Kentucky confirms approval of AWW sale

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The state regulator approved the deal with RWE in December. Again.

The Kentucky Public Service Commission (PSC) has approved RWE’s takeover of American Water Works (AWW) for the third time in eight months. The state regulatory agency said the sale of AWW was in the public interest of customers in Lexington and central Kentucky.

The sale of the Kentucky-American Water company (an AWW subsidiary) had been opposed by public interest groups.

In a ruling of 20 December, the PSC stated that it found no reason to substantially alter its previous rulings of 30 May and 10 July.

The main issue in Kentucky, as in other US states where American operates, has been the effect that international treaties might have on the PSC’s ability to regulate AWW under foreign ownership.

In the 20 December verdict, the PSC restated that it had jurisdiction over the regulation of Kentucky-American Water, regardless of who owns the company’s shares.

“There should be no concern on anyone’s part about the fact that the Commonwealth of Kentucky will continue to oversee the operations, rates and investment of Kentucky-American”, said company president Roy Mundy.

Stop press
At the end of the first week of January, RWE announced that it had received all the required approvals from utility regulatory commissions for the AWW transaction to proceed.

The final enterprise value of the deal is $8.6 billion, including the assumption of $4 billion of debt. RWE will finance the purchase by obtaining funds from the capital and money markets and through internal funds.

American Water will now be fully consolidated into RWE and the water division will contribute more than 25% to group operating profits. Thames Water chief executive Bill Alexander is the new chairman and CEO of AWW. The transaction adds 16 million people to RWE/Thames Water’s global customer base.