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What changed in AMERICAN STATES WATER CO's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AMERICAN STATES WATER CO's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+525 added−459 removedSource: 10-K (2025-02-19) vs 10-K (2024-02-21)

Top changes in AMERICAN STATES WATER CO's 2024 10-K

525 paragraphs added · 459 removed · 364 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

102 edited+31 added−10 removed207 unchanged
Biggest changeWe are also subject to other business risks typical of our business, including: • Cybersecurity incidents and physical security risks of our infrastructure and data could disrupt our operations and critical systems, increase our expenses, result in liabilities to third parties and damage to our reputation; • Failure to attract, train, develop and transition key employees with the necessary skills to replace employees who are retiring or otherwise terminate employment or to fill new positions needed to respond to the increase in public utility and environmental regulations; • Failure to make accurate estimates about financing and accounting matters, and in filing requests for rate increases with the CPUC or requests for price adjustments with the U.S. government or in bids on military base contracts or obtain new task orders from the U.S. government; • Our ability to finance significant capital expenditures required by our businesses, which could be adversely impacted by general economic and market conditions, delays in receiving decisions from the CPUC on our general rate cases or delays in receiving payment from the U.S. government; 12 Table of Contents • Volatility in economic conditions such as changes to inflation, short-term interest rate volatility, and other market conditions may adversely impact our financial performance; • Changes in accounting, public utility, environmental and tax laws and regulations impacting our business; • Our inability to comply with debt covenants in our debt agreements; and • Final determination of our income tax liability by the federal and applicable state governments.
Biggest changeWe are also subject to other business risks typical of our business, including: • Cybersecurity incidents or information and operational technology outages, including incidents and outages caused by third party solutions that support operational and business processes, could disrupt and adversely impact our operations and critical technology systems, resulting in an increase of costs, liabilities to third parties and damage to our reputation; • Physical security risks of our infrastructure, critical assets, and data critical to our business, employees, customers and vendors could also disrupt our operations and critical systems, resulting in reputational damage and adversely impact our financial performance; • Failure to attract, train, develop and transition key employees with the necessary skills to replace employees who are retiring or otherwise terminate employment or to fill new positions needed to respond to the increase in public utility and environmental regulations; 12 Table of Contents • Failure to make accurate estimates about financing and accounting matters, and in filing requests for rate increases with the CPUC or requests for price adjustments with the U.S. government or in bids on military base contracts or obtain new task orders from the U.S. government; • Our ability to finance significant capital expenditures required by our businesses, which could be adversely impacted by general economic and market conditions, delays in receiving decisions from the CPUC on our general rate cases or delays in receiving payment from the U.S. government; • Volatility in economic conditions such as changes to inflation, short-term interest rate volatility, and other market conditions may adversely impact our financial performance; • Changes in accounting, public utility, environmental and tax laws and regulations impacting our business; • Our inability to comply with debt covenants in our debt agreements; and • Final determination of our income tax liability by the federal and applicable state governments.
BVES offers a distributed generation program, which benefits customers who install a solar or wind-generating facility that produces renewable energy. Those customers can receive a bill credit if their monthly renewable energy production exceeds their on-site use. BVES also has a number of customers on its Net Energy Metering Program (NEM), which was the previous renewable energy program.
BVES also offers a distributed generation program, which benefits customers who install a solar or wind-generating facility that produces renewable energy. Those customers can receive a bill credit if their monthly renewable energy production exceeds their on-site use. BVES also has a number of customers on its Net Energy Metering Program (NEM), which was the previous renewable energy program.
Risk Factors You should carefully read the risks described below and other information in this Form 10-K in order to understand certain of the risks of our business. Overview of Risk Factors We have three business segments, water utility, electric utility and contracted services, each of which are subject to different risks as further discussed below.
Risk Factors You should carefully read the risks described below and other information in this Form 10-K in order to understand certain risks of our business. Overview of Risk Factors We have three business segments, water utility, electric utility and contracted services, each of which are subject to different risks as further discussed below.
We may not be fully reimbursed for all of our construction costs or may only receive payment on a delayed basis Unlike GSWC and BVES, who recover their capital investments from customers over the life of the assets through annual depreciation and earn a return on such investments through the ratemaking process, ASUS is reimbursed for the cost of ongoing renewal and replacement construction projects plus a profit through the collection of a monthly cash stream under each of the 50-year contracts with the U.S. government.
We may not be fully reimbursed for all of our construction costs or may only receive payment on a delayed basis Unlike GSWC and BVES, who recover their capital investments from customers over the life of the assets through annual depreciation and earn a return on such investments through the ratemaking process, ASUS is reimbursed for the cost of ongoing renewal and replacement construction projects plus a profit through the collection of a monthly cash stream under each of the 50-year and 15-year contracts with the U.S. government.
We may be required to (i) incur greater costs to relocate lines or increase our trimming of trees and other plants near our electric facilities to avoid wildfires, (ii) make significant additional capital expenditures to fund the projects in BVES’s wildfire and safety mitigation plans, and (iii) bear the costs of damages to property or injuries to the public if it is determined that our power lines or other electrical equipment was a cause of such damages or injuries.
We may be required to (i) incur greater costs to relocate lines or increase our trimming of trees and other plants near our electric or water facilities to avoid wildfires, (ii) make significant additional capital expenditures to fund the projects in BVES’s wildfire and safety mitigation plans, and (iii) bear the costs of damages to property or injuries to the public if it is determined that our power lines or other electrical or water equipment was a cause of such damages or injuries.
We anticipate that the costs of capital improvements necessary to implement this program will continue to increase. BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. Shut-offs can reduce BVES’s liquidity and decrease customer satisfaction. Abnormal weather patterns created by climate change can also impact electricity demand at BVES.
We anticipate that the costs of capital improvements necessary to sustain this program will continue to increase. BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. Shut-offs can reduce BVES’s liquidity and decrease customer satisfaction. Abnormal weather patterns created by climate change can also impact electricity demand at BVES.
Changes in market conditions, including events beyond our control such as recent increases to interest rates, could limit our ability to access capital on terms favorable to us or at all, including obtaining credit facilities with the borrowing capacities needed as well as issuing equity or debt securities.
Changes in market conditions, including events beyond our control such as increases to interest rates, could limit our ability to access capital on terms favorable to us or at all, including obtaining credit facilities with the borrowing capacities needed as well as issuing equity or debt securities.
Water shortages at GSWC may: • adversely affect our supply mix, for instance, by causing increased reliance upon more expensive water sources; • adversely affect our operating costs, for instance, by increasing the cost of producing water from more highly contaminated aquifers or requiring us to transport water over longer distances, truck water to water systems or adopt other emergency measures to enable us to continue to provide water service to our customers; • result in an increase in our capital expenditures over the long term, for example, by requiring future construction of pipelines to connect to alternative sources of supply, new wells to replace those that are no longer in service or are otherwise inadequate to meet the needs of our customers, and other facilities to conserve or reclaim water; • adversely affect the volume of water sold as a result of such factors as mandatory or voluntary conservation efforts by customers, changes in customer conservation patterns, recycling of water by customers and imposition of new regulations impacting such things as landscaping and irrigation patterns; 18 Table of Contents • adversely affect aesthetic water quality if we are unable to flush our water systems as frequently due to water shortages or drought restrictions; and • result in customer dissatisfaction and harm to our reputation if water service is reduced, interrupted or otherwise adversely affected as a result of drought, water contamination or other causes.
Water shortages at GSWC may: • adversely affect our supply mix, for instance, by causing increased reliance upon more expensive water sources; • adversely affect our operating costs, for instance, by increasing the cost of producing water from more highly contaminated aquifers or requiring us to transport water over longer distances, truck water to water systems or adopt other emergency measures to enable us to continue to provide water service to our customers; • result in an increase in our capital expenditures over the long term, for example, by requiring future construction of pipelines to connect to alternative sources of supply, new wells to replace those that are no longer in service or are otherwise inadequate to meet the needs of our customers, and other facilities to conserve or reclaim water; • adversely affect the volume of water sold as a result of such factors as mandatory or voluntary conservation efforts by customers, changes in customer conservation patterns, recycling of water by customers and imposition of new regulations impacting such things as landscaping and irrigation patterns; • adversely affect aesthetic water quality if we are unable to flush our water systems as frequently due to water shortages or drought restrictions; and • result in customer dissatisfaction and harm to our reputation if water service is reduced, interrupted or otherwise adversely affected as a result of drought, water contamination or other causes.
The onsite Safety Coordinator is responsible for regulatory compliance, as well as beneficial health and safety monitoring functions. Learning and Development Compliance training is required each year, for each employee. Other types of training are offered on an optional basis.
The Safety Coordinator is responsible for regulatory compliance, as well as beneficial health and safety monitoring functions. Learning and Development Compliance training is required each year, for each employee. Other types of training are offered on an optional basis.
Other Business Risks We may be subject to financial losses, penalties and other liabilities if we fail to operate and maintain safe work sites, equipment and facilities, including losses, damages, penalties and other liabilities arising from wildfires, other natural disasters and terrorist activities.
