AWK
#Thank, <UNK>.
Hello, <UNK>.
Well, actually Illinois was the first.
When you look at the fair market legislation, at least in our service area, it started with Illinois legislation.
They were among the first to do that.
The general question though is, I think that as you continue to see water and wastewater systems under distress across the country, this is a very viable solution.
That enables municipalities to benefit from water utilities like us and others to benefit, and to solve ---+ the main thing is to solve a problem for the citizens out there who are depending on the best water quality.
But also you have communities around the country who are doing an amazing job, first of all, but they have all of these different priorities.
They have to provide for schools, and for roads, and for parks.
And the responsibilities that these municipalities have is so long, and as we know, a lot of the federal funds aren't there anymore that were there during the 70s and 80s and even 90s.
So they're trying the very best they can to service the citizens of their communities.
So where it makes sense and this is an option for them, and they choose to put their systems up for sale, having this type of legislation takes an obstacle away from that.
In the past, we've had situations where a municipality or governmental entity wanted to sell its system, we wanted to buy it.
But because of the way things worked between the book value and what we were able to put in a rate base that wasn't considered premium, it stopped a lot of deals before they ever took place.
So I think this is an effort by states to have a win-win situation.
But at the end of day, the people in those communities need be better off, and the municipalities are able then to provide the critical services that they're responsible for.
I think that is a big open question right now, <UNK>.
I think one of the things we know is that on some of the military installations where we serve water and wastewater, a question has come up about storm water so that we provide services for the whole water cycle.
So that is really the immediate issue that we are looking at in clarifying in Washington in terms of roll of storm water in the privatization legislation which, by the way, is actually there.
So I think it is one of those that as the entire country looks at water supply challenges and we look at the entire water cycle, it is not ---+ in the past, we tend to say it is the drinking water, it is storm water, it is sewer water.
Where you have draught situations, where you have the need and we need promote water recycle reuse, you are going to start everyone looking at the whole cycle.
So I think it is very early in the stage to do that, but it is something because it is part of the water cycle that we have to look at.
Well, <UNK>, what we know ---+ so we like to go ---+ we like to base our guidance on what we know.
So market conditions have stabilized.
We know that, and they have begun to slightly improve.
So we have seen some increases in rig count, commodity pricing, as you all know, some customers are resumed completion and drilling activities.
But we're looking at capital spending, how much of it will hit at the end of this year versus 2017.
So I think it is really a timing issue that we are looking at.
So what we want to do is look over next few months to look at how that has stabilized, what that means for 2016 versus 2017.
But the good news, as you said, is that we are starting to see activity.
It is widespread.
We are starting to see our growth in market share.
The last we had shared with you before this call was about 30%, we're now seeing about 35% as some of the smaller players have fallen by the wayside during the really tough times.
So our customers are steady.
We're not seeing any further deferrals of completion activities, we are picking up some new customers.
But we just need to monitor over the next few months and see what we have got.
Thanks, Rich.
Well, Rich, I'm not going to comment on NASUCA because they need to speak for themselves.
But I will tell you from our standpoint, here's what we know.
There is a recognition by the EPA throughout the country about the infrastructure needs that we have in the United States.
Our plans are very open.
In our state in our DSIC in any of our infrastructure surcharge, we present plans.
We also go in when we have either quarterly, sometimes semi-annually filing where there is a close monitoring of the projects we're working on, what we're spending.
In addition to our O&M efficiency, at least for American Water, we also have several efforts in terms of capital efficiency.
What are we doing not only to spend every O&M dollar, but what are we doing to show that we are actually even improving how we spend every capital dollar.
Because for us, it is this situation.
We're faced with years of investment.
We want to be as efficient with every dollar as we can possibly be, because that means we can put more in ground, not impact the customer bills and to be able to get the infrastructure replaced more quickly which still is a decades-long issue.
So that's one thing we know.
I will also tell you that with the recent, I will say attention to water quality issues, in a time when you have infrastructure but you also have emerging water quality issues.
And we have seen what happens in different parts of the country when you don't invest in infrastructure, I am not sure that is a risk that we are willing to take.
Sure.
So first of all, understand that our Keystone executives and management spend a lot of time with our customers.
We do have a lot of ---+ we share with them and they share with us some of their plans, their drilling plans.
So the cautiousness is not really related to timing of holidays or vacations, it is more of you're talking about an E&P industry that's extremely cautious, because of what they have gone through the past 18 months.
So you don't have people that have going from being so far down to saying we're going to pull out all the stops and ramp everything up immediately.
They have a cautiousness, so we have a cautiousness.
It is a testing of the waters, the foundations are becoming stronger.
We are seeing natural gas prices I think NYMEX closed yesterday at $2.84, for example.
Just in April, it was $1.90 per million BTUs.
