Artesian Water Company, Inc. Files Application with Delaware Public Service Commission for Increase in Customer Rates

Rhea-AI Summary

Artesian Water Company, a subsidiary of Artesian Resources (NASDAQ: ARTNA), has filed an application with the Delaware Public Service Commission for a 12.41% rate increase, seeking approximately $10.8 million in additional annual revenue. The effective rate increase would be 10.75% after resetting the current 1.66% Distribution System Improvement Charge.

The rate adjustment aims to recover over $58.5 million in utility plant investments made since October 2023 through September 2025. Key investments include PFAS treatment systems at fourteen facilities and infrastructure upgrades to aging facilities and pipelines dating 50-75 years old. The company cites rising operational costs, particularly in electric power and PFAS filter media maintenance.

If approved, the average residential customer using 4,000 gallons monthly would see their bill increase from $52.94 to $59.76, representing an additional $0.23 per day.

Positive

• Proactive investment in PFAS treatment ahead of regulatory requirements
• Significant infrastructure modernization with $58.5 million investment
• System reliability improvements through water main renewal program

Negative

• 12.41% rate increase impacting customer bills
• Rising operational costs, particularly in electricity and PFAS treatment maintenance
• Aging infrastructure requiring substantial ongoing investment

Insights

Utilities Regulatory Analyst

Artesian's rate increase application represents a significant potential boost to revenue, with the company seeking a 12.41% increase ($10.8 million annually). The application addresses $58.5 million in utility infrastructure investments made since their last filing and reflects the company's need to recover costs associated with several critical areas.

The rate case is strategically structured, noting that the effective increase to customers would be 10.75% since it incorporates the existing 1.66% Distribution System Improvement Charge that will reset once new rates are implemented. This approach demonstrates regulatory savvy, potentially minimizing the perceived impact on ratepayers.

The focus on PFAS treatment infrastructure—expanding from eleven to fourteen facilities—positions Artesian favorably with regulators, as environmental compliance investments typically receive more favorable treatment in rate cases. The company's proactive approach to addressing emerging contaminants ahead of final regulations strengthens their case.

For the average residential customer, the monthly bill would increase from $52.94 to $59.76—an increase the company carefully frames as just $0.23 per day or 1.5 cents per gallon, messaging designed to mitigate potential consumer opposition.

While Delaware regulators will conduct a thorough review, utilities in the region have generally secured reasonable returns on infrastructure investments, especially those tied to regulatory compliance and system reliability. The application's success will significantly impact Artesian's future revenue trajectory and investment recovery timeline.

Financial Analyst

This rate application represents a meaningful potential catalyst for Artesian's financial performance. The requested 12.41% increase ($10.8 million annualized) would significantly boost the company's revenue stream, representing approximately 3.1% of the current market capitalization of $343 million.

The investment recovery strategy is particularly noteworthy—Artesian has deployed $58.5 million in capital expenditures since its last rate case, a substantial sum relative to the company's size. The regulatory framework allowing recovery of these investments supports the utility business model's stability while providing growth through infrastructure expansion.

The rate case strategically addresses rising operational costs, particularly electricity and PFAS treatment media maintenance, which have been pressure points for utility margins industry-wide. By specifically identifying these cost drivers in their filing, Artesian strengthens their case for rate relief.

While regulatory approval introduces timing uncertainty, Delaware's regulatory environment has historically provided reasonable mechanisms for capital recovery. The incremental approach—presenting the effective increase as 10.75% rather than the full 12.41% by accounting for the existing DSIC charge—demonstrates regulatory pragmatism that may facilitate approval.

For investors, approved rate increases provide predictable revenue growth without the customer acquisition costs faced by competitive industries. The focus on regulatory compliance investments also aligns with increasing ESG priorities, potentially widening Artesian's appeal to sustainability-focused investors.

NEWARK, Del., April 04, 2025 (GLOBE NEWSWIRE) -- Artesian Water Company, Inc. (“Artesian”), a subsidiary of Artesian Resources Corporation (Nasdaq: ARTNA), filed an application with the Delaware Public Service Commission (PSC) today for a change in customer rates. The rate application submitted to the PSC for review and approval consists of a requested increase in revenue of 12.41%, or approximately $10.8 million, on an annualized basis. The increase also reflects the recovery of investments made under the Distribution System Improvement Charge (DSIC) of 1.66% currently in place that will reset to 0.0% once new base rates are implemented, meaning the incremental increase to existing billed rates would be 10.75%. This rate filing will undergo extensive review by both the PSC and the Division of the Public Advocate (DPA).