Other Business Risks We may be subject to financial losses, penalties and other liabilities if we fail to operate and maintain safe work sites, equipment and facilities, including losses, damages, penalties and other liabilities arising from wildfires, other natural disasters and cybersecurity and terrorist activities.
Water Quality Regulatory Risks Our costs involved in maintaining water quality and complying with environmental regulation have increased and are expected to continue to increase Capital and operating costs at GSWC may increase substantially as a result of increases in environmental regulation arising from increases in the cost of upgrading and building new water treatment plants, disposing of residuals from our water treatment plants, handling and storing hazardous chemicals, compliance-monitoring activities and securing alternative supplies when necessary.
Water Quality Regulatory Risks Our costs involved in maintaining water quality and complying with environmental regulation have increased and are expected to continue to increase Capital and operating costs at GSWC are expected to increase substantially as a result of increases in environmental regulation arising from increases in the cost of upgrading and building new water treatment plants, disposing of residuals from our water treatment plants, handling and storing hazardous chemicals, compliance-monitoring and testing activities and securing alternative supplies when necessary.
Since 2008, GSWC has implemented a modified supply cost balancing account, the MCBA, to track and recover costs from supply mix changes and rate changes by wholesale suppliers, as authorized by the CPUC.
Since 2008, GSWC implemented a modified supply cost balancing account, the MCBA, to track and recover costs from supply mix changes and rate changes by wholesale suppliers, as authorized by the CPUC.
Utility Privatization Contract Risks Our contracts for servicing military bases create certain risks that are different from our public utility operations We have entered into contracts to provide water and/or wastewater services at military bases primarily pursuant to initial 50-year, firm-fixed-priced contracts, additional firm-fixed-price contracts and task order contracts, subject to termination, in whole or in part, for the convenience of the U.S. government.
Utility Privatization Contract Risks Our contracts for servicing military bases create certain risks that are different from our public utility operations We have entered into contracts to provide water and/or wastewater services at military bases primarily pursuant to initial 50-year, firm fixed-priced contracts, one 15-year contract, additional firm fixed-price contracts and task order contracts, subject to termination, in whole or in part, for the convenience of the U.S. government.
Recruiting, developing and retaining the right talent is key to our long-term success. With approximately 30% of our employees eligible for retirement in the next five years, we are focused on transferring institutional knowledge, continuing succession planning and pursuing recruitment and development strategies to attract qualified talent. 11 Table of Contents Item 1A.
Recruiting, developing and retaining the right talent is key to our long-term success. With approximately 38% of our employees eligible for retirement in the next five years, we are focused on transferring institutional knowledge, continuing succession planning and pursuing recruitment and development strategies to attract qualified talent. 11 Table of Contents Item 1A.
To reinforce our safety efforts and protocols, company-wide safety inspections at GSWC and BVES are conducted with supervisors. The inspection reports are forwarded to management for review, allocation of resources are made (if needed), and corrective actions are taken. ASUS has a dedicated Safety Coordinator located at each military base installation served.
To reinforce our safety efforts and protocols, company-wide safety inspections at GSWC and BVES are conducted with supervisors. The inspection reports are forwarded to management for review, allocation of resources are made (if needed), and corrective actions are taken. ASUS has a dedicated Safety Coordinator to support each military base installation served.
A loss which is not insured or not fully insured or cannot be recovered in customer rates could materially affect our financial condition and results of operations. We operate in areas subject to natural disasters We operate in areas that are prone to earthquakes, fires, mudslides, hurricanes, tornadoes, high winds, storms, flooding or other natural disasters.
A loss which is not insured or not fully insured or cannot be recovered in customer rates could materially affect our financial condition and results of operations. We operate in areas subject to natural disasters We operate in areas that are prone to earthquakes, wildfires, mudslides, hurricanes, tornadoes, high winds, storms, flooding or other natural disasters.
NEM customers can receive a bill credit if their annual renewable energy production exceeds their on-site use. Approximately 5% of the energy consumed by our BVES customers is now generated by customer-owned renewable sources (solar). BVES is also required to comply with the CPUC’s greenhouse gas emission performance standards.
NEM customers can receive a bill credit if their annual renewable energy production exceeds their on-site use. Approximately 5% of the energy consumed by BVES customers is now generated by customer-owned renewable sources (solar). BVES is required to comply with the CPUC’s greenhouse gas emission performance standards.
This is especially challenging for us since approximately 30% of our employees will be eligible to retire in the next five years. The failure to successfully hire key employees or the loss of a material number of key employees could have a significant impact on the quality of our operations in the short term.
This is especially challenging for us since approximately 38% of our employees will be eligible to retire in the next five years. The failure to successfully hire key employees or the loss of a material number of key employees could have a significant impact on the quality of our operations in the short term.
Both GSWC’s and BVES’s operations exhibit seasonal trends. Although both have diversified customer bases, residential and commercial customers account for the majority of water and electric sales and revenues. Revenues derived from commercial and residential customers accounted for approximately 90% of total water and electric revenues for the years ended December 31, 2023, 2022 and 2021.
Both GSWC’s and BVES’s operations exhibit seasonal trends. Although both have diversified customer bases, residential and commercial customers account for the majority of water and electric sales and revenues. Revenues derived from commercial and residential customers accounted for approximately 90% of total water and electric revenues for the years ended December 31, 2024, 2023 and 2022.
BVES has entered into a contract to construct a solar energy project in Big Bear Lake, subject to obtaining CPUC approval and necessary permits. If approved and constructed, the project will provide a source of clean, local energy for BVES’s customers.
BVES has entered into a contract to construct a solar energy project in Big Bear City, subject to obtaining CPUC approval and necessary permits. If approved and constructed, the project will provide a source of clean, local energy for BVES’s customers.
If we are unable to collect amounts owed to us on a timely basis or the U.S. government asserts its offset rights, profits and cash flows could be adversely affected. 21 Table of Contents Moreover, we are subject to potential government investigations of our business practices and compliance with government procurement statutes and security regulations.
If we are unable to collect amounts owed to us on a timely basis or the U.S. government asserts its offset rights, profits and cash flows could be adversely affected. Moreover, we are subject to potential government investigations of our business practices and compliance with government procurement statutes and security regulations.
While BVES’s power-plant emissions are below the reporting threshold, as a “Covered Entity,” BVES has an obligation to file a report with the California Air Resources Board (“CARB”) in June of each year under the Greenhouse Gas Mandatory Reporting Regulation. The report will become available publicly in the third quarter of 2024.
While BVES’s power-plant emissions are below the reporting threshold, as a “Covered Entity,” BVES has an obligation to file a report with the California Air Resources Board in June of each year under the Greenhouse Gas Mandatory Reporting Regulation. The report will become available publicly in the third quarter of 2025.
We also from time to time enter into contracts with third party 20 Table of Contents prime contractors on military bases. The U.S. government may stop work under the terms of one or more of these contracts, not provide additional task orders, delay performance of our obligations under the contracts, or modify the contracts at its convenience.
We also from time to time enter into contracts with third party prime contractors on military bases. The U.S. government may stop work under the terms of one or more of these contracts, not provide additional task orders, delay performance of our obligations under the contracts, or modify the contracts at its convenience.
We recognize additional revenue for such work as, and to the extent that, our economic price adjustments and/or requests for equitable adjustments are approved. Delays in obtaining approval of economic price adjustments and/or equitable adjustments can negatively impact our results of operations and cash flows. Certain payments under these contracts are subject to appropriations by Congress.
We recognize additional revenue for such work as, and 21 Table of Contents to the extent that, our economic price adjustments and/or requests for equitable adjustments are approved. Delays in obtaining approval of economic price adjustments and/or equitable adjustments can negatively impact our results of operations and cash flows. Certain payments under these contracts are subject to appropriations by Congress.
Historically, we have taken a number of steps to address contamination, including the removal of wells from service, decreasing the amount of groundwater pumped from wells in order to facilitate remediation of plumes of contaminated water, constructing water 17 Table of Contents treatment facilities and securing alternative sources of supply from other areas not affected by the contamination.
Historically, we have taken a number of steps to address contamination, including the removal of wells from service, decreasing the amount of groundwater pumped from wells in order to facilitate remediation of plumes of contaminated water, constructing water treatment facilities and securing alternative sources of supply from other areas not affected by the contamination.
We may not be able to procure sufficient renewable energy resources to comply with CPUC rules We are required to procure a portion of our electricity for BVES from renewable energy resources to meet the CPUC’s renewable procurement requirements. We have agreements with third parties to purchase renewable energy credits, which enables us to meet these requirements through 2024.
We may not be able to procure sufficient renewable energy resources to comply with CPUC rules We are required to procure a portion of our electricity for BVES from renewable energy resources to meet the CPUC’s renewable procurement requirements. We have agreements with third parties to purchase renewable energy credits, which has enabled us to meet these requirements through 2024.
The failure of any of these subcontractors to perform services for us in accordance with the terms of our contracts with the U.S. government could result in the termination of our contract to provide water and/or wastewater services at the affected base(s), and/or a loss of revenues, or increases in costs, to correct a subcontractor’s performance failures.
