American Water Works: PAWC GRC: Recommended decision supports ~52% of requested revenue

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American Water Works: PAWC GRC: Recommended decision supports ~52% of requested revenue

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American Water Works

PAWC GRC: Recommended decision

supports ~52% of requested revenue

Reiterate Rating: NEUTRAL | PO: 134.00 USD | Price: 124.16 USD

Regulatory pushback on PAWC’s full rate case request 20 May 2026

We reiterate our Neutral rating on American Water Works following the Administrative Equity

Law Judge’s (ALJ) Recommended Decision (RD) in Pennsylvania-American Water

Company’s (PAWC) pending rate cases (Dockets R-2025-3057983 & 3058051). The RD

Key Changestakes a conservative stance, effectively rejecting much of PAWC’s requested increases —

$152.4m (+16.1%) for water and $16.3m (+7.8%) for wastewater — citing insufficient (US$) Previous Current

evidence to support the full filing. This translates to a ~$83m revenue increase (vs. the Price Obj. 147.00 134.00

$160m rebuttal request and the ~$169m original request), reflecting a more constrained

view of key regulatory levers, including a 9.7% return on equity (ROE; vs. 10.95% Ross Fowler, CFA

Research Analyst

requested; 9.45% current) and modestly lower equity ratios of 55.0% for water (vs. 56.3% BofAS

requested) and 51.5% for wastewater (in line with the request; vs. 52.9% current). +1 646 855 1506 ross.fowler@bofa.com

Floor established, upside constrained F.ResearchPaul ColeAnalyst

While the headline recommendation signals regulatory pushback, the alternative BofAS paul.cole2@bofa.com

framework provides a clearer floor for partial recovery, particularly in wastewater, where Rinny Singh

the requested capital structure was preserved. Similar to the Columbia Gas case in late Research Analyst

2025: the ALJ found the company had not fully met its burden of proof but provided an BofASrinny.singh@bofa.com