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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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51-0063696
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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AWK
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates;
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the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure, authorized return on equity, capital investment, system acquisitions and dispositions, taxes, permitting and other decisions;
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changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts;
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limitations on the availability of the Company’s water supplies or sources of water, or restrictions on its use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors;
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changes in laws, governmental regulations and policies, including with respect to environmental, health and safety, consumer privacy, water quality and water quality accountability, emerging contaminants, public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections;
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weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms, sinkholes and solar flares;
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the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions;
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the risks associated with the Company’s aging infrastructure, and its ability to appropriately maintain and replace current infrastructure, including its operational and technology systems, and manage the expansion of its businesses;
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exposure or infiltration of the Company’s technology and critical infrastructure systems, including the disclosure of sensitive, personal or confidential information contained therein, through physical or cyber attacks or other means;
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the Company’s ability to obtain permits and other approvals for projects;
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changes in the Company’s capital requirements;
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the Company’s ability to control operating expenses and to achieve operating efficiencies;
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the intentional or unintentional actions of a third party, including contamination of the Company’s water supplies or water provided to its customers;
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the Company’s ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials;
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the Company’s ability to successfully meet growth projections for the Regulated Businesses and the Market-Based Businesses (each as defined in this Form 10-K), either individually or in the aggregate, and capitalize on growth opportunities, including, among other things, with respect to:
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acquiring, closing and successfully integrating regulated operations and market-based businesses;
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entering into contracts and other agreements with, or otherwise obtaining, new customers or partnerships in the Market-Based Businesses; and
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realizing anticipated benefits and synergies from new acquisitions;
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risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations;
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cost overruns relating to improvements in or the expansion of the Company’s operations;
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the Company’s ability to successfully develop and implement new technologies and to protect related intellectual property;
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•
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the Company’s ability to maintain safe work sites;
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the Company’s exposure to liabilities related to environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers;
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•
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changes in general economic, political, business and financial market conditions;
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access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures;
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•
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fluctuations in interest rates;
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restrictive covenants in or changes to the credit ratings on the Company or any of its subsidiaries, or on any of their current or future indebtedness, that could increase the Company’s financing costs or funding requirements or affect the ability to borrow, make payments on debt or pay dividends;
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•
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fluctuations in the value of benefit plan assets and liabilities that could increase the Company’s cost and funding requirements;
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changes in federal or state general, income and other tax laws, including any further rules, regulations, interpretations and guidance by the U.S. Department of the Treasury and state or local taxing authorities (collectively, the “Related Interpretations”) related to the enactment of the TCJA, the availability of tax credits and tax abatement programs, and the Company’s ability to utilize its U.S. federal and state income tax net operating loss (“NOL”) carryforwards;
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migration of customers into or out of the Company’s service territories;
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the use by municipalities of the power of eminent domain or other authority to condemn the systems of one or more of the Company’s utility subsidiaries, or the assertion by private landowners of similar rights against such utility subsidiaries;
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any difficulty or inability to obtain insurance for the Company, its inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or its inability to obtain reimbursement under existing insurance programs and coverages for any losses sustained;
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the incurrence of impairment charges related to the Company’s goodwill or other assets;
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labor actions, including work stoppages and strikes;
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the Company’s ability to retain and attract qualified employees;
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civil disturbances or terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and
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the impact of new, and changes to existing, accounting standards.
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ITEM 1.
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BUSINESS
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Operating Revenues (in millions)
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Number of Customers (in thousands)
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|||||||||||||||||||||||
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Water (a)
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Wastewater
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Total
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% of Total
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Water
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Wastewater
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Total
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% of Total
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|||||||||||
New Jersey
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$
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718
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$
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42
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$
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760
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24.6
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%
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651
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51
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702
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20.4
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%
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Pennsylvania
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627
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62
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689
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22.3
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%
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666
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74
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740
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21.6
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%
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Missouri
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314
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11
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325
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10.5
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%
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470
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15
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485
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14.1
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%
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Illinois
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281
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24
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305
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9.9
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%
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286
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51
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337
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9.8
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%
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California
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228
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4
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232
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7.5
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%
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177
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3
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180
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5.2
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%
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Indiana
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223
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1
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224
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7.2
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%
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314
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2
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316
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9.2
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%
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West Virginia
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158
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1
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159
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5.1
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%
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166
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1
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167
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4.9
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%
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Total—Top Seven States (b)
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2,549
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145
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2,694
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87.1
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%
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2,730
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197
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2,927
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85.2
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%
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Other states (c)
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378
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22
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400
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12.9
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%
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475
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32
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507
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14.8
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%
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Total Regulated Businesses
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$
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2,927
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$
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167
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$
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3,094
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100.0
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%
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3,205
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229
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3,434
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100.0
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%
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(a)
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Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
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(b)
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The Company’s “Top Seven States” are determined based upon operating revenues.
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(c)
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Includes the Company’s utilities in the following states: Georgia, Hawaii, Iowa, Kentucky, Maryland, Michigan, New York, Tennessee and Virginia.
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(a)
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Includes water revenues from public authorities and other utilities and community water systems under bulk contracts.
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(b)
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Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
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2019
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2018
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2017
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(In thousands)
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Water
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Wastewater
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Water
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Wastewater
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Water
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Wastewater
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||||||
Residential
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2,914
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215
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2,892
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188
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2,872
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182
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Commercial
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222
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13
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222
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11
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221
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11
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Fire service
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49
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—
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48
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—
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47
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—
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Industrial
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4
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—
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4
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—
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4
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—
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Public and other (a)
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16
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1
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16
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1
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16
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—
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Total
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3,205
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229
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3,182
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200
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3,160
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193
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(a)
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Includes public authorities and other utilities and community water and wastewater systems under bulk contracts. Bulk contracts, which are accounted for as a single customer in the table above, generally result in service to multiple customers.
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Regulatory Practices
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Description
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States Allowed
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Infrastructure replacement surcharges
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Allows rates to change periodically, outside a general rate case proceeding, to reflect recovery of capital investments made to replace infrastructure necessary to sustain safe, reliable services for the Company’s customers. These mechanisms typically involve periodic filings and reviews to ensure transparency.
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IA, IL, IN, KY, MO, NJ, NY, PA, TN, VA, WV
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Future test year
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A test period used for setting rates, which begins with the date new rates are effective. This allows current or projected revenues, expenses and capital investments to be collected on a more timely basis.
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CA, HI, IA, IL, IN, KY, NY, PA, TN, VA
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Hybrid test year
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Allows an update to historical data for “known and measurable” changes that occur subsequent to the historical test year.
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MD, MO, NJ, WV
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Utility plant recovery mechanisms
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Allows recovery of the full return on utility plant costs during the construction period, instead of capitalizing an allowance for funds used during construction. In addition, some states allow the utility to seek pre-approval of certain capital projects and associated costs. In this pre-approval process, the PUC may assess the prudency of such projects.
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CA, IL, KY, NY, PA, TN, VA
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Expense mechanisms
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Allows changes in certain operating expenses, which may fluctuate based on conditions beyond the utility’s control, to be recovered outside of a general rate case proceeding or deferred until the next general rate case proceeding.
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CA, IL, MD, MO, NJ, NY, PA, TN, VA
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Revenue stability mechanisms
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Separates a utility’s cost recovery from the amount of water it sells to recover its fixed costs and ongoing infrastructure investment needs. Such a mechanism adjusts rates periodically to ensure that a utility’s revenue will be sufficient to cover its costs, regardless of sales volume, including recognition of declining sales resulting from reduced consumption, while providing an incentive for customers to use water more efficiently.
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CA, IL, NY
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Consolidated tariffs
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Use of a unified rate structure for water systems owned and operated by a single utility, which may or may not be physically interconnected. The consolidated tariff pricing structure may be used fully or partially in a state, and is generally used to prioritize capital investments and moderate the impact of periodic fluctuations in local costs, while lowering administrative costs for customers. Pennsylvania also permits a blending of water and wastewater revenue requirements.
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CA, IA, IL, IN, KY, MD, MO, NJ, NY, PA, VA, WV
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Surface Water
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Ground Water
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Purchased Water
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New Jersey
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72%
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24%
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4%
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Pennsylvania
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91%
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7%
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2%
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Missouri
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77%
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22%
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1%
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Illinois
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55%
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35%
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10%
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California
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—
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64%
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36%
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Indiana
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44%
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56%
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—
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West Virginia
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100%
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—
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—
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•
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Homeowner Services Group (“HOS”), which provides various warranty protection programs and other home services to residential customers;
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•
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Military Services Group (“MSG”), which enters into long-term contracts with the U.S. government to provide water and wastewater services on various military installations.
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•
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Safety—The safety of the Company’s employees and its customers is the number one focus for American Water.
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Customers—The Company’s customers are at the center of everything it does, helping the Company to shape its strategic priorities. The Company challenges itself so that if its regulated utility customers were to have a choice of providers, the Company would want them to choose American Water.
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•
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People—Maintaining an environment which is open, transparent, diverse and inclusive, and where the Company’s people feel valued, included and accountable, is critical to the Company’s ability to serve its customers every day.
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•
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Operational Excellence—The Company’s operational excellence strategy helps it to find better and more efficient ways to do business, and to provide safe, clean and affordable water services for its customers.
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•
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Growth—The Company believes that when companies grow, they can invest more in creating stable jobs, training, benefits, infrastructure and their communities. The Company’s growth benefits all of its stakeholders, including its shareholders.
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•
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Energy Use
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•
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The Company lowered its greenhouse gas emissions through December 31, 2018 by approximately 31% since its base year of 2007 with a goal of achieving a 40% reduction by 2025.
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The Company’s headquarters building in Camden, New Jersey attained LEED Platinum certification, and earned all possible points within the sustainable site credit category.
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Design, construct, operate and maintain the Company’s systems for efficiency and best practices.
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•
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Water Supply
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•
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Constructed a new 90 million gallon reservoir and intake in Bel Air, Maryland in response to water supply demands during times of drought and in order to meet levels required by Maryland regulators. The new reservoir provides a long-term, safe and reliable water supply and economic opportunity in that region.
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•
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Water Policy Leadership
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•
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Expect to spend between $8.8 billion and $9.4 billion from 2020 to 2024 and between $20 billion and $22 billion from 2020 to 2029 on capital investments to address aging infrastructure, reduce or eliminate leaks, improve cyber and physical security, and increase resiliency of critical assets against the impacts of climate variability. Approximately 8% of the Company’s total projected capital investment is dedicated to resiliency.
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•
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More than $1.5 billion per year is allocated to renewing and improving regulated assets through a long-term perspective.
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Scientists dedicated to research and partnering with water research foundations, on water quality and technology-water source monitoring.
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•
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Collaboration and partnerships with federal and state agencies to support effective environmental, health and safety and water quality standards and regulations.
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•
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People
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•
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During 2019, nearly 96,000 hours of safety training were completed by the Company’s employees.
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•
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As a result of the Company’s continued focus on safety, the Company has made significant progress towards its zero injuries goal, reducing workplace injuries by 61% over the past five years, and the Company’s 2019 safety performance was the best in its recorded history. Through year end 2019, the Company has further reduced its recordable injury rate to 1.13, approximately 62% better than the industry average.
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•
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During 2019, approximately 86% of the Company’s job requisitions had a diverse candidate pool, with approximately 57% of transfers or promotions filled by minority, female, veteran or disabled individuals.
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•
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Customers
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•
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Achieved a customer satisfaction rating in the top quartile among the Company’s industry peer group.
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•
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Communities
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•
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More than 5,000 hours of Company-sponsored community service performed during 2019 by its employees.
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•
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Company-sponsored workplace giving campaigns with the United Way and Water For People.
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•
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Through annual contributions from the American Water Charitable Foundation, the Company focused on supporting its employees in their own charitable endeavors, providing support for disaster relief efforts, and providing funding for initiatives related to clean water, conservation, education and community sustainability.
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•
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Board and Committees
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•
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The Board of Directors and each of its committees are led by an independent, non-executive chairperson.
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•
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The Board of Directors met 12 times in 2019.
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•
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In July 2019, the Board of Directors added three additional directors, increasing its size from eight to 11 members. The three new directors represent gender, racial and experiential diversity, and all three have extensive regulated utility backgrounds.
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•
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Diversity
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•
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With the addition of three new directors in 2019, the percentage of women on the Board of Directors increased to 54.5% as of December 31, 2019.
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•
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The Company’s average director tenure was approximately 5.8 years as of December 31, 2019.
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•
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Demonstrated and Representative Expertise
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•
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The Company’s Board of Directors has demonstrated expertise, including experience in utility and finance operations, customer service, cybersecurity, the military, financial services and capital markets, service as a public company CEO and board member, and management of global operations.
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•
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using its research findings to communicate information to its customers on the actions they can take to manage Legionella (the Centers for Disease Control statistics indicate that water-associated disease from Legionella is on the rise, with exposure typically associated with customer-owned plumbing systems in large buildings);
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•
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aerial drone testing to detect harmful algal blooms and testing ultrasonic technology to help prevent taste and odor events and to eliminate cyanotoxins before they get to the water treatment plant;
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•
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the implementation of water source assessment tools, including sensors and analytics, to evaluate and track chemical storage and aid in the detection of source water contamination events;
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•
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development of methodology and measurement techniques for emerging contaminants to investigate transport, occurrence and treatment; and
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•
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the implementation of activated carbon, biofiltration and ion exchange for the control of emerging contaminants.
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Name
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Age
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Office and Experience
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Susan N. Story
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60
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President and Chief Executive Officer. Ms. Story has served as President and Chief Executive Officer of the Company and a director since May 2014, and has announced her retirement from these positions, effective April 1, 2020. Ms. Story served as Senior Vice President and Chief Financial Officer of the Company from April 2013 until May 2014. Prior to joining American Water, she served as President and Chief Executive Officer of Southern Company Services, a subsidiary of Southern Company, from January 2011 until March 2013 and President and Chief Executive Officer of Gulf Power Company, also a subsidiary of Southern Company, from 2003 until December 2010. Since 2008, Ms. Story has served as a member of the Board of Directors of Raymond James Financial, Inc., a diversified financial services company, and as lead director since 2016. Since January 2017, Ms. Story has also served on the Board of Directors of Dominion Energy, Inc., a producer and transporter of energy.
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Brian Chin
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46
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Senior Vice President, Strategic Financial Planning. Mr. Chin joined the Company as its Senior Vice President, Planning and Strategy Integration in June 2017. He has had his current title since February 15, 2019, and he also served as Interim Treasurer from October 26, 2018 until February 15, 2019. Prior to joining the Company, from May 2013 to April 2017, Mr. Chin served as the lead utility analyst for the North America research function at Bank of America Merrill Lynch. From 2001 to 2013, Mr. Chin worked in Electric Utilities Research at Citigroup. Within that period, Mr. Chin was the global head of Electric Utilities Research for Citigroup.
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M. Susan Hardwick
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57
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Executive Vice President and Chief Financial Officer. Ms. Hardwick joined American Water on June 3, 2019 as its Executive Vice President—Finance and became its Executive Vice President and Chief Financial Officer on July 1, 2019. Ms. Hardwick previously served as the Executive Vice President and Chief Financial Officer of Vectren Corporation, which was sold to CenterPoint Energy, Inc. on February 1, 2019. Ms. Hardwick joined Vectren Corporation in January 2000 and served in a variety of positions, including Vice President, Controller and Assistant Treasurer; Senior Vice President, Finance; Senior Vice President, Chief Financial Officer; and Executive Vice President and Chief Financial Officer. Prior to joining Vectren, Ms. Hardwick was Assistant Corporate Comptroller at Cinergy Corp. She began her career with Arthur Andersen & Co., leaving there as a senior manager to join Cinergy Corp. Ms. Hardwick is a Certified Public Accountant.
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Melanie M. Kennedy
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46
|
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Senior Vice President, Human Resources. Since March 2017, Ms. Kennedy has served as the Company’s Senior Vice President, Human Resources. From August 2014 until March 2017, Ms. Kennedy served as Vice President, Human Resources of the Company, and from August 2012 to August 2014, she served as Director, Human Resources in the Company’s Northeast Division. Ms. Kennedy initially joined the Company in 2007, and before that time, she practiced law for nine years.
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Walter J. Lynch
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|
57
|
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Executive Vice President and Chief Operating Officer. Mr. Lynch has over 20 years of experience in the water and wastewater industry. He has served as the Company’s Executive Vice President and Chief Operating Officer since January 2016, as Chief Operating Officer of Regulated Operations from February 2010 to December 2015, and President of Regulated Operations from July 2008 to December 2015. Mr. Lynch joined the Company in 2001. Mr. Lynch is on the Board of Directors of the National Association of Water Companies and serves on its Executive Committee. In addition, Mr. Lynch also serves on the Water Research Foundation Board of Trustees. Effective April 1, 2020, Mr. Lynch will succeed Ms. Story as President and Chief Executive Officer of the Company and a member of the Board of Directors.
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James S. Merante
|
|
45
|
|
Vice President and Treasurer. Mr. Merante was appointed as the Company’s Vice President and Treasurer on February 15, 2019. Prior to that, Mr. Merante was Vice President, Internal Audit from February 2018 to February 15, 2019, and served as Divisional Chief Financial Officer for the Company’s Mid-Atlantic Division from July 2014 until February 2018. Prior to joining American Water, Mr. Merante served as Vice President of Operations for FSM, Inc., a private digital media company, from February 2010 until July 2014. Mr. Merante is licensed as a Certified Public Accountant in Pennsylvania.
|
Michael A. Sgro
|
|
61
|
|
Executive Vice President, General Counsel and Secretary. Mr. Sgro has 25 years of experience in the water and wastewater industry. He has served as the Company’s Executive Vice President, General Counsel and Secretary since January 2016 and its Senior Vice President, General Counsel and Secretary from February 2015 until January 2016. Prior to that, he served as the Company’s Interim General Counsel and Secretary from January 2015 until February 2015 and as Vice President, General Counsel and Secretary of American Water’s Northeast Division from 2002 to 2015.
