American States Water Company Announces Final Decision by the CPUC in Its Electric Utility General Rate Case Proceeding

Rhea-AI Summary

American States Water Company (NYSE:AWR) received a final decision from the California Public Utilities Commission (CPUC) on January 16, 2025, regarding the general rate case for its subsidiary Bear Valley Electric Service (BVES). The decision, consistent with the proposed decision from December 12, 2024, adopts a full settlement agreement setting new electric rates for 2023-2026.

The new rates will be implemented effective March 1, 2025, with retroactive adjustments dating back to January 1, 2023. BVES will file for recovery of retroactive amounts through February 28, 2025, and seek recovery of incremental operating costs related to wildfire mitigation plans within 90 days of the decision's effective date. The financial impact will be detailed in AWR's Q4 2024 earnings release and 2024 Form 10-K.

Positive

• Approval of new rates for 2023-2026 period
• Successful settlement agreement with CPUC and other parties
• Authorization to recover retroactive amounts from January 2023
• Approval to recover wildfire mitigation plan costs

Negative

• Implementation delay of new rates until March 2025
• Accumulated retroactive amounts pending recovery

Insights

Utility Rate Specialist

The CPUC's final decision on BVES's general rate case represents a major regulatory milestone that will significantly impact AWR's revenue stream. The approval of new electric rates for 2023-2026, with retroactive implementation to January 2023, provides important revenue visibility and stability. The decision's alignment with the December proposed ruling, which incorporated a full settlement agreement, indicates a favorable outcome for all stakeholders.

The March 1, 2025 implementation timeline, coupled with the 90-day window for retroactive recovery, suggests a substantial one-time revenue boost in early 2025. Of particular importance is the provision for recovering costs related to wildfire mitigation plans, which addresses a critical operational concern in California's utility sector. This comprehensive rate case resolution strengthens AWR's financial position and regulatory certainty through 2026.

Financial Analyst

This regulatory approval carries substantial financial implications for AWR. The retroactive rate implementation will likely result in a significant non-recurring revenue recognition in Q1 2025, encompassing both the backdate to January 2023 and wildfire mitigation cost recovery. For investors, this presents a potential earnings catalyst that could positively impact AWR's stock performance.

The settlement's approval without material changes from the December proposal reduces regulatory uncertainty and provides a clear framework for revenue growth through 2026. The ability to recover wildfire mitigation costs is particularly valuable given the increasing importance of such investments in California's utility sector. This decision strengthens AWR's investment thesis as a stable utility stock with predictable revenue streams and regulatory support for necessary infrastructure investments.

SAN DIMAS, Calif.--(BUSINESS WIRE)-- American States Water Company (NYSE:AWR) announced that on January 16, 2025, the California Public Utilities Commission (“CPUC”) adopted a final decision in connection with the general rate case at AWR’s regulated electric utility subsidiary, Bear Valley Electric Service, Inc. (“BVES”).

The final decision in BVES’s general rate case proceeding will set new electric rates for the years 2023 – 2026. The assigned administrative law judge at the CPUC had issued a proposed decision on December 12, 2024 that adopted a full settlement agreement between BVES, the Public Advocates Office at the CPUC and the other intervenor in the proceeding with new rates retroactive to January 1, 2023. The final decision is consistent in all material respects with the proposed decision issued in December. As a result of receiving the final decision, BVES will file for the implementation of new 2023 through 2025 rate increases. The new rates are expected to go into effect on March 1, 2025. Within 90 days from the effective date of the final decision, BVES will also file for recovery of retroactive amounts accumulated through February 28, 2025 related to the new rates, as well as recovery of incremental operating costs already incurred in connection with BVES’s wildfire mitigation plans that were being tracked in memorandum accounts.

We are in the process of reviewing the financial impact from the final decision that will be reported in our 2024 fourth quarter earnings release and included in the 2024 Form 10-K that will be filed with the Securities and Exchange Commission.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can often be identified by words such as “anticipate,” “estimate,” “expect,” “intend,” “may,” “should” and similar phrases and expressions, and variations or negatives of these words. They are not guarantees or assurances of any outcomes, financial results, levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors, including those described in greater detail in the Company’s filings with the SEC, particularly those described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Readers are encouraged to review the Company’s filings with the SEC for a more complete discussion of risks and other factors that could affect any forward-looking statements. The statements made herein speak only as of the date of this press release and except as required by law, the Company does not undertake any obligation to publicly update or revise any forward-looking statement.

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 ten states. Through its water utility subsidiary, Golden State Water Company, the company provides water service to approximately 264,600 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 24,800 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 twelve military bases throughout the country under 50-year privatization contracts with the U.S. government and one military base under a 15-year contract.

AWR has paid common dividends every year since 1931, and has increased the dividends received by shareholders each calendar year for 70 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. The company has grown its quarterly dividend rate at a compound annual growth rate (“CAGR”) of 8.8% over the last five years through 2024 and achieved a 10-year CAGR of 8.0% in its calendar year dividend payments through 2024. AWR's current policy is to achieve a CAGR in the dividend of more than 7% over the long-term.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250117350627/en/

Eva G. Tang

Senior Vice President-Finance, Chief Financial Officer,

Corporate Secretary and Treasurer

Telephone: (909) 394-3600, ext. 707

Source: American States Water Company

FAQ

When will AWR's new electric rates go into effect under the CPUC decision?

The new electric rates for Bear Valley Electric Service will go into effect on March 1, 2025.

What period does AWR's new rate case decision cover?

The rate case decision covers the years 2023 through 2026.

How will AWR handle the retroactive rate adjustments from 2023?

BVES will file for recovery of retroactive amounts accumulated through February 28, 2025, within 90 days of the final decision's effective date.

What additional costs can AWR recover under the CPUC decision?

AWR can recover incremental operating costs already incurred in connection with BVES's wildfire mitigation plans that were being tracked in memorandum accounts.

When will AWR report the financial impact of the CPUC decision?

The financial impact will be reported in AWR's 2024 fourth quarter earnings release and included in the 2024 Form 10-K.