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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]

o

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Report of Independent Registered Public Accounting Firm

4

Financial Statements

Statements of Net Assets Available for Plan Benefits as of December 31, 2006 and 2005

5

Statement of Changes in Net Assets Available for Plan Benefits for the Year Ended December 31, 2006

6

Notes to Financial Statements

7-17

Supplemental Schedule

Schedule I: Form 5500 — Schedule H — Line 4i — Schedule of Assets (Held at End of Year) as of December 31, 2006

18

Signatures

19

Exhibit 23.1 - Consent of Independent Registered Public Accounting Firm

December 31,

2006

2005

Assets

Investments, at fair value

$

57,973,338

$

47,591,705

Contributions receivable

28,026

136,514

Net assets available for plan benefits, at fair value

$

58,001,364

$

47,728,219

Adjustment from fair value to contract value for interest in collective trust fund relating to fully benefit-responsive investment contracts

72,554

54,395

Net assets available for plan benefits

$

58,073,918

$

47,782,614

Year ended December 31,

2006

Additions:

Contributions:

Employee

$

2,974,607

Employer

1,242,049

Total contributions

4,216,656

Investment income:

Net appreciation in value of investments

6,865,213

Interest and dividends

2,469,747

Total investment income

9,334,960

Total additions

13,551,616

Deductions:

Benefits paid to participants

3,229,029

Loans in default

23,116

Administrative and other expenses

8,167

Total deductions

3,260,312

Net increase

10,291,304

Net assets available for plan benefits

Beginning of year

47,782,614

End of year

$

58,073,918

1.

Plan Description

The following description of the Golden State Water Company Investment Incentive Program (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.  The Plan was formerly known as the Southern California Water Company Investment Incentive Program.  Effective June 1, 2006, the Plan was renamed the Golden State Water Company Investment Incentive Plan.

General

The Plan is a defined contribution plan established by Golden State Water Company (the “Company”) under the provisions of Section 401(a) of the Internal Revenue Code (the “IRC”) which includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC, for the benefit of eligible employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERlSA”).

Prior to inception of the Plan, the Company maintained the Payroll-Based Tax Credit Employee Stock Ownership Plan (the “PAYSOP”) for the benefit of participating employees and their beneficiaries. Under the PAYSOP, the Company contributed amounts equal to a tax credit claimed by the Company on its federal income tax return. This credit was calculated as a percentage of qualifying payroll. The Tax Reform Act of 1986 eliminated this credit for tax years after 1986. As a result, the Company terminated the PAYSOP and transferred the net assets into the Plan effective January 1, 1988. The trustee of the Plan maintains a separate account for the net assets which were transferred from the PAYSOP. The net assets relating to the PAYSOP amounted to $3,134,383 and $2,708,192 as of December 31, 2006 and 2005, respectively. Such net assets are considered non-participant directed investments and the full net assets balance is invested in the American States Water Company Stock Fund (See Note 6).

1.

Plan Description
(Continued)

In 1998, the Company formed a holding company, American States Water Company (“ASWC”). ASWC has no material assets other than the common stock of the Company. At the time of the formation, the Plan’s investments in the Company’s common stock changed to an investment in the ASWC common stock. Such change did not have a significant impact on the financial statements.

Effective January 1, 2002, the Plan was amended to adopt the changes allowed under the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). Effective January 1, 2003, the Plan was also amended to allow participants to redirect the investment of employer matching contributions which are initially required to be invested in the Company’s stock fund, and transfer it to other funds. Furthermore, effective March 28, 2005, the Plan was amended to comply with the new distribution limitations in Section 401(a)(31)(B) of the Internal Revenue Code in that mandatory lump sum distributions will be made at termination, only for account balances under $1,000.

Plan Administration

The Plan is administered by the Investment Incentive Program Administrative Committee (the “Plan Administrator”), which is appointed by the Company’s Board of Directors. Wells Fargo Bank (“Trustee”) provides the record keeping services and serves as the Plan’s appointed trustee.

Eligibility

Any employee who has completed a period of service of 30 consecutive days is eligible to participate in the Plan. Participation begins on the first day of the payroll period coincident with or next following the attainment of 30 consecutive days of service.

1.

Plan Description
(Continued)

Contributions

Subject to statutory limits, eligible employees can contribute an amount between 1% and 20% of compensation, as defined in the Plan document. In 2006, the maximum allowable pre-tax deferral increased to $15,000, with additional “catch-up” deferrals of up to $5,000. In addition, the Company provides matching contributions of 100 percent of the first three percent and 50 percent of the next three percent contributed by a participant. Under the terms of the Plan, employer matching contributions are invested in the ASWC Common Stock Fund, formerly the Company’s Common Stock Fund. Total contributions, including receivable, from the employer in cash and company stock amounted to $30,200 and $1,211,849, respectively, for the year ended December 31, 2006 (See Note 3).

