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Operator
gas will be available for a really long time in the Pittsburgh, Pennsylvania area. Now, if you've not spent time in Pittsburgh, you might not know that Pittsburghers are proud of their natural gas history and understand its importance not only to their local economy, but also to national energy independence. Next, our natural gas service territory is really in middle-class America. So to switch a home from natural gas to electric, solar, or wind would cost in the range of $8,000 to switch, and would also mean paying higher monthly energy costs. I think it's fair to say our customers are unlikely to switch. Now, if we aggregated all of the greenhouse gas from all of the residential natural gas consumption in the country, we would only equate to about 4% of the country's total greenhouse gas emissions. So minor in the scheme of things, and I think that sometimes gets lost in the discussion as well. I think those of you who know us well know that at Aqua America, we were always an environmental leader. Over many years, we've demonstrated our commitment to be responsible stewards of the environment. We specialize in rehabilitating underground infrastructure, and People's Gas is really no different than Aqua America was before we were combined. We believe as the new owner of the business, we can modernize its infrastructure and apply industry best practices to aggressively reduce emissions and adopt advanced technologies. As essential utilities, we plan to set a credible and aggressive intermediate term emissions reduction target by early next year. and will continue to evaluate technologies and strategies to further reduce emissions in the longer term. So in summary, while the media may have you believe that natural gas will go away over the next decade or whatever they're saying today, that clearly does not line up with the objective reality of energy use in the United States. In fact, it's quite the opposite. I'll say this as clearly as I can. We are very pleased with our purchase of Peoples. It's performing extremely well, and we believe we have a long and successful future with Peoples and Aqua as essential. Now, I'm really pleased to introduce our new leader of our natural gas business, Mike Hewler. Mike is our new president of the People's Gas Company and joined us in August, concurrent with the retirement of Joe Gregorini, who was our longtime leader of the People's Operations over there. Joe did a great job, and we wish him well in his retirement. Mike's a native of Pittsburgh, comes to us from Columbia Gas, where he spent 34 years, a 34-year career there, and most recently was president and COO of Columbia's PA and Maryland operations. I've asked Mike to provide some of his early observations about Peeples and to provide his perspective on the natural gas business in Pennsylvania where 690,000 of our 740,000 customers reside. Mike?
Mike Hewler
Thanks, Chris. It's truly a pleasure to be with you today. You know, as a native of Pittsburgh, I must tell you that I have long respected the Peoples Gas Company for its leadership in the community, and I'm absolutely thrilled to have the opportunity to lead the utility. Although I joined Peoples just three months ago, I've been in the natural gas business for a few years now, and while there's always opportunity for improvement, I'm happy to tell you that I'm impressed with our management, our safety culture, and our safety record at Peoples. The team is well-trained and maybe equally important. They're very committed to both employee and customer safety. In fact, Peoples was honored by the American Gas Association in 2019, receiving an industry leader accident prevention award for achieving total days away, restricted or transferred, which is DART, rate lower than the industry average. I have found the depth of management to be remarkable. If you count the years of service for my senior team alone, we have nearly 263 combined years of service in the natural gas industry. The team is well prepared to take the company to the next level, including the ramp-up of our capital plan. In fact, we are preparing to invest nearly $1.4 billion of capital in the replacement of aging gas distribution infrastructure over the next three years. And over the next 15 years, we will replace nearly 2,700 miles of distribution facilities. You know, any time you combine two companies together, you have a melding of cultures, and that's going to take care and effort. My early observations of the combination of aqua and peoples as now essential indicate the cultures are very similar to start. which will make integration much easier. I've been pleased with the spirit of cooperation among the teams and the full integration of the management teams. I believe we are developing a strong combined culture that will provide a strong and resilient company. You know, People's has always been a part of the fabric of the Pittsburgh community. The company's visibility and community assistance has been particularly important during the pandemic I should also mention that the customers have access nearly to $27 million in customer assistance through the use of programs like LIHEAP, the low-income heating energy assistance program, and CAP, the customer assistance program, so that customers in need can find help to paying their bills and remain safely in their homes. Natural gas is by far the most effective energy source to heat homes and businesses in colder climates. And let's remember that our LDC, our local distribution company, Peoples, has access to an abundant, low-cost supply of natural gas, given our position directly above the magnificent Marcellus Utica supply basin. Low-cost commodity in this region have also presented Peoples the opportunity to make investments and modernize our distribution system with limited impact to the total bill of our customers, all while enhancing safety, and reliability. As a native to southwestern Pennsylvania, it's hard to underscore how much natural gas is a part of the fabric of this community. I see this as a region where business leaders, legislators, regulators, and communities work together to protect our environment and keep our economy vibrant as well. While parts of the country mandate to move away from natural gas more quickly than others, for example, the West Coast, Peeples is located in a geography where I would expect natural gas to remain an essential part of the energy picture for generations to come. Taking a look at the slide here, I'd like to make a few points that further the discussion on the sustainability of natural gas. I won't make every point on the slide, as