Benzinga | Oct 13, 2020 06:00PM EDT

SJW Group Announces That Its Texas Subsidiary Has Filed an Application To Acquire the Clear Water Estates Water System in Canyon Lake, Texas

SJW Group (NYSE:SJW) today announced that its Texas subsidiary, SJWTX Inc., which does business as Canyon Lake Water Service Company, is planning to acquire the Clear Water Estates Water System in Canyon Lake, Texas. The companies have filed an application with the Public Utilities Commission of Texas ("PUCT") for approval of the transaction. This will be the first application to the PUCT to request treatment under Texas's new Fair Market Value legislation.

Eric W. Thornburg, chairman, president and CEO of SJW Group, stated, "We are eager to have the customers of Clear Water Estates Water System join Canyon Lake Water Service Company. This transaction, if approved by the PUCT, will grow our company and allow for future growth. Customers will benefit by being served by a strong regional company that also has access to national scale and resources to deliver exceptional service and water quality."

Thomas Hodge, president of SJWTX, stated, "The Clear Water Estates Water System has water resources above and beyond what is needed to meet the water needs of its current customers that can be used for future Clear Water Estates Water System growth and the surrounding Canyon Lake Community." Comal County, Texas, is the second-fastest-growing county in the nation according to 2019 data from the U.S. Census Bureau.

Under Texas's new Fair Market Value legislation, a process has been laid out by the PUCT to determine the fair market value of an acquired utility's rate base, which would be used for future rate-making purposes.

This would be a "tuck-in" acquisition, with the Clear Water Estates Water System bordering the Canyon Lake Water Service Company's water system to the north and south. The Clear Water Estates Water System is less than 40 years old. It has no employees and is already being operated under contract by Canyon Lake Water Service Company. The transaction will not affect the rates or service for customers of Canyon Lake Water Service Company or Clear Water Estates.

The PUCT's decision on the application is expected in the first quarter of 2021. If approved by the PUCT, this would become the 13th acquisition by SJWTX since 2006. Over the past 14 years, the company has nearly tripled in size from 6,500 to 19,000 connections and now serves approximately 57,000 people.