Form 8-K CALIFORNIA WATER SERVICE For: Jul 28
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 28, 2016
CALIFORNIA WATER SERVICE GROUP
(Exact name of Registrant as Specified in its Charter)
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Delaware |
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1-13883 |
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77-0448994 |
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(State or other jurisdiction |
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(Commission file number) |
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(I.R.S. Employer |
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1720 North First Street |
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95112 |
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(Address of principal executive offices) |
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(Zip Code) |
(408) 367-8200
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On July 28, 2016, California Water Service Group (the “Company”) issued a press release (a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference) announcing its financial results for the second quarter of 2016, ended June 30, 2016. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
As announced, the Company will host a conference call and webcast on Thursday, July 28, 2016 at 11:00 am EST to discuss financial results and management’s business outlook. The financial results announcement contains information about how to access the conference call and webcast. A slide presentation, which includes supplemental information relating to the Company, will be used by management during the conference call and webcast. A copy of the slide presentation is attached hereto as Exhibit 99.2 and is incorporated by reference herein. The Exhibits will be posted on the Company’s website at www.calwatergroup.com under the “Investor Relations” tab.
The information furnished pursuant to Item 2.02 of this Current Report shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
The information included in the Exhibits to this report is incorporated by reference in response to this Item 7.01.
The information furnished pursuant to Item 7.01 of this Current Report shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
We hereby furnish the following exhibits, which shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, with this report:
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Exhibit No. |
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Description |
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99.1 |
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Press Release issued July 28, 2016 |
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99.2 |
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Slide presentation relating to conference call and webcast |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CALIFORNIA WATER SERVICE GROUP | |
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Date: July 28, 2016 |
By: |
/s/ Thomas F. Smegal |
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Name: |
Thomas F. Smegal |
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Title: |
Vice President, Chief Financial Officer & Treasurer |
Exhibit 99.1
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NEWS RELEASE CALIFORNIA WATER SERVICE GROUP |
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1720 North First Street |
July 28, 2016 |
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Contact: |
Tom Smegal (408) 367-8200 (analysts) |
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CALIFORNIA WATER SERVICE GROUP ANNOUNCES
SECOND QUARTER AND YEAR TO DATE 2016 RESULTS
SAN JOSE, CA — California Water Service Group (NYSE: CWT) today announced 2016 second quarter net income of $11.5 million or $0.24 per diluted common share, compared to net income of $9.8 million or $0.21 per diluted common share for the same period last year. The $1.7 million increase was due primarily to higher accrued unbilled revenue resulting from higher customer consumption at the end of the period, which was partially offset by increases in maintenance, depreciation and amortization, and net interest expense.
Total revenue increased $8.0 million, or 5.6%, to $152.4 million, compared to revenue of $144.4 million for the second quarter of 2015. Rate increases added $10.1 million, $8.0 million of which was related to water production cost increases. The accrued unbilled revenue added $4.6 million. Revenue decoupling mechanisms and other balancing accounts reduced revenue $7.3 million. All other changes increased revenue $0.6 million.
The WRAM account records changes in billed revenue. Unbilled revenue is an accounting estimate that is accrued at the end of the quarter. The unbilled revenue accrual is subject to consumption changes and can fluctuate on a quarter-to-quarter basis.
Total operating expenses increased $6.0 million, or 4.7%, to $133.9 million in the second quarter of 2016 compared to operating expenses of $127.9 million in the second quarter of 2015, principally due to a $4.6 million or 8.6% increase in water production expenses. The increase in water production expenses was primarily due to a 10% increase in purchased water rates from water wholesalers and a 2% increase in the use of purchased water to meet customer demand.
Administrative & general and other operations expenses decreased $1.9 million, or 4.3%, to $42.3 million, due primarily to decreases in pension and post retirement costs of $2.5 million, which were partially offset by increases to water conservation program costs of $0.3 million, California drought program incremental costs of $0.2 million, and employee wage increases of $0.1 million. Water conservation program costs are affected by seasonal patterns and customer demand. Changes in employee pension and other postretirement benefits and water conservation program expenses for regulated California operations do not affect net income, because the Company is permitted by the California Public Utilities Commission (CPUC) to record these costs in balancing accounts for future recovery, which creates a corresponding change to operating revenue. Drought program costs are tracked in a CPUC-approved memorandum account and require Commission review before they become recoverable.
Maintenance expense increased $0.6 million, or 11.4%, to $5.9 million, mostly due to expenses incurred to respond to a large wildfire in the Company’s Kern River Valley District.
Depreciation and amortization expense increased $0.5 million, or 3.2%, to $15.8 million due to 2015 capital additions.