you can read those on your own, but I believe natural gas will remain a vital part of the nation's long-term energy solution. as natural gas remains an affordable, abundant, safe, and reliable solution to our energy needs. The United States is natural gas rich and has supply to fulfill the country's energy needs for the next century. As Chris mentioned, eliminating the direct use of natural gas in homes and in businesses would be an expensive and impractical way to address greenhouse gas emissions. You know, in fact, As the demand for natural gas has never been greater, it's estimated that one new customer connects their home to the natural gas distribution system every minute now, providing service to 179 million Americans, or roughly half our country. Conversions to alternatives are expensive and would result in an increase in households of nearly $1,000 annually in their utility bills. You know, the reality is when you add up potential equipment conversion costs, higher operating costs, the impact of moving away from natural gas would be profound on every household. In addition to existing technologies which have dramatically reduced emissions, the emissions profile of the natural gas industry in recent years, there are opportunities for further improvements. For example, RNG, renewable natural gas, This is a climate-neutral, pipeline-compatible, gaseous fuel derived from biogenic or other renewable sources. The industry and our company are looking at opportunities to do more RNG. Today, as we said, Peoples acquires over 1.5 billion cubic feet of renewable natural gas annually within its portfolio, and we plan to do more. In closing, I look forward to leading the Peoples team and we believe we can do great things together as we look to continue to provide quality service to the communities that we serve. With that, I'll hand the call back to you, Chris.
Operator
Hey, thanks, Mike, and nice job. Great to have you on the team. I would just leave you with one final thought on this topic before we move on, and that is that given our natural gas utility, People's, Given its rate-based growth, its position geographically, and its access to gas, among many other reasons, it should be thought of differently than many other gas LDCs across the country for regulatory reasons and everything else, and especially should be thought differently than natural gas utilities in, call it, Pacific regions or some of these coastal communities. All right. Now, let's take a look at the highlights from the quarter. We have invested already $607.6 million in infrastructure in the communities we serve during the first nine months of the year, of which $377 million was invested in our regulated water segment and $230.6 million was invested in our regulated natural gas segment. I just always want to point out that about $53 million was invested by peoples in the first quarter pre-closing. So bottom line, we remain on track for record capital spending of $950 million in 2020. Now in the box, you also see that on a non-GAAP basis, adjusted income per share decreased to 23 cents from 48 cents when compared to the same period last year. And Dan's going to take in more detail on those financial results in just a moment. Our municipal acquisition program, remains strong with signed municipal transactions, municipal agreements, I should say, totaling over $360 million in expected rate base and over 212,000 customer equivalents. We just recently closed the water and wastewater acquisition of Rockwell Utilities, that's in Illinois, and announced the signing of Lower Makefield in Bucks County, Pennsylvania, which was a $53 million acquisition with 11,000 wastewater customers. Finally, in the last box, we're excited to point out that our latest ESG report that was just published just a few weeks ago, and I'd encourage you to take a look at it. You can find it through our website. It's our new ESG site, really, really strong ESG site, I would say. And with that, let's use that as a segue to the next slide here and talk a little bit about ESG. Sustainability has always been a core part of our corporate culture, and it's been a personal priority of mine as well. Since I became CEO in 2015, we've really made an ESG priority. We started with board refreshment. Our board is nine members. About a third of those, or exactly one-third of those, are women, and another two members are black. Our diversity helps to facilitate better discussion and and better outcomes, and I firmly believe that. As I mentioned, we've been ramping up our ESG communications since last February, and even before the People's Transaction, our ESG team published the first ESG tear sheet and dramatically enhanced our 2021 proxy last spring. Since then, to ensure we provide transparent and comprehensive reporting on our work, we hired a full-time in-house ESG manager. Most recently, we issued a new and more detailed ESG report, as I just mentioned, and a digital microsite format, really easy to navigate. Our ESG website will be the home of all of our future related news and disclosures. Now, on the water side, We made some important announcements earlier this year, and we've talked about these. We said that by 2022, 60% of our energy would be sourced from renewable sources. We also said that we believe we stand alone as a multi-state water utility in our commitment to test every source of water in our eight states and treat any source negatively. that detects PFAS above 13 parts per trillion. You'll recall that the federal health advisory level is at 70 parts per trillion, so this is a sizable improvement from what the federal government provides as their guideline. This is really a significant commitment. On the natural gas side, as I mentioned, in the first quarter of 2021, we'll announce an aggressive but achievable set of targets for emissions reduction. We want to do this before we reach the one-year mark of ownership, so looking at probably the January timeframe. Remember, we have significant pipe to replace at Peoples, and each length of pipe that we tighten up quantifiably reduces methane emissions. We plan to report those reductions in our ESG reports in the future. To give you a sense, each mile of pipe replaced is expected to reduce fugitive methane emissions by the equivalent of 50 metric tons per year of CO2. This is the same as taking 11 cars a year off the road for every mile of pipe. That's pretty important. Let's not forget that while this effort reduces methane emissions, the Pipe Replacement Program also contributes about 8 to 10% rate-based growth annually over the 15 years. So with that, let me pass it over to Dan for the financial results.
