BW Growth Strategy

Big Water Growth Strategy

Nationwide the two largest water/wastewater utilities are

Essential Utilities – the parent company for Aqua Pennsylvania

American Water – the parent company for Pennsylvania American Water

Both companies are seeking aggressive earnings growth through acquisition and infrastructure renewal. This is not surprising because as regulated companies their annual earnings are a direct percentage of their investment. The more they invest, the greater their profits. Therefore, their strategy is to grow their investment base. One element of investment growth is infrastructure renewal. Pennsylvania is a prime example for both companies for their water business (LINK). The second major element is acquiring nonprofit municipal water and sewer systems. In Pennsylvania most of the acquisition activity has been for sewer systems (LINK).

Both companies are very open about their acquisition strategy. A good source of information is their periodic investor presentations - typically four or five every year. A couple of examples follow. These examples are for specific presentations, but there is substantial consistency from one presentation to the next. Open whatever is the most current one and you will see extensive discussion about the growth drivers for their business and how they are maximizing investor benefit.

American Water

As the time this was written, American's latest investor presentation was dated June-2026. It can be downloaded here (LINK). If that link does not work you can Google "American investor presenations" and the latest one will pop up. Highlights of the presentation include:

#1 - There are a total of 36 pages. Of those, 24 directly relate to their business growth strategies.

#2 - There are a couple of pages on earnings per share. Notably that they forecast 7% - 9% growth every year.

#3 - There are multiple pages on their capital spending plans - a key earnings driver.

#4 - There are pages on favorable state legislation.

#5 - Aging infrastructure is addressed as an opportunity.

#6 - There are pages on acquisition activity - both completed and in progress.

#7 - Several pages address rate increases obtained recently.

Essential Utilities

(Aqua in most states)

Essential's most recent investor presentation was May 9, 2026 - at least at the time this was written. It can be found here (LINK). Highlights include:

#1 - There are a total of 22 pages. However, eight of those pages are "place holders" - things like pictures of key officials and a forward looking disclaimer. So, 14 pages of real information. Of those 14, seven are related to earnings growth, acquisitions, investment plans and regulatory activity.

#2 - One page touts that since 2015 Essential has spent $570 million acquiring 138,000 customers. It also notes three other pending acquisitions.

#3 - Two pages detail regulatory actions leading to higher revenues.

Nationwide the two Big Water companies, have captured almost 190,000 customers in the last few years. What benefits have these customers realized? Is the water coming out of their faucets more pure? Do their toilets flush any better? In the large majority of cases the answer is a resounding NO!.

The most dominate impact on customers is significantly higher bills. Big Water acquired those customers to increase their profits (LINK). So now those customers have to pay up.

The following table illustrates the point for acquisitions made in Pennsylvania. We used tariff rate data from before the acquisition and rate case records to calculate the rate increases customers are actually seeing. They are based on a customer using 4,000 gallons/month. The water companies typically claim their "average" customer ranges between 3,000 - 4,000 gallons/month.

This is called “rate shock”.

How much say did these customers have in the acquisition process? It is pretty likely that the answer for most of them is “not much”. Here is a description of how many acquisitions take place: (LINK).

however, there is hope, push back on these acquisitions is forming.