You are starting see better pricing as the supply is being drawn down because of the heat across the country this summer.
We are starting to see some activities where people had not been doing drilling, and now they are.
We are starting to see more drilling rigs come up.
So our cautiousness is the timing.
It is the spacing.
It is how quickly will we see this come up, how quickly will we see the supply that basically is being drown and being replenished.
What are the forecasts for the winter months, how cold will the winter be.
So we try to base looking at objective third-party data like price projections, like drilling projections.
We look at all of that, then we also look at our internal discussions we have with our customers and their drilling plans are.
So the cautiousness is, what you don't want is for people to flip back and forth to say it is not good.
It is great, it is not.
We just want to be very cautious as we look at the ramp up and the continuing strength of the natural gas drilling market, and make sure that we are very careful in how we look at that emergence.
Really, it is both.
They're so close.
Basically it is three states, it is Pennsylvania, it is Ohio and it is West Virginia.
Of course, the formations are beside each other.
And also, importantly, as we mentioned on the first quarter call, Shell has announced that they're going to build the cracker plant there south of Pittsburgh.
Which is right in heart of where the Marcellus and Utica, and some of the formations are very close together.
So we are very excited about that.
Because what they will do is if they start construction as they have said in 2018 and finish in 2020, you are talking about even more valuable natural gas drilling where you can get the NGLs along with the natural gas.
So we just see that area and the intersection between Utica and Marcellus being very rich, in terms of ---+ the fact is we know it is the cheapest to drill for the drillers, and it also requires a good bit of water because of the depth of the formations.
So we think that is the right place to be, and we have been asked.
Also at this point, we're not interested in going into other formations, because we think that the Utica and Marcellus is where we have the most key areas for production growth in the future.
We do.
We work with a lot of ---+ we have right now, I believe, somewhere between 22 and 27 different customers.
Well a couple of things.
So, Rich, in recent weeks, the drill count has been about 36 in the Appalachian basin and ours is ---+ we're all natural gas by the way.
So we do very little to no support for oil, actually for us it is mostly natural gas.
So that's one.
Second thing, you are exactly right.
What we are finding is that in order to more efficiently utilize wells that have already been drilled, they are looking at higher pressure more sand, which does require more water, you are exactly right.
But those changes in the market and the efficiency are things that our folks at Keystone work closely with customers in terms of estimates of how much water we need.
So your right, there's changes.
That's one of the reasons that the wells have become so much more efficient, is they're doing the second and third frac, and they're also putting a lot more sand and al lot more pressure with the sand when they go to those second and third fracs.
So you're exactly right.
There's a couple of other things we're involved in.
One of them is, we are working with a couple of customers on some automated pumping that really is not pretty standard right now.
So we consistently look at working with E&Ps on how to make the production more efficient, how to get the most they can out of each individual well, and to make sure that we are a solutions provider on everything around water and water services.
Yes, well we actually have an AMI team that we're working throughout the Company to come up with a rollout.
Unlike electric, the water bills are so much less expensive.
Of course we're looking at the ability to be able to justify them economically.
One good things is we're seeing a lot better technology with the meters that will allow us to actually put in AMR meters that we can then do software upgrades to actually make them AMI meters which is good.
We continue to work with some electric utilities on utilizing some of the same backhaul infrastructure, so that our customers don't have to double the cost of those investments.
We're working with commonwealth Edison ComEd in the Chicago area, as well as there's a couple of other utilities that have expressed an interest and we're very exited about that.
Because it truly is a win-win for our customers, where we put in a water meter.
But the one reason it does push to do AMI is interestingly, still a lot of water meters across our footprint are in people's homes.
So the ability to put in AMI that we don't have to actually send people out to people's homes and set up times to go into their home is a real not just efficiency improvement, but also a customer satisfaction improvement.
So we are taking all of those factors.
We have got a plan in place to roll out AMI over the next few years.
And where we can partner with electric utilities to offset some of that cost for our customers, we are all for it.
Thank, Rich.
We don't foresee any announcements the second half of year.
With that said, however, one never knows.
So when you have got a bid out there that has been out there for a couple of three years, depending on the particular installation and where the Department of Defense is.
So it is very difficult to predict, but at this point we don't foresee any further awards this year.
But we could be wrong.
<UNK>, that is correct.
We have looked at the weather impacts through July across all of our states, and although we did see more heat in those states and hot weather, it was offset by also having rain fall in those areas as well.
Thanks, <UNK>.
Thank you.
Operator, I think that concludes our question-answer-session for this morning.
Thanks, everybody, for participating on our call today.
And as always, if you have any questions, please give <UNK> or Melissa a call.
They will be happy too help.
We want to thank everybody for participating.
Look forward to seeing you in November, and thank goodness in one month, football season starts.
So everybody have a great day.
