American States Water Company Announces Final Decisions by the CPUC in Its Water Utility General Rate Case and Cost of Capital Proceedings
06 Juli 2023 - 3:00PM
Business Wire
American States Water Company (NYSE:AWR) announced that on June
29, 2023, the California Public Utilities Commission (“CPUC”)
adopted final decisions in connection with the general rate case
and cost of capital proceedings at AWR’s regulated water utility
subsidiary, Golden State Water Company (“GSWC”).
The final decision in GSWC’s general rate case proceeding will
set new water rates for the years 2022 – 2024. The assigned
administrative law judge at the CPUC had issued a proposed decision
on April 13, 2023 that (i) adopted the full settlement agreement
between GSWC and the Public Advocates Office at the CPUC with new
rates retroactive to January 1, 2022, (ii) approved GSWC’s request
for balancing accounts for medical and general liability insurance,
(iii) denied GSWC’s request to consolidate two of its customer
service areas, and (iv) allowed for additional increases in adopted
revenues for 2023 and 2024 subject to an earnings test and
inflationary index values at the time of filing for implementation
of the new rates. The final decision issued on June 29, 2023 is
consistent in all material respects with the proposed decision
issued in April, except it included a change to substitute the
adoption of balancing accounts for medical and general liability
insurance with memorandum accounts. As a result of receiving the
final decision, on June 30, 2023 GSWC filed for the implementation
of new 2023 rate increases using inflationary index values as of
May 31, 2023. The new rates for 2023 are expected to go into effect
on July 31. Within 90 days after 2023 rates have been implemented,
GSWC will also file for recovery of retroactive amounts accumulated
through July 31 related to the new 2022 and 2023 rates.
Also on June 29, the CPUC unanimously adopted the proposed
decision issued on May 9, 2023 in the cost of capital proceeding.
The final decision adopts for GSWC an 8.85% return on equity, a
5.10% cost of debt and a capital structure of 57% equity and 43%
debt, resulting in a 7.24% authorized return on rate base for the
calendar year 2022. Based on the final decision, all adjustments to
rates are interpreted to be prospective and not retroactive. The
decision also continues the Water Cost of Capital Mechanism
(“WCCM”) for the years 2023 and 2024. On June 30, 2023, GSWC filed
an advice letter to trigger the WCCM for 2023, which will increase
the 8.85% adopted return on equity in the decision to 9.36% for the
remainder of 2023 and 2024.
We are in the process of reviewing all of the impacts resulting
from the two final decisions. This will include reassessing the
accounting estimates recorded through March 31, 2023 from both
decisions, including management’s estimates of the cost of capital
proceeding that resulted in the recording of lower revenues
beginning in 2022 that were estimated to be refunded to customers
to reflect the lower cost of debt in this proceeding (from 6.6% to
5.1%). Any true-up adjustments resulting from changes in estimates
and circumstances will be recorded in the 2023 second quarter
results that will be reported in our second quarter earnings
release and Form 10-Q that will be filed with the Securities and
Exchange Commission.
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, Bear Valley Electric Service, Inc. and American
States Utility Services, Inc., serving over one million people in
nine states. Through its water utility subsidiary, Golden State
Water Company, the company provides water service to approximately
263,400 customer connections located within more than 80
communities in Northern, Coastal and Southern California. Through
its electric utility subsidiary, Bear Valley Electric Service,
Inc., the company distributes electricity to approximately 24,700
customer connections in the City of Big Bear Lake 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, wastewater collection,
and treatment facilities located on eleven 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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Eva G. Tang Senior Vice President - Finance, Chief Financial
Officer, Corporate Secretary and Treasurer (909) 394-3600,
extension 707
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