The failure of any of these subcontractors to perform services for us in accordance with the terms of our contracts with the U.S. government could result in the termination of our contract to provide water and/or wastewater 22 Table of Contents services at the affected base(s), and/or a loss of revenues, or increases in costs, to correct a subcontractor’s performance failures.
Factors that could cause fluctuations in the trading price of our Common Shares include: changes in interest rates; regulatory developments, decisions and delays; general economic conditions and trends; price and volume fluctuations in the overall stock market; actual or anticipated changes or fluctuations in our results of operations; actual or anticipated changes in the expectations of investors or securities analysts; actual or anticipated developments in other utilities’ businesses or the competitive landscape generally; litigation involving us or our industry; major catastrophic events, or sales of large blocks of our stock.
Factors that could cause fluctuations in the trading price of our Common Shares include: changes in interest rates; regulatory developments, decisions and delays of decisions; general economic conditions and trends; price and volume fluctuations in the overall stock market; actual or anticipated changes or fluctuations in our results of operations; actual or anticipated changes in the expectations of investors or securities analysts; 26 Table of Contents actual or anticipated developments in other utilities’ businesses or the general competitive landscape; litigation involving us or our industry; major catastrophic events, or sales of large blocks of our stock.
Even if we are able to obtain waivers from our creditors, we may only be able to do so on unfavorable terms. Our ability to comply with the financial 25 Table of Contents covenants in our debt agreements may be adversely affected by delays in obtaining CPUC approval of our general rate case filings.
Even if we are able to obtain waivers from our creditors, we may only be able to do so on unfavorable terms. Our ability to comply with the financial covenants in our debt agreements may be adversely affected by delays in obtaining CPUC approval of our general rate case filings.
We are also, in some cases, required to estimate future expenses and, in others, we are required to incur the expense before receiving approval to recover the costs. As a result, our revenues and earnings may fluctuate depending on the accuracy of our estimates, the timing of our investments or expenses or other factors.
We are also, in some cases, required to estimate future expenses and, in others, we are required to incur the expense before receiving approval to recover the costs. As a result, our revenues and earnings may fluctuate depending on the accuracy 14 Table of Contents of our estimates, the timing of our investments or expenses or other factors.
The subsidiaries of ASUS are subject to similar requirements in connection with their water and wastewater operations on military bases. GSWC is also responsible for clean-up and remediation at a plant site that contained an underground storage tank.
The subsidiaries of ASUS are subject to similar requirements in connection with their water and 8 Table of Contents wastewater operations on military bases. GSWC is also responsible for clean-up and remediation at a plant site that contained an underground storage tank.
AWR generally guarantees performance of all of the contracts of ASUS’s subsidiaries. 7 Table of Contents Pursuant to the terms of the 50-year contracts with the U.S. government, the subsidiaries of ASUS operate the following water and wastewater systems: Subsidiary Military Base Type of System Location FBWS Fort Bliss Water and Wastewater Texas and New Mexico ODUS Fort Gregg-Adams Wastewater Virginia ODUS Joint-Base Langley Eustis and Joint Expeditionary Base Little Creek-Fort Story Water and Wastewater Virginia TUS Joint Base Andrews Water and Wastewater Maryland PSUS Fort Jackson Water and Wastewater South Carolina ONUS Fort Liberty, Pope Army Airfield and Camp Mackall Water and Wastewater North Carolina ECUS Eglin Air Force Base Water and Wastewater Florida FRUS Fort Riley Water and Wastewater Collection and Treatment Kansas PRUS Naval Air Station Patuxent River Water and Wastewater Maryland BSUS Joint Base Cape Cod* Water and Wastewater Collection and Treatment Massachusetts *BSUS is the only subsidiary that has entered into a task order agreement serving Joint Base Cape Cod that has a term of 15 years.
AWR generally guarantees performance of all of the contracts of ASUS’s subsidiaries. 7 Table of Contents Pursuant to the terms of the 50-year contracts with the U.S. government, the subsidiaries of ASUS operate the following water and wastewater systems: Subsidiary Military Base (1) Type of System Location FBWS Fort Bliss Water and Wastewater Texas and New Mexico ODUS Fort Gregg-Adams Wastewater Virginia ODUS Joint-Base Langley Eustis and Joint Expeditionary Base Little Creek-Fort Story Water and Wastewater Virginia TUS Joint Base Andrews Water and Wastewater Maryland PSUS Fort Jackson Water and Wastewater South Carolina ONUS Fort Liberty, Pope Army Airfield and Camp Mackall Water and Wastewater North Carolina ECUS Eglin Air Force Base Water and Wastewater Florida FRUS Fort Riley Water and Wastewater Collection and Treatment Kansas PRUS Naval Air Station Patuxent River Water and Wastewater Maryland BSUS Joint Base Cape Cod* Water and Wastewater Collection and Treatment Massachusetts (1) Names of military bases are as of December 31, 2024. *BSUS is the only subsidiary that has entered into a task order agreement serving Joint Base Cape Cod that has a term of 15 years.
Although we do not believe that our systems are at a materially greater risk of cybersecurity attacks than other similar organizations, our information technology systems remain at risk to damage or interruption from the following among other types of cybersecurity risks: • Supply Chain Attacks; 23 Table of Contents • Malicious Software; • Credential Loss or Theft; • Supervisory Control and Data Acquisition System Takeover; • Equipment Theft; • Ransomware; • Actions of Employees (Intentional or Accidental); • Phishing Attacks; • Identity-Based Attacks; and • Denial-of-Service Attacks.
Although we do not believe that our systems are at a materially greater risk of cybersecurity attacks when compared to other similar organizations, our information technology systems remain at risk to damage or interruption from the following among other types of cybersecurity risks: • Supply Chain Attacks; • Malicious Software; • Credential Loss or Theft; • Supervisory Control and Data Acquisition System Takeover; • Equipment Theft; • Ransomware; • Actions of Employees (Intentional or Accidental); • Phishing Attacks; 24 Table of Contents • Identity-Based Attacks; and • Denial-of-Service Attacks.
We make certain estimates and judgments in preparing our financial statements regarding, among others: • timing of recovering WRAM, MCBA and BRRAM regulatory assets; • amounts to set aside for uncollectible accounts receivable, inventory obsolescence and uninsured losses; • our legal exposure and the appropriate accrual for claims, including general liability and workers’ compensation claims; • future costs and assumptions for pensions and other post-retirement benefits; • regulatory recovery of deferred items; and • possible tax uncertainties.
We make certain estimates and judgments in preparing our financial statements regarding, among others: • timing of recovering M-WRAM, WRAM, ICBA, MCBA and BRRAM regulatory assets; • regulatory recovery of deferred items; 25 Table of Contents • amounts to set aside for uncollectible accounts receivable, inventory obsolescence and uninsured losses; • our legal exposure and the appropriate accrual for claims, including general liability and workers’ compensation claims; • future costs and assumptions for pensions and other post-retirement benefits; and • possible tax uncertainties.
However, cash flows from operations can be significantly affected since much of the balance we recognize in the MCBA is collected from or refunded to customers primarily through surcharges or surcredits, respectively, generally over twelve- to twenty-four-months.
However, cash flows from 19 Table of Contents operations can be significantly affected since much of the balance we recognize in the MCBA is collected from or refunded to customers primarily through surcharges or surcredits, respectively, generally over twelve- to twenty-four-months.
ASUS, through its subsidiaries, has contracted with the U.S. government to provide water and/or wastewater services at various military installations.
ASUS, through its wholly owned subsidiaries, has contracted with the U.S. government to provide water and/or wastewater services at various military installations.
With respect to GSWC and BVES, the CPUC has historically allowed utilities to establish a catastrophic emergency memorandum account (“CEMA”) to potentially recover incremental costs not covered in rates caused by catastrophic emergency events. With respect to ASUS’s subsidiaries, costs associated with responding to natural disasters have been recoverable through requests for equitable adjustment.
With respect to GSWC and BVES, the CPUC has historically allowed utilities to establish a catastrophic emergency memorandum account (“CEMA”) to potentially recover 17 Table of Contents incremental costs not covered in rates caused by catastrophic emergency events. With respect to ASUS’s subsidiaries, costs associated with responding to natural disasters have been recoverable through requests for equitable adjustment.
We rely on our computer, information and communications technology systems in connection with the operation of our business, especially with respect to customer service and billing, accounting and the monitoring and operation of our treatment, storage and pumping facilities.
We rely on our information and operational technology systems in connection with the operation of our business, especially with respect to customer service and billing, accounting and the monitoring and operation of our treatment, storage and pumping facilities.
Under these standards, BVES must file an annual attestation with the CPUC stating that BVES has no new ownership investment in generation facilities exceeding the emission performance standards and no long-term commitments for generation exceeding the standards. In January 2024, BVES filed an attestation that BVES complied with the standards for 2023.
Under these standards, BVES must file an annual attestation with the CPUC stating that BVES has no new ownership investment in generation facilities exceeding the emission performance standards and no long-term commitments for generation exceeding the standards. In February 2025, BVES filed an attestation that BVES complied with the standards for 2024.