Income taxes increased $1.8 million to $6.9 million in the second quarter of 2016 compared to the second quarter of 2015, primarily due to a $2.8 million increase in pre-tax income and a $0.6 million tax benefit recorded in the second quarter of 2015.
Other income, net of income taxes, increased $0.6 million in the second quarter of 2016, principally due to an increase in unrealized gains associated with our benefit plan investments.
Net interest expense increased $1.0 million, or 14.5%, to $7.6 million, due mostly to the sale of $150.0 million First Mortgage Bonds in the fourth quarter of 2015 and the first quarter of 2016 to support infrastructure investments needed to provide a safe and reliable water supply to customers.
The under-collected net receivable balance in the WRAM and MCBA mechanism was $28.9 million at the end of the second quarter, down 14.0% or $4.7 million from the balance at the end of the first quarter.
According to President and Chief Executive Officer Martin A. Kropelnicki, financial results were in line with expectations, given the continuing drought and the critical importance of investing in water conservation.
“The real story for the second quarter isn’t the numbers; it’s our people. Thanks to our employees, we continued to take a customer-first approach to drought management. Additionally, we responded effectively and compassionately to a devastating fire in our Kern River Valley District, continued to work diligently on our 2015 General Rate Case, and we were ranked “highest in customer satisfaction among water utilities in the West” by J.D. Power. In addition, we were named a Top 100 Workplace in the San Francisco Bay
Area for a fifth consecutive year. I’m very proud of our team and what we accomplished during the quarter,” Kropelnicki said.
Year-to-Date Results
For the six-month period ended June 30, 2016, net income was $10.7 million or $0.22 per diluted common share, compared to net income of $11.4 million or $0.24 per diluted common share for the six-month period ended June 30, 2015. The $0.7 million decrease in net income was primarily due to incremental drought program expenses, increased maintenance, depreciation and amortization, and net interest expenses. A $0.6 million tax benefit which had occurred in 2015 did not occur in 2016. Expense increases were partially offset by an increase in accrued unbilled revenue.
During the first six months of 2016, the total company-funded and developer-funded investment was $116.2 million in utility plant, up 53.3%, or $40.4 million, from $75.8 million in the first six months of 2015.
On July 15, 2016, Cal Water filed an advice letter to recover $4.2 million of incremental drought expenses associated with calendar years 2014 and 2015. The Company expects to receive approval of this advice letter before the end of 2016.
2015 California General Rate Case
As previously reported, in July 2015, California Water Service Company (Cal Water) filed a General Rate Case (GRC) application seeking rate increases in all regulated operating districts in California effective January 1, 2017. The 2015 GRC application requests increased revenues of $94.8 million for 2017, $23.0 million for 2018, and $22.6 million for 2019. The primary reason for the requested revenue increase was a proposed
capital program of $693.0 million in districts throughout California over the three-year period from January 1, 2016 through December 31, 2018. The GRC process considers the views of several intervenors, including the CPUC’s Office of Ratepayer Advocates (ORA).
The Company reviewed the GRC intervenors’ recommendations and composed rebuttal testimony during the second quarter of 2016. During the months of June and July, the Company and intervenors met in settlement discussions and completed rate case evidentiary hearings at the CPUC on July 18, 2016. The case is being processed according to the adopted schedule which would allow for a decision at the end of 2016.
Other Information
All stockholders and interested investors are invited to listen to the second quarter of 2016 conference call on July 28, 2016 at 8:00 a.m. PDT (11:00 a.m. EDT) by dialing 1-888-359-3627 and keying in ID #7514207. A replay of the call will be available from 11:00 a.m. PDT (2:00 p.m. EDT) on July 28, 2016 through September 28, 2016, at 1-888-203-1112 or 1-719-457-0820, ID #7514207. The replay will also be available under the investor relations tab at www.calwatergroup.com. Prior to the call, Cal Water will post a slide presentation on its website. The presentation can be found at www.calwatergroup.com/docs/earningsslidesjune2016.pdf after 6:00 a.m. PDT. The call will be hosted by President and Chief Executive Officer Martin A. Kropelnicki and Vice President and Chief Financial Officer Thomas F. Smegal III.
California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., CWS Utility Services, and HWS Utility Services, LLC. Together these companies provide regulated and non-regulated water service to approximately 2 million people in more than 100 California, Washington, New Mexico
and Hawaii communities. Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.” Additional information is available online at www.calwatergroup.com.