Mike
Thank you, Chris. Good morning, everyone. Reviewing the financials for the quarter, we ended the third quarter with revenue of $348.6 million, up $105 million from $243.6 million last year. The natural gas business contributed $92.1 million of this revenue growth, while the remainder was a result of rate increases, volume, and growth in the regulated water segments. We're also reporting adjusted revenue of $352.7 million, which excludes approximately $4.1 million of rate credits issued to water utility customers, which were as a condition of the Pennsylvania PUC approval of the People's Acquisition. O&M increased to $136.2 million, up from $82 million in the third quarter of last year. This was primarily a result of the addition of the natural gas operations and maintenance expenses, which we'll discuss further when we show the O&M waterfall. Net income was down year over year from $88.5 million to $55.7 million, and GAAP EPS was down from $0.38 to $0.22. We're again providing adjusted income and adjusted income per share lines, which adjust for the transaction-related water rate credits that I mentioned. Adjusted income was down $27 million to $58.6 million, and adjusted income per share was down from $0.48 to $0.23. This result aligns with the adjusted income per share guidance of $1.53 to $1.58 for the full year. Next, we'll discuss the details using the following waterfall slides, starting with revenue. As we walk through the $105 million revenue increase for the third quarter, you'll notice that the revenue related to our natural gas segment was the main driver, adding $92.1 million. Increased volume, growth from a regulated water segment, rates and surcharges and other provided an additional $17 million towards the revenue increase, which was offset by the $4.1 million of rate credits issued to water utility customers in the third quarter. The $3.9 million growth component is primarily due to the acquisition of wastewater systems. In the fourth quarter, we'll provide nearly $19 million of rate credits to natural gas customers to fully satisfy the rate concessions included in the Pennsylvania regulatory approval. Given the nearly $10 million in incremental revenue from volume, let's discuss our third quarter water consumption on the next slide. We experienced a material overall positive impact due to volume during the third quarter. Despite COVID, year-over-year water usage was up 5.5%. With many customers working from home and favorable weather, residential usage was again very strong, up over 10%, which offsets declines in most of our other segments. Although commercial continued to be down, it rebounded significantly from the second quarter, when you'll recall that we were down about 16% versus last year. As we've discussed previously, given the shutoff moratoria that states enacted when COVID-19 emerged in March, we continue to closely monitor incremental increases in our bad debt expense and the timing of when these moratoria will be lifted. As you can see on the right, all of our states have lifted their moratoria, with the exception of Pennsylvania, where this is expected to occur in the next few days, and New Jersey, where the moratorium should be lifted in March of 2021. As moratoria are lifted, we resume our regular delinquency procedures. During the quarter, we increased our bad debt reserves by $6.8 million across water and gas, and identified potential regulatory asset filings for much of this, as we expect to be able to seek recovery of COVID-related increases in bad debt in several of our key states. With that, let's move to the O&M waterfall. Operations and maintenance expenses were $136.2 million for the third quarter, compared to $82 million in the third quarter of 2019. The main driver was the $62.2 million addition of People's O&M, Other contributing drivers included COVID related expenses for our water segment, including COVID related employee costs, growth, and normal employee related costs, which were offset by other costs and the impact of last year's people's acquisition related expenses. The other bar that you see in the middle of the page includes overhead savings, a reduction in insurance reserves, and a combination of beneficial one-time items this year and detrimental one-time items last year. For a regulated water segment, third quarter O&M expenses decreased 2.2% relative to last year. Next, we'll spend some time on the earnings per share waterfall. Again, this presentation bridges between GAAP and adjusted figures for both 2019 and 2020. Gap EPS in the third quarter of 2019 was $0.38, but adding back the almost $0.10 from the dilutive effect of the equity offering and the people's related transaction costs brought us to $0.48 per share on an adjusted income basis for Q3 last year. Continuing on, volume, expenses, regulated water segment rates and surcharges, and growth together contributed almost $0.07, which were offset by $0.23 from the people's contribution along with 8.6 cents from other items, such as increased depreciation, amortization and interest, and decreased Aqua Pennsylvania repair benefit relative to last year. That then results in the 23 cents for the adjusted income per share for the third quarter of 2020. Now, remember, the 23-cent impact of PEOPLES here includes the dilution from the share issuance, the financial performance of the gas business in this low-usage