The cost of damage to our infrastructure may be somewhat mitigated if the CPUC permits us to establish a catastrophic emergency memorandum account enabling us to recover the costs incurred.
The cost of damage to our infrastructure may be somewhat mitigated if the CPUC permits us to establish a catastrophic emergency memorandum account that enables us to recover the costs incurred.
BVES is required to adopt and implement a wildfire mitigation plan that is submitted periodically to, and subject to the approval of, the CPUC. In December 2023, the CPUC ratified BVES’s 2023-2025 wildfire mitigation plan which was also approved by the Office of Energy Infrastructure Safety in the fourth quarter of 2023.
BVES is required to adopt and implement a wildfire mitigation plan that is submitted periodically to, and subject to the approval of, the CPUC. In January 2025, the CPUC ratified BVES’s 2025 wildfire mitigation plan update which was also approved by the Office of Energy Infrastructure Safety in the fourth quarter of 2024.
ASUS actively competes for business with other investor-owned utilities, other third-party providers of water and/or wastewater services, and governmental entities primarily on the basis of quality of service and price. AWR Workforce AWR and its subsidiaries had a total of 815 employees as of December 31, 2023. GSWC had 506 employees as of December 31, 2023.
ASUS actively competes for business with other investor-owned utilities, other third-party providers of water and/or wastewater services, and governmental entities primarily on the basis of quality of service and price. AWR Workforce AWR and its subsidiaries had a total of 846 employees as of December 31, 2024. GSWC had 517 employees as of December 31, 2024.
If the CPUC approves lower rates than the interim rates we were permitted to adopt, the 13 Table of Contents CPUC will require us to refund to customers the difference between the interim rates and the rates approved by the CPUC.
If the CPUC approves lower rates than the interim rates we were permitted to adopt, the CPUC will require us to refund to customers the difference between the interim rates and the rates approved by the CPUC.
BVES had 50 employees, of which 18 employees are covered by a collective bargaining agreement with the International Brotherhood of Electrical Workers, which expires in December 2025.
BVES had 46 employees, of which 17 employees are covered by a collective bargaining agreement with the International Brotherhood of Electrical Workers, which expires in December 2025.
To the extent that our construction activities are impeded by these events, we will experience a delay in recognizing revenues from these construction projects.
To the extent that our 23 Table of Contents construction activities are impeded by these events, we will experience a delay in recognizing revenues from these construction projects.
Although we aim to comply with such health and safety standards, it is unlikely that we will be able to avoid all accidents or other events resulting in damage to property or the public.
We maintain health and safety standards to protect our employees, customers, vendors and the public. Although we aim to comply with such health and safety standards, it is unlikely that we will be able to avoid all accidents or other events resulting in damage to property or the public.
In certain circumstances, the U.S. government may be unwilling or unable to appropriate funds to pay costs mandated by changes in rules and policies of federal or state regulatory agencies.
Changes in policies of the U.S. government may adversely affect one or more of ASUS’s subsidiaries. In certain circumstances, the U.S. government may be unwilling or unable to appropriate funds to pay costs mandated by changes in rules and policies of federal or state regulatory agencies.
Human Capital Management Risks Failure to attract, retain, train, motivate, develop and transition key employees could adversely affect our business In order to be successful, we must attract, retain, train, motivate, and develop key employees, including those in managerial, operational, financial, regulatory, business-development and information-technology support positions. Our regulated business and contracted services operations are complex.
“ Cybersecurity. ” Human Capital Management Risks Failure to attract, retain, train, motivate, develop and transition key employees could adversely affect our business In order to be successful, we must attract, retain, train, motivate, and develop key employees, including those in managerial, operational, financial, regulatory, business development and information technology support positions.
As a result, we may sustain losses that exceed or that are excluded from our insurance coverage or for which we are not insured. Uninsured losses and increases in the cost of insurance may not be recoverable or fully recoverable in customer rates.
We may experience further increased insurance costs and/or coverage reductions in future years. As a result, we may sustain losses that exceed or that are excluded from our insurance coverage or for which we are not insured. Uninsured losses and increases in the cost of insurance may not be recoverable or fully recoverable in customer rates.
We compete with other companies in bidding on providing utility services on military bases. We submit bids on new U.S. government contracts for military bases based on estimates of cost and potential profit. Our estimates and judgment are important, for in the event we overpay to obtain a contract, we could incur losses on it.
We submit bids on new U.S. government contracts for military bases based on estimates of cost and potential profit. Our estimates and judgment are important, for in the event we overpay to obtain a contract, we could incur losses on it.
Attracting and retaining high quality staff allows us to minimize the cost of providing quality service. In order to attract and retain key employees in a competitive marketplace, we must provide a competitive compensation package and be able to effectively recruit qualified candidates.
Our regulated businesses and contracted services operations are complex. Attracting and retaining high quality staff allows us to minimize the cost of providing quality service. In order to attract and retain key employees in a competitive marketplace, we must provide a competitive compensation package and be able to effectively recruit qualified candidates.
These proceedings may pertain to regulatory investigations, employment matters or other disputes. Management periodically reviews its assessment of the probable outcome of these proceedings, the costs and expenses reasonably expected to be incurred, and the availability and extent of insurance coverage. On the basis of this review, management establishes reserves for such matters.
Management periodically reviews its assessment of the probable outcome of these proceedings, the costs and expenses reasonably expected to be incurred, and the availability and extent of insurance coverage. On the basis of this review, management establishes reserves for such matters.
Safety performance is included as a metric in the officer and manager compensation programs. Employees attend training in various mandated safety programs that are applicable to their area of operations, including training to meet regulatory safety training requirements and requirements of the Department of Transportation. We also provide training to assist in compliance with local, state, and federal environmental laws.
Employees attend training in various mandated safety programs that are applicable to their area of operations, including training to meet regulatory safety training requirements and requirements of the Department of Transportation. We also provide training to assist in compliance with local, state, and federal environmental laws.
BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. The CPUC may assess penalties if BVES shuts-down power to its customers and the CPUC determines that the shutdown was not reasonably necessary in the circumstances.
We anticipate that the costs of capital improvements necessary to implement this program will increase substantially. BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. The CPUC may assess penalties if BVES shuts-down power to its customers and the CPUC determines that the shutdown was not reasonably necessary in the circumstances.
We may also find it difficult to secure insurance for this business in the future at acceptable rates. 22 Table of Contents We may have responsibility for water quality at the military bases we serve While it is the responsibility of the U.S. government to provide the source of water supply to meet ASUS’s subsidiaries water distribution system requirements under their contracts with the U.S. government, the ASUS’s subsidiaries, as the water system permit holders for most of the bases they serve, are responsible for ensuring the continued compliance of the provided source of supply with all federal, state and local regulations.
We may have responsibility for water quality at the military bases we serve While it is the responsibility of the U.S. government to provide the source of water supply to meet ASUS’s subsidiaries water distribution system requirements under their contracts with the U.S. government, ASUS’s subsidiaries, as the water system permit holders for most of the bases they serve, are responsible for ensuring the continued compliance of the provided source of supply with all federal, state and local regulations.
Regulatory agencies may disallow recovery of certain costs if they determine they may no longer be recovered in rates, or if audit findings determine that we have failed to comply with our policies and procedures for procurement or other practices.
Regulatory agencies may disallow recovery of certain costs if they determine they may no longer be recovered in rates, or if audit findings determine that we have failed to comply with our policies and procedures for procurement or other practices. Additional information regarding water quality regulations is discussed in Item 7.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “ Regulatory Matters . ” AWR’s regulated utilities served 264,093 water customers and 24,777 electric customers at December 31, 2023, or a total of 288,870 customers, compared with 263,265 water customers and 24,705 electric customers at December 31, 2022, or a total of 287,970 customers.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “ Regulatory Matters . ” AWR’s regulated utilities served 264,557 water customers and 24,857 electric customers at December 31, 2024, or a total of 289,414 customers, compared with 264,093 water customers and 24,777 electric customers at December 31, 2023, or a total of 288,870 customers.
Ongoing development of our talent across the organization to meet critical business needs is a continual focus, and includes (i) building a culture such that high-potential talent is identified and further developed, (ii) creating career paths that not only move up a specialized ladder, but across the organization, and (iii) offering opportunities for employees to accept new challenges through stretch assignments.
Ongoing development of our talent across the organization to meet critical business needs is a continual focus, and includes (i) building a culture such that high-potential talent is identified and further developed, (ii) creating career paths that not only move up a specialized ladder, but across the organization, and (iii) offering opportunities for employees to accept new challenges through stretch assignments. 10 Table of Contents Attracting Diverse Qualified Candidates We understand that strength comes from having a diverse employee population.
On August 27, 2020, the CPUC issued a final decision in the first phase of the CPUC’s Order Instituting Rulemaking evaluating the low income ratepayer assistance and affordability objectives contained in the CPUC’s 2010 Water Action Plan, addressing the continued use of the Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”) by California water utilities.
On August 27, 2020, the CPUC issued a final decision in the first phase of the CPUC’s Order Instituting Rulemaking evaluating the low income ratepayer assistance and affordability objectives contained in the CPUC’s 2010 Water Action Plan, addressing the continued use of the WRAM and the MCBA by California water utilities.
