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American Water (AWK) Indiana Arm to Spend $24.5M on Water Mains

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American Water Works (AWK - Free Report) announced that its unit, Indiana American Water, is going to invest $24.5 million on a water main replacement project in Gary, IN. This project aims to replace five miles of water mains from the early 1900s and install nearly 11 miles of new water mains, ranging in size from 8-36 inches, over the next three years.

Replacement of the aging water mains is quite essential to ensure water quality and system pressures as well as increase system resiliency. The new water mains will ensure enough water pressure for firefighters at times of emergency. The company expects increasing demand for water services in northwest Indiana in the next few years and these infrastructure upgrades will assist the company to meet the demand hike.

Indiana American Water regularly invests to upgrade, maintain, and expand the existing water and wastewater infrastructure. It provides high-quality and reliable water and wastewater services to nearly 1.32 million people.

Aging Water Infrastructure a Concern

The U.S. water infrastructure, which includes more than 2.2 million miles of pipelines, is aging and needs major repair and maintenance to provide proper services to millions of Americans. Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to the aging of the existing water infrastructure.

Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators. The pipeline breaks not only increase the cost of water services but also expose it to the possibility of contamination.

Investment Essential for Water Industry

Per the U.S. Environmental Protection Agency, a $750 billion investment is necessary to maintain and expand drinking water as well as wastewater services to meet demand over the next 20 years.

American Water Works has plans to invest $10.4 billion between 2021 and 2025, and $22-$25 billion in the next decade to upgrade as well as strengthen its existing water and wastewater infrastructure. In addition to American Water, other water utilities like Essential Utilities (WTRG - Free Report) , California Water Service Group (CWT - Free Report) , and Middlesex Water Company (MSEX - Free Report) continue to invest in their respective water and wastewater infrastructure to provide high-quality services to customers.

In addition to the water utility operators, the U.S. government has made provisions for the upgrade of the aging water and wastewater assets. The American Jobs Plan has provisions for $111 billion in water and wastewater infrastructure upgrade.

Price Performance

Shares of American Water have outperformed the industry in the past 12 months.

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Zacks Rank

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