Cal Water announces first quarter 2003 results
California Water Service Group reported a loss of $768,000 for the first quarter 2003, compared to net income of $1.9 million in the first quarter of 2002.
SAN JOSE, Calif., April 24, 2003 -- California Water Service Group has announced a loss of $768,000, or ($0.05) per share, for the first quarter 2003, compared to net income of $1.9 million and earnings per share of $0.12 in the first quarter of 2002.
According to President and Chief Executive Officer Peter C. Nelson, first quarter 2003 results were impacted by a decline in customer usage due to weather and continued delays in receiving rate relief from the California Public Utilities Commission (CPUC).
"Sales and net income are historically low in the first quarter, and this year was much wetter than the prior year, which reduced our customers' water usage. But more significantly, we are still awaiting decisions from the CPUC that, had they been favorably acted on in a timely manner, would have added revenue and net earnings to our first quarter results," Nelson said.
The company is anticipating decisions on its requests to recover $6 million in purchased water and electricity costs incurred prior to November 2001, and not yet billed to customers. The company is also awaiting decisions on the 15 general rate cases filed in July 2001, which if favorably acted upon, are expected to add at least $12.8 million in annual revenue. The CPUC rate case process calls for decisions to be issued within 10 months. These filings have now been outstanding for 21 months.
In a potentially favorable decision issued April 3, 2003, the CPUC set an effective date for the 15 general rate cases filed in 2001. Once decisions are made, the company will be allowed to recover the new rates as of an effective date of April 3, 2003.
In the second of three filings related to the Bakersfield Treatment Plant, the company received authorization in April 2003 to recover costs incurred for construction of that plant. The two filings will add an estimated $1.5 million to 2003 revenues. A third filing will be made in 2003, which may or may not impact 2003 revenues, depending on the timing and amount of authorization received from the CPUC. The plant is expected to be operational in the second quarter of 2003.
The company made additional rate case filings in November 2002 and January 2003 but cannot predict the amount or the timing of the CPUC decisions.
"We continue to control expenses throughout the company and have delayed capital expenditures that do not relate to water supply, water quality or compliance with regulations. We have a responsibility to provide a reliable supply of high-quality water. Necessary costs must be incurred to serve our customers," Nelson said.
Revenue for the quarter decreased 0.6%, or $301,000. A $1.9 million decrease in water sales to existing customers was partially offset by $845,000 in rate increases and $740,000 in sales to new customers.
Total operating expenses increased 5%, or $2.4 million. Water production costs increased from last year due to a $750,000 water wholesaler refund received in 2002. Maintenance expense increased because more repairs were made to pumping equipment, pipelines, and other facilities. Depreciation expense was higher due to increases in 2002 capital expenditures driven by more stringent water quality standards.
Other operations expense increases included wages and benefit increases that were effective at the start of the year. Contracts with unions were made in the 4th quarter of 2002 that included salary increases. Benefit increases are attributable to changes made to the pension plan and increases in medical claim costs.
At their meeting recently, Directors declared the 234th consecutive quarterly dividend on common stock in the amount of $0.28125. It is payable on May 16, 2003, to stockholders of record on May 2, 2003. The regular dividend on Series C preferred stock was also declared.
California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company and CWS Utility Services. Together these companies provide regulated and non-regulated water service to over 2 million people in 98 California, Washington and New Mexico communities. Group's common stock trades on the New York Stock Exchange under the symbol "CWT".