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These excerpts taken from the CWT 10-K filed Mar 2, 2009. Changes
in water supply costs impacts our operations
The cost to obtain water for delivery to our customers varies
depending on the sources of supply, wholesale suppliers’
prices and the quantity of water produced to supply customer
water usage. Our source of supply varies by operating district.
Certain districts obtain all of their supply from wells, some
districts purchase all of the supply from wholesale suppliers
and other districts obtain the supply from a combination of well
and purchased sources. A portion of the supply is from surface
sources and processed through company-owned water treatment
plants. On average, slightly more than half of the water we
deliver to our customers is pumped from wells or received from a
surface supply with the remainder purchased from wholesale
suppliers. Water purchased from suppliers usually costs us more
than surface supplied or well pumped water. During 2008, the
cost of purchased water for delivery to customers represented
31.7% of our total operating costs and in 2007 it represented
33.1% of our total operating costs.
Wholesale water suppliers may increase their prices for water
delivered to us based on factors that affect their operating
costs. Purchased water rate increases are beyond our control. In
California, effective July 1, 2008, our ability to recover
increases in the cost of purchased water changed with the
adoption of the MCBA. With this change, any price increase will
be recorded as an expense but also as revenue. The balance in
the MCBA will be collected in the future. There may be a
short-term impact to our cash flow from operations, but the
impact to earnings has been minimized.
Depending on the degree of heat and lack of rain and other
factors that affect the adequacy of our water supply, we may
have to purchase higher-cost water to meet customer demand.
Table of Contents
Changes in water supply costs impacts our operations The cost to obtain water for delivery to our customers varies depending on the sources of supply, wholesale suppliers’ prices and the quantity of water produced to supply customer water usage. Our source of supply varies by operating district. Certain districts obtain all of their supply from wells, some districts purchase all of the supply from wholesale suppliers and other districts obtain the supply from a combination of well and purchased sources. A portion of the supply is from surface sources and processed through company-owned water treatment plants. On average, slightly more than half of the water we deliver to our customers is pumped from wells or received from a surface supply with the remainder purchased from wholesale suppliers. Water purchased from suppliers usually costs us more than surface supplied or well pumped water. During 2008, the cost of purchased water for delivery to customers represented 31.7% of our total operating costs and in 2007 it represented 33.1% of our total operating costs. Wholesale water suppliers may increase their prices for water delivered to us based on factors that affect their operating costs. Purchased water rate increases are beyond our control. In California, effective July 1, 2008, our ability to recover increases in the cost of purchased water changed with the adoption of the MCBA. With this change, any price increase will be recorded as an expense but also as revenue. The balance in the MCBA will be collected in the future. There may be a short-term impact to our cash flow from operations, but the impact to earnings has been minimized. Depending on the degree of heat and lack of rain and other factors that affect the adequacy of our water supply, we may have to purchase higher-cost water to meet customer demand.
Table of ContentsChanges in water supply costs impacts our operations The cost to obtain water for delivery to our customers varies depending on the sources of supply, wholesale suppliers’ prices and the quantity of water produced to supply customer water usage. Our source of supply varies by operating district. Certain districts obtain all of their supply from wells, some districts purchase all of the supply from wholesale suppliers and other districts obtain the supply from a combination of well and purchased sources. A portion of the supply is from surface sources and processed through company-owned water treatment plants. On average, slightly more than half of the water we deliver to our customers is pumped from wells or received from a surface supply with the remainder purchased from wholesale suppliers. Water purchased from suppliers usually costs us more than surface supplied or well pumped water. During 2008, the cost of purchased water for delivery to customers represented 31.7% of our total operating costs and in 2007 it represented 33.1% of our total operating costs. Wholesale water suppliers may increase their prices for water delivered to us based on factors that affect their operating costs. Purchased water rate increases are beyond our control. In California, effective July 1, 2008, our ability to recover increases in the cost of purchased water changed with the adoption of the MCBA. With this change, any price increase will be recorded as an expense but also as revenue. The balance in the MCBA will be collected in the future. There may be a short-term impact to our cash flow from operations, but the impact to earnings has been minimized. Depending on the degree of heat and lack of rain and other factors that affect the adequacy of our water supply, we may have to purchase higher-cost water to meet customer demand.
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