The request addresses investments in water utility infrastructure made by Artesian since October 1, 2023 and projected to be made through September 30, 2025. It also addresses increases in costs necessary to provide reliable service while continuing to maintain compliance with more stringent water quality regulations.

“For 120 years, Artesian has been committed to delivering high-quality drinking water and fire protection services to its customers. Meeting that commitment requires regular investments in infrastructure to maintain system resiliency,” said Nicki Taylor, President and CEO.

Artesian will have invested over $58.5 million in utility plant since its last base rates filing. A significant portion of the investments made address the ongoing need to maintain current and future compliance with more stringent regulations of man-made contaminants, such as per- and polyfluoroalkyl substances (commonly known as PFAS). Artesian has long taken a proactive approach to water quality, installing PFAS treatment ahead of final state and federal regulations to provide customers high-quality drinking water. Artesian’s filing in April 2023 included costs associated with the installation of additional treatment equipment at eleven (11) water treatment facilities to assist in the removal of these chemicals. This filing includes costs for improvements to three (3) additional treatment systems to remove PFAS. During this same time, the cost to maintain the filter media of the PFAS treatment systems has increased. In addition, electric power costs, which are a substantial portion of operating expenses, have increased significantly.

Artesian is continually upgrading and rehabilitating aging infrastructure. Many of Artesian’s facilities and much of the underground network of pipes delivering water to homes and businesses were originally designed and built 50-75 years ago. To ensure that these systems continue to provide reliable, high-quality drinking water and adequate fire flow for customers requires investments that include upgrading electrical equipment, improving security systems and enhancing water quality analyzing equipment. Artesian also continues to renew aging water mains to reduce the number of water main breaks and leaks, which improves system reliability.

The average residential customer using 4,000 gallons of water per month is currently billed $52.94. If approved by the PSC, this bill would increase to $59.76, or an additional $0.23 per day. The typical Artesian residential customer would spend less than $2 per day for their water needs, or about 1.5 cents per gallon.

About Artesian Resources
Artesian Resources Corporation operates as a holding company of wholly owned subsidiaries offering water and wastewater services, and other related core services, on the Delmarva Peninsula. Artesian Water Company, the principal subsidiary, is the oldest and largest regulated water utility on the Delmarva Peninsula, providing water service since 1905. Artesian supplies 9.5 billion gallons of water per year through 1,491 miles of water main to over a third of Delaware residents.

Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, recovery of investments in water utility plant and increased operating costs in rates charged to customers as presented in our current filing before the Delaware Public Service Commission, expectations regarding the cost and timing of planned infrastructure investments and our ability to maintain continued compliance with more stringent water quality regulations. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, including the timing and results of our rate request, failure to receive regulatory approvals, changes in our contractual obligations, changes in government policies, changes in economic and market conditions generally, including inflationary pressures, and other matters discussed in our filings with the Securities and Exchange Commission. While the Company may elect to update forward-looking statements, we specifically disclaim any obligation to do so, and you should not rely on any forward-looking statement as representation of the Company’s views as of any date subsequent to the date of this release.

Contact:
Virginia Eisenbrey
Communications
(302) 453-6900
veisenbrey@artesianwater.com

FAQ

How much is ARTNA's proposed rate increase in Delaware for 2025?

Artesian Water is seeking a 12.41% rate increase, or $10.8 million in additional annual revenue, with an effective rate increase of 10.75% after DSIC adjustment.

What infrastructure investments is ARTNA making with the 2025 rate increase?

ARTNA is investing over $58.5 million in utility plant improvements, including PFAS treatment systems at 14 facilities and upgrades to aging infrastructure from 50-75 years ago.

How will ARTNA's 2025 rate increase affect residential customers' monthly bills?

The average residential customer using 4,000 gallons monthly will see their bill increase from $52.94 to $59.76, an additional $0.23 per day.

What environmental compliance measures is ARTNA implementing with the rate increase?

ARTNA is installing PFAS treatment systems at additional facilities and maintaining existing systems to comply with stricter regulations on man-made contaminants.