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Loyd “Aldie” Warnock
|
|
60
|
|
Senior Vice President, Chief External Affairs and Corporate Business Development Officer. Mr. Warnock has served as the Company’s Senior Vice President, Chief External Affairs and Corporate Business Development Officer since January 1, 2020 and as the Company's Senior Vice President of External Affairs and Business Development from August 1, 2017 to December 31, 2019. From April 2014 until August 2017, Mr. Warnock served as the Company’s Senior Vice President of External Affairs, Communications and Public Policy. Prior to joining the Company, he served as Senior Vice President of External Affairs at Midwest Independent System Operator, Inc., a non-profit, self-governing organization, from March 2011 to April 2014. Prior to that, he served as Vice President of External Affairs for Allegheny Energy, Inc. from December 2005 to February 2011 and Senior Vice President of Governmental and Regulatory Affairs at Mirant Corporation from July 2004 to November 2005. Mr. Warnock serves on the Board of Directors of the National Association of Water Companies and on the Executive Advisory Board of the Mississippi State University College of Business.
|
Melissa K. Wikle
|
|
54
|
|
Vice President and Controller. Ms. Wikle joined the Company in July 2016 as its Vice President and Controller, and assumed the duties of the Company’s principal accounting officer in August 2016. Prior to joining the Company, Ms. Wikle served as Corporate Controller and Chief Accounting Officer of Columbus McKinnon Corporation, a publicly-traded worldwide designer, manufacturer and marketer of material handling products, systems and services, since April 2011. Ms. Wikle is a Certified Public Accountant.
|
•
|
cover our expenses, including purchased water and costs of chemicals, fuel and other commodities used in our operations;
|
•
|
enable us to recover our investment; and
|
•
|
provide us with an opportunity to earn an appropriate rate of return on our investment.
|
•
|
increased frequency and duration of droughts;
|
•
|
increased precipitation and flooding;
|
•
|
increased frequency and severity of storms and other weather events;
|
•
|
challenges associated with changes in temperature or increases in ocean levels;
|
•
|
potential degradation of water quality;
|
•
|
decreases in available water supply and changes in water usage patterns;
|
•
|
increases in disruptions in service;
|
•
|
increased costs to repair damaged facilities; or
|
•
|
increased costs to reduce risks associated with the increasing frequency of natural events, including to improve the resiliency and reliability of our water production and delivery facilities and systems.
|
•
|
making it more difficult for us to increase our rates and, as a consequence, to recover our costs or earn our expected rates of return;
|
•
|
changing the determination of the costs, or the amount of costs, that would be considered recoverable in rate cases;
|
•
|
restricting our ability to terminate our services to customers who owe us money for services previously provided or limiting our bill collection efforts;
|
•
|
requiring us to provide water or wastewater services at reduced rates to certain customers;
|
•
|
limiting or restricting our ability to acquire water or wastewater systems, purchase or dispose of assets or issue securities, or making it less cost-effective for us to do so;
|
•
|
negatively impacting the deductibility of expenses under federal or state tax laws, the amount of tax credits or tax abatement benefits that may be available, the amount of taxes owed, the timing of tax effects on rates, or the ability to utilize our net operating loss carryforwards;
|
•
|
changing regulations that affect the benefits we expected to receive when we began offering services in a particular area;
|
•
|
increasing the associated costs of, or difficulty complying with, environmental, health, safety, consumer privacy, water quality, and water quality accountability laws and regulations to which our operations are subject;
|
•
|
changing or placing additional limitations on change in control requirements relating to any concentration of ownership of our common stock;
|
•
|
making it easier for governmental entities to convert our assets to public ownership via condemnation, eminent domain or other similar process, or for governmental agencies or private plaintiffs to assess liability against us for damages under these or similar processes;
|
•
|
placing limitations, prohibitions or other requirements with respect to the sharing of information and participation in transactions by or between a regulated subsidiary and us or our other affiliates, including Service Company and any of our other subsidiaries;
|
•
|
restricting or prohibiting our extraction of water from rivers, streams, reservoirs or aquifers; and
|
•
|
revoking or altering the terms of a CPCN issued to us by a state PUC.
|
•
|
incurrence or assumption of debt, contingent liabilities and environmental liabilities of or with respect to an acquired business, including liabilities that were unknown at the time of acquisition;
|
•
|
failure to recover acquisition premiums;
|
•
|
unanticipated capital expenditures;
|
•
|
failure to maintain effective internal control over financial reporting;
|
•
|
the need to successfully integrate the acquired systems’ cybersecurity and infrastructure protection measures with those of the Company’s;
|
•
|
recording goodwill and other intangible assets at values that ultimately may be subject to impairment charges;
|
•
|
fluctuations in quarterly results;
|
•
|
unanticipated acquisition-related expenses;
|
•
|
failure to realize anticipated benefits, such as cost savings and revenue enhancements; and
|
•
|
difficulties in integrating or assimilating personnel, benefits, services and systems.
|
•
|
power loss, computer systems failures, and internet, telecommunications or data network failures;
|
•
|
operator error or improper operation by, the negligent or improper supervision of, or the intentional acts of, employees and contractors;
|
•
|
physical and electronic loss of customer or employee data due to security breaches, cyber attacks, hacking, denial of services action, misappropriation of data or other property and similar events;
|
•
|
computer viruses; and
|
•
|
severe weather and other events, including without limitation, hurricanes, tornadoes, fires, floods, earthquakes and other disasters.
|
•
|
limiting our ability to obtain additional financing to fund future working capital requirements or capital expenditures;
|
•
|
exposing us to interest rate risk with respect to the portion of our indebtedness that bears interest at variable rates;
|
•
|
limiting our ability to pay dividends on our common stock or make payments in connection with our other obligations;
|
•
|
impairing our access to the capital markets for debt and equity;
|
•
|
requiring that an increasing portion of our cash flows from operations be dedicated to the payment of the principal and interest on our debt, thereby reducing funds available for future operations, dividends on our common stock or capital expenditures;
|
•
|
limiting our ability to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions; and
|
•
|
placing us at a competitive disadvantage compared to those of our competitors that have less debt.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
•
|
80 surface water treatment plants;
|
•
|
520 groundwater treatment plants;
|
•
|
140 wastewater treatment plants;
|
•
|
52,500 miles of transmission, distribution and collection mains and pipes;
|
•
|
1,000 groundwater wells;
|
•
|
1,500 water and wastewater pumping stations;
|
•
|
1,300 treated water storage facilities; and
|
•
|
76 dams.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Years Ended December 31,
|
||||||||||||||||||
(In millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Statement of Operations data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
$
|
3,610
|
|
|
$
|
3,440
|
|
|
$
|
3,357
|
|
|
$
|
3,302
|
|
|
$
|
3,159
|
|
Net income attributable to common shareholders
|
621
|
|
|
567
|
|
|
426
|
|
|
468
|
|
|
476
|
|
|||||
Net income attributable to common shareholders per basic common share
|
$
|
3.44
|
|
|
$
|
3.16
|
|
|
$
|
2.39
|
|
|
$
|
2.63
|
|
|
$
|
2.66
|
|
Net income attributable to common shareholders per diluted common share
|
3.43
|
|
|
3.15
|
|
|
2.38
|
|
|
2.62
|
|
|
2.64
|
|
|||||
Balance Sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
22,682
|
|
|
$
|
21,223
|
|
|
$
|
19,482
|
|
|
$
|
18,482
|
|
|
$
|
17,241
|
|
Long-term debt and redeemable preferred stock at redemption value
|
8,644
|
|
|
7,576
|
|
|
6,498
|
|
|
5,759
|
|
|
5,874
|
|
|||||
Other data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
$
|
2.00
|
|
|
$
|
1.82
|
|
|
$
|
1.66
|
|
|
$
|
1.50
|
|
|
$
|
1.36
|
|
Net cash provided by operating activities (a) (b)
|
1,383
|
|
|
1,386
|
|
|
1,449
|
|
|
1,289
|
|
|
1,195
|
|
|||||
Net cash used in investing activities (b)
|
(1,945
|
)
|
|
(2,036
|
)
|
|
(1,672
|
)
|
|
(1,590
|
)
|
|
(1,459
|
)
|
|||||
Net cash provided by financing activities (a) (b)
|
494
|
|
|
726
|
|
|
207
|
|
|
328
|
|
|
290
|
|
|||||
Capital expenditures included in net cash used in investing activities
|
(1,654
|
)
|
|
(1,586
|
)
|
|
(1,434
|
)
|
|
(1,311
|
)
|
|
(1,160
|
)
|
(a)
|
The information for the years ended December 31, 2016 and 2015, has been revised to reflect the retrospective application of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting, which was adopted by the Company as of January 1, 2017.
|
(b)
|
The information for the years ended December 31, 2016 and 2015, has been revised to reflect the retrospective application of Accounting Standards Update 2016-18, Restricted Cash, which was adopted by the Company as of December 31, 2017.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Diluted earnings per share (GAAP):
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.43
|
|
|
$
|
3.15
|
|
|
$
|
2.38
|
|
Adjustments:
|
|
|
|
|
|
||||||
Loss on sale of Keystone operations
|
0.24
|
|
|
—
|
|
|
—
|
|
|||
Income tax impact
|
(0.05
|
)
|
|
—
|
|
|
—
|
|
|||
Net adjustment
|
0.19
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Freedom Industries settlement activities
|
(0.02
|
)
|
|
(0.11
|
)
|
|
(0.12
|
)
|
|||
Income tax impact
|
0.01
|
|
|
0.03
|
|
|
0.05
|
|
|||
Net adjustment
|
(0.01
|
)
|
|
(0.08
|
)
|
|
(0.07
|
)
|
|||
|
|
|
|
|
|
||||||
Gain on sale of Contract Services Group contracts
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
|||
Income tax impact
|
—
|
|
|
0.02
|
|
|
—
|
|
|||
Net adjustment
|
—
|
|
|
(0.06
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Keystone impairment charge
|
—
|
|
|
0.31
|
|
|
—
|
|
|||
Income tax impact
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net adjustment
|
—
|
|
|
0.22
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Early extinguishment of debt at parent company
|
—
|
|
|
—
|
|
|
0.03
|
|
|||
Income tax impact
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|||
Net adjustment
|
—
|
|
|
—
|
|
|
0.02
|
|
|||
|
|
|
|
|
|
||||||
Impact of re-measurement from the TCJA
|
—
|
|
|
0.07
|
|
|
0.70
|
|
|||
Total net adjustments
|
0.18
|
|
|
0.15
|
|
|
0.65
|
|
|||
Adjusted diluted earnings per share (non-GAAP)
|
$
|
3.61
|
|
|
$
|
3.30
|
|
|
$
|
3.03
|
|
•
|
$1.7 billion capital investment in the Regulated Businesses, the majority for infrastructure improvements and replacements.
|
•
|
$235 million to fund acquisitions in the Regulated Businesses, which added approximately 53,100 water and wastewater customers.
|
•
|
The Company has entered into agreements for pending acquisitions in the Regulated Businesses to add approximately 44,200 customers.
|
•
|
Joint Base San Antonio is comprised of Randolph Air Force Base, Fort Sam Houston, Camp Bullis and Lackland Air Force Base. The installation spans 46,539 acres, across 11 geographically separated parcels of land. The contract award includes estimated revenues of approximately $448 million over a 50-year period, subject to an annual economic price adjustment.
|
•
|
The United States Military Academy is located at West Point, New York, the oldest continuously operated Army post in the United States. The institution’s campus, central post and training areas expand across nearly 16,000 acres, and is home to a student body of approximately 4,400 cadets. The total contract award includes estimated revenues of approximately $519 million over a 50-year period, subject to an annual economic price adjustment.
|
•
|
capital investment for infrastructure improvements in the Regulated Businesses of $8.2 billion over the next five years, and between $18.2 billion and $19.2 billion over the next 10 years, including $1.6 billion expected in 2020; and
|
•
|
growth from acquisitions in the Regulated Businesses to expand the Company’s water and wastewater customer base of between $600 million to $1.2 billion over the next five years, and between $2 billion to $3 billion over the next 10 years, including a range of $100 million to $300 million expected in 2020.
|
•
|
In 2019:
|
•
|
the Regulated Businesses achieved an adjusted O&M efficiency ratio (a non-GAAP measure) of 34.5% for the year ended December 31, 2019, compared to 35.6% and 35.3% for the years ended December 31, 2018 and 2017, respectively. The improvement in the Company’s adjusted O&M efficiency ratio in 2019, when compared to 2018, was due to an increase in operating revenues as well as continued focus on operating costs of the Regulated Businesses;
|
•
|
the Company worked to decrease costs and deploy capital efficiently, including using trenchless technologies for pipeline rehabilitation and leveraging its buying power and strategic sourcing to drive cost savings;
|
•
|
the Company continued its commitment to water quality and the environment by leveraging new technologies; the Company now has advanced water quality sensors at all of its major drinking water intake sites and is automating its environmental reporting and compliance systems; and
|
•
|
the Company implemented other technology tools that will enhance communication, collaboration and mobility, enable further business insights and process automation, and increase self-service capabilities, to help its employees work safely and efficiently, and enhance the customer experience.
|
•
|
Looking forward, the Company will focus on technology and efficiency to:
|
•
|
be the leader in optimizing technology across the water and wastewater industry, with a focus on specific, innovative projects that will set it apart from other utilities; aiding the Company in serving its customers with greater ease, making the Company’s employees safer and helping the Company operate more efficiently; and
|
•
|
further improve the Company’s adjusted O&M efficiency ratio.
|
|
For the Years Ended December 31,
|
||||||||||
(Dollars in millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Total operation and maintenance expenses (a)
|
$
|
1,544
|
|
|
$
|
1,479
|
|
|
$
|
1,369
|
|
Less:
|
|
|
|
|
|
||||||
Operation and maintenance expenses—Market-Based Businesses
|
393
|
|
|
362
|
|
|
337
|
|
|||
Operation and maintenance expenses—Other (a)
|
(31
|
)
|
|
(42
|
)
|
|
(44
|
)
|
|||
Total operation and maintenance expenses—Regulated Businesses (a)
|
1,182
|
|
|
1,159
|
|
|
1,076
|
|
|||
Less:
|
|
|
|
|
|
||||||
Regulated purchased water expenses
|
135
|
|
|
133
|
|
|
128
|
|
|||
Allocation of non-operation and maintenance expenses
|
31
|
|
|
31
|
|
|
29
|
|
|||
Impact of Freedom Industries settlement activities (b)
|
(4
|
)
|
|
(20
|
)
|
|
(22
|
)
|
|||
Adjusted operation and maintenance expenses—Regulated Businesses (i)
|
$
|
1,020
|
|
|
$
|
1,015
|
|
|
$
|
941
|
|
|
|
|
|
|
|
||||||
Total operating revenues
|
$
|
3,610
|
|
|
$
|
3,440
|
|
|
$
|
3,357
|
|
Less:
|
|
|
|
|
|
||||||
Pro forma adjustment for impact of the TCJA (c)
|
—
|
|
|
—
|
|
|
166
|
|
|||
Total pro forma operating revenues
|
3,610
|
|
|
3,440
|
|
|
3,191
|
|
|||
Less:
|
|
|
|
|
|
||||||
Operating revenues—Market-Based Businesses
|
539
|
|
|
476
|
|
|
422
|
|
|||
Operating revenues—Other
|
(23
|
)
|
|
(20
|
)
|
|
(23
|
)
|
|||
Total operating revenues—Regulated Businesses
|
3,094
|
|
|
2,984
|
|
|
2,792
|
|
|||
Less:
|
|
|
|
|
|
||||||
Regulated purchased water revenues (d)
|
135
|
|
|
133
|
|
|
128
|
|
|||
Adjusted operating revenues—Regulated Businesses (ii)
|
$
|
2,959
|
|
|
$
|
2,851
|
|
|
$
|
2,664
|
|
|
|
|
|
|
|
||||||
Adjusted O&M efficiency ratio—Regulated Businesses (i) / (ii)
|
34.5
|
%
|
|
35.6
|
%
|
|
35.3
|
%
|
(a)
|
Includes the impact of the Company’s adoption of ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-Retirement Benefit, on January 1, 2018.
|
(b)
|
Includes the impact of settlements in 2017 and 2018 with two of the Company’s general liability insurance carriers, and a reduction in the first quarter of 2019 of a liability, each related to the Freedom Industries chemical spill.
|
(c)
|
Includes the estimated impact of the TCJA on operating revenues for the Regulated Businesses for all periods presented prior to January 1, 2018, as if the lower federal corporate income tax rate was in effect for these periods.
|
(d)
|
The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses.
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
General rate cases by state:
|
|
|
|
|
|
|
|
|
|||
Indiana (a)
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Kentucky (effective June 28, 2019)
|
13
|
|
|
—
|
|
|
—
|
|
|||
California (b)
|
4
|
|
|
10
|
|
|
5
|
|
|||
New York (c)
|
4
|
|
|
5
|
|
|
4
|
|
|||
West Virginia (effective February 25, 2019)
|
19
|
|
|
—
|
|
|
—
|
|
|||
Maryland (effective February 5, 2019)
|
1
|
|
|
—
|
|
|
—
|
|
|||
New Jersey (d)
|
—
|
|
|
40
|
|
|
—
|
|
|||
Missouri (effective May 28, 2018)
|
—
|
|
|
33
|
|
|
—
|
|
|||
Pennsylvania (effective January 1, 2018)
|
—
|
|
|
62
|
|
|
—
|
|
|||
Virginia (e)
|
—
|
|
|
—
|
|
|
5
|
|
|||
Iowa (effective March 27, 2017)
|
—
|
|
|
—
|
|
|
4
|
|
|||
Illinois (effective January 1, 2017)
|
—
|
|
|
—
|
|
|
25
|
|
|||
Total general rate case authorizations
|
$
|
45
|
|
|
$
|
150
|
|
|
$
|
43
|
|
(a)
|
The Company’s Indiana subsidiary received an order approving a joint settlement agreement with all major parties with respect to its general rate case filing, authorizing annualized incremental revenues of $4 million in the first rate year, effective July 1, 2019, and $13 million in the second rate year, effective approximately May 1, 2020.
|
(b)
|
The Company’s California subsidiary received approval for the second rate year (2019) step increase associated with its most recent general rate case authorization, effective May 11, 2019. On December 13, 2018, a settlement in this subsidiary’s general rate case filing was approved, authorizing rates effective January 1, 2018. In 2017, step rates were effective January 13 through February 2.
|
(c)
|
The Company’s New York subsidiary implemented its third step increase associated with its most recent general rate case authorization, effective April 1, 2019.
|
(d)
|
The effective date was June 15, 2018. As part of the resolution of the general rate case, the Company’s New Jersey subsidiary’s customers received refunds for the amount of provisional rates implemented as of June 15, 2018 and collected, to the extent that such rates exceeded the final rate increase plus interest.
|
(e)
|
The effective date was May 24, 2017, authorizing the implementation of interim rates as of April 1, 2016.