Once employer matching contributions have been allocated to a participant’s account, the participant may redirect the investment of such matching contributions into any of the investment funds, subject to compliance with applicable laws and any Company insider trading policies.

The ASWC Common Stock Fund shall be deemed an ‘employee stock ownership plan’ within the meaning of Section 4975(e)(7) of the Code and ERISA Section 407(d)(6) that is intended to invest primarily in Company Stock. All cash dividends on Company Stock allocated to participants’ accounts invested in the Company Stock Fund shall be reinvested in Company Stock, except for dividends allocated to any participant who elects that such dividends shall be distributed to the participant in cash. Such election shall be made in a manner prescribed by the Committee.  Effective January 1, 2007, the allocations of Company match contributions was changed so that the investment of the Company contributions follow the choices made by the participant for investment of their own contributions.

Vesting

Participants are fully vested in their contributions and the employer contributions made to their account, plus actual earnings thereon.

1.

Plan Description
(Continued)

Distribution of Benefits

Participants’ benefits under the Plan become distributable upon termination of service, as defined in the Plan document. Participants electing to have their distribution deferred will receive benefits equal to the amounts credited to their account as of the end of the next calendar quarter. The value of benefits distributable to a participant not electing deferral is based upon amounts credited to the participants account under the Plan as of the end of the preceding calendar quarter, except as described below.

A participant shall be entitled to request an in-service withdrawal of the lesser of the balance of his account or the total unwithdrawn deferral contributions after the participant has attained age 59-1/2. Such a distribution shall be permitted only once every two years while the participant remains an employee of the Company. In addition, subject to the approval of the Plan Administrator, withdrawals from a participant’s account may be permitted before age 59-1/2 to meet a financial hardship, as defined in the Plan document.

A participant who has attained age 55 and completed at least ten years of participation in the Plan (including any years of participation in the PAYSOP) may elect a distribution of a portion of his PAYSOP account attributable to shares of Company Stock after December 31, 1986, as provided in Section 401(a)(28)(B) of the IRC.

1.

Plan Description
(Continued)

Participant Accounts

Each participant’s account is credited or debited with the participant’s contributions and related employer matching contributions, as well as the participant’s share of the Plan’s earnings or losses. Certain administrative expenses (i.e. loan processing fee) directly relating to a participant’s account are specifically deducted from the specific participant’s account. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account balance.

Participant Loans

Participants may borrow from their account a minimum of $1,000 up to a maximum amount equal to the lesser of $50,000 or 50 percent of his or her account balance. Loan transactions are treated as a transfer between the investment fund and the Participant Loan Fund. Principal and interest are repayable ratably through payroll deductions over 36 months for loans less than $5,000 and within 59 months for all other loans. The loans bear interest at the Prime Rate plus one percent. The interest rates as of December 31, 2006 range from 5% to 10.50%. A loan is considered to be in default at the end of the quarter in which any scheduled payment is more than thirty days late. Under the current terms and conditions of the Plan, there are no special provisions for loans made to purchase a principal residence.

Management determines the collectibility of participant loans on a periodic basis. This determination is made based on the terms of the Plan document and the related Plan policies and procedures. Those participant loans that are deemed to be uncollectible are written-off and included as loans in default in the financial statements and the Form 5500 for financial reporting purposes in the year the determination is made. As of December 31, 2006, there is a total of $49,801 in participant loans deemed to be uncollectible of which $23,116 were deemed uncollectible in 2006.

2.

Summary of Significant
Accounting Policies

Basis of Accounting

The accompanying financial statements are prepared on the accrual basis of accounting.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Plan’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could materially differ from those estimates.

Risks and Uncertainties

The Plan’s investment in the ASWC Stock Fund amounted to $29,835,807 and $25,093,846 as of December 31, 2006 and 2005, respectively. Such investments represented approximately 51% and 53% of the Plan’s total assets as of December 31, 2006 and 2005, respectively. For risks and uncertainties regarding ASWC, participants should refer to the December 31, 2006 Form 10-K and the March 31, 2007 Form 10-Q of ASWC filed with the Securities and Exchange Commission.

The Plan provides for various investment options in mutual funds, common and collective trust investment funds offered by the Trustee, and ASWC Stock Fund. Such investment options are exposed to various risks such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the various risk factors in the near term could materially affect the amounts reported in the financial statements.

The Plan invests in common and collective trust investment funds that hold securities of foreign companies, which involve special risks and considerations not typically associated with investing in U.S. companies. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies.

2.

