Analyzing Metered Water Companies

I recently interviewed David Schanzer, Senior Analyst at Janney Montgomery Scott about methods of analyzing Water Utilities and the State of the Water Utility stocks. The following are some of the highlights from that interview:

• Roughly 65%-75% of the ownership of the publicly-traded metered water companies is in the hands of retail investors.
• Unlike their electric and gas brethren, the water utilities never, ever reduce their dividends.
• In general, the water companies have more amiable dealings with regulatory authorities than the electric and gas utilities.
• Water utilities that operate in states that have separate regulatory staffs that only oversee water companies - as opposed to also regulating electric and natural gas utilities - are typically at an advantage.
• While there are short-term savings to be had as a result of consolidation in the water utility sector, these savings typically get regulated away at subsequent rate case hearings.
• In terms of rainfall, water utilities are most advantaged when there is a lot of rain in the spring and winter and a lot of dry, hot weekends during the summer.
• Electricity is the largest expense that a water utility faces because that is what pumps the water from place to place.
• Organic growth for the average water company in most of the United States is about 1% a year.

Mr. Schanzer will speak at our Premier Profiting in the Water Industry Conference which will take place in New York City on June 8, 2006. Other speakers are CEOs, CFOs, and Presidents of publicly-traded water companies such as American Water, California Water Service, Consolidated Water, Southwest Water Company, SJW Corp., Artesian Resources Corporation, The York Water Company, American States Water Company, Pennichuck Corporation, and Pure Cycle Corporation.

These are some of the issues that will be addressed at IncreMental Advantage's Profiting in the Water Industry Conference which will take place in New York City on June 6. Further information can be obtained at www.incrementaladvantage.com/conferences or by contacting Neomi Barazani at neomi@incrementaladvantage.com.