California has established long-term indoor and outdoor water use standards to address the impact of climate change on California water resources. These standards will require all urban water retailers to meet certain water use standards on a system-by-system basis.
California has established long-term indoor and outdoor water use standards to address the impact of climate change on California water resources. These standards, which were adopted by the California State Water Resources Board and effective January 1, 2025, require all urban water retailers to meet certain water use standards on a system-by-system basis.
Our 15 Table of Contents liquidity, earnings and operations may be materially adversely affected by wildfires.
Our liquidity, earnings and operations may be materially adversely affected by wildfires.
Furthermore, due to insurance market conditions resulting in tighter underwriting and increased premiums along with reductions in capacity, we have experienced increased costs and difficulties in obtaining certain insurance coverages, particularly along the general liability, umbrella and cyber insurance lines. We may experience further increased insurance costs and/or coverage reductions in future years.
Furthermore, due to insurance market conditions, including the prevalence of wildfires in recent years, resulting in tighter underwriting and increased premiums along with reductions in capacity, we have experienced increased costs and difficulties in obtaining certain insurance coverages, particularly along the general liability, umbrella and cyber insurance lines.
Additional information regarding the regulation of PFAS in drinking water is provided in Item 7. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” under the heading “ Environmental Matters .” Our operating costs may increase as a result of groundwater contamination Our operations can be impacted by groundwater contamination in certain service territories.
“ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” under the heading “ Environmental Matters .” Our operating costs may increase as a result of groundwater contamination Our operations can be impacted by groundwater contamination in certain service territories.
ASUS expects to perform construction activities related to environmental control facilities with a contract value of $9.2 million in 2024. In 8 Table of Contents addition, various other capital expenditures at the regulated utilities and construction projects at ASUS are incurred for purposes other than environmental control facilities but may also have some environmental benefits.
ASUS expects to perform $9.0 million construction activities related to environmental control facilities in 2025. In addition, various other capital expenditures at the regulated utilities and construction projects at ASUS are incurred for purposes other than environmental control facilities but may also have some environmental benefits.
Attracting Diverse Qualified Candidates We understand that strength comes from having a diverse employee population. We strive to hire from our local communities and to have a workforce that is representative, at all job levels, of the communities we serve and from which we recruit. This begins with the recruitment process.
We strive to hire from our local communities and to have a workforce that is representative, at all job levels, of the communities we serve and from which we recruit. This begins with the recruitment process.
The fees that we may charge are adjusted annually and in response to our requests for equitable adjustments. We have experienced delays in obtaining price and equitable adjustments, as well as delays in being paid by the U.S. government. We are also responsible for complying with water quality and wastewater quality regulations on military bases.
The fees that we may charge are adjusted annually and in response to our requests for equitable adjustments. We have experienced delays in obtaining price and equitable adjustments, as well as delays in being paid by the U.S. government.
Water Supply Risks The adequacy of our water supplies depends upon weather and a variety of other uncontrollable factors The adequacy of our water supplies varies from year to year depending upon a variety of factors, including: • rainfall, basin replenishment, flood control, snowpack levels in California and the West, reservoir levels and availability of reservoir storage; • availability of Colorado River water and imported water from the State Water Project; • the amount of usable water stored in reservoirs and groundwater basins; • the amount of water used by our customers and others; • water quality; • legal limitations on production, diversion, storage, conveyance and use; and • climate change.
However, such issues, if ultimately resolved unfavorably to us, could, in the aggregate, have a material adverse effect on our results of operations and financial condition. 18 Table of Contents Water Supply Risks The adequacy of our water supplies depends upon weather and a variety of other uncontrollable factors The adequacy of our water supplies varies from year to year depending upon a variety of factors, including: • rainfall, basin replenishment, flood control, snowpack levels in California and the West, reservoir levels and availability of reservoir storage; • availability of Colorado River water and imported water from the State Water Project; • the amount of usable water stored in reservoirs and groundwater basins; • the amount of water used by our customers and others; • water quality and changes to water quality regulations; • legal limitations on production, diversion, storage, conveyance and use; and • climate change.
Information Technology Risk Factors We must successfully maintain and/or upgrade our information technology systems as we are increasingly dependent on the continuous and reliable operation of these systems We rely on various information technology systems to manage our operations.
Information Technology Risk Factors We must successfully maintain and/or upgrade our information technology systems as we are increasingly dependent on the continuous and reliable operation of these systems We rely on various information and operational technology systems to manage our operations, including those provided by third party solutions that support our operational and business processes.
We also may from time to time issue Common Shares to support our capital investment program.
We also may from time to time issue Common Shares, including pursuant to our at-the-market offering program, to support our capital investment program.
We have also experienced instances of increased costs and delays in obtaining permits that we need in order to install, maintain, repair, and replace some of our aging water and electric utility infrastructure and upgrades needed to comply with changes in laws and regulations or otherwise necessary to harden our infrastructure as a result of drought, wildfires and increases in the frequency and duration of more extreme weather events due to climate change.
These trends may adversely affect our ability to recover in rates the costs of providing water and electric services and to efficiently manage capital expenditures and operating and maintenance expenses within CPUC-authorized levels. 15 Table of Contents We have also experienced instances of increased costs and delays in obtaining permits that we need in order to install, maintain, repair, and replace some of our aging water and electric utility infrastructure and upgrades needed to comply with changes in laws and regulations or otherwise necessary to harden our infrastructure as a result of drought, wildfires and increases in the frequency and duration of more extreme weather events due to climate change.
The extended drought in the Colorado River watershed has resulted in a short-term agreement between Arizona, California and Nevada and the Bureau of Reclamation to reduce the amount of water taken from the Colorado River by 10% over the next three years (through the end of 2026).
The extended drought in the Colorado River watershed has resulted in a short-term agreement between Arizona, California and Nevada and the Bureau of Reclamation to reduce the amount of water taken from the Colorado River by 10% through the end of 2026. The impact to GSWC as a result of the short-term agreement is not known at this time.
Risks Associated with Regulated Public Utility and Contracted Services Operations Our businesses are heavily regulated and, as a result, decisions by regulatory agencies or the U.S. government can significantly affect our businesses GSWC’s and BVES’s revenues depend substantially on the rates and fees they charge their customers and their ability to recover costs on a timely basis as authorized by the CPUC, including the ability to recover the costs of purchased water, groundwater assessments, electricity, natural gas, chemicals, water treatment, security at water facilities and preventative maintenance and emergency repairs.
Furthermore, potential future legislative efforts to ban gas powered power plants as a response to climate change may require us to replace our current 8.4 MW natural gas-powered generator before its useful life is completed. 13 Table of Contents Risks Associated with Regulated Public Utility and Contracted Services Operations Our businesses are heavily regulated and, as a result, decisions by regulatory agencies or the U.S. government can significantly affect our businesses GSWC’s and BVES’s revenues depend substantially on the rates and fees they charge their customers and their ability to recover costs on a timely basis as authorized by the CPUC, including the ability to recover the costs of purchased water, groundwater assessments, electricity, natural gas, chemicals, water treatment, security at water facilities and preventative maintenance and emergency repairs.
The regulated utilities spent approximately $29.0 million in 2023 and expect to spend approximately $23.5 million in 2024 for capital expenditures on environmental control facilities. During 2023, ASUS performed construction activities (for the benefit of the U.S. government) related to environmental control facilities with a contract value of $4.5 million.
The regulated utilities spent approximately $27.4 million in 2024 and expect to spend approximately $15.9 million in 2025 for capital expenditures on environmental control facilities. During 2024, ASUS performed $12.1 million of construction activities (for the benefit of the U.S. government) related to environmental control facilities.
It is our policy not to discriminate on the basis of race, color, religion, marital status, age, national origin, ancestry, physical or mental disability, medical condition, pregnancy, genetic information, gender, sexual orientation, gender identity or expression, veteran status, or any other status protected under federal, state, or local laws. 10 Table of Contents Compensation and Benefits We believe that we pay employees a competitive and fair wage, as benchmarked with other leading companies and the market.
It is our policy not to discriminate on the basis of race, color, religion, marital status, age, national origin, ancestry, physical or mental disability, medical condition, pregnancy, genetic information, gender, sexual orientation, gender identity or expression, veteran status, or any other status protected under federal, state, or local laws.
Safety and Training Strong occupational health and safety practices reduce injuries, keep our workforce healthy, and reduce operating costs. A safe workforce translates into better performance company-wide. We work to create a safety-focused culture in which each individual feels personally responsible for their own safety, the safety of their co-workers, as well as the safety of the communities they serve.
A safe workforce translates into better performance company-wide. We work to create a safety-focused culture in which each individual feels personally responsible for their own safety, the safety of their co-workers, as well as the safety of the communities they serve. Safety performance is included as a metric in the officer and manager compensation programs.
The impact to GSWC as a result of the short-term agreement is not known at this time. Drought conditions have contributed to increases in wildfires, which has resulted in new California legislation requiring electric utilities to adopt and implement wildfire mitigation plans. BVES is incurring increased capital expenditures related to the creation and implementation of these plans.
