American States Water Company Announces Favorable Ruling by the California Supreme Court Vacating the CPUC’s Prior Decision to Discontinue Use of a Full Revenue Decoupling Mechanism by Water Utilities
July 10 2024 - 4:30PM
Business Wire
American States Water Company (AWR: NYSE) announced today that
the California Supreme Court (the “Court”) issued a ruling on July
8, 2024 that set aside a previously issued order by the California
Public Utilities Commission (“CPUC”) in August 2020, which had
mandated the discontinuation of an existing full revenue decoupling
mechanism known as the Water Revenue Adjustment Mechanism (“WRAM”)
used by investor owned water utilities since 2008 that, in
conjunction with tiered rates, incentivizes water conservation. In
response to the CPUC’s order, AWR’s regulated water utility, Golden
State Water Company (“GSWC”), three other investor-owned water
utilities and the California Water Association each separately
filed a petition in 2021 with the Court to review the CPUC’s
decision-making processes that resulted in discontinuing the use of
the WRAM. As a result of the Court’s decision, portions of the
CPUC’s August 2020 order, including the accompanying findings and
conclusions that eliminated the water utilities’ abilities to
request the WRAM, are being vacated.
To encourage water conservation, the CPUC in 2008 recommended
that water utilities implement tiered rates, where customers pay
more per unit of water used as they use more water. In exchange for
implementing the tiered rates, the CPUC allowed water utilities,
including GSWC, to “decouple” revenue from the amount of water sold
and authorized the use of the WRAM. Since their implementation in
2008, the tiered rates and the WRAM have promoted conservation
while mitigating fluctuations in GSWC’s earnings due to changes in
water consumption by its customers. In August 2023, GSWC filed a
general rate case application for all its water regions and the
general office that will determine new water rates for the years
2025 – 2027. Among other things, GSWC had requested the
continuation of tiered rates and mechanisms to accommodate fully
decoupled revenues and sales.
“We are very pleased with the Court’s decision and its positive
impact on conservation in California,” stated Robert J. Sprowls,
President and CEO of American States Water Company. “We have seen
the favorable effects on conservation since implementing the tiered
rates and this decoupling mechanism in 2008. Water usage per
customer by GSWC customers was 41.6% lower in 2023 than in 2007,
without compromising the financial stability of GSWC. This
stability allows the company to attract capital for investments in
its infrastructure that enable us to provide safe and reliable
services to our customers, and permits continued growth of our
dividends paid to shareholders.”
Forward-Looking Statements
Certain matters discussed in this press 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 most recent 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
ten states. Through its water utility subsidiary, Golden State
Water Company, the company provides water service to approximately
264,200 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.
American States Water Company has paid dividends to shareholders
every year since 1931, increasing the dividends received by
shareholders each calendar year for 69 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 achieved
an 8.1% compound annual growth rate in its calendar year dividend
payments from 2013 – 2023.
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version on businesswire.com: https://www.businesswire.com/news/home/20240710103189/en/
Eva G. Tang Senior Vice President-Finance, Chief Financial
Officer, Corporate Secretary and Treasurer Telephone: (909)
394-3600, ext. 707
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