Fitch: Proposal Could Mean Revenue Increase for California Water Issuers

Proposed changes to California’s drought regulations would likely result in higher sales and better financial performance for water issuers in fiscal 2017, according to Fitch Ratings. The proposal would move from state-mandated conservation levels to a system based on local supply conditions.

If the proposal is approved, Fitch says it expects it will lead to a quick rise in sales for some utilities, resulting in higher revenues. The prior state conservation mandate required between 4 percent and 36 percent reductions in usage over the past year. That led sales to fall sharply across the state, even for some utilities with robust supplies. Most water credits raised rates to levels that would, at least partially, recoup the revenue they lost when the cuts were put into place.