Drought conditions have contributed to increases in wildfires, which has resulted in new California legislation requiring electric utilities to adopt and implement wildfire mitigation plans. BVES is incurring increased capital expenditures and other operating costs related to the creation, implementation and to maintain ongoing requirements of these plans.
If expenses increase significantly over a short period, we may experience delays in recovery of these expenses and the inability to recover the carrying costs for the expenses, which increases risks of regulatory disallowances or write-offs.
If expenses increase significantly over a short period, we may experience delays in recovery of these expenses and the inability to recover the carrying costs for the expenses, which increases risks of regulatory disallowances or write-offs. Additional information related to the CPUC’s adopted final decision in connection with GSWC’s general rate case proceeding is discussed in Item 7.
Our liquidity, earnings and operations may be adversely affected if we are unable to recover the costs of paying claims for damages caused by the non-negligent operation and maintenance of our property from customers or through insurance.
Our liquidity, earnings and operations may be adversely affected if we are unable to recover the costs of paying claims for damages caused by the non-negligent operation and maintenance of our property from customers or through insurance. 16 Table of Contents We may be subject to financial losses, penalties and other liabilities if we fail to maintain safe work sites, equipment or facilities Our safety record is critical to our reputation.
The recovery of costs incurred to implement this plan are not approved by the CPUC at the time of its approval of the wildfire mitigation plan but will only be approved by the CPUC in a subsequent general rate case. We anticipate that the costs of capital improvements necessary to implement this program will increase substantially.
The recovery of costs incurred to implement the plan and its update are not approved by the CPUC at the time of its approval of the plan but will only be 20 Table of Contents approved by the CPUC in a subsequent general rate case.
Additionally, the CPUC has delegated to its staff the authority to issue citations, which carry a fine of $50,000 per-violation per day, to electric utilities subject to its jurisdiction for violations of safety rules found in statutes, regulations, and the General Orders of the CPUC. 16 Table of Contents We may sustain losses that exceed or are excluded from our insurance coverage or for which we are not insured We are, from time to time, parties to legal or regulatory proceedings.
Additionally, the CPUC has delegated to its staff the authority to issue citations, which carry a fine of $50,000 per-violation per day, to electric utilities subject to its jurisdiction for violations of safety rules found in statutes, regulations, and the General Orders of the CPUC.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

213 edited+126 added−83 removed105 unchanged
Biggest changeThe following is a computation and reconciliation of diluted earnings per share from the measure of operating income by business segment as disclosed in Note 17 to the Consolidated Financial Statements, to AWR’s consolidated fully diluted earnings per common share for the year ended December 31, 2023 and 2022: Water Electric Contracted Services AWR (Parent) Consolidated (GAAP) In 000's except per share amounts 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Operating income (Note 17) $ 159,177 $ 92,455 $ 11,196 $ 11,740 $ 26,151 $ 22,449 $ 216 $ (8) $ 196,740 $ 126,636 Other (income) and expense 20,780 22,339 2,202 425 1,446 (273) 5,792 2,085 30,220 24,576 Income tax expense (benefit) 35,689 16,346 1,515 2,439 6,109 5,476 (1,714) (597) 41,599 23,664 Net income (loss) $ 102,708 $ 53,770 $ 7,479 $ 8,876 $ 18,596 $ 17,246 $ (3,862) $ (1,496) $ 124,921 $ 78,396 Weighted Average Number of Diluted Shares 37,077 37,039 37,077 37,039 37,077 37,039 37,077 37,039 37,077 37,039 Diluted earnings per share $ 2.77 $ 1.45 $ 0.20 $ 0.24 $ 0.50 $ 0.46 $ (0.10) $ (0.04) $ 3.36 $ 2.11 Note: Certain amounts in the table above may not foot or crossfoot due to rounding. 38 Table of Contents Water Segment: For the year ended December 31, 2023, recorded diluted earnings from the water utility segment were $2.77 per share, as compared to $1.45 per share for 2022, an increase of $1.32 per share, which includes: (i) the impact of retroactive new rates related to the full 2022 year of $0.38 per share (shown separately in the Summary Results by Segment table above), (ii) a net favorable variance of $0.26 per share (shown separately in the Summary Results by Segment table above) from the impact of the final cost of capital decision that resulted in the reversal of $6.4 million, or $0.13 per share, due to a change in estimate from what had been recorded during 2022, and (iii) a net favorable variance of $0.20 per share from gains totaling $5.0 million, or $0.10 per share, recorded during 2023 on investments held to fund a retirement plan, as compared to losses of $5.2 million, or $0.10 per share, recorded in 2022.
Biggest changeThe following is a computation and reconciliation of diluted earnings per share from the measure of net income (loss) by business segment as disclosed in Note 17 to the Consolidated Financial Statements, to AWR’s consolidated fully diluted earnings per common share for the year ended December 31, 2024 and 2023: Water Electric Contracted Services AWR (Parent) Consolidated (GAAP) In 000's except per share amounts 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 Net income (loss) (Note 17) $ 94,463 $ 102,708 $ 7,754 $ 7,479 $ 20,642 $ 18,596 $ (3,591) $ (3,862) $ 119,268 $ 124,921 Weighted Average Number of Diluted Shares 37,583 37,077 37,583 37,077 37,583 37,077 37,583 37,077 37,583 37,077 Diluted earnings per share $ 2.51 $ 2.77 $ 0.21 $ 0.20 $ 0.55 $ 0.50 $ (0.10) $ (0.10) $ 3.17 $ 3.36 Note: Certain amounts in the table above may not foot or crossfoot due to rounding. 40 Table of Contents Water Segment: For the year ended December 31, 2024, recorded diluted earnings from the water utility segment were $2.51 per share, as compared to $2.77 per share for 2023, a decrease of $0.26 per share, which includes: (i) the impact from the final decision in the water general rate case recorded in 2023 that included retroactive new rates related to the full 2022 year of $0.38 per share, and (ii) the impact of the final cost of capital decision that resulted in the reversal of estimated water revenues subject to refund previously recorded in 2022 of $6.4 million, or $0.13 per share.
In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and used the proceeds to pay down the majority of its outstanding intercompany borrowings from AWR, which in turn used the proceeds to pay down outstanding borrowings under the AWR credit facility at that time.
In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and used the proceeds to pay down the majority of its outstanding intercompany borrowings from AWR at that time, which in turn used the proceeds to pay down outstanding borrowings under its credit facility.
Additionally, on October 12, 2023, GSWC filed an advice letter to establish the WCCM for 2024, which has been approved by the CPUC, and increased GSWC’s 9.36% adopted return on equity to 10.06% effective January 1, 2024. 2024 COC Application: Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis.
Additionally, on October 12, 2023, GSWC filed an advice letter to establish the WCCM for 2024, which has been approved by the CPUC, and increased GSWC’s 9.36% adopted return on equity to 10.06% effective January 1, 2024. 2024-2025 COC Application: Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis.
These measures consider advances in security and emergency preparedness technology and relevant industry developments in developing their respective capital-improvement plans, and both intend to seek approval of the CPUC to recover any additional costs that either may incur in enhancing the security, reliability and resiliency of their utility systems. On October 23, 2018, America’s Water Infrastructure Act (“AWIA”) became law.
These measures consider advances in security and emergency preparedness technology and relevant industry developments in developing their respective capital improvement plans, and both intend to seek approval of the CPUC to recover any additional costs that either may incur in enhancing the security, reliability and resiliency of their utility systems. On October 23, 2018, America’s Water Infrastructure Act became law.
Included in the $2.7 million is a remaining commitment of $1.3 million under an agreement with the City of Claremont to lease water rights that were ascribed to the City as part of the Six Basins adjudication. The initial term of the agreement expires in 2028. GSWC may exercise an option to renew this agreement for ten additional years.
Included in the $2.3 million is a remaining commitment of $1.1 million under an agreement with the City of Claremont to lease water rights that were ascribed to the City as part of the Six Basins adjudication. The initial term of the agreement expires in 2028. GSWC may exercise an option to renew this agreement for ten additional years.
The CPUC has authorized GSWC to track incremental costs, including laboratory testing and monitoring costs, customer and public notification costs, and chemical and operating treatment costs, incurred as a result of PFAS contamination in a memorandum account to be filed with the CPUC for future recovery.
The CPUC has authorized GSWC to track incremental expenses, including laboratory testing and monitoring costs, customer and public notification costs, and chemical and operating treatment costs, incurred as a result of PFAS contamination in a memorandum account to be filed with the CPUC for future recovery.
These improvements include the physical security at all of the office and employee facilities it operates. 61 Table of Contents Despite its efforts, Registrant cannot guarantee that intrusions, cybersecurity incident or other attacks will not cause water, wastewater or electric system problems, disrupt service to customers, compromise important data or systems or result in unintended release of customer or employee information.
These improvements include the physical security at all of the office and employee facilities it operates. 65 Table of Contents Despite its efforts, Registrant cannot guarantee that intrusions, cybersecurity incident or other attacks will not cause water, wastewater or electric system problems, disrupt service to customers, compromise important data or systems or result in unintended release of customer or employee information.
