRG - Free Report) has a long-term plan to spend nearly $3 billion through 2023 to strengthen water as well as natural gas pipeline systems. Under the Water for Tomorrow program, Middlesex Water (MSEX - Free Report) is making regular capital investments to enhance its system reliability, resiliency and overall service quality.

Zacks Rank & Price Performance

California Water Service currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of California Water Service have gained 0.6% against the industry’s fall of 0.9% in the past month.

One-Month Price Performance

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