quarter, and other one-time impacts. Finally, the decrease of 1.1 cent due to water rate credits to utility customers in the third quarter brings us to gap EPS of 22 cents for Q3 2020. As I mentioned earlier, the fourth quarter of 2020 will include additional rate credits of approximately 19 million to be issued to the natural gas utility customers. Let's look at rate activity on the next slide. In 2020 so far, we've completed rate cases or surcharges for our regulated water segment in Illinois, Indiana, North Carolina, Ohio, Virginia, and Pennsylvania, totaling annualized revenue of $21 million. In our regulated natural gas segment, we've completed surcharge filings in Kentucky and Pennsylvania, with total annualized revenue of $1 million. In the coming months, we expect to receive new base rates or surcharges in New Jersey, Virginia, and Indiana for our regulated water segments. At this point in the year, we do not have any pending base rates or surcharges for our regulated natural gas segment. Our relatively limited rate-related activity remains on track despite COVID, and we continue to have regular virtual interactions with our regulators and our counterparties. As we announced in August, we filed a petition with the Pennsylvania PUC requesting accounting treatment for the approximately $380 million catch-up deduction for the tax repair eligible capital invested prior to Essentials ownership of peoples. The proceeding has been assigned to an administrative law judge per the normal process, and we're in the discovery phase of the proceeding. If needed, evidentiary hearings are scheduled at the end of January. At this point, I'd like to turn the call back over to Chris for an update on our municipal acquisition initiative.
Operator
All right, Dan. Thanks. Are many of you familiar with this slide? You've seen it before, which represents our acquisitions for the regulated water segment. So far this year, we've closed the Campbell Water System in Ohio, East Norriton Wastewater System in Pennsylvania, and Rockwell Utilities in Illinois. We continue to advance the New Garden, Commons Water, and Del Cura transactions. And as I mentioned, we recently announced a signed agreement with Lower Makefield in Bucks County, Pennsylvania, to acquire their wastewater assets for $53 million, about 11,000 customers. These signed agreements are expected to generate about $18 million of incremental annual earnings. We expect to execute asset purchase agreements on probably two or three other transactions by the end of the year, totaling over $10,000. or equivalent dwelling units, and over $70 million of purchase price. So we're doing really well this year with our waterways water acquisitions. I mentioned the status of Delcor earlier in the call, and so I was going to suggest that I take questions in a moment rather than reiterate again. But I just want to reiterate our confidence that we have a valid contract and that we'll close the transaction in early 2021. Now, in addition to the signed municipal acquisitions that we just mentioned, we have a healthy pipeline of potential municipal deals. Our pipeline includes acquisitions where opportunities are active, right? We have our active discussions with potential sellers. And as illustrated by this slide, we are actively pursuing acquisition opportunities, totaling about 360,000 customers, so a really strong pipeline at this point over our multiple states. Before we wrap up our discussion on the strategy piece here, I should mention that we were part of a joint venture that owned a raw water pipeline that was built to deliver water to the Marcellus Shale region. The pipe was originally built to reduce the trucking activity associated with bringing water to frack wells, and some of you may recall that. But the venture was not as successful as it was envisioned to be, and as a result, it was written down when I became CEO. And now in October, just last month, we sold our interest in that joint venture. So that is now behind us. Let me just wrap up with guidance here. We are updating our 2020 guidance. We believe that the company's current position will allow us to deliver at the top end of our adjusted income range of $1.53 to $1.58 per share on a pro forma 2020. The rest of our guidance remains unchanged, and we expect to announce new annual guidance
Dan
early in 2021 we'll plan to provide another three years of guidance as we have done previously and with that let me open the line for questions thank you and ladies and gentlemen at this time we will open the floor for questions if you would like to ask a question please signal by pressing star 1 on your telephone keypad now if you're using a speakerphone please make sure that your mute function is turned off to allow your signal to reach our equipment and again that's star 1 to ask a question Our first question comes from Julian de Moulin-Smith with Bank of America.
Julian de Moulin - Smith
Hey, Julian. Hey, good morning. Hey, thanks so much, Chris, and the whole team here. Perhaps I wasn't going to start here, but in light of your commentary, I'd be curious, I mean, what do you think this strategically means for the gas LDC space, Chris? I mean, certainly your observations are not lost on us, but I'm curious if there are implications that obviously you all have been more on the acquisition side, but I'm curious if you can opine across the broader space.
