SAN JOSE, Calif. - California Water Service Group (NYSE: NYSE:CWT), the largest regulated water utility in the western United States, has announced its ongoing commitment to invest approximately $215 million in treatment for per- and polyfluoroalkyl substances (PFAS).
This announcement follows a decision by the California Public Utilities Commission (CPUC) to dismiss the utility’s application to modify an existing PFAS-expense memorandum account to include capital investments for future recovery.
Despite the regulatory setback, the Group's Chairman & CEO, Martin A. Kropelnicki, stated that the company will proceed with its plans to construct treatment facilities to meet new federal water quality standards.
The U.S. Environmental Protection Agency recently set new maximum contaminant levels (MCLs) for PFAS, with utilities required to begin monitoring by 2027 and achieve compliance by 2029. California Water Service Group, however, has already tested most of its active water sources and believes it is well-positioned to treat any sources as needed within the compliance timeframe.
The Group's investment is part of a broader strategy to ensure the health and safety of its customers. Kropelnicki emphasized the company's highest priority is protecting customer health and safety, indicating that construction of the necessary infrastructure will move forward.
In addition to self-funded investments, California Water Service Group has filed lawsuits against PFAS manufacturers to hold them financially responsible for testing and treatment costs. The company is also pursuing grants to alleviate the financial burden on its customers.
California Water Service Group provides water and/or wastewater services to over 2.1 million people across California, Hawaii, New Mexico, Washington, and Texas through its regulated subsidiaries. The company is recognized for its commitment to sustainability initiatives and community well-being, and has been named one of America's Most Responsible Companies by Newsweek.
The information for this article is based on a press release statement from California Water Service Group.
InvestingPro Insights
As California Water Service Group (NYSE: CWT) reinforces its commitment to water safety and compliance with new PFAS regulations, the company's financial health and stock performance offer a mixed picture.
With a market capitalization of $2.59 billion, the company trades at a high earnings multiple with a P/E ratio of 49.93, reflecting investor expectations of future earnings growth. This is underscored by the company's net income, which is expected to grow this year, according to one of the InvestingPro Tips.
InvestingPro Data indicates that CWT has experienced a revenue decline of 6.12% over the last twelve months as of Q4 2023. However, the quarterly revenue growth shows a positive turn, with a 6.76% increase in Q4 2023. This suggests a potential recovery or positive shift in the company's revenue trajectory.
Another point to consider is the dividend yield, which stands at 2.54%, coupled with a history of maintaining dividend payments for 54 consecutive years—a testament to the company's commitment to returning value to shareholders.
Investors and potential shareholders can look to InvestingPro Tips for deeper insights, noting that analysts predict profitability for the company this year and that it is trading near its 52-week low, potentially presenting a buying opportunity. For those interested in exploring a comprehensive list of tips, they can find 9 additional InvestingPro Tips at https://www.investing.com/pro/CWT. To enhance their investment research experience, users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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