Walter J. Lynch
President and Chief Executive Officer at American Water Works
Thanks, Ed. Good morning, everyone, and thanks for joining us. Once again, the employees of American Water delivered solid results as we continue to execute on our low-risk profile and predictable growth story.
Let's move to Slide five to cover the highlights of our second quarter and six-month results. Our second quarter 2021 earnings per share increased 17.5% compared to the second quarter of 2020. Included in the results is a $0.03 per share benefit from weather primarily in the Northeast, where we saw a moderate impact from warmer and drier-than-normal conditions. In the first six months of 2021, we invested $782 million with the majority dedicated to needed infrastructure improvements to better serve our customers. We continue to work hard to minimize the bill impacts of these investments by focusing on capital and operating efficiencies, constructive regulatory outcomes and by leveraging the size and scale of our business.
As a reminder, we previously announced an O&M efficiency target of 30.4% by 2025. We also continue our disciplined approach to regulated acquisitions. We've added approximately 11,200 customer connections to date through closed acquisitions and organic growth and look forward to welcoming an additional 86,900 customer connections through pending acquisitions. I'll provide more detail on growth in a moment.
Moving to Slide six. The foundation of our earnings growth continues to be the capital investment we make in our regulated operations. We plan to spend $1.9 billion in 2021 and about $10.4 billion over the next five years. The continued investment is critical to improving and maintaining distribution and treatment infrastructure, including improving water quality, fixing leaks and providing water for fire hydrants. These efforts help our communities remain strong and attractive to residents and businesses. With a strong first half of 2021 and continued execution of our strategies, we're affirming today our 2021 earnings guidance range of $4.18 to $4.28 per share. We're also affirming our long-term EPS compound annual growth rate range of 7% to 10%.
Turning to Slide seven. Let's go through some of the regulatory and legislative highlights of the second quarter 2021. On June 28, the Iowa Utilities Board issued an order approving an increase in annual base revenue of $1 million for Iowa American Water. The company's investment of almost $87 million in water system improvements was the primary driver behind the rate adjustment request. We also have pending cases in West Virginia and California. We cover California American Water's general rate case as well as the cost of capital application on the last call and both cases are progressing as expected. Let me spend a few minutes on California's drought emergency. As you've likely heard, Governor Newsom expanded the state's drought emergency declaration in 50 out of 58 counties.
Currently, our water supplies in California are in good shape, but we're activating mandatory conservation measures for our customers in Sonoma County. We're also conducting extensive outreach to our highest water users and encouraging our customers to voluntarily reduce their water use across our entire service area. The drought once again highlights the need for the Monterey Peninsula Water Supply Project. As we previously discussed, California American Water refiled its application to the Coastal Commission on November 6, 2020.
On December 3, 2020, the Coastal Commission sent a notice requesting additional information. California American Water provided the requested responses in March 2021. The Coastal Commission then requested additional information on June 18. Our California team is working on this additional request. Once we provide that information and staff deems the application complete, by statute, the Coastal Commission would have 180 days to process it.
Additionally, on July 29, The New Jersey Board of Public Utilities issued a final order denying approval of acquisition adjustments and rates associated with the purchase of Shorelands and Haddonfield in 2017 and 2015, respectively. The order is not the outcome we've been working towards, and we continue to evaluate next steps. However, we had a counter for this possibility and the decision will not have an impact on our financial results.
Moving to state legislation. We continue to engage with states as they take action to help address water and wastewater challenges. In New Jersey, legislation that strengthens the state's Water Quality Accountability Act has passed both houses unanimously and is awaiting the governor signature. The enhancements include additional enforcement requirements for reporting data, stronger cybersecurity requirements and asset management plans and requirements for the sale of systems with prolonged violations.
New Jersey was the first state to pass the Water Quality Accountability Act, and we're pleased to see the act strengthen on behalf of all water customers in New Jersey. Also in New Jersey, the Governor signed a lead service line replacement bill that includes O&M expenses and interest accrued on customer-owned lines as recoverable items. As you know, American Water is long advocated for full service line replacement versus a partial replacement to address lead issues.
In Missouri, the governor signed the Water and Sewer Infrastructure Act, which will become effective on August 28, 2021. This act establishes a new statewide infrastructure system replacement surcharge program that broadens the list of eligible projects. It also increases the cap from 10% to 15% of Missouri American Water's revenue requirement for these eligible projects. Additionally, customer-owned lead service line replacements are excluded from the cap.
Finally, as we mentioned last call, at a national level, we remain supportive of investments in water and wastewater infrastructure. The proposed bipartisan package supported by the administration includes $55 billion for water infrastructure. We believe the proposed additions to state revolving funds for drinking water and the possible expansion of a water LIHEAP type program for all water customers would help improve our nation's water infrastructure.
Moving to Slide eight. Customers remain at the center of every decision we make. This means smart investments balanced by efficient operations and capital deployment. For the 12-month period ending June 30, 2021, our O&M efficiency ratio was 33.9% compared to 34.3% for the 12-month period ended June 30, 2020.
As we note each quarter, our adjusted O&M expenses are just slightly higher today than they were in 2010. During that period, we've added approximately 333,000 customer connections while expenses only increased at a compound annual growth rate of just over 1%. On the subject of cost, inflationary pressures and scarcities of some supplies in certain sectors of the U.S. economy, let me remind you that our company does have the advantage of volumetric purchases and economies of scale.
By leveraging our national size and scale and working closely with our suppliers in the water sector, we've been able to shield ourselves for the most part from these effects. At this time, we've not experienced and do not anticipate any material negative impacts on our supply chain. Before we move to growth, let me provide a quick update on the sale of New York American Water. Both American Water and Liberty remain committed to closing the sale and continue to work through the regulatory process.
As noted by 8-K filing on June 29, both parties agreed to extend the closing end date in accordance with the terms of the stock purchase agreement. We remain confident that the sale will be completed. Assuming progress continues as expected, we believe that the net impact from New York in 2021 results won't materially impact our 2021 guidance range. Further, we don't anticipate any impact on the expected timing of our previously discussed future equity needs.
Moving to Slide nine. We've announced multiple acquisitions in the first half of 2021, including our largest acquisition in York, Pennsylvania, which will add an equivalent customer connection total of more than 45,000. We continue to make progress on that acquisition, most recently filing an application with the Public Utility Commission on July 1. As I mentioned earlier, so far in 2021, we've closed on eight acquisitions in four different states, adding approximately 3,000 new customer connections. We've also added approximately 8,200 customer connections to organic growth in the first six months.
We look forward to adding another 86,900 customer connections through 37 currently signed agreements in eight states. These new agreements reflect our commitment to provide water and wastewater solutions in communities where we can leverage our scale and expertise. We know that many communities are facing unprecedented challenges, and we're well positioned to provide them solutions. Our growth is also a direct result of our commitment to customer service.
I want to congratulate both our New Jersey and Illinois subsidiaries for earning J.D. Power awards for ranking highest in customer satisfaction among large utilities, large water utilities in the Northeast and Midwest. This is the second year in a row that our Illinois subsidiary, ranked highest. We're proud of our teams and the way they put our customers first every day.
With that, I'll turn it over to Susan.