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Infrastructure surcharges by state:
|
|
|
|
|
|
||||||
Missouri (a)
|
$
|
14
|
|
|
$
|
6
|
|
|
$
|
6
|
|
Pennsylvania (b)
|
11
|
|
|
—
|
|
|
1
|
|
|||
Tennessee (effective September 1, 2019, April 10, 2018 and March 14, 2017)
|
1
|
|
|
1
|
|
|
2
|
|
|||
New York (effective August 1, 2019)
|
2
|
|
|
—
|
|
|
—
|
|
|||
New Jersey (c)
|
15
|
|
|
—
|
|
|
14
|
|
|||
Illinois (effective January 1, 2019 and January 1, 2018)
|
8
|
|
|
3
|
|
|
—
|
|
|||
West Virginia (effective January 1, 2019, January 1, 2018 and January 1, 2017)
|
2
|
|
|
3
|
|
|
2
|
|
|||
Indiana (effective March 14, 2018 and March 22, 2017)
|
—
|
|
|
7
|
|
|
8
|
|
|||
Virginia (effective March 1, 2018)
|
—
|
|
|
1
|
|
|
—
|
|
|||
Total infrastructure surcharge authorizations
|
$
|
53
|
|
|
$
|
21
|
|
|
$
|
33
|
|
(a)
|
In 2019, $5 million was effective December 21 and $9 million was effective June 24. In 2018, the effective date was December 15. In 2017, the effective date was December 15.
|
(b)
|
In 2019, $6 million was effective October 1, $3 million was effective July 1 and $2 million was effective April 1. In 2017, the effective date was January 1.
|
(c)
|
In 2019, the effective date was July 1. In 2017, $4 million was effective December 10 and $10 million was effective June 1.
|
(In millions)
|
Amount
|
||
Infrastructure surcharge filings by state:
|
|
||
Pennsylvania (effective January 1, 2020)
|
$
|
10
|
|
New Jersey (effective January 1, 2020)
|
10
|
|
|
Illinois (effective January 1, 2020)
|
7
|
|
|
West Virginia (effective January 1, 2020)
|
3
|
|
|
Total infrastructure surcharge filings
|
$
|
30
|
|
•
|
Indiana Senate Enrolled Act 472 allows non-municipal utilities to benefit from full appraisal recovery of their assets in a sale.
|
•
|
Indiana House Enrolled Act 1406 established the first state appropriation for water infrastructure investment at $20 million per year.
|
•
|
Indiana Senate Enrolled Act 4 extends leveling legislation to require biannual water loss audits and establishes the state revolving fund administrator as the central coordinator for water issues in the state.
|
•
|
In Pennsylvania, House Bill 751, now Act 53 of 2019, allows water and wastewater utilities responsible for funding the income taxes on taxable contributions and advances to record the income taxes paid in accumulated deferred income taxes for accounting and ratemaking purposes.
|
•
|
In West Virginia, House Bill 117 allows qualified low income customers to apply for a 20% discount on their wastewater bill.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Operating revenues
|
$
|
3,610
|
|
|
$
|
3,440
|
|
|
$
|
3,357
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Operation and maintenance
|
1,544
|
|
|
1,479
|
|
|
1,369
|
|
|||
Depreciation and amortization
|
582
|
|
|
545
|
|
|
492
|
|
|||
General taxes
|
280
|
|
|
277
|
|
|
259
|
|
|||
Loss (gain) on asset dispositions and purchases
|
34
|
|
|
(20
|
)
|
|
(16
|
)
|
|||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|||
Total operating expenses, net
|
2,440
|
|
|
2,338
|
|
|
2,104
|
|
|||
Operating income
|
1,170
|
|
|
1,102
|
|
|
1,253
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest, net
|
(382
|
)
|
|
(350
|
)
|
|
(342
|
)
|
|||
Non-operating benefit costs, net
|
16
|
|
|
20
|
|
|
(9
|
)
|
|||
Loss on early extinguishment of debt
|
(4
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|||
Other, net
|
33
|
|
|
19
|
|
|
17
|
|
|||
Total other income (expense)
|
(337
|
)
|
|
(315
|
)
|
|
(341
|
)
|
|||
Income before income taxes
|
833
|
|
|
787
|
|
|
912
|
|
|||
Provision for income taxes
|
212
|
|
|
222
|
|
|
486
|
|
|||
Consolidated net income
|
621
|
|
|
565
|
|
|
426
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||
Net income attributable to common shareholders
|
$
|
621
|
|
|
$
|
567
|
|
|
$
|
426
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
3,094
|
|
|
$
|
2,984
|
|
|
$
|
2,958
|
|
Operation and maintenance
|
1,182
|
|
|
1,159
|
|
|
1,076
|
|
|||
Depreciation and amortization
|
529
|
|
|
500
|
|
|
462
|
|
|||
General taxes
|
262
|
|
|
261
|
|
|
244
|
|
|||
(Gain) on asset dispositions and purchases
|
(10
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|||
Other income (expenses)
|
(262
|
)
|
|
(247
|
)
|
|
(266
|
)
|
|||
Income before income taxes
|
869
|
|
|
826
|
|
|
925
|
|
|||
Provision for income taxes
|
215
|
|
|
224
|
|
|
367
|
|
|||
Net income attributable to common shareholders
|
654
|
|
|
602
|
|
|
559
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Water services:
|
|
|
|
|
|
||||||
Residential
|
$
|
1,735
|
|
|
$
|
1,663
|
|
|
$
|
1,644
|
|
Commercial
|
639
|
|
|
616
|
|
|
601
|
|
|||
Fire service
|
142
|
|
|
137
|
|
|
139
|
|
|||
Industrial
|
138
|
|
|
136
|
|
|
137
|
|
|||
Public and other
|
230
|
|
|
216
|
|
|
244
|
|
|||
Total water services
|
2,884
|
|
|
2,768
|
|
|
2,765
|
|
|||
Wastewater services
|
167
|
|
|
161
|
|
|
142
|
|
|||
Other (a)
|
43
|
|
|
55
|
|
|
51
|
|
|||
Total operating revenues
|
$
|
3,094
|
|
|
$
|
2,984
|
|
|
$
|
2,958
|
|
(a)
|
Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
|
|
For the Years Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
(Gallons in millions)
|
|
|
|
|
|
|||
Billed water services volumes:
|
|
|
|
|
|
|||
Residential
|
167,470
|
|
|
172,827
|
|
|
174,420
|
|
Commercial
|
81,268
|
|
|
82,572
|
|
|
82,147
|
|
Industrial
|
37,242
|
|
|
38,432
|
|
|
39,404
|
|
Fire service, public and other
|
50,501
|
|
|
50,651
|
|
|
51,341
|
|
Total billed water services volumes
|
336,481
|
|
|
344,482
|
|
|
347,312
|
|
•
|
$132 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment in various states; a
|
•
|
$20 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; partially offset by a
|
•
|
$24 million decrease from lower water services demand, including $10 million primarily driven by unusually wet weather conditions experienced in the Northeast and Midwest during the second quarter of 2019 and ongoing customer usage reductions from conservation, partially offset by balancing accounts, primarily in the Company’s California subsidiary; and a
|
•
|
$17 million decrease from the impacts of the TCJA, including the Company’s Missouri subsidiary’s 2018 general rate case decision which authorized the adjustment of customer rates, effective May 28, 2018, to reflect the income tax savings resulting from the TCJA.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Production costs
|
$
|
317
|
|
|
$
|
313
|
|
|
$
|
298
|
|
Employee-related costs
|
462
|
|
|
451
|
|
|
431
|
|
|||
Operating supplies and services
|
237
|
|
|
227
|
|
|
209
|
|
|||
Maintenance materials and supplies
|
74
|
|
|
81
|
|
|
70
|
|
|||
Customer billing and accounting
|
55
|
|
|
60
|
|
|
51
|
|
|||
Other
|
37
|
|
|
27
|
|
|
17
|
|
|||
Total
|
$
|
1,182
|
|
|
$
|
1,159
|
|
|
$
|
1,076
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Purchased water
|
$
|
135
|
|
|
$
|
133
|
|
|
$
|
128
|
|
Fuel and power
|
90
|
|
|
91
|
|
|
89
|
|
|||
Chemicals
|
54
|
|
|
52
|
|
|
47
|
|
|||
Waste disposal
|
38
|
|
|
37
|
|
|
34
|
|
|||
Total
|
$
|
317
|
|
|
$
|
313
|
|
|
$
|
298
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Salaries and wages
|
$
|
363
|
|
|
$
|
349
|
|
|
$
|
334
|
|
Pensions
|
12
|
|
|
19
|
|
|
14
|
|
|||
Group insurance
|
60
|
|
|
57
|
|
|
57
|
|
|||
Other benefits
|
27
|
|
|
26
|
|
|
26
|
|
|||
Total
|
$
|
462
|
|
|
$
|
451
|
|
|
$
|
431
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|||
Operating revenues
|
$
|
539
|
|
|
$
|
476
|
|
|
$
|
422
|
|
Operation and maintenance
|
393
|
|
|
362
|
|
|
337
|
|
|||
Depreciation and amortization
|
37
|
|
|
29
|
|
|
18
|
|
|||
Loss (gain) on asset dispositions and purchases
|
44
|
|
|
(13
|
)
|
|
—
|
|
|||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|||
Income before income taxes
|
66
|
|
|
41
|
|
|
66
|
|
|||
Provision for income taxes
|
20
|
|
|
11
|
|
|
28
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||
Net income attributable to common shareholders
|
46
|
|
|
32
|
|
|
38
|
|
•
|
$74 million increase in HOS from contract growth and from the acquisition of Pivotal, which occurred in the second quarter of 2018; and a
|
•
|
$20 million increase in MSG from the addition of two new contracts in 2018 (Wright-Patterson Air Force Base and Fort Leonard Wood); partially offset by a
|
•
|
$18 million decrease in CSG from the sale of the majority of its O&M contracts in the third quarter of 2018; and a
|
•
|
$15 million decrease at Keystone from the exit of the construction business in the third quarter of 2018.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(Dollars in millions)
|
|
|
|
|
|
||||||
Production costs
|
$
|
29
|
|
|
$
|
32
|
|
|
$
|
37
|
|
Employee-related costs
|
109
|
|
|
104
|
|
|
97
|
|
|||
Operating supplies and services
|
128
|
|
|
142
|
|
|
121
|
|
|||
Maintenance materials and supplies
|
109
|
|
|
69
|
|
|
67
|
|
|||
Other
|
18
|
|
|
15
|
|
|
15
|
|
|||
Total
|
$
|
393
|
|
|
$
|
362
|
|
|
$
|
337
|
|
•
|
$40 million increase in maintenance materials and supplies primarily due to contract growth and increased claims expense in HOS; and a
|
•
|
$5 million increase in employee-related costs primarily in HOS and MSG due to growth in the business, partially offset by lower costs resulting from the sale of the majority of CSG’s O&M contracts and the exit of the construction business at Keystone, both occurring during the third quarter of 2018; partially offset by a
|
•
|
$14 million decrease in operating supplies and services primarily due to the exit of the construction business in the third quarter of 2018 at Keystone, higher advertising and marketing expense in HOS in 2018, and lower expenses due to the sale of the majority of CSG’s O&M contracts during the third quarter of 2018, as discussed above.
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
621
|
|
|
$
|
565
|
|
|
$
|
426
|
|
Add (less):
|
|
|
|
|
|
||||||
Depreciation and amortization
|
582
|
|
|
545
|
|
|
492
|
|
|||
Deferred income taxes and amortization of investment tax credits
|
208
|
|
|
195
|
|
|
462
|
|
|||
Non-cash impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|||
Other non-cash activities (a)
|
38
|
|
|
56
|
|
|
16
|
|
|||
Changes in working capital (b)
|
(1
|
)
|
|
30
|
|
|
123
|
|
|||
Settlement of cash flow hedges
|
(30
|
)
|
|
—
|
|
|
—
|
|
|||
Pension and postretirement healthcare contributions
|
(31
|
)
|
|
(22
|
)
|
|
(48
|
)
|
|||
Impact of Freedom Industries settlement activities
|
(4
|
)
|
|
(40
|
)
|
|
(22
|
)
|
|||
Net cash flows provided by operating activities
|
$
|
1,383
|
|
|
$
|
1,386
|
|
|
$
|
1,449
|
|
(a)
|
Includes provision for losses on accounts receivable, loss (gain) on asset dispositions and purchases, pension and non-pension postretirement benefits and other non-cash, net. Details of each component can be found on the Consolidated Statements of Cash Flows.
|
(b)
|
Changes in working capital include changes to receivables and unbilled revenues, accounts payable and accrued liabilities, and other current assets and liabilities, net, less the settlement of cash flow hedges.
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Capital expenditures
|
$
|
(1,654
|
)
|
|
$
|
(1,586
|
)
|
|
$
|
(1,434
|
)
|
Acquisitions, net of cash acquired
|
(235
|
)
|
|
(398
|
)
|
|
(177
|
)
|
|||
Proceeds from sale of assets
|
48
|
|
|
35
|
|
|
15
|
|
|||
Removal costs from property, plant and equipment retirements, net
|
(104
|
)
|
|
(87
|
)
|
|
(76
|
)
|
|||
Net cash flows used in investing activities
|
$
|
(1,945
|
)
|
|
$
|
(2,036
|
)
|
|
$
|
(1,672
|
)
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Transmission and distribution
|
$
|
661
|
|
|
$
|
572
|
|
|
$
|
551
|
|
Treatment and pumping
|
190
|
|
|
231
|
|
|
171
|
|
|||
Services, meter and fire hydrants
|
346
|
|
|
303
|
|
|
281
|
|
|||
General structure and equipment
|
234
|
|
|
371
|
|
|
281
|
|
|||
Sources of supply
|
83
|
|
|
26
|
|
|
54
|
|
|||
Wastewater
|
140
|
|
|
83
|
|
|
96
|
|
|||
Total capital expenditures
|
$
|
1,654
|
|
|
$
|
1,586
|
|
|
$
|
1,434
|
|
•
|
Paid $235 million for 21 water and wastewater systems, representing in the aggregate approximately 53,100 customers.
|
•
|
Received $48 million for the sale of assets, including $31 million from the sale of the Keystone operations.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
(In millions)
|
|
|
|
|
|
||||||
Proceeds from long-term debt
|
$
|
1,530
|
|
|
$
|
1,358
|
|
|
$
|
1,395
|
|
Repayments of long-term debt
|
(495
|
)
|
|
(526
|
)
|
|
(896
|
)
|
|||
Net short-term borrowings
|
(178
|
)
|
|
60
|
|
|
55
|
|
|||
Proceeds from issuance of common stock
|
—
|
|
|
183
|
|
|
—
|
|
|||
Dividends paid
|
(353
|
)
|
|
(319
|
)
|
|
(289
|
)
|
|||
Anti-dilutive stock repurchases
|
(36
|
)
|
|
(45
|
)
|
|
(54
|
)
|
|||
Other financing activities, net (a)
|
26
|
|
|
15
|
|
|
(4
|
)
|
|||
Net cash flows provided by financing activities
|
$
|
494
|
|
|
$
|
726
|
|
|
$
|
207
|
|
(a)
|
Includes proceeds from issuances of common stock under various employee stock plans and the dividend reinvestment plan, net of taxes paid, advances and contributions for construction, net of refunds, and debt issuance costs and make-whole premiums on early debt redemption.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC (a)
|
|
Senior notes—fixed rate
|
|
3.45%-4.15%
|
|
2029-2049
|
|
$
|
1,100
|
|
AWCC (a) (b)
|
|
Private activity bonds and government funded debt—fixed rate
|
|
2.45%
|
|
2039
|
|
100
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.00%
|
|
2021-2048
|
|
330
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,530
|
|
(a)
|
This indebtedness is considered “debt” for purposes of a support agreement between parent company and AWCC, which serves as a functional equivalent of a guarantee by parent company of AWCC’s payment obligations under such indebtedness.
