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US state approves German company RWE's plan to spin off American Water

US state approves German company RWE's plan to spin off American Water

West Virginia regulators on Friday approved a German company's plan to spin off American Water Works Co. in an initial public offering.
West Virginia American Water is a subsidiary of American Water.
In its order, the Public Service Commission also approved the merger of American Water's immediate corporate parent, London-based Thames Water Aqua Holdings, into American Water. Thames is a subsidiary of Germany-based RWE-AG, which provides electricity, water, gas and environmental services to more than 120 million business and residential customers in Europe and North America.
RWE had announced in March that it planned to spin off American Water, and that its executive board decided on an IPO instead of selling the Vorhees, New Jersey-based company outright.
West Virginia is one of several U.S. states that must approve the transaction, the PSC said.
Friday's order approved a settlement between the companies and the PSC staff and Consumer Advocate Division. It includes several stipulations aimed at protecting West Virginia American Water's customers.
If there are any savings from the deal, West Virginia American Water will pass them along to customers in future rate cases. RWE and Thames agreed to put equity capital into American Water before the IPO, a condition that the PSC said was the heart of the settlement.
"Without an infusion to American Water's equity capital structure, WVAWC's future capital costs likely would increase," the PSC said. "Under the settlement, sufficient capital will be added to put American Water in an equity position comparable to other similar companies. This is an essential component in protecting West Virginia rate payers."
American Water employs about 7,000 people, including about 300 in West Virginia. West Virginia American Water must notify the PSC in writing if it plans to reduce its work force by at least 5 percent over the next three years.
"We expect the transition to go virtually unnoticed by WVACW customers," PSC Chairman Jon McKinney said in a news release. "With the provisions outlined in the settlement, parties have made allowances for any possible situation that might be a detriment to ratepayers. We applaud the involved parties for achieving this result."


Updated : 2020-12-01 13:52 GMT+08:00