Operator
Yeah, I mean, listen, I think, as I mentioned, we're in a hyperbolic situation with the elections and the whole discussion. And so I think there's a lot of factors contributing currently, let alone, I mean, listen, there's an ESG movement. We're part of it to make the country and generally the world greener. But I really believe that natural gas plays a prominent role in that work. and will for a very long time. And so I believe, Julian, that once people get really grounded in the facts, I think we'll see some improvement. Now, not all gas LDCs are the same, and that's why I really wanted to spend time today differentiating the gas LDC that we purchased that sits over top of the Marcellus Shale region and has low-cost gas for a very long time versus some of the areas where people are passing legislation to prohibit new natural gas opportunities. Pittsburgh, Pennsylvania is very, very different and, as I said, very proud. So in total, I think you'll see a return recognition to the importance of natural gas as not only part of our energy independence in this country, but also as a prominent part of the greening. It has to be – we're not going to cold start a nuclear plant when it's not windy and it's not sunny out. You're going to depend on natural gas. It's a very efficient way to heat a home. And so hopefully that gives you a little insight into how we're thinking about it.
Julian de Moulin - Smith
Okay. All right. Fair enough. Doesn't sound like too many strategic implications, though, as I hear from you. But I want to pivot at this point back to the other strategic actions you have pending already. With respect to Delcorra here, we understand you expect to close in one queue, but can you just walk through the timeline for clarity? I know you kind of alluded to that already, and how we should think about the cadence of pulling on the equity.
Operator
Yeah, well, let's think about this first on the acquisition of Delcorra. So a lot of moving parts to that. There's a court date coming up. It was supposed to be this week. We're still hoping it's going to be next week, but we'll probably know that sometime later today. And then there's obviously the Public Utility Commission process that will wind through, and we've got a pandemic over top, which, you know, always delays things a little bit. So I would say, you know, we're not locking ourselves into the first quarter, but I would say, you know, it's probably fair to think about the March-April timeframe in terms of, you know, when we might get it done. Now, for the equity, and I'll pass it over to Dan here in a moment. Remember, when we talked about our $300 million equity offering, that wasn't all for Del Cora. That was for use of a lot of – you see as we went through this – We've got a lot of work going on with municipal acquisitions and pretty chunky-sized acquisitions. And so as we continue to do that, we've said that we'll continue to need to pull down equity in order to finance these acquisitions. Dan, do you have something to add on the equity portion?
Mike
Yeah, and maybe, Julian, you know, what you kind of implied there is the timing of pulling down the equity. And, you know, I just wanted to reiterate, you know, our August timing was, was really driven by the fact that we wanted to make sure we were in a good position to close these transactions. We obviously wanted to price the stock at a strong price from a share price perspective, and we wanted to avoid the volatility going into this election cycle. And certainly we've seen that volatility play out really kind of since the time that we did that equity forward. So, you know, we really were quite pleased at the timing of that equity forward coming right off the last earnings call and, you know, you know, put us in a position where when we need that equity for the transaction, we will issue those shares, we'll settle that forward, and we'll get the proceeds we need to close the Del Cora transaction as well as other transactions. And in the meantime, you don't, since it is a forward, Julian, you know, those shares won't count in our denominator when we think about earnings per share unless there's material price movement. But without that... you don't count those shares or any impact. So we're quite pleased with it.
Julian de Moulin - Smith
Got it. Sorry, if I can see another one quickly in here. Obviously, Trenton, the water size, especially with Rezzy and large Rezzy at that, look like they're curbing some of the other impacts. Can you talk very quickly about the gas LDC side of the equation as we talk about coming into their impact on COVID? into the back half of the year?
Mike
Yeah, it's a little early to tell. And obviously, we're coming out of Q2, Q3 that are low gas usage months. I would say we didn't in those months see what we would call a meaningful impact that was due to COVID. And as you know, weather and heat and degree days drive gas usage more than anything else. And so, We're confident as we go into this fall that we'll see usage correlated with the weather, and I would say from our conversations in western Pennsylvania, we're not seeing significant load, meaning manufacturing, heating loads, things like that, manufacturers offline that would really impact the consumption in a way other than it being weather-driven.
Jonathan
Excellent. Thank you guys for the time. Yeah, absolutely.
Dan
Our next question will come from Ryan Connors with Boning Scattergood.
Ryan
Thanks. Good morning.
spk02
Yeah.
