About Essential Utilities Inc

Essential Utilities, Inc., through its subsidiaries, provides water, wastewater, or natural gas services. The company provides its services to approximately five million people in Pennsylvania, Ohio, Texas, Illinois, North Carolina, New Jersey, Indiana, Virginia, West Virginia, and Kentucky under the Aqua and Peoples brands. The company’s major operating subsidiary is Aqua Pennsylvania, Inc. (Aqua Pennsylvania). As of December 31, 2022, Aqua Pennsylvania provided water or wastewater services to approximately one-half of the total number of water and wastewater customers the company served. Aqua Pennsylvania’s service territory is located in the suburban areas in counties north and west of the city of Philadelphia and in 27 other counties in Pennsylvania. The company’s other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Additionally, commencing on March 16, 2020, with the completion of the Peoples Gas Acquisition, the company began to provide natural gas distribution services to customers in western Pennsylvania, Kentucky, and West Virginia. Approximately 93% of the total number of natural gas utility customers the company serves are in western Pennsylvania. The company also operates non-regulated market-based activities that are supplementary and complementary to its regulated utility businesses. Aqua Resources offers, through a third-party, water and sewer line protection solutions and repair services to households. Other non-regulated subsidiaries of Peoples provide utility service line protection services to households and operate gas marketing and production businesses. For many years, starting in the early 1990s, the company’s business strategy was primarily directed toward the regulated water and wastewater utility industry, where it has more than quadrupled the number of regulated customers it serves, and has extended its regulated operations from southeastern Pennsylvania to include its current regulated utility operations throughout Pennsylvania and in seven additional states. On March 16, 2020, the company completed its acquisition of a natural gas distribution company consisting of Peoples Natural Gas Company LLC, Peoples Gas Company LLC, Peoples Gas WV LLC, Peoples Gas KY LLC, PNG Gathering LLC, and Delta Natural Gas Company Inc., expanding the company’s regulated utility business to include natural gas distribution. This acquisition is referred to as the Peoples Gas Acquisition, and collectively these businesses are referred to as Peoples. Peoples serves approximately 750,000 gas utility customers in western Pennsylvania, West Virginia, and Kentucky. During the fourth quarter of 2022, the company signed an agreement to sell its regulated natural gas utility assets in West Virginia, which represent approximately two percent of the company’s regulated natural gas customers. The company seeks to acquire businesses in the U.S. regulated sector, which includes water and wastewater utilities and other regulated utilities, and to pursue growth ventures in market-based activities, such as infrastructure opportunities that are supplementary and complementary to its regulated utility businesses. The company has identified twelve operating segments and has two segments, the Regulated Water segment and the Regulated Natural Gas segment. The Regulated Water segment consists of eight operating segments for the company’s water and wastewater regulated utility companies, aligned with the states where it provides these services. These operating segments are aggregated into one reportable segment since each of the company’s operating segments has the following similarities: economic characteristics, nature of services, production processes, customers, water distribution or wastewater collection methods, and the nature of the regulatory environment. The Regulated Natural Gas segment consists of one operating segment representing natural gas utility companies, acquired in the Peoples Gas Acquisition, for which the company provides natural gas distribution services. In addition to the company’s two segments, the company includes three of its operating segments in Other. These businesses represent the company’s non-regulated water, wastewater, and natural gas operations. Customers The company’s water utility customer base is diversified among residential water, commercial water, fire protection, industrial water, other water, wastewater customers, and other utility customers (consisting of contracted services that are associated with the utility operations). Residential water and wastewater customers make up the largest component of its water utility customer base, with these customers representing approximately 68% of the company’s water and wastewater revenues for 2022. The company’s natural gas utility customer base is diversified among residential gas, commercial gas, industrial gas, gas transportation, and other utility. Substantially all of the company’s natural gas utility customers are metered, which allows it to measure and bill for its customers’ natural gas usage. Natural gas usage per customer is affected by local weather conditions during the year, especially during the fall, winter, and early spring. The company’s water utility operations obtain their water supplies from surface water sources, underground aquifers, and water purchased from other water suppliers. The company’s water supplies are primarily self-supplied and processed at twenty-three surface water treatment plants located in five states, and numerous well stations located in the states in which it conducts business. Approximately 5.9% of the company’s water supplies are provided through water purchased from other water suppliers. The company’s natural gas supply strategy is to ensure a dependable gas supply that is economically priced and which is available for delivery when needed. The company purchases natural gas from intrastate, interstate and local sources, and transport natural gas supplies through various intrastate and interstate pipelines under contracts with remaining terms, including extensions, varying from one month to 15 years. The company owns and operates underground natural gas storage facilities with capacity of 10.5 billion cubic feet (Bcf). Total working capacity is 5.2 Bcf for use during the heating season with a maximum daily withdrawal rate of 115.5 million cubic feet (MMcf). Additionally, the company has contracted for off-system storage from interstate pipelines. The total amount of off-system storage under contract is 35.6 Bcf with a maximum daily withdrawal rate of 598.6 MMcf. On an ongoing basis, the company enters into contracts to provide sufficient supplies and pipeline capacity to meet its customers’ natural gas requirements. However, it is possible for limited service disruptions to occur from time to time due to weather conditions, transportation constraints, and other events. In Pennsylvania, the company’s distribution system is connected to six interstate pipelines, where it maintains capacity is sufficient to meet its customers’ gas requirements. In Kentucky, the company’s distribution system is connected to four interstate pipelines, where it maintains capacity is sufficient to meet its customers’ gas requirements. In West Virginia, the company’s distribution system is connected to one interstate pipeline, as well as local production, where it maintains capacity that is sufficient to meet its customers’ gas requirements. The company’s Pennsylvania Regulated Natural Gas service territory is situated in the Marcellus Shale production region. Approximately 28% of the natural gas supply on the system is from locally produced gas, which it gathers and transports into its distribution system. The company’s gathering system is regulated by the Pennsylvania Public Utility Commission which includes various safety, environmental and, in some circumstances, anti-discrimination requirements, and in some instances complaint-based rate regulation. The company’s gathering operations may be subject to ratable take and common purchaser statutes in the states in which it operates. The company’s Regulated Natural Gas gathering operations could be adversely affected should they be subject in the future to the application of state or federal regulation of rates and services. The company’s water and wastewater operations are comprised of 47 rate divisions, and its natural gas operations are consisted of four rate divisions. Regulation The company’s gathering system is regulated by the Pennsylvania Public Utility Commission, which includes various safety, environmental and, in various circumstances, anti-discrimination requirements, and in various instances complaint-based rate regulation. The company maintains safety policies and procedures to comply with the Occupational Safety and Health Administration’s rules and regulations. History The company was founded in 1886. It was formerly known as Philadelphia Suburban Corporation and changed its name to Aqua America, Inc. in 2004 and then to Essential Utilities, Inc. in 2020.