Registrant believes that it will be able to refinance debt instruments at their maturity through public issuance or private placement of debt or equity. Annual payments to service debt are generally made from cash flows from operations. The following table reflects Registrant’s contractual obligations and commitments to make future payments pursuant to contracts as of December 31, 2023.
Registrant believes that it will be able to refinance debt instruments at their maturity through public issuance or private placement of debt or equity. Annual payments to service debt are generally made from cash flows from operations. The following table reflects Registrant’s contractual obligations and commitments to make future payments pursuant to contracts as of December 31, 2024.
Employees hired or rehired after December 31, 2010 are eligible to participate in a defined contribution plan instead of the pension plan. 50 Table of Contents Liquidity and Capital Resources AWR AWR’s regulated business is capital intensive and requires considerable capital resources. A portion of these capital resources is provided by internally generated cash flows from operations.
Employees hired or rehired after December 31, 2010 are eligible to participate in a defined contribution plan instead of the pension plan. 52 Table of Contents Liquidity and Capital Resources AWR AWR’s regulated business is capital intensive and requires considerable capital resources. A portion of these capital resources is provided by internally generated cash flows from operations.
In addition, GSWC receives advances and contributions from customers, home builders and real estate developers to fund construction necessary to extend service to new areas. Advances for construction are generally refundable at a rate of 2.5% in equal annual installments over 40 years. Utility plant funded by advances and contributions is excluded from rate base.
GSWC also receives advances and contributions from customers, home builders and real estate developers to fund construction necessary to extend service to new areas. Advances for construction are generally refundable at a rate of 2.5% in equal annual installments over 40 years. Utility plant funded by advances and contributions is excluded from rate base.
San Juan Oaks Mutual Acquisition: In August 2023, GSWC entered into an agreement to purchase the water and wastewater system assets from San Juan Oaks Mutual Water Company (“SJO Mutual”) in San Benito County, California. The new master-planned community, known as San Juan Oaks, will serve up to an estimated 1,300 customers once the community is built as planned.
San Juan Oaks Mutual Acquisition: In August 2023, GSWC entered into an agreement to purchase the water and wastewater system assets from San Juan Oaks Mutual Water Company in San Benito County, California. The new master-planned community, known as San Juan Oaks, will serve up to an estimated 1,300 customers once the community is built as planned.
Under AB 1054, if an electric utility has a valid safety certification, it will be presumed to have acted reasonably unless a party to the relevant proceeding creates a “serious doubt” as to the reasonableness of the utility’s conduct. In December 2023, OEIS issued a renewal of the safety certification for BVES for 12 months.
Under AB 1054, if an electric utility has a valid safety certification, it will be presumed to have acted reasonably unless a party to the relevant proceeding creates a “serious doubt” as to the reasonableness of the utility’s conduct. In December 2024, OEIS issued a renewal of the safety certification for BVES for 12 months.
AWR has paid common dividends every year since 1931, and has increased 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.
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.
Borrowings on AWR's new credit facility is used to support AWR (parent) and its contracted services subsidiary and borrowings on GSWC’s and BVES’s credit facilities are used to fund GSWC and BVES capital expenditures, respectively, until long-term financing is arranged. AWR (parent) may also from time to time make equity contributions to GSWC and BVES.
Borrowings on AWR’s new credit facility is used to support AWR (parent) and its contracted services subsidiary, and borrowings on GSWC’s and BVES’s credit facilities are used to fund GSWC and BVES capital programs, respectively, until long-term financing is arranged. AWR may also from time to time make equity contributions to GSWC and BVES.
Information comparing the liquidity and capital resources for fiscal years 2022 and 2021 can be found under Item 7, Management’s Discussion and Analysis under the heading “ Liquidity and Capital Resources ” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC.
Information comparing the liquidity and capital resources for fiscal years 2023 and 2022 can be found under Item 7, Management’s Discussion and Analysis under the heading “ Liquidity and Capital Resources ” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC.
As of December 31, 2023, Registrant’s total amount of unrecognized tax benefits was zero. Pension Benefits — Registrant’s pension benefit obligations and related costs are calculated using actuarial concepts within the framework of accounting guidance for employers’ accounting for pensions and post-retirement benefits other than pensions.
As of December 31, 2024, Registrant’s total amount of unrecognized tax benefits was zero. Pension Benefits — Registrant’s pension benefit obligations and related costs are calculated using actuarial concepts within the framework of accounting guidance for employers’ accounting for pensions and post-retirement benefits other than pensions.
The remaining $1.4 million is for commitments for purchased water with other third parties, which expire through 2038. Imported Water GSWC also manages a portfolio of water supply arrangements with water wholesalers who may import water from outside the immediate service area.
The remaining $1.2 million is for commitments for purchased water with other third parties, which expire through 2038. Imported Water GSWC also manages a portfolio of water supply arrangements with water wholesalers who may import water from outside the immediate service area.
Future cash flows from contracted services subsidiaries will depend on new business activities, existing operations, the construction of new and/or replacement infrastructure at military bases, timely economic price and equitable adjustment of prices, and timely collection of payments from the U.S. government and other prime contractors operating at the military bases, and any adjustments arising out of an audit or investigation by federal governmental agencies.
Future cash flows from contracted services subsidiaries will depend on new business activities, existing operations, the 54 Table of Contents construction of new and/or replacement infrastructure at military bases, timely economic price and equitable adjustment of prices, and timely collection of payments from the U.S. government and other prime contractors operating at the military bases, and any adjustments arising out of an audit or investigation by federal governmental agencies.
BVES has an electric-supply-cost balancing account, as approved by the CPUC, to alleviate any impacts to earnings. Construction Program GSWC maintains an ongoing water distribution main replacement program throughout its customer service areas based on the age and type of distribution-system materials, priority of leaks detected, remaining productive life of the distribution system and an underlying replacement schedule.
BVES has an electric-supply-cost balancing account, as approved by the CPUC, to alleviate any impacts to earnings. 59 Table of Contents Construction Program GSWC maintains an ongoing water distribution main replacement program throughout its customer service areas based on the age and type of distribution-system materials, priority of leaks detected, remaining productive life of the distribution system and an underlying replacement schedule.
Earnings and cash flows from modifications to the initial 50-year contracts and additional contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue in future periods. 42 Table of Contents Operating Expenses: Supply Costs Total supply costs at the regulated utilities comprise the largest segment of total consolidated operating expenses.
Earnings and cash flows from modifications to the initial 50-year contracts and additional contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue in future periods. Operating Expenses: Supply Costs Total supply costs at the regulated utilities comprise the largest segment of total consolidated operating expenses.
In accordance with this funding policy, for 2024, the pension contribution is expected to be approximately $3.3 million . Any differences between the forecasted annual pension costs in rates and the actual pension costs are included in the two-way pension balancing accounts. Additionally, market factors can affect assumptions we use in determining funding requirements with respect to our pension plan.
In accordance with this funding policy, for 2025, the pension contribution is expected to be approximately $3.4 million . Any differences between the forecasted annual pension costs in rates and the actual pension costs are included in the two-way pension balancing accounts. Additionally, market factors can affect assumptions we use in determining funding requirements with respect to our pension plan.
A portion of these capital expenditures was funded by developers through contributions in aid of construction, which are not required to be repaid, and refundable advances. During the years ended December 31, 2023, 2022 and 2021, capital expenditures funded by developers were $7.0 million, $6.9 million and $8.0 million, respectively.
A portion of these capital expenditures was funded by developers through contributions in aid of construction, which are not required to be repaid, and refundable advances. During the years ended December 31, 2024, 2023 and 2022, capital expenditures funded by developers were $8.5 million, $7.0 million and $6.9 million, respectively.
Additionally, the governor of California approved AB 1054 in July 2019 that, among other things, changed the burden of proof applicable in CPUC proceedings in which an electric utility with a valid safety certification seeks to recover wildfire costs. Previously, an electric utility seeking to recover costs had the burden to prove that it acted reasonably.
Additionally, the governor of California approved AB 1054 in July 2019 that, among other things, changed the burden of proof applicable in CPUC proceedings for an electric utility with a valid safety certification seeking to recover wildfire costs. Previously, an electric utility seeking to recover costs had the burden to prove that it acted reasonably.
BVES Power-Supply Arrangements BVES purchases power pursuant to purchase power contracts approved by the CPUC. Prior to 2023, BVES had entered into purchase power contracts with three- and five-year terms depending on the amount of power and the period during which the power is purchased under the contracts. These remaining contracts will expire in 2024.
BVES Power-Supply Arrangements BVES purchases power pursuant to purchase power contracts approved by the CPUC. Prior to 2023, BVES had entered into purchase power contracts with three- and five-year terms depending on the amount of power and the period during which the power is purchased under the contracts. These remaining contracts expired in 2024.
(12) Water purchase agreements consist of (i) a remaining amount of $1.3 million under an agreement expiring in 2028 to use water rights from a third party, and (ii) an aggregate amount of $1.4 million of other water purchase commitments with other third parties, which expire between 2025 through 2038.