|
(b)
|
This indebtedness has a mandatory redemption provision callable in 2029.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-6.25%
|
|
2021-2031
|
|
$
|
101
|
|
AWCC
|
|
Senior notes—fixed rate
|
|
7.21%
|
|
2019
|
|
25
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-6.20%
|
|
2019-2048
|
|
333
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
5.48%-9.13%
|
|
2019-2021
|
|
28
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
5.76%-5.81%
|
|
2021
|
|
6
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
495
|
|
(In millions)
|
Credit Facility Commitment
|
|
Available Credit Facility Capacity
|
|
Letter of Credit Sublimit
|
|
Available Letter of Credit Capacity
|
|
Commercial Paper Limit
|
|
Available Commercial Paper Capacity
|
||||||||||||
December 31, 2019
|
$
|
2,250
|
|
|
$
|
2,174
|
|
|
$
|
150
|
|
|
$
|
74
|
|
|
$
|
2,100
|
|
|
$
|
1,314
|
|
December 31, 2018
|
2,262
|
|
|
2,177
|
|
|
150
|
|
|
69
|
|
|
2,100
|
|
|
1,146
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Total common shareholders’ equity
|
39.2
|
%
|
|
40.4
|
%
|
|
41.0
|
%
|
Long-term debt and redeemable preferred stock at redemption value
|
55.6
|
%
|
|
52.4
|
%
|
|
49.6
|
%
|
Short-term debt and current portion of long-term debt
|
5.2
|
%
|
|
7.2
|
%
|
|
9.4
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Securities
|
|
Moody’s Investors Service
|
|
Standard & Poor’s Ratings Service
|
Rating Outlook
|
|
Stable
|
|
Stable
|
Senior unsecured debt
|
|
Baa1
|
|
A
|
Commercial paper
|
|
P-2
|
|
A-1
|
(In millions)
|
Total
|
|
1 year or less
|
|
2-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt obligations (a)
|
$
|
8,692
|
|
|
$
|
28
|
|
|
$
|
324
|
|
|
$
|
632
|
|
|
$
|
7,708
|
|
Interest on long-term debt (b)
|
6,064
|
|
|
375
|
|
|
726
|
|
|
685
|
|
|
4,278
|
|
|||||
Operating lease obligations (c)
|
152
|
|
|
14
|
|
|
24
|
|
|
14
|
|
|
100
|
|
|||||
Purchase water obligations (d)
|
912
|
|
|
65
|
|
|
130
|
|
|
112
|
|
|
605
|
|
|||||
Other purchase obligations (e)
|
915
|
|
|
915
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension plan obligations (f)
|
171
|
|
|
38
|
|
|
67
|
|
|
66
|
|
|
—
|
|
|||||
Other obligations (g)
|
1,055
|
|
|
465
|
|
|
245
|
|
|
69
|
|
|
276
|
|
|||||
Total
|
$
|
17,961
|
|
|
$
|
1,900
|
|
|
$
|
1,516
|
|
|
$
|
1,578
|
|
|
$
|
12,967
|
|
NOTE
|
The above table reflects only financial obligations and commitments. Therefore, performance obligations associated with the Company’s Market-Based Businesses are not included in the above amounts. Also, uncertain tax positions of $110 million are not reflected in this table as the Company cannot predict when open tax years will close with completed examinations. See Note 14—Income Taxes in the Notes to Consolidated Financial Statements.
|
(a)
|
Represents sinking fund obligations, debt maturities, finance lease obligations and preferred stocks with mandatory redemption requirements.
|
(b)
|
Represents expected interest payments on outstanding long-term debt and interest on preferred stock with mandatory redemption requirements. Amounts reported may differ from actual due to future financing of debt.
|
(c)
|
Represents future minimum payments under non-cancelable operating leases, primarily for the lease of motor vehicles, buildings, land and other equipment including water facilities and systems constructed by partners under public-private partnerships. For discussion of the Company’s public-private partnerships, see Note 19—Leases in the Notes to Consolidated Financial Statements.
|
(d)
|
Represents future payments under water purchase agreements for minimum quantities of water.
|
(e)
|
Represents the open purchase orders as of December 31, 2019 for goods and services purchased in the ordinary course of business.
|
(f)
|
Represents contributions expected to be made to the Company’s pension plans for the years 2020 through 2024.
|
(g)
|
Includes an estimate of advances for construction to be refunded, capital expenditures estimated to be required under legal and binding contractual obligations, contracts entered into for energy purchases, a liability associated with a conservation agreement, and service agreements.
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which are based on projections of benefit payments to be made in the future. The objective in selecting the discount rate is to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments, would provide the necessary future cash flows to pay the accumulated benefits when due.
|
•
|
Expected Return on Plan Assets (“EROA”)—Management projects the future return on plan assets considering prior performance, but primarily based upon the plans’ mix of assets and expectations for the long-term returns on those asset classes. These projected returns reduce the net benefit costs the Company records currently.
|
•
|
Rate of Compensation Increase—Management projects employees’ pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Health Care Cost Trend Rate—Management projects the expected increases in the cost of health care.
|
•
|
Mortality—Management retained the Society of Actuaries RP-2014 mortality base table, which provides rates of mortality in 2006, but adopted the new MP-2018 mortality improvement scale to gradually adjust future mortality rates downward due to increased longevity in each year after 2006.
|
|
|
2020 Target Allocation
|
|
Percentage of Plan Assets as of December 31,
|
|||||
Asset Category
|
|
|
2019
|
|
2018
|
||||
Equity securities
|
|
43
|
%
|
|
45
|
%
|
|
42
|
%
|
Fixed income
|
|
50
|
%
|
|
48
|
%
|
|
52
|
%
|
Real Estate
|
|
5
|
%
|
|
7
|
%
|
|
5
|
%
|
Real estate investment trusts (“REITs”)
|
|
2
|
%
|
|
—
|
%
|
|
1
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
2020 Target Allocation (a)
|
|
Percentage of Plan Assets as of December 31,
|
|||||
Asset Category
|
|
|
2019
|
|
2018
|
||||
Equity securities
|
|
17
|
%
|
|
17
|
%
|
|
17
|
%
|
Fixed income
|
|
83
|
%
|
|
83
|
%
|
|
83
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(a)
|
Includes the American Water Postretirement Medical Benefits Bargaining Plan, the New York Water Service Corporation Postretirement Medical Benefits Bargaining Plan, the American Water Postretirement Medical Benefits Non-Bargaining Plan, and the American Water Life Insurance Trust.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
Audited Consolidated Financial Statements
|
|
/s/ PricewaterhouseCoopers LLP
|
Philadelphia, Pennsylvania
|
February 18, 2020
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|||||||
Property, plant and equipment
|
$
|
23,941
|
|
|
$
|
23,204
|
|
Accumulated depreciation
|
(5,709
|
)
|
|
(5,795
|
)
|
||
Property, plant and equipment, net
|
18,232
|
|
|
17,409
|
|
||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
60
|
|
|
130
|
|
||
Restricted funds
|
31
|
|
|
28
|
|
||
Accounts receivable, net
|
294
|
|
|
301
|
|
||
Unbilled revenues
|
172
|
|
|
186
|
|
||
Materials and supplies
|
44
|
|
|
41
|
|
||
Assets held for sale
|
566
|
|
|
—
|
|
||
Other
|
118
|
|
|
95
|
|
||
Total current assets
|
1,285
|
|
|
781
|
|
||
Regulatory and other long-term assets:
|
|
|
|
||||
Regulatory assets
|
1,128
|
|
|
1,156
|
|
||
Operating lease right-of-use assets
|
103
|
|
|
—
|
|
||
Goodwill
|
1,501
|
|
|
1,575
|
|
||
Postretirement benefit asset
|
159
|
|
|
155
|
|
||
Intangible assets
|
67
|
|
|
84
|
|
||
Other
|
207
|
|
|
63
|
|
||
Total regulatory and other long-term assets
|
3,165
|
|
|
3,033
|
|
||
Total assets
|
$
|
22,682
|
|
|
$
|
21,223
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
CAPITALIZATION AND LIABILITIES
|
|||||||
Capitalization:
|
|
|
|
||||
Common stock ($0.01 par value, 500,000,000 shares authorized, 185,903,727 and 185,367,158 shares issued, respectively)
|
$
|
2
|
|
|
$
|
2
|
|
Paid-in-capital
|
6,700
|
|
|
6,657
|
|
||
Accumulated deficit
|
(207
|
)
|
|
(464
|
)
|
||
Accumulated other comprehensive loss
|
(36
|
)
|
|
(34
|
)
|
||
Treasury stock, at cost (5,090,855 and 4,683,156 shares, respectively)
|
(338
|
)
|
|
(297
|
)
|
||
Total common shareholders' equity
|
6,121
|
|
|
5,864
|
|
||
Long-term debt
|
8,639
|
|
|
7,569
|
|
||
Redeemable preferred stock at redemption value
|
5
|
|
|
7
|
|
||
Total long-term debt
|
8,644
|
|
|
7,576
|
|
||
Total capitalization
|
14,765
|
|
|
13,440
|
|
||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
786
|
|
|
964
|
|
||
Current portion of long-term debt
|
28
|
|
|
71
|
|
||
Accounts payable
|
203
|
|
|
175
|
|
||
Accrued liabilities
|
596
|
|
|
556
|
|
||
Accrued taxes
|
46
|
|
|
45
|
|
||
Accrued interest
|
84
|
|
|
87
|
|
||
Liabilities related to assets held for sale
|
128
|
|
|
—
|
|
||
Other
|
174
|
|
|
196
|
|
||
Total current liabilities
|
2,045
|
|
|
2,094
|
|
||
Regulatory and other long-term liabilities:
|
|
|
|
||||
Advances for construction
|
240
|
|
|
252
|
|
||
Deferred income taxes and investment tax credits
|
1,893
|
|
|
1,740
|
|
||
Regulatory liabilities
|
1,806
|
|
|
1,907
|
|
||
Operating lease liabilities
|
89
|
|
|
—
|
|
||
Accrued pension expense
|
411
|
|
|
390
|
|
||
Other
|
78
|
|
|
78
|
|
||
Total regulatory and other long-term liabilities
|
4,517
|
|
|
4,367
|
|
||
Contributions in aid of construction
|
1,355
|
|
|
1,322
|
|
||
Commitments and contingencies (See Note 16)
|
|
|
|
|
|
||
Total capitalization and liabilities
|
$
|
22,682
|
|
|
$
|
21,223
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating revenues
|
$
|
3,610
|
|
|
$
|
3,440
|
|
|
$
|
3,357
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Operation and maintenance
|
1,544
|
|
|
1,479
|
|
|
1,369
|
|
|||
Depreciation and amortization
|
582
|
|
|
545
|
|
|
492
|
|
|||
General taxes
|
280
|
|
|
277
|
|
|
259
|
|
|||
Loss (gain) on asset dispositions and purchases
|
34
|
|
|
(20
|
)
|
|
(16
|
)
|
|||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|||
Total operating expenses, net
|
2,440
|
|
|
2,338
|
|
|
2,104
|
|
|||
Operating income
|
1,170
|
|
|
1,102
|
|
|
1,253
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest, net
|
(382
|
)
|
|
(350
|
)
|
|
(342
|
)
|
|||
Non-operating benefit costs, net
|
16
|
|
|
20
|
|
|
(9
|
)
|
|||
Loss on early extinguishment of debt
|
(4
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|||
Other, net
|
33
|
|
|
19
|
|
|
17
|
|
|||
Total other income (expense)
|
(337
|
)
|
|
(315
|
)
|
|
(341
|
)
|
|||
Income before income taxes
|
833
|
|
|
787
|
|
|
912
|
|
|||
Provision for income taxes
|
212
|
|
|
222
|
|
|
486
|
|
|||
Consolidated net income
|
621
|
|
|
565
|
|
|
426
|
|
|||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||
Net income attributable to common shareholders
|
$
|
621
|
|
|
$
|
567
|
|
|
$
|
426
|
|
|
|
|
|
|
|
||||||
Basic earnings per share: (a)
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.44
|
|
|
$
|
3.16
|
|
|
$
|
2.39
|
|
Diluted earnings per share: (a)
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.43
|
|
|
$
|
3.15
|
|
|
$
|
2.38
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
181
|
|
|
180
|
|
|
178
|
|
|||
Diluted
|
181
|
|
|
180
|
|
|
179
|
|
(a)
|
Amounts may not calculate due to rounding.
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to common shareholders
|
$
|
621
|
|
|
$
|
567
|
|
|
$
|
426
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Change in employee benefit plan funded status, net of tax of $3, $20 and $2 in 2019, 2018 and 2017, respectively
|
8
|
|
|
60
|
|
|
7
|
|
|||
Defined benefit pension plans:
|
|
|
|
|
|
||||||
Amortization of actuarial loss, net of tax of $1, $3 and $5 in 2019, 2018 and 2017, respectively
|
4
|
|
|
7
|
|
|
7
|
|
|||
Pension reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act
|
—
|
|
|
(22
|
)
|
|
—
|
|
|||
Foreign currency translation adjustment
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Unrealized loss on cash flow hedges, net of tax of $(5), $0 and $(4) in 2019, 2018 and 2017, respectively
|
(13
|
)
|
|
(2
|
)
|
|
(6
|
)
|
|||
Cash flow hedges reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act
|
—
|
|
|
2
|
|
|
—
|
|
|||
Net other comprehensive (loss) income
|
(2
|
)
|
|
45
|
|
|
7
|
|
|||
Comprehensive income attributable to common shareholders
|
$
|
619
|
|
|
$
|
612
|
|
|
$
|
433
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
621
|
|
|
$
|
565
|
|
|
$
|
426
|
|
Adjustments to reconcile to net cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
582
|
|
|
545
|
|
|
492
|
|
|||
Deferred income taxes and amortization of investment tax credits
|
208
|
|
|
195
|
|
|
462
|
|
|||
Provision for losses on accounts receivable
|
28
|
|
|
33
|
|
|
29
|
|
|||
Loss (gain) on asset dispositions and purchases
|
34
|
|
|
(20
|
)
|
|
(16
|
)
|
|||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|||
Pension and non-pension postretirement benefits
|
17
|
|
|
23
|
|
|
57
|
|
|||
Other non-cash, net
|
(41
|
)
|
|
20
|
|
|
(54
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables and unbilled revenues
|
(25
|
)
|
|
(17
|
)
|
|
21
|
|
|||
Pension and non-pension postretirement benefit contributions
|
(31
|
)
|
|
(22
|
)
|
|
(48
|
)
|
|||
Accounts payable and accrued liabilities
|
66
|
|
|
25
|
|
|
38
|
|
|||
Other assets and liabilities, net
|
(72
|
)
|
|
22
|
|
|
64
|
|
|||
Impact of Freedom Industries settlement activities
|
(4
|
)
|
|
(40
|
)
|
|
(22
|
)
|
|||
Net cash provided by operating activities
|
1,383
|
|
|
1,386
|
|
|
1,449
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Capital expenditures
|
(1,654
|
)
|
|
(1,586
|
)
|
|
(1,434
|
)
|
|||
Acquisitions, net of cash acquired
|
(235
|
)
|
|
(398
|
)
|
|
(177
|
)
|
|||
Proceeds from sale of assets
|
48
|
|
|
35
|
|
|
15
|
|
|||
Removal costs from property, plant and equipment retirements, net
|
(104
|
)
|
|
(87
|
)
|
|
(76
|
)
|
|||
Net cash used in investing activities
|
(1,945
|
)
|
|
(2,036
|
)
|
|
(1,672
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from long-term debt
|
1,530
|
|
|
1,358
|
|
|
1,395
|
|
|||
Repayments of long-term debt
|
(495
|
)
|
|
(526
|
)
|
|
(896
|
)
|
|||
Net short-term borrowings with maturities less than three months
|
(178
|
)
|
|
60
|
|
|
55
|
|
|||
Issuance of common stock
|
—
|
|
|
183
|
|
|
—
|
|
|||
Proceeds from issuances of employee stock plans and direct stock purchase plan, net of taxes paid of $11, $8 and $11 in 2019, 2018 and 2017, respectively
|
15
|
|
|
16
|
|
|
15
|
|
|||
Advances and contributions for construction, net of refunds of $30, $22 and $22 in 2019, 2018 and 2017, respectively
|
26
|
|
|
21
|
|
|
28
|
|
|||
Debt issuance costs and make-whole premium on early debt redemption
|
(15
|
)
|
|
(22
|
)
|
|
(47
|
)
|
|||
Dividends paid
|
(353
|
)
|
|
(319
|
)
|
|
(289
|
)
|
|||
Anti-dilutive share repurchases
|
(36
|
)
|
|
(45
|
)
|
|
(54
|
)
|
|||
Net cash provided by financing activities
|
494
|
|
|
726
|
|
|
207
|
|
|||
Net (decrease) increase in cash and cash equivalents and restricted funds
|
(68
|
)
|
|
76
|
|
|
(16
|
)
|
|||
Cash and cash equivalents and restricted funds at beginning of period
|
159
|
|
|
83
|
|
|
99
|
|
|||
Cash and cash equivalents and restricted funds at end of period
|
$
|
91
|
|
|
$
|
159
|
|
|
$
|
83
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest, net of capitalized amount
|
$
|
383
|
|
|
$
|
332
|
|
|
$
|
338
|
|
Income taxes, net of refunds of $4, $0 and $0 in 2019, 2018 and 2017, respectively
|
$
|
12
|
|
|
$
|
38
|
|
|
$
|
30
|
|
Non-cash investing activity:
|
|
|
|
|
|
||||||
Capital expenditures acquired on account but unpaid as of year end
|
$
|
235
|
|
|
$
|
181
|
|
|
$
|
204
|
|
Acquisition financed by treasury stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
Common Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Total Shareholders' Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
|
Shares
|
|
At Cost
|
|
||||||||||||||||
Balance as of December 31, 2016
|
181.8
|
|
|
$
|
2
|
|
|
$
|
6,388
|
|
|
$
|
(873
|
)
|
|
$
|
(86
|
)
|
|
(3.7
|
)
|
|
$
|
(213
|
)
|
|
$
|
5,218
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Stock-based compensation activity
|
0.5
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(7
|
)
|
|
15
|
|
||||||
Acquisitions via treasury stock
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
27
|
|
|
34
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(54
|
)
|
|
(54
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Dividends ($1.66 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
||||||
Balance as of December 31, 2017
|
182.5
|
|
|
$
|
2
|
|
|
$
|
6,432
|
|
|
$
|
(723
|
)
|
|
$
|
(79
|
)
|
|
(4.1
|
)
|
|
$
|
(247
|
)
|
|
$
|
5,385
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
567
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
567
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Stock-based compensation activity
|
0.4
|
|
|
—
|
|
|
26
|
|
|
(1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
20
|
|
||||||
Issuance of common stock
|
2.3
|
|
|
—
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(45
|
)
|
|
(45
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Dividends ($1.82 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
||||||
Balance as of December 31, 2018
|
185.4
|
|
|
$
|
2
|
|
|
$
|
6,657
|
|
|
$
|
(464
|
)
|
|
$
|
(34
|
)
|
|
(4.7
|
)
|
|
$
|
(297
|
)
|
|
$
|
5,864
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
621
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
621
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Stock-based compensation activity
|
0.4
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
21
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(36
|
)
|
|
(36
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Dividends ($2.00 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
||||||
Balance as of December 31, 2019
|
185.9
|
|
|
$
|
2
|
|
|
$
|
6,700
|
|
|
$
|
(207
|
)
|
|
$
|
(36
|
)
|
|
(5.1
|
)
|
|
$
|
(338
|
)
|
|
$
|
6,121
|
|
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
60
|
|
|
$
|
130
|
|
Restricted funds
|
31
|
|
|
28
|
|
||
Restricted funds included in other long-term assets
|
—
|
|
|
1
|
|
||
Cash and cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows
|
$
|
91
|
|
|
$
|
159
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Allowance for other funds used during construction
|
$
|
28
|
|
|
$
|
24
|
|
|
$
|
19
|
|
Allowance for borrowed funds used during construction
|
13
|
|
|
13
|
|
|
8
|
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Effect on the Consolidated Financial Statements
|
Accounting for Leases
|
|
Updated the accounting and disclosure guidance for leasing arrangements. Under this guidance, a lessee is required to recognize the following for all leases, excluding short-term leases, at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. A package of optional transition practical expedients allows an entity not to reassess under the new guidance: (i) whether any expired or existing contracts as of the adoption date are or contain leases; (ii) lease classification; and (iii) initial direct costs. Additional, optional transition practical expedients are available which allow an entity not to evaluate expired or existing land easements as of the adoption date if the easements were not previously accounted for as leases; and to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment in the opening balance of retained earnings in the period of adoption.
|
|
January 1, 2019
|
|
Modified retrospective
|
|
See Note 19—Leases.
|
Targeted Improvements to Accounting for Hedging Activities
|
|
Updated the accounting and disclosure guidance for hedging activities, allowing for more financial and nonfinancial hedging strategies to be eligible for hedge accounting. Under this guidance, a qualitative effectiveness assessment is permitted for certain hedges if an entity can reasonably support an expectation of high effectiveness throughout the term of the hedge, provided that an initial quantitative test establishes that the hedge relationship is highly effective. Also, for cash flow hedges determined to be highly effective, all changes in the fair value of the hedging instrument will be recorded in other comprehensive income, with a subsequent reclassification to earnings when the hedged item impacts earnings.
|
|
January 1, 2019
|
|
Modified retrospective for adjustments related to the measurement of ineffectiveness for cash flow hedges; prospective for the updated presentation and disclosure requirements.
|
|
The adoption did not have a material impact on the Consolidated Financial Statements.
|
Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
|
|
Designated the OIS rate based on SOFR as an eligible U.S. benchmark interest rate for the purposes of applying hedge accounting.
|
|
January 1, 2019
|
|
Prospective
|
|
The adoption did not have a material impact on the Consolidated Financial Statements.