Ryan
Good morning. Yeah. You've got, it sounds, seems like you've got a knack for timing this year. I remember the Dow was down about 4,000 points the week of the analyst day. And then, uh, and then another interesting day to day to be, uh, to be active here. So, um, Anyway, my first question was, I appreciate the waterfall, Dan, on the earnings and the revenue. It's very helpful. But it seems like the O&M expense came in pretty well above our model. And I think that might have been a factor in being a little shy of consensus as well. So yeah, I think based on what you've said, that seems to be driven more by the people's side. So at least for those like myself who are somewhat newer to the gas side, can you just kind of walk us through some of the moving parts there on the expense side for people's?
Mike
Yeah, and let me first comment that you're right in terms of where the expenses are, that we've added that new expense from people's. And, you know, frankly, we don't see that. You know, we've got no comparison to that expense in prior quarters. When you look at the regulated water segment, and you'll see this in our segment reporting when the queue comes out, you'll see if you look at the O&M line for the regulated water segment year on year, and you do the math, you'll see that that's down about 2.2%. So comfortable with where expenses are there. On the people side, what we're doing here is we're really just kind of adding in these people's expenses this year, and I'm not sure kind of the basis for your model relative to kind of what we're reporting for the first time. So, you know, maybe that conversation, we make sure we have it another kind of offline.
Ryan
Sure, sure. Okay. And a couple other kind of big picture questions. You know, one is, you know, NAWC had their big annual shindig last week, virtual, of course. And one of the things that was interesting is NARUC was on there talking about sort of more federal involvement in the water utility space, whether it's things like encouraging so-called water grid investment and things like a LIHEAP for water. All that, you know, it sounds great on the surface, but then again, one of the great differentiators for water is that you are regulated closer to home. So I guess, did you happen to hear those comments? And what's your reaction to that concept of greater federal involvement? Is that there? Some of that stuff moves forward that you kind of get pulled into some kind of regulatory constructs that may be ultimately counterproductive?
Operator
Well, let's use the example that you pointed out there of LIHEAP. I do think, Ryan, that as people become more and more aware that the cost to serve water is climbing given the massive capital expense that we've got to put forth, there is going to be a need for some customer assistance beyond what we've been able to provide in the way we've been doing it in the past. So we are going to, as I think you know this, we are going to submit in this rate case, our next water rate case, a universal service program for the first time. We'll be the first water utility in Pennsylvania to do it. We're going to submit that. But, you know, listen, when we look at what's happening at People's, you know, all in, People's provides about $27 million of assistance to their customers, and a lot of that comes from the federal government. There probably ought to be some consideration as water prices continue to climb as well, and I think it's tough to say if that's going to come from the state. It should probably be provided in the same way that the gas utilities and the electric utilities get their supplements. So I think there are some advantages to that as prices continue to climb. But, you know, I agree with you. I prefer not to get sucked into the red tape of the federal government for many other issues other than maybe customer assistance.
Ryan
Okay. Okay, that's fair. And then my last one was just – and you kind of alluded to it here, Chris, about the rate case in Pennsylvania. I mean, you came into COVID with a pretty light rate pipeline, which is – maybe lucky, maybe good, but sort of good timing because the optics of trying to go out for rates right now is not great. But we've got this K-shaped recovery where there's a segment of the population that's going to be struggling for a while. How do you think about sort of the sequencing in base rate case activity? I mean, is there... you know, the optics of that and the politics of that. And, I mean, how does that affect the timing of what you ordinarily would be doing right now in terms of sizing up various rate cases?
Operator
Yeah, it's an important question and one that we spend time considering all the aspects of. But I think when you think about as large a unit as the Pennsylvania water utility is for the company, you really have to remain on a cadence of, given the continued capital spend and everything else. Listen, I hope we have a vaccine out shortly here, and by the time we're filing a rate case, we're well into a national vaccination for COVID-19. And, of course, we'll continue to evaluate things as we get deeper into the spring. But suffice it to say, it does – you know, the national – issue of the pandemic, you know, does play here in Pennsylvania and would impact how we think about a rate increase. I can't tell you at this point that there's any plans to alter course, but it certainly will be in the consideration.
Mike
And then, Chris, I'd add, too, that the Universal Service Program proposal for that helps to address the people that are on that downward leg of that K-shaped recovery, Ryan, that you mentioned. Yep, yep.
Ryan
Yep, okay. Super. Well, hey, thanks for your time.
Mike
Yeah, thanks, Ryan.
Dan
We'll take our next question from Insoo Kim with Goldman Sachs. Thank you.
Chris
Good morning. First question is, On the equity side, just on a hypothetical basis, if the Delcora transaction fails to close, how do you think about the amount of equity that you are expected to pull from the forward? Do you still expect it to do the full amount or could it be something less?
Operator
Well, let's remember, I'm going to kick it to Dan here for a second, but let's remember that we have other transactions in Sioux that are pretty chunky here and a couple of others that we think we're on the precipice of announcing. Obviously, we hope things stay on course, but there are multiple uses for that equity. Dan, why don't you jump in there?