Summary of Significant
Accounting Policies
(Continued)

Investment Valuation and Income Recognition

Investments are stated at fair value. Investments in registered investment companies are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year end. The Wells Fargo Stable Return Fund (N), a fully benefit-responsive investment contract, is stated at fair value and then adjusted to contract value (See Adoption of New Accounting Pronouncement below). Fair value of the contract is calculated by discounting the related cash flows based on current yields of similar instruments with comparable durations. The unit price of the American States Water Company Stock Fund and the common and collective trusts investment funds is based on the current market value and fair values of underlying assets of the fund as determined by the trustee. Participant loans are valued at cost, which approximates fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Net Appreciation (Depreciation) in Fair Value of Investments

Net appreciation (depreciation) in fair value of investments is based on the fair value of the assets at the beginning of the year or at the time of purchase for assets purchased during the year and the related fair values on the day investments are sold with respect to realized gains and losses, and on the last day of the year with respect to unrealized gains and losses. Net realized and unrealized appreciation (depreciation) is recorded in the accompanying Statement of Changes in Net Assets Available for Plan Benefits as net appreciation (depreciation) in fair value of investments.

Payment of Benefits

Benefits are recorded when paid.

Administrative Expenses

Administrative fees for accountants, legal counsel and other specialists and any other costs of administering the Plan, unless paid directly by the Company, will be paid by the Plan and will be charged against participants’ accounts. Certain administrative expenses directly relating to a participant’s account are specifically allocated and deducted from the specific participant’s account. The Company is not obligated to pay the Plan expenses.

2.

Summary of Significant
Accounting Policies
(Continued)

Administrative expenses incurred related to the net assets of the former PAYSOP account that are paid out of the Plan are limited to the lesser of (i) the sum of 10 percent of the first $100,000 and 5 percent of any amount in excess of $100,000 of the income from dividends paid to the Plan with respect to the American States Water Company common stock allocated to the PAYSOP account during the Plan year, or (ii) $100,000. During 2006, administrative expenses borne by the Plan and by the Company were insignificant.

Adoption of New Accounting Pronouncement

The financial statements reflect the retroactive adoption of Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, “Reporting of Fully Benefit-Responsive Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans” (the “FSP”). As described in the FSP, investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for plan benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As required by the FSP, the Statement of Net Assets Available for Plan Benefits presents the fair value of the investment contracts as well as an additional line item showing the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes on Net Assets Available for Benefits is prepared on a contract value basis. The effect of adoption on the 2006 and 2005 financial statements was a reduction in the value of investments of $72,554 and $54,395, respectively. The adoption of the FSP did not impact the amount of total net assets available for benefits at December 31, 2006 and 2005.

3.

Investment Options

Participants may direct their contributions and any related earnings into various investment options. Participants may change their investment elections on a daily basis, in full percentage increments. Participants may direct the investment of employer matching contributions which are required to initially be invested in the Company’s stock fund, and transfer it out to other funds. Participants should refer to the fund information provided by the Trustee for a complete description of the investment options as well as for the detailed composition of each investment fund.

4.

Investments

The following table presents investments that represent 5 percent or more of the Plan’s Net Assets and Participant Loans:

December 31,

2006

2005

Investments at Fair Value as Determined by Quoted Market Price:

Common Stock:

American States Water Company Stock Fund, 514,734 and 541,734 units, respectively

$

29,835,807

*

$

25,093,846

*

Registered Investment Companies:

Wells Fargo Advantage Opportunity Fund, 132,565 and 114,736 units, respectively

5,519,987

5,148,184

PIMCO Total Return Fund, 258,433 and 229,025 units, respectively

2,682,540

2,404,762

Other (less than 5%)

7,926,364

4,936,797

16,128,891

12,489,743

45,964,698

37,583,589

Investments at Estimated Fair Value:

Common and Collective Trusts Investment Funds:

Wells Fargo Stable Return Fund (N), 129,060 and 105,116 units, respectively

5,046,156

**

3,939,949

**

Wells Fargo Advantage Index Fund, 90,013 units

5,017,306

—

Wells Fargo S&P 500 Stock Fund, 89,945 units

—

4,228,476

10,063,462

8,168,425

Participant loans

1,945,178

1,839,691

Total investments at fair value

$

57,973,338

$

47,591,705

Net Change in Value:

2006

Investments at Fair Value as Determined by Quoted Market Price:

American States Water Company Stock Fund

$

6,158,252

Registered Investment Companies

31,344

6,189,596

Investments at Estimated Fair Value, except for Wells Fargo Stable Return Fund (N) which is at Contract Value:

Common and Collective Trusts Investment Funds

675,617

Net appreciation in value of investments

$

6,865,213

5.