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Estimated Effect on the Consolidated Financial Statements
|
Measurement of Credit Losses on Financial Instruments
|
|
Updated the accounting guidance on reporting credit losses for financial assets held at amortized cost basis and available-for-sale debt securities. Under this guidance, expected credit losses are required to be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. Also, this guidance requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down.
|
|
January 1, 2020; early adoption permitted
|
|
Modified retrospective
|
|
The standard will not have a material impact on the Consolidated Financial Statements.
|
Changes to the Disclosure Requirements for Fair Value Measurement
|
|
Updated the disclosure requirements for fair value measurement. The guidance removes the requirements to disclose transfers between Level 1 and Level 2 measurements, the timing of transfers between levels, and the valuation processes for Level 3 measurements. Disclosure of transfers into and out of Level 3 measurements will be required. The guidance adds disclosure requirements for the change in unrealized gains and losses in other comprehensive income for recurring Level 3 measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 measurements.
|
|
January 1, 2020; early adoption permitted
|
|
Prospective for added disclosures and for the narrative description of measurement uncertainty; retrospective for all other amendments.
|
|
The standard will not have a material impact on the Consolidated Financial Statements.
|
Simplifying the Accounting for Income Taxes
|
|
Simplified the accounting for income taxes by removing certain exceptions and by adding certain requirements. The guidance removes exceptions related to the incremental approach for intraperiod tax allocation, the requirement to recognize a deferred tax liability for changes in ownership of a foreign subsidiary or equity method investment, and the general methodology for calculating income taxes in an interim period when the year-to-date loss exceeds the anticipated loss. The guidance adds requirements to reflect changes to tax laws or rates in the annual effective tax rate computation in the interim period in which the changes were enacted, to recognize franchise or other similar taxes that are partially based on income as an income-based tax and any incremental amounts as non-income-based tax, and to evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction.
|
|
January 1, 2021; early adoption permitted
|
|
Modified retrospective for amendments related to changes in ownership of a foreign subsidiary or equity method investment;
Modified retrospective or retrospective for amendments related to taxes partially based on income; Prospective for all other amendments.
|
|
The Company is evaluating any impact on its Consolidated Financial Statements, as well as the timing of adoption.
|
|
Revenues from Contracts with Customers
|
|
Other Revenues Not from Contracts with Customers (a)
|
|
Total Operating Revenues
|
||||||
Regulated Businesses:
|
|
|
|
|
|
||||||
Water services:
|
|
|
|
|
|
||||||
Residential
|
$
|
1,734
|
|
|
$
|
1
|
|
|
$
|
1,735
|
|
Commercial
|
639
|
|
|
—
|
|
|
639
|
|
|||
Fire service
|
142
|
|
|
—
|
|
|
142
|
|
|||
Industrial
|
138
|
|
|
—
|
|
|
138
|
|
|||
Public and other
|
214
|
|
|
—
|
|
|
214
|
|
|||
Total water services
|
2,867
|
|
|
1
|
|
|
2,868
|
|
|||
Wastewater services:
|
|
|
|
|
|
|
|||||
Residential
|
119
|
|
|
—
|
|
|
119
|
|
|||
Commercial
|
31
|
|
|
—
|
|
|
31
|
|
|||
Industrial
|
3
|
|
|
—
|
|
|
3
|
|
|||
Public and other
|
14
|
|
|
—
|
|
|
14
|
|
|||
Total wastewater services
|
167
|
|
|
—
|
|
|
167
|
|
|||
Miscellaneous utility charges
|
36
|
|
|
—
|
|
|
36
|
|
|||
Alternative revenue programs
|
—
|
|
|
16
|
|
|
16
|
|
|||
Lease contract revenue
|
—
|
|
|
7
|
|
|
7
|
|
|||
Total Regulated Businesses
|
3,070
|
|
|
24
|
|
|
3,094
|
|
|||
Market-Based Businesses
|
539
|
|
|
—
|
|
|
539
|
|
|||
Other
|
(22
|
)
|
|
(1
|
)
|
|
(23
|
)
|
|||
Total operating revenues
|
$
|
3,587
|
|
|
$
|
23
|
|
|
$
|
3,610
|
|
(a)
|
Includes revenues associated with provisional rates, alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of ASC 606 and accounted for under other existing GAAP.
|
|
Amount
|
||
Contract assets:
|
|
||
Balance at January 1, 2019
|
$
|
14
|
|
Additions
|
27
|
|
|
Transfers to accounts receivable, net
|
(28
|
)
|
|
Balance at December 31, 2019
|
$
|
13
|
|
|
|
||
Contract liabilities:
|
|
||
Balance at January 1, 2019
|
$
|
20
|
|
Additions
|
62
|
|
|
Transfers to operating revenues
|
(55
|
)
|
|
Balance at December 31, 2019
|
$
|
27
|
|
|
December 31, 2019
|
||
Current assets
|
$
|
14
|
|
Property, plant and equipment
|
456
|
|
|
Regulatory assets
|
55
|
|
|
Goodwill
|
39
|
|
|
Other assets
|
2
|
|
|
Assets held for sale
|
$
|
566
|
|
Current liabilities
|
24
|
|
|
Deferred income taxes
|
67
|
|
|
Regulatory liabilities
|
37
|
|
|
Liabilities related to assets held for sale
|
$
|
128
|
|
|
2019
|
|
2018
|
|
Range of Remaining Useful Lives
|
|
Weighted Average Useful Life
|
||||
Utility plant:
|
|
|
|
|
|
|
|
||||
Land and other non-depreciable assets
|
$
|
166
|
|
|
$
|
155
|
|
|
|
|
|
Sources of supply
|
858
|
|
|
821
|
|
|
2 to 127 Years
|
|
47 years
|
||
Treatment and pumping facilities
|
3,750
|
|
|
3,607
|
|
|
3 to 101 Years
|
|
41 years
|
||
Transmission and distribution facilities
|
10,807
|
|
|
10,164
|
|
|
9 to 149 Years
|
|
70 years
|
||
Services, meters and fire hydrants
|
4,304
|
|
|
4,008
|
|
|
5 to 90 Years
|
|
31 years
|
||
General structures and equipment
|
1,748
|
|
|
1,625
|
|
|
1 to 109 Years
|
|
16 years
|
||
Waste collection
|
1,153
|
|
|
943
|
|
|
5 to 114 Years
|
|
59 years
|
||
Waste treatment, pumping and disposal
|
720
|
|
|
570
|
|
|
3 to 139 Years
|
|
45 years
|
||
Construction work in progress
|
801
|
|
|
593
|
|
|
|
|
|
||
Less: Utility plant included in assets held for sale (a)
|
(587
|
)
|
|
—
|
|
|
|
|
|
||
Total utility plant
|
23,720
|
|
|
22,486
|
|
|
|
|
|
||
Nonutility property
|
226
|
|
|
718
|
|
|
3 to 50 Years
|
|
6 years
|
||
Less: Nonutility plant included in assets held for sale (a)
|
(5
|
)
|
|
—
|
|
|
|
|
|
||
Total property, plant and equipment
|
$
|
23,941
|
|
|
$
|
23,204
|
|
|
|
|
|
(a)
|
This property, plant and equipment is related to the pending transactions contemplated by the Stock Purchase Agreement and is included in assets held for sale on the Consolidated Balance Sheets. See Note 4—Acquisitions and Divestitures for additional information.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance as of January 1
|
$
|
(45
|
)
|
|
$
|
(42
|
)
|
|
$
|
(40
|
)
|
Amounts charged to expense
|
(28
|
)
|
|
(33
|
)
|
|
(29
|
)
|
|||
Amounts written off
|
32
|
|
|
34
|
|
|
30
|
|
|||
Recoveries of amounts written off
|
—
|
|
|
(4
|
)
|
|
(3
|
)
|
|||
Balance as of December 31
|
$
|
(41
|
)
|
|
$
|
(45
|
)
|
|
$
|
(42
|
)
|
|
2019
|
|
2018
|
||||
Deferred pension expense
|
$
|
384
|
|
|
$
|
362
|
|
Removal costs recoverable through rates
|
305
|
|
|
292
|
|
||
Regulatory balancing accounts
|
96
|
|
|
110
|
|
||
Other
|
398
|
|
|
392
|
|
||
Less: Regulatory assets included in assets held for sale (a)
|
(55
|
)
|
|
—
|
|
||
Total regulatory assets
|
$
|
1,128
|
|
|
$
|
1,156
|
|
(a)
|
These regulatory assets are related to the pending transactions contemplated by the Stock Purchase Agreement and are included in assets held for sale on the Consolidated Balance Sheets. See Note 4—Acquisitions and Divestitures for additional information.
|
|
2019
|
|
2018
|
||||
Income taxes recovered through rates
|
$
|
1,258
|
|
|
$
|
1,279
|
|
Removal costs recovered through rates
|
297
|
|
|
309
|
|
||
Postretirement benefit liability
|
186
|
|
|
209
|
|
||
Other
|
102
|
|
|
110
|
|
||
Less: Regulatory liabilities included in liabilities related to assets held for sale (a)
|
(37
|
)
|
|
—
|
|
||
Total regulatory liabilities
|
$
|
1,806
|
|
|
$
|
1,907
|
|
(a)
|
These regulatory liabilities are related to the pending transactions contemplated by the Stock Purchase Agreement and are included in liabilities related to assets held for sale on the Consolidated Balance Sheets. See Note 4—Acquisitions and Divestitures for additional information.
|
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Consolidated
|
||||||||||||||||||||||
|
Cost
|
|
Accumulated Impairment
|
|
Cost
|
|
Accumulated Impairment
|
|
Cost
|
|
Accumulated Impairment
|
|
Total Net
|
||||||||||||||
Balance as of January 1, 2018
|
$
|
3,492
|
|
|
$
|
(2,332
|
)
|
|
$
|
327
|
|
|
$
|
(108
|
)
|
|
$
|
3,819
|
|
|
$
|
(2,440
|
)
|
|
$
|
1,379
|
|
Goodwill from acquisitions
|
2
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
|||||||
Goodwill impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
|
(53
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
3,494
|
|
|
$
|
(2,332
|
)
|
|
$
|
574
|
|
|
$
|
(161
|
)
|
|
$
|
4,068
|
|
|
$
|
(2,493
|
)
|
|
$
|
1,575
|
|
Goodwill from acquisitions
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||||
Goodwill reduced through sale of Keystone operations
|
—
|
|
|
—
|
|
|
(91
|
)
|
|
53
|
|
|
(91
|
)
|
|
53
|
|
|
(38
|
)
|
|||||||
Less: Goodwill included in assets held for sale (a)
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(39
|
)
|
|||||||
Balance as of December 31, 2019
|
$
|
3,458
|
|
|
$
|
(2,332
|
)
|
|
$
|
483
|
|
|
$
|
(108
|
)
|
|
$
|
3,941
|
|
|
$
|
(2,440
|
)
|
|
$
|
1,501
|
|
(a)
|
This goodwill is related to the pending transactions contemplated by the Stock Purchase Agreement and is included in assets held for sale on the Consolidated Balance Sheets. See Note 4—Acquisitions and Divestitures for additional information.
|
|
2018
|
|
Disposals (a)
|
|
2019
|
||||||
Customer relationships
|
$
|
86
|
|
|
$
|
(8
|
)
|
|
$
|
78
|
|
Other intangible assets
|
13
|
|
|
—
|
|
|
13
|
|
|||
Total gross carrying value
|
$
|
99
|
|
|
$
|
(8
|
)
|
|
$
|
91
|
|
(a)
|
The disposals relate to customer relationship intangible assets disposed of as part of the sale of the Company’s Keystone operations on December 12, 2019. See Note 4—Acquisitions and Divestitures for additional information.
|
|
2018
|
|
Amortization
|
|
Disposals (a)
|
|
2019
|
||||||||
Customer relationships
|
$
|
(13
|
)
|
|
$
|
(12
|
)
|
|
$
|
5
|
|
|
$
|
(20
|
)
|
Other intangible assets
|
(2
|
)
|
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
||||
Total accumulated amortization
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
|
$
|
5
|
|
|
$
|
(24
|
)
|
Total intangible assets, net
|
$
|
84
|
|
|
|
|
|
|
$
|
67
|
|
(a)
|
The disposals relate to customer relationship intangible assets disposed of as part of the sale of the Company’s Keystone operations on December 12, 2019. See Note 4—Acquisitions and Divestitures for additional information.
|
|
Amount
|
||
2020
|
$
|
12
|
|
2021
|
10
|
|
|
2022
|
9
|
|
|
2023
|
6
|
|
|
2024
|
5
|
|
|
Defined Benefit Plans
|
|
Foreign Currency Translation
|
|
Gain (Loss) on Cash Flow Hedge
|
|
Accumulated Other Comprehensive Loss
|
||||||||||||||||
|
Employee Benefit Plan Funded Status
|
|
Amortization of Prior Service Cost
|
|
Amortization of Actuarial Loss
|
|
|
|
|||||||||||||||
Beginning balance as of January 1, 2018
|
$
|
(140
|
)
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(79
|
)
|
Other comprehensive income (loss) before reclassification
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
58
|
|
||||||
TCJA tax effects reclassified from accumulated other comprehensive loss
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(20
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net other comprehensive income
|
38
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Ending balance as of December 31, 2018
|
$
|
(102
|
)
|
|
$
|
1
|
|
|
$
|
56
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(34
|
)
|
Other comprehensive income (loss) before reclassification
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(5
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
—
|
|
|
3
|
|
||||||
Net other comprehensive income (loss)
|
8
|
|
|
—
|
|
|
4
|
|
|
(1
|
)
|
|
(13
|
)
|
|
(2
|
)
|
||||||
Ending balance as of December 31, 2019
|
$
|
(94
|
)
|
|
$
|
1
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(36
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
December
|
$
|
0.50
|
|
|
$
|
0.455
|
|
|
$
|
0.415
|
|
September
|
$
|
0.50
|
|
|
$
|
0.455
|
|
|
$
|
0.415
|
|
June
|
$
|
0.50
|
|
|
$
|
0.455
|
|
|
$
|
0.415
|
|
March
|
$
|
0.455
|
|
|
$
|
0.415
|
|
|
$
|
0.375
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Stock options
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
1
|
|
RSUs and PSUs
|
15
|
|
|
15
|
|
|
9
|
|
|||
Nonqualified employee stock purchase plan
|
2
|
|
|
1
|
|
|
1
|
|
|||
Stock-based compensation
|
17
|
|
|
17
|
|
|
11
|
|
|||
Income tax benefit
|
(4
|
)
|
|
(5
|
)
|
|
(4
|
)
|
|||
Stock-based compensation expense, net of tax
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
7
|
|
|
Shares (in thousands)
|
|
Weighted Average Exercise Price (per share)
|
|
Weighted Average Remaining Life (years)
|
|
Aggregate Intrinsic Value
|
|||||
Options outstanding as of December 31, 2018
|
517
|
|
|
$
|
54.92
|
|
|
2.96
|
|
$
|
19
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited or expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(223
|
)
|
|
52.45
|
|
|
|
|
|
|||
Options outstanding as of December 31, 2019
|
294
|
|
|
$
|
56.80
|
|
|
2.04
|
|
$
|
19
|
|
Options exercisable as of December 31, 2019
|
294
|
|
|
$
|
56.80
|
|
|
2.04
|
|
$
|
19
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Intrinsic value
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
10
|
|
Exercise proceeds
|
14
|
|
|
7
|
|
|
11
|
|
|||
Income tax benefit realized
|
3
|
|
|
2
|
|
|
3
|
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value (per share)
|
|||
Non-vested total as of December 31, 2018
|
133
|
|
|
$
|
77.44
|
|
Granted
|
67
|
|
|
101.25
|
|
|
Vested
|
(65
|
)
|
|
85.27
|
|
|
Forfeited
|
(17
|
)
|
|
86.38
|
|
|
Non-vested total as of December 31, 2019
|
118
|
|
|
$
|
85.41
|
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value (per share)
|
|||
Non-vested total as of December 31, 2018
|
308
|
|
|
$
|
73.39
|
|
Granted
|
145
|
|
|
97.73
|
|
|
Vested
|
(112
|
)
|
|
72.84
|
|
|
Forfeited
|
(25
|
)
|
|
84.54
|
|
|
Non-vested total as of December 31, 2019
|
316
|
|
|
$
|
83.89
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Expected volatility
|
16.80
|
%
|
|
17.23
|
%
|
|
17.40
|
%
|
|||
Risk-free interest rate
|
2.47
|
%
|
|
2.36
|
%
|
|
1.53
|
%
|
|||
Expected life (years)
|
3.0
|
|
|
3.0
|
|
|
3.0
|
|
|||
Grant date fair value per share
|
$
|
110.37
|
|
|
$
|
73.62
|
|
|
$
|
72.81
|
|
|
Rate
|
|
Weighted Average Rate
|
|
Maturity
|
|
2019
|
|
2018
|
||||
Long-term debt of AWCC: (a)
|
|
|
|
|
|
|
|
|
|
||||
Senior notes—fixed rate
|
2.95%-8.27%
|
|
4.18%
|
|
2021-2049
|
|
$
|
7,191
|
|
|
$
|
6,116
|
|
Private activity bonds and government funded debt—fixed rate
|
1.79%-5.38%
|
|
3.72%
|
|
2021-2040
|
|
191
|
|
|
192
|
|
||
Long-term debt of other American Water subsidiaries:
|
|
|
|
|
|
|
|
|
|
||||
Private activity bonds and government funded debt—fixed rate (b)
|
0.00%-5.60%
|
|
3.08%
|
|
2020-2048
|
|
724
|
|
|
727
|
|
||
Mortgage bonds—fixed rate
|
3.92%-9.71%
|
|
7.49%
|
|
2020-2039
|
|
578
|
|
|
606
|
|
||
Mandatorily redeemable preferred stock
|
8.47%-9.75%
|
|
8.59%
|
|
2024-2036
|
|
7
|
|
|
8
|
|
||
Finance lease obligations
|
12.25%
|
|
12.25%
|
|
2026
|
|
1
|
|
|
1
|
|
||
Term loan
|
|
|
|
|
|
|
—
|
|
|
6
|
|
||
Long-term debt
|
|
|
|
|
|
|
8,692
|
|
|
7,656
|
|
||
Unamortized debt premium, net (c)
|
|
|
|
|
|
|
1
|
|
|
7
|
|
||
Unamortized debt issuance costs
|
|
|
|
|
|
|
(21
|
)
|
|
(16
|
)
|
||
Less current portion of long-term debt
|
|
|
|
|
|
|
(28
|
)
|
|
(71
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
8,644
|
|
|
$
|
7,576
|
|
(a)
|
This indebtedness is considered “debt” for purposes of a support agreement between parent company and AWCC, which serves as a functional equivalent of a guarantee by parent company of AWCC’s payment obligations under such indebtedness.
