Cheryl Norton
Executive Vice President and Chief Operating Officer at American Water Works
Thanks, Susan, and good morning, everyone. Let me start by turning to slide nine and reviewing the U.S. EPA's drinking water rule on PFAS published in April. As Susan stated, we fully support the EPA's efforts to protect drinking water quality. These contaminants are among the multiple challenges that the water industry faces regarding water quality, quantity and reliability. We remain steadfast in our commitment to be a leader in the U.S. water and wastewater industry and a provider of solutions to these challenges. EPA's final rule was unchanged in terms of the drinking water limit of four parts per trillion for PFOA and PFOS. However, the federal timeline to comply was extended from three years to five years in the final rule. The federal compliance window now includes the two-year extension that states would have been allowed to grant the water systems for capital improvements.
As always, we will work with our state regulators to incorporate any additional state specific guidance related to implementing the new federal rule, including maximum contaminant level guidelines. Based upon our preliminary analysis of this new PFAS rule and assuming states don't adopt more stringent limits, we currently do not anticipate any change to our estimate of $1 billion of capital and our estimate of up to $50 million annually of operating expenses to comply with the rule. We also do not currently expect the new limits set by the EPA for three additional PFAS compounds to impact these estimates. Through a separate rule-making in April, U.S. EPA also designated PFOA and PFOS as hazardous substances under CERCLA.
As a reminder, we continue to actively advocate and support bipartisan federal legislation that would provide PFAS liability protections under CERCLA for water and wastewater systems as passive receivers of PFAS. Previously, we've disclosed that we remained a party to two settlements so far with 3M and DuPont coming out of the multi-district litigation, or MDL lawsuit. As we shared, we believe this is the best path to recouping the most dollars possible from PFAS manufacturers in an expedient manner for our customers. The MDL Court issued its final approval of the DuPont and 3M settlements in February and March of this year, respectively. The amount of proceeds to be received from each settlement is still pending. Turning to slide 10. I'll cover the latest regulatory activity in our states. In West Virginia, the Commission issued an order authorizing an additional $18 million in annualized revenues effective February 25.
We also received an order for $7 million of additional revenue related to our DSIC request, effective March 1. In Indiana, the Commission issued an order authorizing an additional $66 million in annualized revenues effective over a phased 3-step process through May 2025. They also approved a new rate design that provides 1,500 gallons of water usage at no additional cost above the fixed monthly customer charge for all water customers. The change will allow Indiana American to provide low-cost basic water service for customers on fixed incomes that use a lower volume of water than the typical residential customer. With this change, the cost for the typical residential water customer using 1,500 gallons will be approximately $20 per month. This is just one example of the many innovative ways we are addressing customer affordability.
Turning to active cases. You can see we have general rate cases in progress in eight jurisdictions. All of these cases are centered around the capital investments we've made and will continue to make in these states. Our cases in California, Virginia, New Jersey and Illinois are progressing well as expected. In Illinois, the next milestones in the case will be staff and intervenor testimony in May, followed by our rebuttal in June. In New Jersey, the next milestones in the case will be staff and intervenor testimony in July, followed by our rebuttal in September and evidentiary hearings in October. In Kentucky, we expect an order any day now as the story deadline for the Commission to act is May 7. Interim rates in Kentucky were implemented on February 6. In Pennsylvania, we expect new rates to be effective in August for the case we filed last year that was driven by $1 billion of vital capital investment.
The next milestones expected in the case are a proposed decision from the ALJ likely in May and a final order in July. We expect a constructive outcome that reflects the State of Pennsylvania's long-standing support for needed capital investment that improves infrastructure for the benefit of customers. And finally, on the rate case front, just yesterday, we filed general rate cases in Iowa and Tennessee. And last week, we filed notice with the Missouri Public Service Commission that we plan to file a case by midyear. On the legislative front, three state bills were passed and signed that will incrementally help water utilities in those states in the areas of lead service line replacements, expediency of approval of smaller acquisitions and fire hydrant maintenance. To show the magnitude of our regulatory execution efforts, you can see on slide 11 that we have $98 million in annualized new revenues in rates since January. This includes $43 million from general rate cases and step increases and $55 million from infrastructure surcharges.
In total, we have $636 million of total annualized revenue request pending. Moving to slide 12 and a topic you've heard us cover just about every quarter, customer affordability. As we've said, we are very focused on balancing customer affordability and the magnitude of the system investments that are needed. Our industry and our company are in very good relative positions in terms of affordability or wallet share. Our system-wide average residential water customer bill is $55 to $65 per month. The investment plan we have in place will allow us to stay within our consolidated target for residential water bills of 1% or less of median household income. That analysis is supported by U.S. Census Bureau data specific to the geographies we serve that project rising levels of median household income in these communities.
At the same time, we realize we must continue to involve our strategies around rate design and programs to assist our customers who are challenged with affordability, as I described earlier, with what we're doing in Indiana as an example. As another example, just last month, California American Water announced an additional $8 million in bill relief for customers who faced financial hardship due to the COVID-19 pandemic. This funding comes through a California program that utilizes Federal American Rescue Plan Act funds. This brings the total benefit for challenged California American Water customers to $15 million under the program. We also continue to strongly advocate for a permanent federally funded low-income water assistance program, similar to what's been in place for many years for electric and gas utility customers.
And we are continuing our focus on technology, efficiencies of scale and cost management to deliver on customer affordability especially as regulatory demand such as the final PFAS rule and the proposed lead and copper rule improvement increased capital needs. Lastly, slide 13 shows that our state and corporate leaders and their teams did a great job in the first quarter, executing on our increased capital plan. It required significant effort to safely and efficiently deliver the hundreds of projects that improved our systems and drove capital investment higher by almost $200 million in the quarter, compared to the same period last year. This result keeps us on pace to hit our goal of approximately $3.1 billion of capital investment in 2024. The pie charts on the right side of the page speak to timely recovery and the nature of our investments across our footprint. As we share with regulators and legislators, our capital spending is driven by a risk-based strategy, balanced by a focus on affordability.
For us, infrastructure renewal includes the basics of replacing older damaged pipe, but it also includes proactively meeting our standards related to lead service line replacements. As we have said many times before, we firmly believe removing the risk of lead service lines over time is the right thing to do for the health and safety of our customers. Through capital recovery mechanisms and forward test years, we can reduce regulatory lag and lessen the reliance on general rate cases. This not only helps us to seek to earn our allowed return, but also to mitigate the size of general rate increases for our customers. We expect at least 75% of capital investments over the next five years to be recoverable through infrastructure mechanisms and through the use of forward test years, which is the key to driving modest bill increases and to unlocking a more consistent annual earnings growth pattern for the long term.
With that, I'll hand it over to John to cover our financial results and plans in further detail. John?