Investment Contracts

The Plan has the Wells Fargo Stable Return Fund (N) (the “Fund”) as an investment option. The Fund is a bank collective fund whose only investment is the Wells Fargo Stable Return Fund G, a collective trust fund sponsored by Wells Fargo Bank, N.A. The value of the Fund is based on the underlying unit value reported by Wells Fargo Stable Return Fund G (“Fund G”). Fund G invests in investment contracts issued or sponsored by various insurance companies, commercial banks and investment funds. The Fund establishes a daily Net Asset Value (“NAV”), including an annual investment management fee of 0.40%, which is then applied to unit holders of the Fund to determine the daily value of account balances.

6.

Non-Participant Directed Investments

Information about the net assets and the significant components of the changes in the net assets relating to the non-participant directed portion of the ASWC Stock Fund is as follows:

December 31,

2006

2005

American States Water Company Stock Fund

$

19,388,566

$

16,525,370

Year ended December 31,

2006

Changes in net assets:

Contributions

$

1,242,049

Net appreciation in fair value and dividend income

4,550,686

Benefits paid to participants

(1,262,145

)

Net transfers to other investment funds

(1,664,053

)

Fees

(3,341

)

Total change in net assets

$

2,863,196

7.

Related Party Transactions

The Trustee and the Company are parties-in-interest as defined by ERISA. Certain Plan investments are shares of common and collective trusts investment funds offered by the Trustee, and shares of ASWC Stock Fund. Such transactions qualify as party-in-interest transactions permitted by the Department of Labor regulations. Fees paid to the Trustee for the year ended December 31, 2006 were insignificant.

8.

Tax Status

The Internal Revenue Service issued a favorable determination letter dated January 15, 2003 stating that the Plan and related trust are designed in accordance with applicable IRC requirements as of that date. The determination letter covered amendments through October 9, 2001. The Plan has been amended since receiving the determination letter. The Plan Administrator and the Plan’s tax counsel believe that the Plan is designed and is currently operated in compliance with the applicable provisions of the IRC. Therefore, the Plan Administrator believes that the Plan was qualified and the related trust was tax-exempt as of December 31, 2006 and 2005 and for the year ended December 31, 2006.

9.

Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan document to discontinue its contributions at any time and to amend or terminate the Plan subject to the provisions of ERISA.

10.

Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of investments at fair value per the financial statements at December 31, 2006 and 2005 to the Form 5500:

2006

2005

Investments in common/collective funds at fair value per the financial statements

$

10,063,462

$

8,168,425

Adjustment from fair value to contract value for fully benefit-responsive investment contracts

72,554

54,395

Investments in common/collective funds at contract value per Form 5500

$

10,136,016

$

8,222,820

Identity of issuer, borrower,
lessor, or similar party

Description of investment
including maturity date, rate of
interest, par or maturity value

Cost

Current
Value

Common Stock:

* American States Water Company

American States Water Company (“ASWC”) Stock Fund **:

Wells Fargo Stable Return Fund (N)

$

281,390

$

276,329

American States Water Company Common Stock

15,230,237

29,559,478

15,511,627

29,835,807

Registered Investment Companies:

American Funds

Balanced Fund

**

614,536

**

Wells Fargo

Advantage Opportunity Fund

**

5,519,987

**

PIMCO

Total Return Fund

**

2,682,540

**

Dodge & Co

Stock Fund

**

2,255,591

**

American Funds

Growth Fund of America

**

2,563,472

**

Royce Premier

Financial Intermediary Fund

**

1,167,644

**

Fidelity

Diversified International Fund

**

1,325,121

16,128,891

Common Collective Trusts Investment Funds:

*Wells Fargo Institutional Trust Group

Stable Return Fund (N)

**

5,046,156

*Wells Fargo Institutional Trust Group

Advantage Index Fund

**

5,017,306

10,063,462

* Participant loans

Loans with maturities through 2008, interest rates ranging from 5% to 10.50%

**

1,945,178

Total investments

$

57,973,338

GOLDEN STATE WATER COMPANY

INVESTMENT INCENTIVE PROGRAM

By: /s/ ROBERT J. SPROWLS

Robert J. Sprowls

Member - Investment Incentive Program Administrative Committee

By: /s/ MCCLELLAN HARRIS III

McClellan Harris III

Member - Investment Incentive Program Administrative Committee

By: /s/ JAMES B. GALLAGHER

James B. Gallagher

Member - Investment Incentive Program Administrative Committee

By: /s/ EVA G. TANG

Eva G. Tang

Member - Investment Incentive Program Administrative Committee

By: /s/ BRYAN K. SWITZER

Bryan K. Switzer

Member - Investment Incentive Program Administrative Committee

Dated: July 13, 2007