|
(b)
|
Includes $3 million and $3 million of variable rate debt as of December 31, 2019 and 2018, respectively, with variable-to-fixed interest rate swaps ranging between 3.93% and 4.65%. This debt was assumed via an acquisition in 2013.
|
(c)
|
Primarily fair value adjustments previously recognized in acquisition purchase accounting.
|
|
Amount
|
||
2020
|
$
|
28
|
|
2021
|
310
|
|
|
2022
|
14
|
|
|
2023
|
159
|
|
|
2024
|
473
|
|
|
Thereafter
|
7,708
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
3.45%-4.15%
|
|
2029-2049
|
|
$
|
1,100
|
|
AWCC (a)
|
|
Private activity bonds and government funded debt—fixed rate
|
|
2.45%
|
|
2039
|
|
100
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.00%
|
|
2021-2048
|
|
330
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,530
|
|
(a)
|
This indebtedness has a mandatory redemption provision callable in 2029.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-6.25%
|
|
2021-2031
|
|
$
|
101
|
|
AWCC
|
|
Senior notes—fixed rate
|
|
7.21%
|
|
2019
|
|
25
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-6.20%
|
|
2019-2048
|
|
333
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
5.48%-9.13%
|
|
2019-2021
|
|
28
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
5.76%-5.81%
|
|
2021
|
|
6
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
495
|
|
Derivative Instrument
|
|
Derivative Designation
|
|
Balance Sheet Classification
|
|
2019
|
|
2018
|
||||
Liability derivative:
|
|
|
|
|
|
|
|
|
||||
Forward starting swaps
|
|
Cash flow hedge
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
14
|
|
|
Credit Facility Commitment
|
|
Available Credit Facility Capacity
|
|
Letter of Credit Sublimit
|
|
Available Letter of Credit Capacity
|
|
Commercial Paper Limit
|
|
Available Commercial Paper Capacity
|
||||||||||||
December 31, 2019
|
$
|
2,250
|
|
|
$
|
2,174
|
|
|
$
|
150
|
|
|
$
|
74
|
|
|
$
|
2,100
|
|
|
$
|
1,314
|
|
December 31, 2018
|
2,262
|
|
|
2,177
|
|
|
150
|
|
|
69
|
|
|
2,100
|
|
|
1,146
|
|
|
2019
|
|
2018
|
||||
Average borrowings
|
$
|
726
|
|
|
$
|
1,029
|
|
Maximum borrowings outstanding
|
1,271
|
|
|
1,905
|
|
||
Weighted average interest rates, computed on daily basis
|
2.54
|
%
|
|
2.28
|
%
|
||
Weighted average interest rates, as of December 31
|
1.86
|
%
|
|
2.84
|
%
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gross receipts and franchise
|
$
|
110
|
|
|
$
|
112
|
|
|
$
|
110
|
|
Property and capital stock
|
124
|
|
|
120
|
|
|
105
|
|
|||
Payroll
|
35
|
|
|
33
|
|
|
31
|
|
|||
Other general
|
11
|
|
|
12
|
|
|
13
|
|
|||
Total general taxes
|
$
|
280
|
|
|
$
|
277
|
|
|
$
|
259
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current income taxes:
|
|
|
|
|
|
||||||
State
|
$
|
4
|
|
|
$
|
26
|
|
|
$
|
25
|
|
Federal
|
—
|
|
|
1
|
|
|
(1
|
)
|
|||
Total current income taxes
|
$
|
4
|
|
|
$
|
27
|
|
|
$
|
24
|
|
Deferred income taxes:
|
|
|
|
|
|
||||||
State
|
$
|
54
|
|
|
$
|
33
|
|
|
$
|
50
|
|
Federal
|
155
|
|
|
163
|
|
|
413
|
|
|||
Amortization of deferred investment tax credits
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total deferred income taxes
|
208
|
|
|
195
|
|
|
462
|
|
|||
Provision for income taxes
|
$
|
212
|
|
|
$
|
222
|
|
|
$
|
486
|
|
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Advances and contributions
|
$
|
410
|
|
|
$
|
402
|
|
Tax losses and credits
|
136
|
|
|
131
|
|
||
Regulatory income tax assets
|
335
|
|
|
339
|
|
||
Pension and other postretirement benefits
|
94
|
|
|
91
|
|
||
Other
|
151
|
|
|
44
|
|
||
Total deferred tax assets
|
1,126
|
|
|
1,007
|
|
||
Valuation allowance
|
(21
|
)
|
|
(14
|
)
|
||
Total deferred tax assets, net of allowance
|
$
|
1,105
|
|
|
$
|
993
|
|
Deferred tax liabilities:
|
|
|
|
|
|||
Property, plant and equipment
|
$
|
2,760
|
|
|
$
|
2,537
|
|
Deferred pension and other postretirement benefits
|
77
|
|
|
77
|
|
||
Other
|
207
|
|
|
97
|
|
||
Total deferred tax liabilities
|
3,044
|
|
|
2,711
|
|
||
Less: Deferred tax liabilities included in liabilities related to assets held for sale (a)
|
67
|
|
|
—
|
|
||
Total deferred tax liabilities, net of deferred tax assets
|
$
|
(1,872
|
)
|
|
$
|
(1,718
|
)
|
(a)
|
These deferred tax liabilities are related to the pending transactions contemplated by the Stock Purchase Agreement and are included in liabilities related to assets held for sale on the Consolidated Balance Sheets. See Note 4—Acquisitions and Divestitures for additional information.
|
|
Amount
|
||
Balance as of January 1, 2018
|
$
|
106
|
|
Increases in current period tax positions
|
13
|
|
|
Decreases in prior period measurement of tax positions
|
(22
|
)
|
|
Balance as of December 31, 2018
|
$
|
97
|
|
Increases in current period tax positions
|
17
|
|
|
Decreases in prior period measurement of tax positions
|
(4
|
)
|
|
Balance as of December 31, 2019
|
$
|
110
|
|
|
Amount
|
||
Balance as of January 1, 2017
|
$
|
6
|
|
Increases in current period tax positions
|
7
|
|
|
Balance as of December 31, 2017
|
$
|
13
|
|
Increases in current period tax positions
|
1
|
|
|
Balance as of December 31, 2018
|
$
|
14
|
|
Increases in current period tax positions
|
7
|
|
|
Balance as of December 31, 2019
|
$
|
21
|
|
Asset Category
|
|
2020 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2019
|
||||||||||
Cash
|
|
|
|
$
|
39
|
|
|
$
|
39
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
%
|
|
Equity securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
358
|
|
|
358
|
|
|
—
|
|
|
—
|
|
|
20
|
%
|
|||||
U.S. small cap
|
|
|
|
84
|
|
|
78
|
|
|
6
|
|
|
—
|
|
|
5
|
%
|
|||||
International
|
|
|
|
320
|
|
|
6
|
|
|
137
|
|
|
177
|
|
|
18
|
%
|
|||||
Real estate fund
|
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
7
|
%
|
|||||
REITs
|
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
%
|
|||||
Fixed income securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
169
|
|
|
158
|
|
|
11
|
|
|
—
|
|
|
10
|
%
|
|||||
Corporate bonds
|
|
|
|
542
|
|
|
—
|
|
|
542
|
|
|
—
|
|
|
31
|
%
|
|||||
Mortgage-backed securities
|
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
1
|
%
|
|||||
Municipal bonds
|
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
1
|
%
|
|||||
Treasury futures
|
|
|
|
8
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Long duration bond fund
|
|
|
|
8
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Guarantee annuity contracts
|
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
3
|
%
|
|||||
Total
|
|
100
|
%
|
|
$
|
1,747
|
|
|
$
|
655
|
|
|
$
|
743
|
|
|
$
|
349
|
|
|
100
|
%
|
Asset Category
|
|
2019 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2018
|
||||||||||
Cash
|
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
%
|
|
Equity securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
297
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
20
|
%
|
|||||
U.S. small cap
|
|
|
|
76
|
|
|
70
|
|
|
6
|
|
|
—
|
|
|
5
|
%
|
|||||
International
|
|
|
|
256
|
|
|
2
|
|
|
132
|
|
|
122
|
|
|
17
|
%
|
|||||
Real estate fund
|
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
4
|
%
|
|||||
REITs
|
|
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
1
|
%
|
|||||
Fixed income securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
181
|
|
|
167
|
|
|
14
|
|
|
—
|
|
|
12
|
%
|
|||||
Corporate bonds
|
|
|
|
491
|
|
|
—
|
|
|
491
|
|
|
—
|
|
|
33
|
%
|
|||||
Mortgage-backed securities
|
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
1
|
%
|
|||||
Municipal bonds
|
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
2
|
%
|
|||||
Long duration bond fund
|
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
Guarantee annuity contracts
|
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
3
|
%
|
|||||
Total
|
|
100
|
%
|
|
$
|
1,499
|
|
|
$
|
567
|
|
|
$
|
702
|
|
|
$
|
230
|
|
|
100
|
%
|
|
Level 3
|
||
Balance as of January 1, 2019
|
$
|
230
|
|
Actual return on assets
|
25
|
|
|
Purchases, issuances and settlements, net
|
94
|
|
|
Balance as of December 31, 2019
|
$
|
349
|
|
|
Level 3
|
||
Balance as of January 1, 2018
|
$
|
278
|
|
Actual return on assets
|
(23
|
)
|
|
Purchases, issuances and settlements, net
|
(25
|
)
|
|
Balance as of December 31, 2018
|
$
|
230
|
|
Asset Category
|
|
2020 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2019
|
||||||||||
Bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
%
|
|
Equity securities:
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
13
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
3
|
%
|
|||||
Fixed income securities:
|
|
96
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
373
|
|
|
298
|
|
|
75
|
|
|
—
|
|
|
94
|
%
|
|||||
Long duration bond fund
|
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Total bargain VEBA
|
|
100
|
%
|
|
$
|
396
|
|
|
$
|
321
|
|
|
$
|
75
|
|
|
$
|
—
|
|
|
100
|
%
|
Non-bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
48
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
36
|
%
|
|||||
International
|
|
|
|
30
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
23
|
%
|
|||||
Fixed income securities:
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund (a)
|
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
41
|
%
|
|||||
Total non-bargain VEBA
|
|
100
|
%
|
|
$
|
132
|
|
|
$
|
82
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
100
|
%
|
Life VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities:
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
50
|
%
|
|
Fixed income securities:
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund (a)
|
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
50
|
%
|
|||||
Total life VEBA
|
|
100
|
%
|
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
Total
|
|
100
|
%
|
|
$
|
532
|
|
|
$
|
407
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
100
|
%
|
(a)
|
Includes cash for margin requirements.
|
Asset Category
|
|
2019 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of 12/31/2018
|
||||||||||
Bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||||
International
|
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
4
|
%
|
|||||
Fixed income securities:
|
|
98
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
179
|
|
|
178
|
|
|
1
|
|
|
—
|
|
|
47
|
%
|
|||||
Corporate bonds
|
|
|
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
37
|
%
|
|||||
Municipal bonds
|
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
3
|
%
|
|||||
Long duration bond fund
|
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Future and option contracts (a)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
%
|
|||||
Total bargain VEBA
|
|
100
|
%
|
|
$
|
382
|
|
|
$
|
214
|
|
|
$
|
151
|
|
|
$
|
17
|
|
|
100
|
%
|
Non-bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
43
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
35
|
%
|
|||||
International
|
|
|
|
24
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
20
|
%
|
|||||
Fixed income securities:
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund (a)
|
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
45
|
%
|
|||||
Total non-bargain VEBA
|
|
100
|
%
|
|
$
|
122
|
|
|
$
|
70
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
100
|
%
|
Life VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities:
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
67
|
%
|
|
Fixed income securities:
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund (a)
|
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
33
|
%
|
|||||
Total life VEBA
|
|
100
|
%
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
Total
|
|
100
|
%
|
|
$
|
507
|
|
|
$
|
287
|
|
|
$
|
203
|
|
|
$
|
17
|
|
|
100
|
%
|
(a)
|
Includes cash for margin requirements.
