Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue Recognition [Abstract]

Revenue Recognition

Note 2 – Revenue Recognition

The following table presents our revenues disaggregated by major source and customer class:

	Three Months Ended								Three Months Ended
	September 30, 2020								September 30, 2019
	Water Revenues		Wastewater Revenues		Natural Gas Revenues		Other Revenues		Water Revenues		Wastewater Revenues		Other Revenues
Revenues from contracts with customers:
Residential	$	157,387	$	24,175	$	46,913	$	-	$	145,643	$	21,437	$	-
Commercial		41,693		4,794		7,993		-		42,883		4,037		-
Fire protection		8,535		-		-		-		8,565		-		-
Industrial		9,022		388		1,407		-		8,730		390		-
Gas transportation		-		-		26,248		-		-		-		-
Other water		9,524		-		-		-		7,332		-		-
Other wastewater		-		1,462		-		-		-		758		-
Customer rate credits		(3,757)		(323)		-		-		-		-		-
Other utility		-		-		5,763		6,548		-		-		2,984
Revenues from contracts with customers		222,404		30,496		88,324		6,548		213,153		26,622		2,984
Alternative revenue program		(341)		(143)		-		-		(65)		162		-
Other and eliminations		-		-		556		803		-		-		770
Consolidated	$	222,063	$	30,353	$	88,880	$	7,351	$	213,088	$	26,784	$	3,754
	Nine Months Ended								Nine Months Ended
	September 30, 2020								September 30, 2019
	Water Revenues		Wastewater Revenues		Natural Gas Revenues		Other Revenues		Water Revenues		Wastewater Revenues		Other Revenues
Revenues from contracts with customers:
Residential	$	431,022	$	70,421	$	156,004	$	-	$	386,240	$	61,647	$	-
Commercial		108,311		14,186		23,887		-		108,329		11,400		-
Fire protection		26,437		-		-		-		24,903		-		-
Industrial		22,597		1,230		3,721		-		23,052		1,358		-
Gas transportation		-		-		75,951		-		-		-		-
Other water		23,378		-		-		-		31,177		-		-
Other wastewater		-		3,449		-		-		-		3,578		-
Customer rate credits		(3,757)		(323)		-		-		-		-		-
Other utility		-		-		12,672		16,088		-		-		9,234
Revenues from contracts with customers		607,988		88,963		272,235		16,088		573,701		77,983		9,234
Alternative revenue program		(281)		(248)		154		-		217		(53)		-
Other and eliminations		-		-		1,409		2,392		-		-		2,568
Consolidated	$	607,707	$	88,715	$	273,798	$	18,480	$	573,918	$	77,930	$	11,802

On March 16, 2020, the Company completed the Peoples Gas Acquisition, which expanded the Company’s regulated utility business, to include natural gas distribution. The natural gas revenues of Peoples are included for the period since the date of the acquisition.

Revenues from Contracts with Customers – These revenues are composed of four main categories: water, wastewater, natural gas, and other. Water revenues represent revenues earned for supplying customers with water service. Wastewater revenues represent revenues earned for treating wastewater and releasing it into the environment. Natural gas revenues represent revenues earned for the delivery of natural gas to customers. Other revenues are associated fees that relate to our utility businesses but are not water, wastewater, or natural gas revenues. Refer to the description below for a discussion of the performance obligation for each of these revenue streams.

Tariff Revenues – These revenues are categorized by customer class: residential, commercial, fire protection, industrial, gas transportation, other water and other wastewater, and customer rate credits. The rates that generate these revenues are approved by the respective state utility commission, and revenues are billed cyclically and accrued for when unbilled. Other water and other wastewater revenues consist primarily of fines, penalties, surcharges, and availability lot fees. Customer rate credits represent a commitment that the Company made, associated with the approval of the Peoples Gas Acquisition by the Pennsylvania Public Utility Commission, to provide $23,000 of customer rate credits before the end of 2020 to its natural gas utility customers and water and wastewater customers served by Aqua Pennsylvania, Inc. The Company granted $4,080 of customer rate credits to its water and wastewater customers during the third quarter of 2020, and natural gas utility customers will be granted credits of $18,920 in the fourth quarter of 2020. Our performance obligation for tariff revenues is to provide potable water, wastewater treatment service, or delivery of natural gas to customers. This performance obligation is satisfied over time as the services are rendered. The amounts that the Company has a right to invoice for tariff revenues reflect the right to consideration from the customers in an amount that corresponds directly with the value transferred to the customer for the performance completed to date.

Other Utility Revenues – Other utility revenues represent revenues earned primarily from: antenna revenues, which represent fees received from telecommunication operators that have put cellular antennas on our water towers; operation and maintenance and billing contracts, which represent fees earned from municipalities for our operation of their water or wastewater treatment services or performing billing services; fees earned from developers for accessing our water mains; miscellaneous service revenue from gas distribution operations; gas processing and handling revenue; sales of natural gas at market-based rates and contracted fixed prices; sales of gas purchased from third parties; and other gas marketing activities. The performance obligations vary for these revenues, but all are primarily recognized over time as the service is delivered.

Alternative Revenue Program:

Water / Wastewater Revenues: These revenues represent the difference between the actual billed utility volumetric water and wastewater revenues for Aqua Illinois and the revenues set in the last Aqua Illinois rate case. In accordance with the Illinois Commerce Commission, we recognize revenues based on the target amount established in the last rate case, and then record either a regulatory asset or liability based on the cumulative annual difference between the target and actual, which results in either a payment from customers or a refund due to customers . The cumulative annual difference is either refunded to customers or collected from customers over a nine-month period.

Natural Gas Revenues: These revenues represent the weather-normalization adjustment (“WNA”) mechanism in place for our natural gas customers served in Kentucky. The WNA serves to minimize the effects of weather on the Company’s results for its residential and small commercial natural gas customers. This regulatory mechanism adjusts revenues earned for the variance between actual and normal weather and can have either positive (warmer than normal) or negative (colder than normal) effects on revenues. Customer bills are adjusted in the December through April billing months, with rates adjusted for the difference between actual revenues and revenues calculated under this mechanism billed to the customers.

These revenue programs represent a contract between the utility and its regulators, not customers, and therefore are not within the scope of the Financial Accounting Standards Board’s (“FASB”) accounting guidance for recognizing revenue from contracts with customers.

Other and Eliminations – Other and eliminations consist of our market-based revenues, which comprises Aqua Infrastructure and Aqua Resources (described below) and intercompany eliminations for revenue billed between our subsidiaries.

Aqua Infrastructure is the holding company for our 49% investment in a joint venture that operates a private pipeline system to supply raw water to natural gas well drilling operations in the Marcellus Shale of north central Pennsylvania. The joint venture earns revenues through providing non-utility raw water supply services to natural gas drilling companies that enter into water supply contracts. The performance obligation is to deliver non-potable water to the joint venture’s customers. Aqua Infrastructure’s share of the revenues recognized by the joint venture is reflected, net, in equity earnings in joint venture on our consolidated statements of operations and comprehensive income.

Aqua Resources earns revenues by providing non-regulated water services through an operating and maintenance contract, and third party water and sewer service line protection and repair services. The performance obligations are performing agreed upon contract services to operate the water system, or allowing the use of our logo to a third party water and sewer service line repair. Revenues are primarily recognized over time as service is delivered.
‎