This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (“Act”). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management’s judgment about the Company, the water utility industry and general economic conditions. Such words as would, expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: governmental and regulatory commissions’ decisions; consequences of eminent domain actions relating to our water systems; changes in regulatory commissions’ policies and procedures; the timeliness of regulatory commissions’ actions concerning rate relief; inability to renew leases to operate city water systems on beneficial terms; changes in California State Water Resources Control Board water quality standards; changes in environmental compliance and water quality requirements; electric power interruptions; changes in customer water use patterns and the effects of conservation; the impact of weather and climate on water availability, water sales and operating results; the unknown impact of contagious diseases, such as Zika, avian flu, H1N1 flu and severe acute respiratory syndrome, on the Company’s operations; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; labor relations matters as we negotiate with the unions; restrictive covenants in or changes to the credit ratings on our current or future debt that could increase our financing costs or affect our ability to borrow, make payments on debt or pay dividends; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
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June 30, |
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December 31, |
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(In thousands, except per share data) |
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2016 |
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2015 |
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ASSETS |
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Utility plant: |
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Utility plant |
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$ |
2,621,322 |
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$ |
2,506,946 |
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Less accumulated depreciation and amortization |
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(836,245 |
) |
(805,178 |
) | ||
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Net utility plant |
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1,785,077 |
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1,701,768 |
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Current assets: |
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Cash and cash equivalents |
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30,826 |
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8,837 |
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Receivables: |
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Customers |
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36,635 |
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31,512 |
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Regulatory balancing accounts |
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26,453 |
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35,052 |
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Other |
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11,901 |
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14,760 |
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Unbilled revenue |
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33,535 |
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23,181 |
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Materials and supplies at weighted average cost |
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6,393 |
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6,339 |
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Taxes, prepaid expense, and other assets |
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13,257 |
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7,897 |
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Total current assets |
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159,000 |
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127,578 |
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Other assets: |
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|
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Regulatory assets |
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363,321 |
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361,893 |
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Goodwill |
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2,615 |
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2,615 |
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Other assets |
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48,110 |
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47,399 |
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Total other assets |
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414,046 |
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411,907 |
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TOTAL ASSETS |
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$ |
2,358,123 |
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$ |
2,241,253 |
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|
|
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CAPITALIZATION AND LIABILITIES |
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Capitalization: |
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Common stock, $.01 par value |
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$ |
480 |
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$ |
479 |
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Additional paid-in capital |
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333,561 |
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333,135 |
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Retained earnings |
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302,719 |
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308,541 |
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Total common stockholders’ equity |
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636,760 |
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642,155 |
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Long-term debt, less current maturities |
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555,787 |
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508,002 |
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Total capitalization |
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1,192,547 |
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1,150,157 |
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Current liabilities: |
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Current maturities of long-term debt |
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6,133 |
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6,043 |
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Short-term borrowings |
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75,100 |
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33,615 |
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Accounts payable |
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77,604 |
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66,380 |
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Regulatory balancing accounts |
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2,702 |
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2,227 |
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Accrued interest |
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5,820 |
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5,088 |
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Accrued expenses and other liabilities |
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34,654 |
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34,545 |
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Total current liabilities |
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202,013 |
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147,898 |
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Unamortized investment tax credits |
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1,872 |