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation as of January 1,
|
$
|
1,892
|
|
|
$
|
2,034
|
|
|
$
|
353
|
|
|
$
|
614
|
|
Service cost
|
28
|
|
|
34
|
|
|
4
|
|
|
8
|
|
||||
Interest cost
|
82
|
|
|
76
|
|
|
15
|
|
|
20
|
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Plan amendments
|
—
|
|
|
(23
|
)
|
|
(1
|
)
|
|
(174
|
)
|
||||
Actuarial loss (gain)
|
264
|
|
|
(153
|
)
|
|
25
|
|
|
(89
|
)
|
||||
Gross benefits paid
|
(105
|
)
|
|
(76
|
)
|
|
(25
|
)
|
|
(29
|
)
|
||||
Federal subsidy
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Benefit obligation as of December 31,
|
$
|
2,161
|
|
|
$
|
1,892
|
|
|
$
|
374
|
|
|
$
|
353
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets as of January 1,
|
$
|
1,499
|
|
|
$
|
1,649
|
|
|
$
|
507
|
|
|
$
|
576
|
|
Actual return on plan assets
|
319
|
|
|
(97
|
)
|
|
51
|
|
|
(40
|
)
|
||||
Employer contributions
|
33
|
|
|
24
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Benefits paid
|
(104
|
)
|
|
(77
|
)
|
|
(26
|
)
|
|
(29
|
)
|
||||
Fair value of plan assets as of December 31,
|
$
|
1,747
|
|
|
$
|
1,499
|
|
|
$
|
532
|
|
|
$
|
507
|
|
Funded value as of December 31,
|
$
|
(414
|
)
|
|
$
|
(393
|
)
|
|
$
|
158
|
|
|
$
|
154
|
|
Amounts recognized on the balance sheet:
|
|
|
|
|
|
|
|
||||||||
Noncurrent asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
159
|
|
|
$
|
155
|
|
Current liability
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
||||
Noncurrent liability
|
(411
|
)
|
|
(390
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Net amount recognized
|
$
|
(414
|
)
|
|
$
|
(393
|
)
|
|
$
|
158
|
|
|
$
|
154
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net actuarial loss
|
$
|
435
|
|
|
$
|
431
|
|
|
$
|
72
|
|
|
$
|
83
|
|
Prior service credit
|
(19
|
)
|
|
(22
|
)
|
|
(257
|
)
|
|
(291
|
)
|
||||
Net amount recognized
|
$
|
416
|
|
|
$
|
409
|
|
|
$
|
(185
|
)
|
|
$
|
(208
|
)
|
|
|
|
|
|
|
|
|
||||||||
Regulatory assets (liabilities)
|
$
|
375
|
|
|
$
|
352
|
|
|
$
|
(185
|
)
|
|
$
|
(208
|
)
|
Accumulated other comprehensive income
|
41
|
|
|
57
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
416
|
|
|
$
|
409
|
|
|
$
|
(185
|
)
|
|
$
|
(208
|
)
|
|
Projected Benefit Obligation Exceeds the Fair Value of Plans' Assets
|
||||||
|
2019
|
|
2018
|
||||
Projected benefit obligation
|
$
|
2,161
|
|
|
$
|
1,892
|
|
Fair value of plan assets
|
1,748
|
|
|
1,499
|
|
||
|
|
|
|
||||
|
Accumulated Benefit Obligation Exceeds the Fair Value of Plans' Assets
|
||||||
|
2019
|
|
2018
|
||||
Accumulated benefit obligation
|
$
|
2,018
|
|
|
$
|
1,768
|
|
Fair value of plan assets
|
1,748
|
|
|
1,499
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||
2020 expected employer contributions:
|
|
|
|
||||
To plan trusts
|
$
|
38
|
|
|
$
|
—
|
|
To plan participants
|
2
|
|
|
—
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
Expected Benefit Payments
|
|
Expected Benefit Payments
|
|
Expected Federal Subsidy Payments
|
||||||
2020
|
$
|
113
|
|
|
$
|
27
|
|
|
$
|
1
|
|
2021
|
115
|
|
|
27
|
|
|
1
|
|
|||
2022
|
118
|
|
|
27
|
|
|
1
|
|
|||
2023
|
123
|
|
|
27
|
|
|
1
|
|
|||
2024
|
126
|
|
|
27
|
|
|
1
|
|
|||
2025-2029
|
657
|
|
|
131
|
|
|
6
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
Weighted average assumptions used to determine December 31 benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
3.44%
|
|
4.38%
|
|
3.75%
|
|
3.36%
|
|
4.32%
|
|
3.73%
|
Rate of compensation increase
|
2.97%
|
|
3.00%
|
|
3.02%
|
|
N/A
|
|
N/A
|
|
N/A
|
Medical trend
|
N/A
|
|
N/A
|
|
N/A
|
|
graded from
|
|
graded from
|
|
graded from
|
|
|
|
|
|
|
|
6.50% in 2020
|
|
6.75% in 2019
|
|
7.00% in 2018
|
|
|
|
|
|
|
|
to 5.00% in 2026+
|
|
to 5.00% in 2026+
|
|
to 4.50% in 2026+
|
Weighted average assumptions used to determine net periodic cost:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.38%
|
|
3.75%
|
|
4.28%
|
|
4.32%
|
|
4.23%
|
|
4.26%
|
Expected return on plan assets
|
6.20%
|
|
5.95%
|
|
6.49%
|
|
3.56%
|
|
4.77%
|
|
5.09%
|
Rate of compensation increase
|
3.00%
|
|
3.02%
|
|
3.07%
|
|
N/A
|
|
N/A
|
|
N/A
|
Medical trend
|
N/A
|
|
N/A
|
|
N/A
|
|
graded from
|
|
graded from
|
|
graded from
|
|
|
|
|
|
|
|
6.75% in 2019
|
|
7.00% in 2018
|
|
7.00% in 2017
|
|
|
|
|
|
|
|
to 5.00% in 2026+
|
|
to 4.50% in 2026+
|
|
to 5.00% in 2021+
|
NOTE
|
“N/A” in the table above means assumption is not applicable.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Components of net periodic pension benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
28
|
|
|
$
|
34
|
|
|
$
|
33
|
|
Interest cost
|
82
|
|
|
76
|
|
|
80
|
|
|||
Expected return on plan assets
|
(91
|
)
|
|
(97
|
)
|
|
(93
|
)
|
|||
Amortization of prior service (credit) cost
|
(3
|
)
|
|
1
|
|
|
1
|
|
|||
Amortization of actuarial loss
|
32
|
|
|
27
|
|
|
34
|
|
|||
Net periodic pension benefit cost
|
$
|
48
|
|
|
$
|
41
|
|
|
$
|
55
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
|
|
|
|
|
|
||||||
Current year actuarial (gain) loss
|
$
|
(8
|
)
|
|
$
|
(60
|
)
|
|
$
|
(7
|
)
|
Amortization of actuarial loss
|
(4
|
)
|
|
(7
|
)
|
|
(7
|
)
|
|||
Total recognized in other comprehensive income
|
(12
|
)
|
|
(67
|
)
|
|
(14
|
)
|
|||
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
36
|
|
|
$
|
(26
|
)
|
|
$
|
41
|
|
Components of net periodic other postretirement benefit (credit) cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
4
|
|
|
$
|
8
|
|
|
$
|
10
|
|
Interest cost
|
15
|
|
|
20
|
|
|
26
|
|
|||
Expected return on plan assets
|
(18
|
)
|
|
(26
|
)
|
|
(26
|
)
|
|||
Amortization of prior service credit
|
(35
|
)
|
|
(23
|
)
|
|
(18
|
)
|
|||
Amortization of actuarial loss
|
3
|
|
|
3
|
|
|
10
|
|
|||
Net periodic other postretirement benefit (credit) cost
|
$
|
(31
|
)
|
|
$
|
(18
|
)
|
|
$
|
2
|
|
|
Amount
|
||
2020
|
$
|
65
|
|
2021
|
65
|
|
|
2022
|
65
|
|
|
2023
|
63
|
|
|
2024
|
49
|
|
|
Thereafter
|
605
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
621
|
|
|
$
|
567
|
|
|
$
|
426
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding—Basic
|
181
|
|
|
180
|
|
|
178
|
|
|||
Effect of dilutive common stock equivalents
|
—
|
|
|
—
|
|
|
1
|
|
|||
Weighted average common shares outstanding—Diluted
|
181
|
|
|
180
|
|
|
179
|
|
|
Carrying Amount
|
|
December 31, 2019
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Long-term debt (excluding finance lease obligations)
|
8,664
|
|
|
7,689
|
|
|
417
|
|
|
1,664
|
|
|
9,770
|
|
|
Carrying Amount
|
|
December 31, 2018
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Long-term debt (excluding finance lease obligations)
|
7,638
|
|
|
5,760
|
|
|
433
|
|
|
1,728
|
|
|
7,921
|
|
|
At Fair Value as of December 31, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Restricted funds
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31
|
|
Rabbi trust investments
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Deposits
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Other investments
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Total assets
|
59
|
|
|
—
|
|
|
—
|
|
|
59
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation obligations
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Total liabilities
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Total assets
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
At Fair Value as of December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Restricted funds
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29
|
|
Rabbi trust investments
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Deposits
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Other investments
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total assets
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation obligations
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Mark-to-market derivative liabilities
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||
Total liabilities
|
17
|
|
|
14
|
|
|
—
|
|
|
31
|
|
||||
Total assets (liabilities)
|
$
|
33
|
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
19
|
|
|
2019
|
||
Cash paid for amounts in lease liabilities (a)
|
$
|
16
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
121
|
|
(a)
|
Includes operating and financing cash flows from operating and finance leases.
|
|
As of December 31, 2019
|
|
Weighted-average remaining lease term:
|
|
|
Finance lease
|
6 years
|
|
Operating leases
|
19 years
|
|
|
|
|
Weighted-average discount rate:
|
|
|
Finance lease
|
12
|
%
|
Operating leases
|
4
|
%
|
|
Amount
|
||
2020
|
$
|
14
|
|
2021
|
13
|
|
|
2022
|
11
|
|
|
2023
|
7
|
|
|
2024
|
7
|
|
|
Thereafter
|
100
|
|
|
Total lease payments
|
152
|
|
|
Imputed interest
|
(53
|
)
|
|
Total
|
$
|
99
|
|
|
Amount
|
||
2019
|
$
|
17
|
|
2020
|
15
|
|
|
2021
|
12
|
|
|
2022
|
11
|
|
|
2023
|
6
|
|
|
Thereafter
|
80
|
|
|
Total
|
$
|
141
|
|
|
2019
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
3,094
|
|
|
$
|
539
|
|
|
$
|
(23
|
)
|
|
$
|
3,610
|
|
Depreciation and amortization
|
529
|
|
|
37
|
|
|
16
|
|
|
582
|
|
||||
Total operating expenses, net
|
1,964
|
|
|
480
|
|
|
(4
|
)
|
|
2,440
|
|
||||
Interest, net
|
(295
|
)
|
|
5
|
|
|
(92
|
)
|
|
(382
|
)
|
||||
Income before income taxes
|
869
|
|
|
66
|
|
|
(102
|
)
|
|
833
|
|
||||
Provision for income taxes
|
215
|
|
|
20
|
|
|
(23
|
)
|
|
212
|
|
||||
Net income attributable to common shareholders
|
654
|
|
|
46
|
|
|
(79
|
)
|
|
621
|
|
||||
Total assets
|
20,318
|
|
|
1,008
|
|
|
1,356
|
|
|
22,682
|
|
||||
Cash paid for capital expenditures
|
1,627
|
|
|
13
|
|
|
14
|
|
|
1,654
|
|
|
2018
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,984
|
|
|
$
|
476
|
|
|
$
|
(20
|
)
|
|
$
|
3,440
|
|
Depreciation and amortization
|
500
|
|
|
29
|
|
|
16
|
|
|
545
|
|
||||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Total operating expenses, net
|
1,912
|
|
|
441
|
|
|
(15
|
)
|
|
2,338
|
|
||||
Interest, net
|
(280
|
)
|
|
4
|
|
|
(74
|
)
|
|
(350
|
)
|
||||
Income before income taxes
|
826
|
|
|
41
|
|
|
(80
|
)
|
|
787
|
|
||||
Provision for income taxes
|
224
|
|
|
11
|
|
|
(13
|
)
|
|
222
|
|
||||
Net income attributable to common shareholders
|
602
|
|
|
32
|
|
|
(67
|
)
|
|
567
|
|
||||
Total assets
|
18,680
|
|
|
999
|
|
|
1,544
|
|
|
21,223
|
|
||||
Cash paid for capital expenditures
|
1,477
|
|
|
13
|
|
|
96
|
|
|
1,586
|
|
|
2017
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,958
|
|
|
$
|
422
|
|
|
$
|
(23
|
)
|
|
$
|
3,357
|
|
Depreciation and amortization
|
462
|
|
|
18
|
|
|
12
|
|
|
492
|
|
||||
Total operating expenses, net
|
1,766
|
|
|
360
|
|
|
(22
|
)
|
|
2,104
|
|
||||
Interest, net
|
(268
|
)
|
|
3
|
|
|
(77
|
)
|
|
(342
|
)
|
||||
Income before income taxes
|
925
|
|
|
66
|
|
|
(79
|
)
|
|
912
|
|
||||
Provision for income taxes
|
366
|
|
|
28
|
|
|
92
|
|
|
486
|
|
||||
Net income attributable to common shareholders
|
559
|
|
|
38
|
|
|
(171
|
)
|
|
426
|
|
||||
Total assets
|
17,602
|
|
|
599
|
|
|
1,281
|
|
|
19,482
|
|
||||
Cash paid for capital expenditures
|
1,316
|
|
|
18
|
|
|
100
|
|
|
1,434
|
|
|
2019
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Operating revenues
|
$
|
813
|
|
|
$
|
882
|
|
|
$
|
1,013
|
|
|
$
|
902
|
|
Operating income
|
238
|
|
|
302
|
|
|
406
|
|
|
224
|
|
||||
Net income attributable to common shareholders
|
113
|
|
|
170
|
|
|
240
|
|
|
98
|
|
||||
Basic earnings per share: (a)
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
0.62
|
|
|
$
|
0.94
|
|
|
$
|
1.33
|
|
|
$
|
0.54
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
0.62
|
|
|
0.94
|
|
|
1.33
|
|
|
0.54
|
|
(a)
|
Amounts may not sum due to rounding.
|
|
2018
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Operating revenues
|
$
|
761
|
|
|
$
|
853
|
|
|
$
|
976
|
|
|
$
|
850
|
|
Operating income
|
217
|
|
|
302
|
|
|
335
|
|
|
248
|
|
||||
Net income attributable to common shareholders
|
106
|
|
|
162
|
|
|
187
|
|
|
112
|
|
||||
Basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
0.60
|
|
|
$
|
0.90
|
|
|
$
|
1.04
|
|
|
$
|
0.62
|
|
Diluted earnings per share: (a)
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
0.59
|
|
|
0.91
|
|
|
1.04
|
|
|
0.62
|
|
(a)
|
Amounts may not sum due to rounding.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
•
|
Mr. Lynch’s annual base salary is to be set at $925,000.
|
•
|
Mr. Lynch is to receive a 2020 target award under the Annual Performance Plan (the “APP”) as President and Chief Executive Officer. His target award opportunity is to be set at 100% of his annual base salary, which will be prorated to reflect the portions of the year he serves as Executive Vice President and Chief Operating Officer and will serve as President and Chief Executive Officer. His performance goals to be used to determine the corporate performance factor with respect to his 2020 APP award will be the same as those in his 2019 APP award.
|
•
|
Mr. Lynch was granted LTPP awards under the Company’s 2017 Omnibus Equity Compensation Plan pursuant to the terms of the Company’s 2020 Long-Term Performance Plan (“LTPP”). In addition to standard LTPP awards granted to him on February 11, 2020 in his role as Executive Vice President and Chief Operating Officer (which were based on his current target award opportunity percentage of 165% and annual base salary of approximately $634,000), he was granted additional LTPP awards effective April 1, 2020 equal to the difference between the fair value of LTPP grants he would be eligible to receive as President and Chief Executive Officer as of April 1, 2020 based on a target award opportunity of 275% and his then annual base salary, and the fair value of the February 11, 2020 LTPP grants. The April 1, 2020 LTPP awards have standard terms and vesting conditions substantially similar to those granted to Mr. Lynch in February 2020. All of Mr. Lynch’s 2020 LTPP awards will include the post-retirement continued vesting provisions applicable to the Company’s executives serving in the CEO, CFO and COO roles.
|
•
|
Mr. Lynch will continue to participate in the Company’s Executive Severance Policy. Under this policy, in the event Mr. Lynch’s employment as President and Chief Executive Officer is terminated by the Company without cause (as determined by the Board of Directors), he would be eligible to receive salary continuation and COBRA benefits, and would continue to participate in any Company-sponsored life insurance plan, for a period of 18 months following the date of termination. In that circumstance, he also would receive a pro rata APP award for the year in which the termination of employment occurs, to the extent such payment is provided for under the terms of the applicable APP award.
|
•
|
Mr. Lynch will continue to be eligible to receive benefits as provided under the Company’s qualified and nonqualified defined benefit pension plans, as they may be in effect from time to time.
|
•
|
Mr. Lynch will continue to be eligible to participate in the Company’s employee nonqualified deferred compensation plan and its 401(k) savings plan.
|
•
|
Mr. Lynch will continue to be subject to the Company’s executive stock ownership guidelines. Beginning April 1, 2020, he will be required to own common stock with a value of at least six times his annual base salary.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)
|
The following documents have been filed as a part of this Form 10-K:
|
1.
|
The financial statements listed in the “Index to Consolidated Financial Statements” contained in Item 8—Financial Statements and Supplementary Data of this Form 10-K are hereby incorporated by reference in response to this Item 15(a).
|
2.
|
Financial statement schedules have been omitted since they are either not required or are not applicable as the information is otherwise included in the financial statements or notes thereto.
|
3.
|
Exhibits. The list of documents contained in “Exhibit Index” below is provided in response to this Item 15(a). The warranties, representations and covenants contained in any of the agreements included or incorporated by reference herein or which appear as exhibits hereto should not be relied upon by buyers, sellers or holders of the Company’s or its subsidiaries’ securities and are not intended as warranties, representations or covenants to any individual or entity except as specifically set forth in such agreement.
|
Exhibit
Number
|
|
Exhibit Description
|
2.1#
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
4.14
|
|
|
4.15
|
|
|
4.16
|
|
|
4.17
|
|
Exhibit
Number
|
|
Exhibit Description
|
4.20
|
|
|
10.1.1
|
|
|
10.1.2
|
|
|
10.2
|
|
|
10.3.1*
|
|
|
10.3.2*
|
|
|
10.3.3*
|
|
|
10.4.1*
|
|
|
10.4.2*
|
|
|
10.5*
|
|
|
10.6*
|
|
|
10.7*
|
|
|
10.8*
|
|
|
10.9.1*
|
|
|
10.9.2*
|
|
|
10.9.3*
|
|
|
10.9.4*
|
|
|
10.10*
|
|
|
10.11.1*
|
|
|
10.11.2*
|
|
|
10.12*
|
|
|
10.13.1*
|
|
|
10.13.2*
|
|
|
10.13.3*
|
|
|
10.13.5*
|
|
|
10.13.6*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.13.7*
|
|
|
10.13.8*
|
|
|
10.13.9*
|
|
|
10.13.10*
|
|
|
10.13.11*
|
|
|
10.13.12*
|
|
|
10.13.13*
|
|
|
10.13.14*
|
|
|
10.13.15*
|
|
|
10.13.16*
|
|
|
10.13.17*
|
|
|
10.13.18*
|
|
|
10.13.19*
|
|
|
10.13.20*
|
|
|
10.13.21*
|
|
|
10.13.22*
|
|
|
10.13.23*
|
|
|
10.13.24*
|
|
|
10.13.25*
|
|
|
10.13.26*
|
|
|
10.13.27*
|
|
|
10.14.1*
|
|
|
10.14.2*
|
|
|
10.14.3*
|
|
|
10.14.4*
|
|
|
10.14.5*
|
|
|
10.14.6*
|
|
|
10.14.7*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.14.8*
|
|
|
10.14.9*
|
|
|
10.14.10*
|
|
|
10.14.11*
|
|
|
10.14.12*
|
|
|
10.14.13*
|
|
|
10.14.14*
|
|
|
10.14.15*
|
|
|
10.14.16*
|
|
|
10.14.17*
|
|
|
10.14.18*
|
|
|
10.14.19*
|
|
|
10.14.20*
|
|
|
10.14.21*
|
|
|
10.14.22*
|
|
|
10.14.23*
|
|
|
10.14.24*
|
|
|
10.14.25*
|
|
|
10.14.26*
|
|
|
10.14.27*
|
|
|
10.14.28*
|
|
|
10.14.29*
|
|
|
10.14.30*
|
|
|
10.14.31*
|
|
|
10.14.32*
|
|
|
10.14.33*
|
|
|
10.14.34*
|
|
|
10.14.35*
|
|
|
10.14.36*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.14.37*
|
|
|
10.14.38*
|
|
|
10.14.39*
|
|
|
10.15*
|
|
|
10.16.1*
|
|
|
10.16.2*
|
|
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
|
#
|
Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish the omitted schedules and exhibits to the SEC upon request.
|
*
|
Denotes a management contract or compensatory plan or arrangement.
|
AMERICAN WATER WORKS COMPANY, INC.
|
|
BY:
|
/s/ SUSAN N. STORY
|
|
Susan N. Story
|
|
President and Chief Executive Officer
|
/s/ SUSAN N. STORY
|
|
/s/ JEFFREY N. EDWARDS
|
Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer and Director)
|
|
Jeffrey N. Edwards
(Director)
|
/s/ M. SUSAN HARDWICK
|
|
/s/ MARTHA CLARK GOSS
|
M. Susan Hardwick
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
Martha Clark Goss
(Director)
|
/s/ MELISSA K. WIKLE
|
|
/s/ VERONICA M. HAGEN
|
Melissa K. Wikle
Vice President and Controller
(Principal Accounting Officer)
|
|
Veronica M. Hagen
(Director)
|
/s/ KIMBERLY J. HARRIS
|
|
/s/ JULIA L. JOHNSON
|
Kimberly J. Harris
(Director) |
|
Julia L. Johnson
(Director)
|
/s/ PATRICIA L. KAMPLING
|
|
/s/ KARL F. KURZ
|
Patricia L. Kampling
(Director) |
|
Karl F. Kurz
(Director)
|
/s/ GEORGE MacKENZIE
|
|
/s/ JAMES G. STAVRIDIS
|
George MacKenzie
(Director)
|
|
James G. Stavridis
(Director)
|
•
|
for breach of the duty of loyalty;
|
•
|
for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law;
|
•
|
under Section 174 of the DGCL (relating to unlawful dividends or stock repurchases); or
|
•
|
for transactions from which the director derived an improper personal benefit.
