American Water Works (AWK) Tennessee Arm Invests in Upgrades
American Water Works AWK recently announced that its unit, Tennessee American Water, is rehabilitating one of the water tanks. This initiative is part of the company's commitment to extending the service life of these overhead structures and enhancing water quality for residents.
The rehabilitation process includes several essential steps aimed at preserving the integrity and functionality of the water tanks. After draining water, the tanks are subjected to sandblasting to remove debris and surface imperfections. The final phase involves repainting to protect the tanks from corrosion and external factors.
Tennessee American Water has been actively involved in rehabilitating water tanks since 2016. To date, it has successfully completed 12 tank rehabilitations, with ongoing work on a second tank at the Chattanooga plant and two tanks on Lookout Mountain, TN, in 2023. The costs associated with tank rehabilitation range from $300,000 up to $2 million, forming part of Tennessee American Water's annual capital work.
By extending the service life of these vital assets and ensuring water quality, the company is actively contributing to the improvement of water infrastructure. Timely upgrades and repairs are essential for maintaining efficient water systems, and Tennessee American Water sets a commendable example in this regard.
Investments Essential for Water Industry
Aging water and wastewater infrastructure is a major headwind for the water industry. It is evident from the findings of the American Society of Civil Engineers (ASCE) that due to the delay in pipeline repairs and maintenance, 6 billion gallons of treated water is lost every day in the United States. Delays in the repair and maintenance of the infrastructure could aggravate the problem.
Per the U.S. Environmental Protection Agency, investments of $473 billion and $271 billion are necessary to maintain and expand drinking water and wastewater pipelines, respectively, to meet demand over the next 20 years. Water infrastructure like storage tanks and purifying units, as well as miles of water mains, need maintenance at proper intervals.
American Water Works is making regular investments to maintain its infrastructure. It aims to invest in the range of $14-$15 billion in the 2023-2027 period and $30-$34 billion for 10 years from 2023-2032. Last week, Pennsylvania American Water decided to invest $17.5 million in 2023 to upgrade and maintain eight of its water storage tanks and construct five new tanks to cater to the rising demand for water.
Water utilities like Essential Utilities WTRG, California Water Service Group CWT and Middlesex Water MSEX have well-chalked-out capital investment plans to strengthen their infrastructure.
Essential Utilities plans to invest $1.1 billion in 2023 and $3.3 billion through 2025 to improve the water and natural gas systems and better serve customers using improved information technology. California Water Service plans to invest more than $725 million in capital expenditures through 2024. Middlesex Water plans to invest $266 million during 2023-2025 to strengthen its water and wastewater infrastructure and provide services to customers in a safe, reliable and efficient manner.
The above investments might appear very small compared with the total requirements needed for repair and upgrades but are undeniably a positive move to address the aging water and wastewater infrastructure.
Price Performance
Shares of AWK have lost 4.1% in the past three months, wider than the industry’s 3.8% decline.
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Zacks Rank
American Water Works currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
California Water Service Group (CWT) : Free Stock Analysis Report
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