SAN DIMAS, Calif.--(BUSINESS WIRE)--Jul. 16, 2012--
American States Water Company (NYSE:AWR) announced today that the
California Public Utilities Commission ("CPUC") has approved the Cost of
Capital application filed by its wholly-owned subsidiary Golden State
Water Company ("GSWC") for its authorized cost of capital for 2012
through 2014.
This decision approves and authorizes GSWC a Return on Equity ("ROE") of
9.99% and a rate-making capital structure of 55% equity and 45% debt.
The weighted cost of capital (rate of return on ratebase) of 8.64%
includes the most recent embedded debt cost. This rate of return
authorized by the CPUC will be implemented into water rates on a
company-wide basis retroactive to January 1, 2012.
Robert J. Sprowls, President and CEO of AWR and GSWC said "We are
pleased with the CPUC’s approval of our cost of capital filing and
believe this is a fair resolution for our shareholders and customers.
The revised cost of capital includes achieved lower debt costs which
will be reflected in customers’ rates, and the combination of a higher
equity ratio in GSWC's capital structure and a slightly lower allowed
return on equity provides an opportunity for GSWC to earn an adequate
return.”
Sprowls added, “GSWC has invested approximately $225 million in its
distribution infrastructure over the past three years and plans to
continue making significant investments in the future. We are pleased
that the CPUC recognizes that California's investor-owned water
utilities require a fair return in order to finance these investments."
Among other things, this decision maintains the automatic adjustment
mechanism called the Water Cost of Capital Mechanism, previously adopted
by the CPUC, to adjust the ROE and rate of return on ratebase between
cost of capital proceedings. Rates to customers will be adjusted only if
there is a positive or negative change of more than 100 basis points in
the average of the Moody's Aa utility bond rate as measured over the
period October 1 through September 30. If the average interest rate
changes by over 100 basis points from the benchmark, the ROE will be
adjusted by one half of the difference.
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.
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 1 out of every 36 Californians located within 75
communities throughout 10 counties in Northern, Coastal and Southern
California (approximately 256,000 customers). The Company also
distributes electricity to over 23,000 customers in the Big Bear
recreational area of 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.
American States Water Company has paid dividends to shareholders every
year since 1931, increasing the dividends received by shareholders each
calendar year since 1954.
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