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1,872 |
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Deferred income taxes |
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271,407 |
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264,897 |
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Pension and postretirement benefits other than pensions |
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238,823 |
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236,266 |
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Regulatory liabilities and other |
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92,141 |
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82,414 |
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Advances for construction |
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180,429 |
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180,172 |
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Contributions in aid of construction |
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178,891 |
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177,577 |
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Commitments and contingencies |
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— |
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— |
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TOTAL CAPITALIZATION AND LIABILITIES |
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$ |
2,358,123 |
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$ |
2,241,253 |
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
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June 30, |
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June 30, |
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For the Three-Months ended: |
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2016 |
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2015 |
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Operating revenue |
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$ |
152,445 |
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$ |
144,414 |
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Operating expenses: |
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Operations: |
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Water production costs |
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57,589 |
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53,022 |
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Administrative and general |
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23,366 |
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26,637 |
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Other operations |
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18,903 |
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17,512 |
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Maintenance |
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5,934 |
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5,326 |
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Depreciation and amortization |
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15,842 |
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15,354 |
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Income taxes |
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6,870 |
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5,102 |
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Property and other taxes |
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5,407 |
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4,968 |
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Total operating expenses |
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133,911 |
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127,921 |
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Net operating income |
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18,534 |
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16,493 |
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|
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Other income and expenses: |
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|
|
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Non-regulated revenue |
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3,764 |
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3,479 |
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Non-regulated expenses |
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(2,809 |
) |
(3,504 |
) | ||
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Income tax (expense) benefit on other income and expenses |
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(384 |
) |
10 |
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Net other income (loss) |
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571 |
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(15 |
) | ||
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Interest expense: |
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|
|
|
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Interest Expense |
|
8,434 |
|
7,061 |
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Less: capitalized interest |
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(837 |
) |
(428 |
) | ||
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Net interest expense |
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7,597 |
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6,633 |
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|
|
|
|
|
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Net income |
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$ |
11,508 |
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$ |
9,845 |
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|
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Earnings per share: |
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|
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Basic |
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$ |
0.24 |
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$ |
0.21 |
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Diluted |
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$ |
0.24 |
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$ |
0.21 |
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|
Weighted average shares outstanding: |
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|
|
|
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Basic |
|
47,972 |
|
47,880 |
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Diluted |
|
47,972 |
|
47,892 |
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Dividends per share of common stock |
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$ |
0.1725 |
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$ |
0.1675 |
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|
|
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June 30, |
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June 30, |
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For the Six-Months ended: |
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2016 |
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2015 |
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|
|
|
|
|
|
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Operating revenue |
|
$ |
274,172 |
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$ |
266,399 |
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|
Operating expenses: |
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|
|
|
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Operations: |
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|
|
|
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Water production costs |
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98,658 |
|
98,224 |
| ||
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Administrative and general |
|
51,193 |
|
54,332 |
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Other operations |
|
38,205 |
|
33,355 |
| ||
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Maintenance |
|
11,997 |
|
9,783 |
| ||
|
Depreciation and amortization |
|
31,888 |
|
30,673 |
| ||
|
Income taxes |
|
5,945 |
|
5,715 |
| ||
|
Property and other taxes |
|
11,482 |
|
10,327 |
| ||
|
Total operating expenses |
|
249,368 |
|
242,409 |
| ||
|
|
|
|
|
|
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Net operating income |
