SAN DIMAS, Calif.--(BUSINESS WIRE)--Jun. 3, 2019--
American States Water Company (NYSE:AWR) announced that on May 30, 2019,
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
2017 for all of its water regions and the general office to determine
new rates for the years 2019 – 2021. The new rates approved by the CPUC
are retroactive to January 1, 2019. Among other things, the final
decision approves a settlement agreement in its entirety that had been
entered into in August 2018 between GSWC and the CPUC’s Public Advocates
Office. As a result, the final decision authorizes GSWC to invest
approximately $334.5 million over the rate cycle in order to continue to
provide safe and reliable water utility service to its customers. The
$334.5 million of infrastructure investment includes $20.4 million of
capital projects to be filed for revenue recovery through advice letters
when those projects are completed. In April 2019, the assigned
Administrative Law Judge had issued a proposed decision approving the
settlement agreement with the exception of these advice letter projects.
However, in the final decision, the CPUC adopted a revised proposed
decision which was modified to approve the initial settlement as filed,
including all of the advice letter capital projects agreed to by GSWC
and the Public Advocates Office.
Excluding the advice letter project revenues, the new rates approved
will increase the water gross margin for 2019 by approximately $7.1
million, adjusted for updated inflation index values since the August
2018 settlement, as compared to the 2018 adopted water gross margin. The
2019 water revenue requirement has been reduced to reflect a decrease of
approximately $7.0 million in depreciation expense, compared to the
adopted 2018 depreciation expense, due to a reduction in the overall
composite depreciation rates based on a revised study filed in the
general rate case. The decrease in depreciation expense lowers the water
gross margin, and is offset by a corresponding decrease in depreciation
expense, resulting in no impact to net earnings. In addition, the 2019
water revenue requirement includes a decrease of approximately $2.2
million for excess deferred tax refunds as a result of the 2017 Tax Cuts
and Jobs Act, which has a corresponding decrease in income tax expense
and also results in no impact to net earnings. Had depreciation expense
remained the same as the 2018 adopted amount and there were no excess
deferred tax refunds that lowered the 2019 revenue requirement, the
water gross margin for 2019 would have increased by approximately $16.3
million.
Due to the delay in receiving a final decision by the CPUC, billed water
revenues to date have been based on 2018 adopted rates. Had new rates
been in place as of January 1, 2019, pretax income for the water segment
would have been higher by approximately $4.0 million, or $0.08 per
share, for the first quarter of 2019. Because the new rates are
retroactive to January 1, 2019, this cumulative impact will be recorded
during the second quarter of 2019. In addition, the final decision
approves the recovery of previously incurred costs that were being
tracked in CPUC-authorized memorandum accounts, which will result in a
reduction to operating expenses of approximately $1.0 million, or $0.02
per share, also to be recorded during the second quarter.
Excluding the advice letter project revenues, the final decision allows
for potential additional water revenue increases in 2020 and 2021 of
approximately $9.6 million and $12.0 million, respectively, subject to
the results of an earnings test and changes to the forecasted
inflationary index values.
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
American States Water Company is the parent of Golden State Water
Company and American States Utility Services, Inc., serving over one
million people in nine states. Through its utility subsidiary, Golden
State Water Company, the company provides water service to approximately
260,000 customer connections located within more than 80 communities in
Northern, Coastal and Southern California. The company also distributes
electricity to approximately 24,000 customer connections 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 distribution and wastewater
collection and treatment facilities located on military bases throughout
the country under 50-year privatization contracts with the U.S.
government.
American States Water Company has paid dividends to shareholders every
year since 1931, increasing the dividends received by shareholders each
calendar year since 1954.
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Source: American States Water Company
Eva G. Tang
Senior Vice President-Finance, Chief Financial Officer,
Corporate
Secretary and Treasurer
Telephone: (909) 394-3600, ext. 707