Mike
Yeah, I think you're exactly right, Chris. I mean, it was interesting, a few minutes ago you talked about lower make field in the size of it being 55 million and 11,000 connections. And, you know, a year or two ago on this call, we would have thought that was a huge acquisition, right? And now we say kind of matter-of-factly. But, you know, we see a number of things that look like that in terms of size or bigger that could help to absorb that equity. I mean, I think we'll continue to evaluate it as we've got, you know, call it, you know, nine, ten months left on that ability to settle that forward. So we've got a lot of time here for that Delcor transaction to play out and for other things of scale that we're working on to play out as well. At this point, we certainly anticipate that we would physically settle that forward, but there are options to cash settle or partial cash settle as well.
Chris
Yeah, makes sense. Understood. And then just my other question is going back to the gas strategy. Chris, I know you and I have spoken about that and the reasonings for the people's gas acquisition. Definitely appreciate the reasoning and the advantages that people's has of being in the Marcellus, but Just going forward from a longer-term strategic business mix perspective, are you still committed that future growth, especially when it comes to M&A, will happen only on the water side versus on the gas LDC side?
Operator
Yes. Yeah, let me say that clearly. You and I have had this conversation before. We are not spending any time on the natural gas side for M&A. We're spending a heck of a lot of time growing the rate base by replacing pipe at people's ramping up that program. So as we've said before, you know, the rate base there is growing 8% to 10% a year. So it is fast growing even without doing M&A. And that's allowed us then to put all of our M&A focus on the water side, and it's really yielding nice results. So you said it exactly right. We're not spending any time on the gas side for M&A. It's all on the water side.
Jonathan
Got it. Thank you so much.
Operator
You bet.
Dan
And as a reminder to our audience, if you would like to ask a question, please press star 1 now. We'll take our next question from Durgesh Chopra with Evercore ISI.
Operator
Hey, Durgesh.
Alcora
Good morning, Durgesh. Hey, Chris and Dan. Good morning. Thank you for taking my question. Can I just clarify really quickly, and Chris, appreciate all the detail around gas. That's very helpful color and perspective from you. Just can I go back to Del Cora, and can you talk about procedurally what are the milestones that we should be watching out for towards the approval process? So it's the court order, then the commission order. Can you just talk about that?
Operator
Sure, sure. First, the... court hearing in what's called Common Pleas County Court in Pennsylvania. We expected that to be this week. It had to be moved hopefully only a week out. And the decision by the court there is, and I'm going to be, I'm not a lawyer, so I'm going to be super simple in how I describe it. The judge had to decide, is there a valid and enforceable contract in place for And clearly, we believe there is, and plenty of evidence of that. So we think that the court should look very favorably on our position there. So we expect that to be sometime next week, and then we expect probably, you know, call it 60 days maximum. The judge has actually been working pretty quickly in that case, so it might be sooner. But I would say within 60 days, we would know what his decision is on that. Assuming he decides the way we think it should go, that makes it pretty easy to then continue to move on to then focus on the commission. The commission proceedings next week are the evidentiary hearings for Del Cora. They'll move through the process there. Then we would expect the commission to wrap up sometime in the March timeframe. with their work, which would allow us to close, call it late March, early April. Probably April is the more appropriate timing.
Alcora
Got it. And if you, in an event, and I know you have a very successful history in Pennsylvania, but in an event that the judge here has an adverse ruling, is there a sort of forum for appeal and things like that?
Operator
Yeah, of course, you could go to the Commonwealth Court and appeal it. But I think, well, you can never suppose what a judge might come up with. But, you know, it could be more nuanced. Because the second question is the contract between ACWA and Del Cora or ACWA and the County of Delaware. And that's probably the more nuanced approach. And, frankly, I'm not sure it matters to us. We know we have a signed contract, and it's enforceable. And so we feel confident that whether it's through the county or directly with Alcora, that contract is enforceable. So I'll leave it there.
Alcora
Yeah, no, that's great. Thank you. Appreciate your granularity there. And then just going back to just any update on the catch-up provision of – of income taxes on people's gas that is pending with the commission? Just anything new there and when to expect a final decision?
