American Water sets a $4.1B 2027 capital plan and lifts its long-term spend

American Water Works used its third-quarter 2026 results on 28 October to set out how much it plans to spend on pipes, plants and acquisitions over the next decade. The short answer is more than before.

The capital plan

The utility expects to invest about $3.7 billion in 2026, including acquisitions, and had already put $2.8 billion to work in the first nine months. For 2027 it has set a standalone capital plan of $4.1 billion.

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Further out, the standalone plan now runs to more than $20 billion for 2026 to 2030 and more than $48 billion for 2026 to 2035. Its quarterly 10-Q filing shows cash capital expenditure of $2,407 million in the nine months to 30 September, up from $2,078 million a year earlier.

How it gets paid for

A regulated utility recovers that spending through customer rates, so rate cases matter as much as engineering plans. Since 1 January American Water has been authorised $284 million of additional annualised revenue, made up of $179 million from general rate cases and $105 million from infrastructure surcharges. General rate cases are under way in five jurisdictions and surcharges have been filed in two, with $360 million of annualised revenue requested in total. New rates took effect in Pennsylvania and New Jersey during the quarter.

Growth by acquisition

The company added about 81,000 customer connections through acquisitions in the first nine months, including the Nexus Water systems, with regulated acquisitions totalling $437 million. Its merger with Essential Utilities has been approved in three states, with settlements reached in Pennsylvania, North Carolina and Texas, and it expects the deal to close by the end of the first quarter of 2027.

The earnings

Adjusted diluted EPS for the quarter was $2.00, up from $1.89. The company narrowed 2026 adjusted EPS guidance to $6.07 to $6.12 and issued initial standalone 2027 guidance of $6.53 to $6.63. President and CEO John Griffith said: "we are fully confident that our long record of consistent execution on the plans we set will continue."

The bigger picture

Last week's issue looked at state grant programmes picking up the slack from federal funding. Investor-owned utilities are the other half of the picture: they fund pipe and plant work from their own balance sheets and recover it through rates, which makes their capital plans steadier than grant-led municipal work. Rising multi-year spending at a utility of this size supports a durable base of demand for pipe, valves, hydrants, meters and treatment equipment, and for the distributors that supply them.

What it means for hiring

We think a multi-year capex ramp at a large investor-owned utility rewards suppliers with dedicated key account managers who understand rate-case cycles and capital planning, not just bid days.
Acquisition-led growth into smaller systems across many states tends to favour distributors with strong branch coverage, so branch managers and outside sales reps in growing utility territories should stay in demand.
If the Essential Utilities merger closes as expected, we would expect procurement and supplier programmes to be reviewed, which makes national and strategic account leaders at manufacturers especially valuable in 2027.

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