Aqua America (WTR) is closing in on its proposed acquisition of Peoples Gas, filing a settlement agreement with Pennsylvania regulators earlier this month. That positions the merger squarely for a late third quarter close.
Initially viewed sceptically, this deal is now seen more favourably by investors, and for good reason. Regulated water, wastewater and natural gas distribution have much in common, and therefore opportunity for improved efficiency and cost cutting.
Advanced metering and big data applications, for example, are still vastly underutilized by all three sectors. And while territories served by Aqua and Peoples are mostly complementary rather than overlapping, there’s potential to utilize the same personnel to provide services, particularly in Pennsylvania.
Following a wave of mergers over the past decade, ownership of natural gas utilities is now even more concentrated than electricity. Water and wastewater, however, are still widely dispersed industries, with thousands of municipal and privately held systems operating independently.
Last year, Aqua acquired three muni-owned water and wastewater systems adding more than 12,000 accounts, as well as privately held utilities with roughly 21,000 customers. So far in 2019, it’s completed three deals, and expects to close on 19,000 municipal customers by the end of the year.