The California Public Utilities Commission (CPUC) granted California Water Service's request, along with three other utilities, to postpone their Cost of Capital applications from May 1, 2026, to May 1, 2027.
This decision maintains a 10.27% return on equity and a 4.23% cost of debt for Cal Water, with a capital structure of 53.40% common equity and 46.60% long-term debt.
The CPUC also reauthorized the Water Cost of Capital Mechanism, which adjusts the rate of return based on fluctuations in the Moody's Utilities Bond Index.
Cost of Capital Postponement
CPUC approved the extension of the Cost of Capital application, helping to stabilize Cal Water's financial structure.
ROE and Cost of Debt
The decision maintains a 10.27% return on equity (ROE) and a 4.23% cost of debt for Cal Water.
Capital Structure
Cal Water's capital structure includes 53.40% common equity and 46.60% long-term debt.
Authorized Rate of Return
The authorized rate of return for Cal Water is 7.46%.
WCCM Reauthorization
The CPUC reauthorized the Water Cost of Capital Mechanism, which adjusts the rate of return based on the Moody's Utilities Bond Index.
- The extension of the Cost of Capital application will provide stability to Cal Water's financial planning and reduce the frequency of rate changes for customers.
- The reauthorization of the Water Cost of Capital Mechanism ensures that Cal Water's rate of return remains responsive to market conditions.
The CPUC's decision to grant the postponement of the Cost of Capital application gives California Water Service Group more time to manage their financial obligations effectively, demonstrating a positive regulatory environment for utilities.