|
24,804 |
|
23,990 |
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|
|
|
|
|
|
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Other income and expenses: |
|
|
|
|
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Non-regulated revenue |
|
7,192 |
|
6,726 |
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Non-regulated expenses |
|
(5,789 |
) |
(5,747 |
) | ||
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Income tax expense on other income and expenses |
|
(565 |
) |
(393 |
) | ||
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Net other income |
|
838 |
|
586 |
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|
|
|
|
|
|
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Interest expense: |
|
|
|
|
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Interest expense |
|
16,499 |
|
14,130 |
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Less: capitalized interest |
|
(1,567 |
) |
(974 |
) | ||
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Net interest expense |
|
14,932 |
|
13,156 |
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|
|
|
|
|
| ||
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Net income |
|
$ |
10,710 |
|
$ |
11,420 |
|
|
|
|
|
|
|
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Earnings per share: |
|
|
|
|
| ||
|
Basic |
|
$ |
0.22 |
|
$ |
0.24 |
|
|
Diluted |
|
$ |
0.22 |
|
$ |
0.24 |
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|
Weighted average shares outstanding: |
|
|
|
|
| ||
|
Basic |
|
47,938 |
|
47,853 |
| ||
|
Diluted |
|
47,943 |
|
47,873 |
| ||
|
Dividends declared per share of common stock |
|
$ |
0.3450 |
|
$ |
0.3350 |
|
Exhibit 99.2
Second Quarter 2016 Earnings Call Presentation CALIFORNIA WATER SERVICE GROUP July 28, 2016
Forward-Looking Statements This presentation contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 ("Act"). The forward-looking statements are intended to qualify under provisions of the federal securities laws for "safe harbor" treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management's judgment about the California drought and its effect on the Company. Words such as would, expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to: governmental and regulatory commissions' decisions; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; eminent domain actions affecting our water systems; electric power interruptions; the ability to successfully implement conservation measures; changes in customer water use patterns; the impact of weather and climate on water sales and operating results; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements. 2
Today’s Participants Marty Kropelnicki President & CEO Tom Smegal Vice President, CFO & Treasurer 3
Presentation Overview Financial Results Financial Highlights Drought Update Regulatory Update Capital Investment History and Projection Net WRAM Balances EPS Bridge YTD 2015 to YTD 2016 Recent Awards 4
Q2 Financial Results (amounts are in millions, except for EPS) Q2 2015 Q2 2016 Variance Operating Revenue $144.4 $152.4 5.6% Operating Expenses 127.9 133.9 4.7% Net Operating Income 16.5 18.5 12.4% Other Income 0.0 0.6 Net Interest 6.6 7.6 14.5% Net Income $9.8 $11.5 16.9% EPS $0.21 $0.24 14.3% 5
Financial Results Six Months Ending June 30 (amounts are in millions, except for EPS) YTD 2015 YTD 2016 Variance Operating Revenue $266.4 $274.2 2.9% Operating Expenses 242.4 249.4 2.9% Net Operating Income 24.0 24.8 3.4% Other Income 0.6 0.8 Net Interest 13.2 14.9 13.5% Net Income $11.4 $10.7 -6.2% EPS $0.24 $0.22 -8.3% 6
Financial Highlights 2016 is the third year of the California GRC cycle with limited rate relief. Year-to-date earnings reduced by: Incremental drought expenses of $2.2 million. Cal Water has been granted a memorandum account to track drought costs, which are expected to be recovered through the California Public Utilities Commission’s (CPUC’s) advice letter process. Maintenance expense increases of $2.2 million. Since July 2015, maintenance expenses have increased in part from changes to operations and operating conditions related to the drought. In addition, in June 2016 Cal Water incurred an estimated $0.4 million in costs to respond to the Erskine Fire, which affected our Kern River Valley District. Interest expense increases of $1.8 million due to long-term debt issued in October 2015 and March 2016. 2016 Capital Program (millions) The company remains on track to meet the annual target of $180-210 million. WRAM decoupling mechanism (millions) 7 YTD 2016 $116.2 YTD 2015 $75.8 Increase $40.4 53.3% Q2 2016 $28.9 Q2 2015 $47.9 Decrease $19.0 39.7%
Drought Update 8 California is entering the 5th year since the drought was declared. Northern California received above-normal rainfall and recorded normal snowfall this winter. Southern California had lower-than-normal precipitation. The State Water Project, one of the major backbone surface water systems in the state, has issued a 60% allocation, highest since 2011. The State Water Board has allowed “self-certification” to reflect local supply conditions. Permanent water use regulations expected from the State Water Board in January 2017. Overall supply situation for Cal Water systems has improved; however conditions vary regionally. Cal Water continues to monitor conditions in each system. Company has suspended drought surcharges but is asking customers to meet a minimum 10% conservation target in most areas. State has given water suppliers flexibility to tighten restrictions if conditions warrant.
Drought – Financial Effects Muted by Regulatory Mechanisms Cal Water has been “decoupled” (minimizes effect of sales and water production costs on earnings) since 2008 with WRAM. Sales decline will not reduce profits. Revenue accrual, not included in WRAM, a short-term impact. Drought costs recorded for future recovery of $3.2 million or $0.04 EPS impact in 2016 YTD. On July 15, 2016, Cal Water filed an advice letter to recover $4.2 million of incremental drought expenses associated with calendar years 2014 and 2015. The Company expects to receive approval from the Commission on this advice letter filing before the end of 2016. Customer surcharges flow to reduce WRAM balances. With $22.1 million of drought surcharges recorded year to date, WRAM balance declined $11.6 million YTD. Lower sales estimates embedded in 2016 rates for most service areas are expected to improve cash collection. 9
2015 General Rate Case Update Requested Increases $94.8M in 2017 $23.0M in 2018 $22.6M in 2019 80% of rate increase is due to capital investments Proposed CapEx of $693M over three years 18 month process – hearings have concluded 10
2015 General Rate Case Update Schedule Update The Company reviewed intervenors’ recommendations and composed rebuttal testimony during the second quarter of 2016. During the months of June and July, the Company and intervening parties met in settlement discussions and on July 18, 2016, Cal Water completed the rate case evidentiary hearings at the California Public Utilities Commission (CPUC). The case is being processed according to the adopted schedule which would allow for a decision at the end of 2016. Please Note: All settlement discussions in the proceeding are confidential. The company may not discuss whether any items in the case have settled or the nature of any potentially settled matter unless or until an executed settlement agreement is filed with the Commission. 11
Capital Investment History and Projection in millions *2016-2018 amounts are based upon Company projections including 2015 California Rate Case filing CAGR = 11% (2007-2018) 12 YTD $116
Net WRAM/MCBA Balance in millions 13
EPS Bridge YTD 2015 to YTD 2016 14
Recent Cal Water Awards “Highest in Customer Satisfaction Among Water Utilities in the West” by J.D. Power Top Workplace in the Bay Area for five consecutive years by Bay Area News Group Second place for Best Mobility Implementation (first place: Duke Energy) by CS Week, a customer service & IT utility association Platinum Hermes Creative Award for outstanding drought communications California Water Service received the highest numerical score among water utilities in the West region in the J.D. Power 2016 Water Utility Residential Customer Satisfaction Study, based on 20,951 responses from 24 companies measuring experiences and perceptions of customers with their primary water provider-surveyed March 2016. Individual experiences may vary. Visit jdpower.com for more information about the study.
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