Mike
Yeah, you know, as you'll recall, we filed that right about the time of the last earnings call. And then we had a pre-hearing conference with the ALJ in early October that really outlined the procedural schedule. And as I noted in my remarks earlier, That has us with evidentiary hearings right at the end of January. But whether there are hearings or whether we settle it, this still probably plays out until, you know, a final order sometime early in the second quarter of 2021. Just as these things go, you know, they have a certain cadence and a time frame, and there are file, there are reply briefs, there's rebuttal, there's surrebuttal. all of these steps that just take time before the administrative law judge writes a proposed decision and it ultimately goes to the commission for the deliberation and creation of an order, if you will. So I think we're kind of in wait-and-see mode, obviously. We're working our way through that. But, you know, I would remember, Durgesh, too, that, you know, don't think about this as increasing earnings in the near term. think about the way we propose this, that what it really does in that sharing of the benefit between rate payers, customers, and shareholders, what it really does is it would help us to stay out of rates longer, help us to achieve the revenue requirement in the out years, think kind of 24, 25, rather than bringing earnings forward and having incremental earnings in the near term.
Alcora
Yep, no, that's great, Dan. Thank you. Good for you guys. Thanks for the time today. Yeah, thanks for getting here. Take care.
Dan
We'll take one more question from Jonathan Reeder with Wells Fargo.
Jonathan Reeder
Hey, Jonathan. Hey, thanks for taking my question, guys. So, Chris, I think you kind of alluded to it a little bit, but I think the court had the hearings a few weeks ago focused on the creation and use of the trust by Del Cora.
Jonathan
How did those go?
Operator
Well, I don't think there's decisions out yet on the – I mean, the arguments went well, I think, and obviously we're a third party to that, Jonathan, as you know, right? The trust is really an issue between Del Cora and ultimately the county is – we would prefer not to see a trust. So we're a third party. The judge's rulings haven't come across on that. But on all of the procedural work that the judge has ruled on, it's all gone very well. We've been very pleased with every one of the rulings. So I would imagine that we would hear more on that trust going forward once the judge makes a decision.
Jonathan Reeder
Does the judge issue two separate rulings then, like the trust one being 60 days, you know, potentially after that hearing date? And then, you know, the one on the asset purchase agreement would come even later? Or will it be just one kind of global ruling that he hands down?
Operator
Well, I think the judge is pushing, you know, the judge would like to see, you know, the settlement discussed. Obviously, he said that very publicly. And so, obviously, I'm not going to comment on that. But I think you're thinking about it the right way, two separate decisions, one on the trust and one on the enforceability or the contract itself. And I think your timeframes are probably about right. So, but listen, there's a lot of ways to come out of trust. It doesn't have to be called a trust. It could be a fund. It could be under the auspices of the county versus Del Cora. There's a lot of, in other words, it's not a, that's not a go, no-go issue necessarily. It may be the current form of the trust. I hate to go down this road because we're getting into, you know, probably a more sensitive area, but I would not think about the trust issue as a, as a, as a deal killer in any way.
Jonathan Reeder
Okay. And, and so you, do you think there is still a chance that it gets settled? You know, the judge is incurring it, you know, like, are there active discussions? I mean, I know you can't go into the details if there are, but you know, is that still a potential pathway?
Jonathan
I'm sorry, ask that one more time, Jonathan.
Jonathan Reeder
I'm just, I know you said that the judge is encouraging the parties to settle or, you know, some discussions. So should we assume that there are active discussions going on? Like, is that, you know, a potential, like, you know, real pathway at this point, even though, you know, we might be, you know, only a month or two away from a judge's ruling otherwise? Yes.
Operator
Listen, settlement is always a possibility, but I can't comment on any kind of settlement discussions.
Jonathan
Okay, but they are occurring?
Operator
I can't say, Jonathan. I really, unfortunately, I can't say.
Jonathan Reeder
Okay, and then, you know, lastly, again, regarding the settlement, but this time in the repairs tax, you kind of sound like you're optimistic about reaching a settlement before the January hearings, is that kind of based on the intervener testimony that you've seen or, you know, how should we be thinking about the prospects there?
Mike
You know, at this point, Jonathan, we're really just working through the process and, you know, we've gotten reply briefs back from the various intervening parties and we're working through those and we'll obviously respond. So I think it's really just too early to give you any more color on it. As I said earlier, we're progressing through it. When I said wait and see, we're going to wait and see in terms of how the timeline and how the time evolves here, but we're obviously going to do everything we can here to make the case for this proposal and the sharing of benefits between the customers and the shareholders in a way that's good for all parties and keeps us out of race longer.
Jonathan Reeder
Okay, yeah, no, appreciate that. Yeah, good luck in, you know, looking forward to those announcements before the end of the year that you alluded to, Chris, on the M&A. Great. Thanks. Good, good, you bet. Thanks, Jonathan. Take care.
Dan
I'll now turn it back to Chris for closing remarks.
Operator
All right, folks, thanks so much for spending the time. I know this was a little more lengthy call, but I think there was some important information that hopefully we traded here. Always available for follow-up. Thanks again. Have a great day.
Dan
Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect. Thank you. Thank you.
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