Two subsidiaries of American Water Works (NYSE: AWK) — the largest publicly traded water utility in the United States — reached rate-increase settlements within four days of each other in June 2026, a back-to-back pairing that shows how steadily investor-owned utilities are pushing customer bills upward to pay for system rebuilds. On June 5, Virginia American Water filed a settlement with the State Corporation Commission for a $16 million annualized revenue increase; on June 9, California American Water filed a partial settlement with the California Public Utilities Commission for $24 million more in 2027, climbing to roughly $22 million a year by 2029. Both deals settle for less than the companies first sought — but both still raise what households pay, and they arrive as federal infrastructure funding faces proposed deep cuts that would shift even more of the rebuilding burden onto ratepayers.
The California Settlement
California American Water filed its General Rate Case on July 1, 2025, initially proposing a revised increase of about $43 million above 2026 expected revenues. The partial settlement filed June 9 with the CPUC’s Public Advocates Office — the independent ratepayer-advocacy arm inside the commission — cuts that figure roughly in half for the first year:
| Year | Additional annualized revenue |
|---|---|
| Test year 2027 | $24 million |
| Escalation year 2028 | ~$21 million |
| Attrition year 2029 | ~$22 million |
The increase funds roughly $750 million in water and wastewater system investments the company completed or plans between 2025 and 2028. One genuinely consumer-favorable term came out of the negotiation: the settlement strengthens the Customer Assistance Program discount from 35% to 50% off bills for income-qualifying customers — a meaningful cushion for low-income households that the flat percentage of a rate case rarely captures. One issue remains unresolved: the treatment of Construction Work in Progress (CWIP) in the rate base, which affects the final 2028–2029 figures.
The Virginia Settlement
Virginia American Water filed its General Rate Case on November 3, 2025, seeking about $22 million in increased annualized revenue. The settlement filed June 5 with the State Corporation Commission — and reached with SCC staff and several intervenors — brings that down to a $16 million annualized increase. The driver is roughly $115 million in capital investments completed and planned between May 2025 and April 2027.
The settlement also fixes two numbers that matter to anyone tracking utility economics: a return on equity (ROE) of 9.75% and a capital structure with an equity component of 51.79% for future filings. ROE is the regulated profit margin the utility earns on shareholder-funded investment — the lever where ratepayer and shareholder interests most directly collide, since every tenth of a percent flows through to bills. The filing remains subject to SCC review and approval.
Why Investor-Owned Water Bills Keep Climbing
Both settlements tell the same story playing out across the regulated water sector: the increases are driven overwhelmingly by capital spending, not operating costs. Utilities are replacing aging pipe, upgrading treatment to meet tighter standards, and — increasingly — installing PFAS removal and replacing lead service lines under the EPA’s Lead and Copper Rule Improvements. That work is real and arguably overdue, but the investor-owned model recovers it through a rate base on which shareholders earn a regulated return, so the bill to customers includes both the cost of the asset and the profit on it.
Three forces are compounding the pressure in 2026:
- Regulatory mandates. New treatment requirements — even amid the federal rollback of some PFAS limits — and the decade-long lead-pipe replacement timeline commit utilities to large, non-optional capital programs.
- Shrinking federal support. Proposed cuts to the State Revolving Funds, the main federal subsidy for water infrastructure, would force more of the rebuild onto local rates. The proposed 90% SRF cut in the FY2027 EPA budget is the starkest example.
- The investor-owned premium. Private utilities recover an authorized profit (here, a 9.75% ROE in Virginia) that municipal systems don’t, which is part of why customers of investor-owned systems often pay more than neighbors on city-run water.
The Affordability Squeeze
Rate cases rarely make national headlines because each one is modest on its own — a few dollars a month. But they compound, year over year, and they hit hardest in communities already paying a high share of income for water. WaterVerge has tracked the same pressure in Pittsburgh, where regulators approved a $25 million rate increase, and in Louisiana, where chronically underfunded systems are posting failing grades precisely because they deferred the investments utilities like American Water are now recovering.
The California settlement’s expansion of low-income discounts to 50% is the kind of mechanism that determines whether a rate increase is merely an annoyance or a genuine hardship. Customer assistance programs, lifeline rates, and arrearage forgiveness are the tools that decide who actually bears the cost of a rebuild — and they vary enormously from state to state and utility to utility.
What Customers Should Do
If you’re served by California American Water or Virginia American Water — or any investor-owned utility filing a rate case — a few practical steps apply:
- Check whether you qualify for the Customer Assistance Program. California American Water’s discount is rising to 50% for income-eligible households; most regulated utilities run a similar program that customers must actively enroll in.
- Read your bill’s rate breakdown and your CCR. Your annual Consumer Confidence Report and bill insert spell out what you’re paying for. Our guide to understanding your CCR explains how to read both the water-quality and the cost side.
- Participate in the rate case. General Rate Cases include public comment periods before the CPUC or SCC. Intervenors and public comments demonstrably move the final number — both of these settlements came in well below the utilities’ opening asks partly because ratepayer advocates pushed back.
- Audit your own usage. The cheapest gallon is the one you don’t buy. Fixing leaks and trimming outdoor irrigation blunts the impact of a per-gallon rate increase more than any single policy lever a household controls.
How WaterVerge Tracks This
WaterVerge focuses on EPA-regulated water-quality data rather than rate filings, but the two are linked: the capital spending driving these increases is largely the treatment and pipe-replacement work that keeps utilities compliant with federal standards. As California American Water and Virginia American Water complete the projects funded by these settlements, the compliance picture on their city pages should reflect it. Search your city to see your utility’s current water-quality data.
Sources
- California American Water Reaches Partial Settlement Agreement in General Rate Case — American Water Newsroom
- Virginia American Water Reaches Settlement Agreement in General Rate Case — American Water Newsroom
- California American Water 2027 rates expand discounts for qualified customers — StockTitan
- Virginia American Water files $16M rate settlement — StockTitan
- American Water Works Form 8-K detailing California and Virginia rate settlements — SEC
- California American Water Company General Rate Case — CPUC Public Advocates Office