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
12/31/2021
|
||
|
|
Adjusted
|
|
|
Illustration
|
||
|
|
|
|||||
Adjusted diluted earnings per share from continuing operations
|
|
$
|
3.30
|
|
|
$
|
4.27
|
|
|
|
|
|
|
|
|
Compounded EPS growth
|
|
|
|
|
|
|
8.97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement
|
|
Award
|
||
|
|
|
||||
Compounded EPS Growth
|
|
8.97%
|
|
127.5
|
%
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
12/31/2021
|
||
|
|
Adjusted
|
|
|
Illustration
|
||
|
|
|
|||||
Adjusted diluted earnings per share from continuing operations
|
|
$
|
3.30
|
|
|
$
|
4.27
|
|
|
|
|
|
|
|
|
Compounded EPS growth
|
|
|
|
|
|
|
8.97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement
|
|
|
Award
|
||
|
|
|
|||||
Compounded EPS Growth
|
|
|
8.97%
|
|
|
127.5
|
%
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
12/31/2021
|
||
|
|
Adjusted
|
|
|
Illustration
|
||
|
|
|
|||||
Adjusted diluted earnings per share from continuing operations
|
|
$
|
3.30
|
|
|
$
|
4.27
|
|
|
|
|
|
|
|
|
Compounded EPS growth
|
|
|
|
|
|
|
8.97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement
|
|
|
Award
|
|
|
|
|
||||
Compounded EPS Growth
|
|
8.97%
|
|
|
127.5
|
%
|
|
|
|
|
|
|
|
|
|
|
12/31/2018
|
|
|
12/31/2021
|
||
|
|
Adjusted
|
|
|
Illustration
|
||
|
|
|
|||||
Adjusted diluted earnings per share from continuing operations
|
|
$
|
3.30
|
|
|
$
|
4.27
|
|
|
|
|
|
|
|
|
Compounded EPS growth
|
|
|
|
|
|
|
8.97%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Achievement
|
|
|
Award
|
|
|
|
|
||||
Compounded EPS Growth
|
|
8.97%
|
|
|
127.5
|
%
|
PENSION PLAN
|
FOR EMPLOYEES OF
|
AMERICAN WATER WORKS COMPANY, INC.
|
AND
|
ITS DESIGNATED SUBSIDIARIES
|
|
|
(As Amended and Restated Effective January 1, 2016)
|
ARTICLE I.
|
PURPOSE 1
|
ARTICLE II.
|
DEFINITIONS 2
|
Section 2.1
|
Definitions 2
|
Section 2.2
|
Administration 10
|
Section 2.3
|
Construction 10
|
Section 2.4
|
Governing Law 10
|
ARTICLE III.
|
PARTICIPATION 10
|
Section 3.1
|
New Participants 10
|
Section 3.2
|
Participants as of January 1, 2006 11
|
Section 3.3
|
Collective Bargaining 12
|
Section 3.4
|
Suspension of Benefits 12
|
ARTICLE IV.
|
RETIREMENT 13
|
Section 4.1
|
Normal Retirement and Late Retirement 13
|
Section 4.2
|
Early Retirement 13
|
Section 4.3
|
Disability Retirement 14
|
ARTICLE V.
|
RETIREMENT INCOME LIFE BENEFITS 15
|
Section 5.1
|
For Participants Who Retired Prior to July 1, 2001 15
|
Section 5.2
|
Normal or Late Retirement Income 15
|
Section 5.3
|
1994 Fresh Start Provisions 17
|
Section 5.4
|
Early Retirement Income 17
|
Section 5.5
|
Disability Retirement Income 17
|
Section 5.6
|
Other Plan Benefits 18
|
Section 5.7
|
Benefits Attributable to Merged Plans 18
|
Section 5.8
|
Normal Form of Retirement Income 18
|
ARTICLE VI.
|
BENEFIT ELECTIONS, SURVIVOR BENEFITS AND RELATED REDUCTIONS IN BENEFITS 18
|
Section 6.1
|
Automatic Surviving Spouse Benefit 18
|
Section 6.2
|
Notice and Election Procedures 20
|
Section 6.3
|
Monthly Income for Life Election 22
|
Section 6.4
|
Survivor Benefits Available by Election 22
|
Section 6.5
|
Death Benefits for Unmarried Participants 23
|
Section 6.6
|
Required Distributions - Code Section 401(a)(9) 24
|
Section 6.7
|
Distributions Pursuant to a Qualified Domestic Relations Order (“QDRO”) 28
|
ARTICLE VII.
|
BENEFIT PAYMENTS 29
|
Section 7.1
|
Purchase of Annuities 29
|
Section 7.2
|
Direct Rollovers 29
|
Section 7.3
|
Limitations for Underfunded Plans 30
|
|
i
|
|
ARTICLE VIII.
|
VESTED BENEFITS IN THE EVENT OF TERMINATION OF EMPLOYMENT 35
|
Section 8.1
|
Vesting 36
|
Section 8.2
|
Payment of Vested Termination Benefit 36
|
Section 8.3
|
Failure to Vest 36
|
ARTICLE IX.
|
RE-EMPLOYMENT AND BREAKS-IN-SERVICE 37
|
Section 9.1
|
Re-employment before July 1, 1976 37
|
Section 9.2
|
Re-employment after June 30, 1976 and before July 1, 1985 37
|
Section 9.3
|
Re-employment after June 30, 1985 37
|
Section 9.4
|
General 38
|
ARTICLE X.
|
VETERANS’ RE-EMPLOYMENT RIGHTS 38
|
Section 10.1
|
Qualified Military Service 38
|
Section 10.2
|
Death While In Qualified Military Service 38
|
ARTICLE XI.
|
PLAN ADMINISTRATION 39
|
Section 11.1
|
Fiduciary Responsibility 39
|
Section 11.2
|
Appointment and Removal of Committee 39
|
Section 11.3
|
Compensation and Expenses of Committee 39
|
Section 11.4
|
Committee Procedures 39
|
Section 11.5
|
Delegation and Allocation of Responsibility 40
|
Section 11.6
|
Indemnification 40
|
Section 11.7
|
Claims Procedure 41
|
Section 11.8
|
Plan Expenses 42
|
ARTICLE XII.
|
CONTRIBUTIONS 42
|
Section 12.1
|
Contributions 42
|
Section 12.2
|
Management of Funds 43
|
ARTICLE XIII.
|
MISCELLANEOUS 44
|
Section 13.1
|
Liability of the Company 44
|
Section 13.2
|
Non-Alienation of Benefits 44
|
Section 13.3
|
Facility of Payment 44
|
Section 13.4
|
Limitation on Benefits 44
|
Section 13.5
|
Right to Terminate Employment 45
|
ARTICLE XIV.
|
TERMINATION OF THE PLAN - DISTRIBUTION OF ASSETS 45
|
Section 14.1
|
Order of Priorities 45
|
Section 14.2
|
Method of Allocation 46
|
Section 14.3
|
Restricted Benefits 47
|
Section 14.4
|
Severance of a Subsidiary 47
|
ARTICLE XV.
|
GOVERNMENTAL APPROVAL 48
|
|
ii
|
|
ARTICLE XVI.
|
AMENDMENTS 48
|
Section 16.1
|
Amendment 48
|
Section 16.2
|
Merger, Consolidation or Transfer of Assets or Liabilities 48
|
|
iii
|
|
[CORPORATE SEAL]
|
AMERICAN WATER WORKS COMPANY, INC.
|
|
|
|
|
|
By:
|
/s/ Brenda J. Holdnak
|
•
|
American Water Works Company, Inc.
|
•
|
American Water Enterprises, Inc. (participating only with respect to certain grandfathered employees)
|
•
|
AAET, L.P.
|
Ø
|
EA2 Systems L.C.
|
Ø
|
American Water Operations and Maintenance, Inc.
|
Ø
|
American Water Services CDM, Inc.
|
•
|
American Water Resources, Inc. (participating only with respect to certain grandfathered employees)
|
•
|
American Water Works Service Company, Inc.
|
•
|
Arizona-American Water Company (prior to July 1, 2011)
|
•
|
California-American Water Company
|
•
|
Hawaii American Water Company
|
•
|
Illinois-American Water Company
|
•
|
Indiana-American Water Company, Inc.
|
•
|
Iowa-American Water Company
|
•
|
Kentucky-American Water Company
|
•
|
Maryland-American Water Company
|
•
|
Michigan American Water Company
|
•
|
Missouri-American Water Company
|
•
|
New Jersey-American Water Company, Inc.
|
•
|
New Mexico-American Water Company (prior to July 1, 2011)
|
•
|
New York American Water Company, Inc. (participating only with respect to the component of the, company formerly known as Long Island Water Corporation)
|
•
|
Ohio-American Water Company (prior to May 1, 2012)
|
•
|
Pennsylvania-American Water Company
|
•
|
Tennessee-American Water Company
|
•
|
Virginia-American Water Company
|
•
|
West Virginia-American Water Company
|
Ø
|
Bluefield Valley Water Works Company
|
Lesser of:
|
|
Years Until Age 65, or
|
|
Years of Vesting Service less than 30
|
Applicable Fraction
|
|
|
10
|
15/30
|
9
|
16/30
|
8
|
17/30
|
7
|
18/30
|
6
|
19/30
|
5
|
20/30
|
4
|
22/30
|
3
|
24/30
|
2
|
26/30
|
1
|
28/30
|
0
|
30/30
|
|
|
V.
|
INDIANA-AMERICAN WATER COMPANY, INC. (formerly Northwest Indiana Water Corporation) - UNION EMPLOYEES AT THE NORTHWEST OPERATIONS FACILITY
|
VI.
|
MISSOURI-AMERICAN WATER COMPANY (formerly St. Louis County Water Company) - UNION EMPLOYEES
|
Age
|
Applicable Factor
|
|
|
64
|
.970
|
63
|
.941
|
62
|
.913
|
61
|
.885
|
60
|
.859
|
59
|
.833
|
58
|
.808
|
57
|
.784
|
56
|
.760
|
55
|
.737
|
|
|
VII.
|
LONG ISLAND WATER CORPORATION - UNION EMPLOYEES
|
VIII.
|
ILLINOIS-AMERICAN WATER COMPANY (formerly Northern Illinois Water Corporation) - UNION EMPLOYEES AT CHAMPAIGN, ILLINOIS
|
Number of Years
|
|
Early Retirement Date
|
|
Precedes Normal
|
|
Retirement Date
|
Applicable Factor
|
|
|
1
|
.97
|
2
|
.94
|
3
|
.91
|
4
|
.88
|
5
|
.85
|
6
|
.82
|
7
|
.79
|
8
|
.76
|
9
|
.73
|
10
|
.70
|
|
|
IX.
|
ILLINOIS-AMERICAN WATER COMPANY (formerly Northern Illinois Water Corporation) - UNION EMPLOYEES AT STERLING, ILLINOIS
|
Number of Years
Early Retirement Date Precedes Normal Retirement Date |
Applicable Factor
|
1
|
.97
|
2
|
.94
|
3
|
.91
|
4
|
.88
|
5
|
.85
|
6
|
.82
|
7
|
.79
|
8
|
.76
|
9
|
.73
|
10
|
.70
|
(a)
|
Basis: Interest Rate specified by Pension Benefit Guaranty Corporation for immediate annuities as of the Participant’s termination date.
|
1.
|
Effective January 1, 2019, Section 2.1(b) of the Plan is amended to read as follows:
|
BENEFITS ADMINISTRATION COMMITTEE OF
|
||
AMERICAN WATER WORKS COMPANY,
|
||
INC. AND ITS DESIGNATED
|
||
SUBSIDIARIES
|
||
|
||
By:
|
/s/ Melanie M. Kennedy
|
|
|
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Title:
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SVP, Human Resources
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Entity Name
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Entity Type
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Jurisdiction of Organization
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American Industrial Water LLC
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Limited Liability Company
|
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Ohio
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American Lake Water Company
|
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Corporation
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Illinois
|
American Water – Acciona Agua LLC
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Limited Liability Company
|
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Delaware
|
American Water (USA), LLC
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Limited Liability Company
|
|
Delaware
|
American Water Canada Corp.
|
|
Corporation
|
|
Ontario
|
American Water Capital Corp.
|
|
Corporation
|
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Delaware
|
American Water Carbon Services Corp.
|
|
Corporation
|
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Ontario
|
American Water Enterprises Holding, LLC
|
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Limited Liability Company
|
|
Delaware
|
American Water Enterprises, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Defense Services, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Federal Services, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Military Services, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Operations and Maintenance, LLC
|
|
Limited Liability Company
|
|
Texas
|
American Water Resources Holdings, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources of Florida, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources of Texas, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources, LLC
|
|
Limited Liability Company
|
|
Virginia
|
American Water Services CDM, Inc.
|
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Corporation
|
|
Washington
|
American Water Services, LLC
|
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Limited Liability Company
|
|
Delaware
|
American Water Works Service Company, Inc.
|
|
Corporation
|
|
Delaware
|
AW Contract Services (Canada), Inc.
|
|
Corporation
|
|
Canada
|
AW Insurance LLC
|
|
Series Limited Liability Company
|
|
Delaware
|
AWIP Holdings LLC
|
|
Limited Liability Company
|
|
Delaware
|
AW Technologies, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Bluefield Valley Water Works Company
|
|
Corporation
|
|
Virginia
|
California-American Water Company
|
|
Corporation
|
|
California
|
Edison Water Company
|
|
Corporation
|
|
New Jersey
|
EMC American Water Canada Inc.
|
|
Corporation
|
|
Canada
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Environmental Disposal Corporation
|
|
Corporation
|
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New Jersey
|
Environmental Management, LLC
|
|
Limited Liability Company
|
|
Missouri
|
E’town Properties, Inc.
|
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Corporation
|
|
Delaware
|
E’town Services L.L.C.
|
|
Limited Liability Company
|
|
New Jersey
|
Georgia-American Water Company LLC
|
|
Limited Liability Company
|
|
Delaware
|
Hawaii-American Water Company
|
|
Corporation
|
|
Nevada
|
Illinois-American Water Company
|
|
Corporation
|
|
Illinois
|
Indiana-American Water Company, Inc.
|
|
Corporation
|
|
Indiana
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Iowa-American Water Company
|
|
Corporation
|
|
Delaware
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Kentucky-American Water Company
|
|
Corporation
|
|
Kentucky
|
Laurel Oak Properties Corporation
|
|
Corporation
|
|
Delaware
|
Liberty Water Company
|
|
Corporation
|
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New Jersey
|
Maryland-American Water Company
|
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Corporation
|
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Maryland
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Michigan-American Water Company
|
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Corporation
|
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Michigan
|
Missouri-American Water Company
|
|
Corporation
|
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Missouri
|
Mt. Ebo Sewage Works, Inc.
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Corporation
|
|
New York
|
Entity Name
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|
Entity Type
|
|
Jurisdiction of Organization
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New Jersey-American Water Company, Inc.
|
|
Corporation
|
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New Jersey
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New York American Water Company, Inc.
|
|
Corporation
|
|
New York
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OMI/Thames Water Stockton, Inc.
|
|
Corporation
|
|
Delaware
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One Water Street LLC
|
|
Limited Liability Company
|
|
New Jersey
|
Pennsylvania-American Water Company
|
|
Corporation
|
|
Pennsylvania
|
Pivotal Home Solutions, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Prism-Berlie (Windsor) Limited
|
|
Corporation
|
|
Ontario
|
Tennessee-American Water Company
|
|
Corporation
|
|
Tennessee
|
TWH LLC
|
|
Limited Liability Company
|
|
Delaware
|
TWNA, Inc.
|
|
Corporation
|
|
Delaware
|
Virginia-American Water Company
|
|
Corporation
|
|
Virginia
|
West Virginia-American Water Company
|
|
Corporation
|
|
West Virginia
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/s/ PricewaterhouseCoopers LLP
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Philadelphia, Pennsylvania
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February 18, 2020
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By:
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/s/ SUSAN N. STORY
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Susan N. Story
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President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/s/ M. SUSAN HARDWICK
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M. Susan Hardwick
|
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Executive Vice President and Chief Financial Officer (Principal Financial Officer)
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By:
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/s/ SUSAN N. STORY
|
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Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer)
|
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February 18, 2020
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By:
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/s/ M. SUSAN HARDWICK
|
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M. Susan Hardwick
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Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
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February 18, 2020
|