Artesian Resources Corp. reported lower earnings in the second quarter, with expense growth outstripping revenue.
Arteisan, based new Newark, has filed to increase rates. Its last comprehensive application was in 2014. Artesian filed a request with the Delaware Public Service Commission, or DEPSC, to implement new rates to meet a requested increase in revenue of 23.84%, or approximately $17.5 million, on an annualized basis. After adjustments, customers would experience an increase of 16.34%, the net of the overall 23.84%, if the requested increase is granted in full by the PSC. .
“Maintaining a reliable water system that ensures high-quality water and service to our customers requires significant and continuous investment in our infrastructure,” said Dian C. Taylor, CEO. “It is our ability to attract investors and raise funds in the capital markets that enables us to cost-effectively provide assured supply of high-quality water to those we serve.”
“Artesian continues to make strategic capital investments to proactively replace aging infrastructure and install enhanced water treatment systems addressing emerging contaminants such as PFAS while also enhancing water supply for continued growth,” said Nicki R. Taylor, president of Artesian Water Company. “We have been working closely with the Delaware Public Service Commission on our rate application. If the application is not resolved within the statutory time frame, a temporary rate increase is planned to go in effect late in the fourth quarter. This will provide financial recovery of both significant investments in capital and increases in operating expenses that have allowed Artesian to continue providing reliable water service to our customers.”
Net income was $4.4 million for the three months ended June 30, at $0.6 million, a 12%, decrease compared to net income recorded during the three months ended June 30, 2022.
Revenues totaled $25.3 million for the three months ended June 30, 2023, $0.2 million, or 1%, more than revenues for the three months ended June 30, 2022. :
Water sales revenue increased $0.9 million, or 4.6%, primarily related to an increase in overall water consumption due to the brief warm, dry weather conditions experienced during the quarter and an increase in fixed-fee charges related to additional customers served.
Non-utility operating revenue decreased approximately $0.8 million, or 33.3%, primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure, slightly offset by an increase in Service Line Protection Plan, or SLP Plan, revenue.
Operating expenses increased $0.8 million, or 6.3%. Utility operating expense increases primarily are the result of increased payroll and employee benefits costs; repair, maintenance and chemical treatment costs associated with our water and wastewater systems; as well as administrative costs. These increases are partially offset by a decrease in purchased water under a new contract.
Non-utility operating expenses decreased $0.8 million primarily due to a decrease in costs associated with the wastewater infrastructure design and construction contract.
Year-to-Date Results
Net income was $8.1 million, a $1.4 million, or 14.5%, decrease compared to net income recorded during the six months ended June 30, 2022. Diluted net income per share decreased to $0.84, compared to $1.01 for the same period in 2022.
Revenues totaled $47.7 million for the six months ended June 30, 2023, $0.5 million, or 1.2%, more than revenues for the six months ended June 30, 2022. Comprising this increase:
Water sales revenue increased $0.8 million, or 2.1%, primarily related to an increase in overall water consumption due to the brief warm, dry weather conditions experienced during the second quarter of 2023 and an increase in fixed-fee charges related to additional customers served.
Other utility operating revenue increased approximately $0.4 million, or 7.5%, primarily due to an increase in wastewater revenue associated with additional customers served.
Non-utility operating revenue decreased approximately $0.6 million, or 16.6%, primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure, partially offset by an increase in SLP Plan revenue.
Operating expenses, excluding depreciation and income taxes, increased $1.8 million, or 6.9%. Utility operating expenses increased $2.3 million, or 11.3%, primarily the result of increased payroll and employee benefits costs; repair, maintenance and chemical treatment costs associated with our water and wastewater system; as well as administrative costs. These increases are partially offset by a decrease in purchased water under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced.
Artesian Resources Corporation operates as a holding company of wholly-owned subsidiaries offering water and wastewater services. Artesian Water Company, the principal subsidiary, is the oldest and largest regulated water utility on the Delmarva Peninsula and has been providing water service since 1905. Artesian supplies 8.7 billion gallons of water per year through 1,442 miles of main to over a third of Delawareans, for the most part in northern New Castle County.
