SAN DIMAS, Calif.--(BUSINESS WIRE)--Dec. 20, 2016--
American States Water Company (NYSE:AWR) announced that on December 15,
2016, the California Public Utilities Commission (“CPUC”) approved the
water general rate case for AWR’s wholly owned subsidiary, Golden State
Water Company (“GSWC”). GSWC had filed a general rate case application
in July 2014 for all of its water regions and the general office to
determine new rates for the years 2016 – 2018. The new rates approved by
the CPUC are retroactive to January 1, 2016. Among other things, the
final decision authorizes GSWC to invest approximately $250 million in
capital infrastructure for years 2015 through 2017 in order to continue
to provide safe and reliable water to its customers. Adopted revenues
for 2016 associated with capital infrastructure are based on
CPUC-approved projected capital expenditures for 2015 and 2016.
Due to the delay in the water rate case, water revenues as reported for
the nine months ended September 30, 2016 had been adjusted based on
settlements reached with the CPUC’s Office of Ratepayer Advocates
(“ORA”) to reflect reductions in (i) supply costs caused by lower
consumption, (ii) depreciation expense resulting from an updated
depreciation study, and (iii) other operating expenses. The primary
litigated issues in the rate case related to GSWC’s capital expenditure
requests and compensation for managerial level employees. Due to the
unpredictability of the final decision outcome, the water revenues
reported for the nine months ended September 30, 2016 in the company’s
Form 10-Q filed with the Securities and Exchange Commission on November
2, 2016, reflected the assumption that the CPUC would adopt GSWC’s
position in its entirety on these two litigated issues. The final
decision issued by the CPUC on December 15, 2016, among other things,
(i) authorized 87% of GSWC’s capital requests in customer rates, (ii)
allowed only a portion of the executive incentive programs, (iii)
approved recovery for certain expenses incurred in prior years, and (iv)
adopted consumption levels which reflect state-mandated conservation
targets that were imposed by the governor of California during the
processing of the application. In addition, in accordance with the
settlement between GSWC and ORA, the decision used updated inflation
index values to calculate operating expense increases for 2015 and 2016.
These recent inflation indices are much lower than the inflation indices
used in July 2014 when the water rate case application was filed.
As a result of all the factors discussed above, diluted earnings at
AWR’s water utility segment for the nine months ended September 30, 2016
would have been lower by approximately $0.07 per share from our reported
results. Because the new rates are retroactive to January 1, 2016, this
cumulative impact will be recorded during the fourth quarter of 2016.
Rate increases for 2017 and 2018 will be subject to an earnings test and
fluctuations in market indices.
Also during the fourth quarter of 2016, AWR’s contracted services
segment, American States Utility Services, Inc. (“ASUS”), received a
notice regarding one of its contracts that the U.S. government has
concurred with ASUS’s final submission of a price redetermination
filing. This notice, the impact of which will be reflected in a contract
modification to be issued, will result in the recognition in the fourth
quarter of 2016 of approximately $0.03 per share in retroactive
operating revenues for periods through September 30, 2016.
Although the net earnings impact from these two retroactive adjustments
was a negative $0.04 per share, management does not expect reported
earnings per share for the consolidated company to be substantially
different from the analysts’ consensus estimate of $1.62
for 2016 (source: Thomson Reuters).
Forward Looking Statements
Certain matters discussed in this news release with regard to the
Company’s expectations may be forward-looking statements that involve
risks and uncertainties. The assumptions and risk factors that could
cause actual results to differ materially, include those described in
the Company’s Form 10-Q and Form 10-K filed with the Securities and
Exchange Commission.
About American States Water Company
American States Water Company is the parent of Golden State Water
Company and American States Utility Services, Inc. Through its utility
subsidiary, Golden State Water Company, AWR provides water service to
approximately 261,000 customers located throughout 10 counties in
Northern, Coastal and Southern California. The Company also distributes
electricity to approximately 24,000 customers in the City of Big Bear
and surrounding areas in San Bernardino County, California. Through its
contracted services subsidiary, American States Utility Services, Inc.,
the Company provides operations, maintenance and construction management
services for water and wastewater systems located on military bases
throughout the country under 50-year privatization contracts with the
U.S. government.
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Source: American States Water Company
American States Water Company
Eva G. Tang
Senior Vice
President-Finance, Chief Financial Officer,
Corporate Secretary and
Treasurer
Telephone: (909) 394-3600, ext. 707