(12) Water purchase agreements consist of (i) a remaining amount of $1.1 million under an agreement expiring in 2028 to use water rights from a third party, and (ii) an aggregate amount of $1.2 million of other water purchase commitments with other third parties, which expire between 2025 through 2038.
These assessments provide areas for additional security focus, new controls, and policy changes. Both GSWC and BVES have security systems and infrastructure in place intended to prevent unlawful intrusion, service disruption and cyber-attacks. GSWC and BVES utilize a variety of physical security measures to protect their facilities.
These assessments provide areas for additional security focus, new controls, and policy changes. Both GSWC and BVES have security systems and infrastructure in place intended to prevent unlawful intrusion, service disruption and cyberattacks. GSWC and BVES utilize a variety of physical security measures to protect their facilities.
GSWC supplemented its groundwater production with wholesale purchases from MWD member agencies and regional water suppliers (roughly 43% of total demand) and with authorized diversions from rivers (roughly 4%) under agreements with the United States Bureau of Reclamation and the Sacramento Municipal Utility District. GSWC also utilizes recycled water supplies to serve recycled water customers in several service areas.
GSWC supplemented its groundwater production with wholesale purchases from MWD member agencies and regional water suppliers (roughly 40% of total demand) and with authorized diversions from rivers (roughly 3%) under agreements with the United States Bureau of Reclamation and the Sacramento Municipal Utility District. GSWC also utilizes recycled water supplies to serve recycled water customers in several service areas.
Information comparing the consolidated results of operations for fiscal years 2022 and 2021 can be found under Item 7, Management’s Discussion and Analysis under the headings “Summary Results by Segment” and “Consolidated Results of Operations-Years Ended December 31, 2022 and 2021” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC. 47 Table of Contents Critical Accounting Policies and Estimates Critical accounting policies and estimates are those that are important to the portrayal of AWR’s financial condition, results of operations and cash flows, and require the most difficult, subjective or complex judgments of AWR’s management.
Information comparing the consolidated results of operations for fiscal years 2023 and 2022 can be found under Item 7, Management’s Discussion and Analysis under the headings “Summary Results by Segment” and “Consolidated Results of Operations-Years Ended December 31, 2023 and 2022” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC. 49 Table of Contents Critical Accounting Policies and Estimates Critical accounting policies and estimates are those that are important to the portrayal of AWR’s financial condition, results of operations and cash flows, and require the most difficult, subjective or complex judgments of AWR’s management.
In February 2020, DDW established new response levels for two of the PFAS compounds: 10 parts per trillion (“ppt”) for perfluorooctanoic acid (“PFOA”) and 40 ppt for perfluorooctanesulfonic acid (“PFOS”). In March 2021, DDW issued drinking-water notification and response levels of 0.5 parts per billion (“ppb”) and 5 ppb, respectively, for perfluorobutane sulfonic acid (“PFBS”).
In February 2020, DDW established new response levels for two of the PFAS compounds: 10 parts per trillion (“ppt”) for perfluorooctanoic acid (“PFOA”) and 40 ppt for perfluorooctanesulfonic acid (“PFOS”). In March 2021, DDW issued drinking-water notification and response levels of 0.5 parts per billion (“ppb”) and 5 ppb, respectively, for perfluorobutane sulfonic acid (“PFBS”). In June 2022, the U.S.
(4) Consists of obligations at GSWC related to (i) a loan agreement supporting $7.7 million in outstanding debt issued by the California Pollution Control Financing Authority, and (ii) $1.7 million of obligations with respect to GSWC’s 500 acre-foot entitlement to water from the State Water Project (“SWP”).
(4) Consists of obligations at GSWC related to (i) a loan agreement supporting $7.7 million in outstanding debt issued by the California Pollution Control Financing Authority, and (ii) $1.8 million of obligations with respect to GSWC’s 500 acre-foot 58 Table of Contents entitlement to water from the State Water Project (“SWP”).
(11) Consists primarily of capital expenditures estimated to be required under signed contracts at GSWC and BVES as of December 31, 2023.
(11) Consists primarily of capital expenditures estimated to be required under signed contracts at GSWC and BVES as of December 31, 2024.
Cash Flows from Financing Activities : AWR’s financing activities include primarily: (i) the issuance and repayment of long-term debt and notes payable to banks, (ii) the proceeds from unsecured new or existing revolving credit facilities for AWR, GSWC and BVES, and (iii) the payment of dividends on Common Shares.
Cash Flows from Financing Activities : AWR’s financing activities include primarily: (i) the proceeds from the issuance of Common Shares, (ii) the issuance and repayment of long-term debt and notes payable to financial institutions, (iii) the proceeds from unsecured new or existing revolving credit facilities for AWR, GSWC and BVES, and (iv) the payment of dividends on Common Shares.
(15) Other commitments consist primarily of (i) $10.5 million in asset retirement obligations of GSWC that reflect the retirement of wells by GSWC, which by law need to be properly capped at the time of removal; (ii) irrevocable letters of credit in the amount of $874,600 for the deductible in Registrant’s business automobile insurance policies; and (iii) a $15,000 irrevocable letter of credit issued on behalf of GSWC pursuant to a franchise agreement with the City of Rancho Cordova.
(15) Other commitments consist primarily of (i) $10.8 million in asset retirement obligations of GSWC that reflect the retirement of wells by GSWC, which by law need to be properly capped at the time of removal; (ii) irrevocable letters of credit in the amount of $0.9 million for the deductible in Registrant’s business automobile insurance policies; and (iii) a $15,000 irrevocable letter of credit issued on behalf of GSWC pursuant to a franchise agreement with the City of Rancho Cordova.
There are 26 such member agencies, consisting of 14 cities, 11 municipal water districts and one county water authority. GSWC has 45 connections to MWD’s water distribution facilities and those of member agencies. GSWC purchases MWD water through six separate member agencies aggregating 43,810 acre-feet annually.
There are 26 such member agencies, consisting of 14 cities, 11 municipal water districts and one county water authority. GSWC has 45 connections to MWD’s water distribution facilities and those of member agencies. GSWC purchases MWD water through six separate member agencies aggregating 42,708 acre-feet annually.
These rates are intended to allow recovery of operating costs and a reasonable rate of return on invested capital. GSWC and BVES plan to continue seeking additional rate increases in future years from the CPUC to recover operating and supply costs, and receive reasonable returns on invested capital.
Rates charged to GSWC and BVES customers are authorized by the CPUC. These rates are intended to allow recovery of operating costs and a reasonable rate of return on invested capital. GSWC and BVES plan to continue seeking additional rate increases in future years from the CPUC to recover operating and supply costs, and receive reasonable returns on invested capital.
In October 2023, GSWC also filed for the recovery of all retroactive amounts for 2022 and 2023 accumulated up to the effective date of the new 2023 rates, July 30, 2023.
In October 2023, GSWC also filed for the recovery of all retroactive amounts for 2022 and 2023 accumulated up to the effective date of the new 2023 rates, July 30, 2023, with surcharges implemented in October 2023.
Notification levels are health-based advisory levels established for contaminants in drinking water for which maximum contaminant levels have not been established. The USEPA has also established health advisory levels for these compounds. Notification to consumers and stakeholders is required when the advisory levels or notification levels are exceeded.
Notification levels are health-based advisory levels established for contaminants in drinking water for which maximum contaminant levels have not been established. The U.S. EPA has also established health advisory levels for these compounds. Notification to consumers and stakeholders is required when the advisory levels or notification levels are exceeded.
BVES is pursuing short- and long-term renewable energy contracts to replace any power purchase agreements that have expired in addition to satisfying its requirements related to its resource portfolio for the next compliance period (2021-2024) and beyond. The average price per MWh, including fixed costs, decreased to $79.80 per MWh in 2023 from $97.89 per MWh in 2022.
BVES is pursuing short- and long-term renewable energy contracts to replace any power purchase agreements that have expired in addition to satisfying its requirements related to its resource portfolio for the next compliance period (2025-2027) and beyond. The average price per MWh, including fixed costs, decreased to $71.89 per MWh in 2024 from $79.80 per MWh in 2023.
Accordingly, the services under these contracts are accounted for under Topic 606 Revenue from Contracts with Customers and the water and/or wastewater systems are not recorded as Property, Plant and Equipment on AWR’s consolidated balance sheet.
Accordingly, the services under these contracts are accounted for under Topic 606 Revenue from Contracts with Customers and the water and/or wastewater systems are not recorded as Property, Plant and 50 Table of Contents Equipment on AWR’s consolidated balance sheet.
MWD has available access to store more than 1.65 MAF of water in Lake Mead as part of an intentionally created surplus program developed under a 2007 Interim Shortage agreement and is available for use during dry years.
MWD has available access to store more than 1.6 MAF of water in Lake Mead as part of an intentionally created surplus program developed under a 2007 Interim Shortage agreement and is available for use during dry years. Currently, 1.6 MAF is stored as Intentionally Created Surplus credit.
Registrant has evaluated its cyber-security systems and continues to address identified areas of improvement with respect to U.S. government regulations regarding cyber-security of government contractors.
Registrant has evaluated its cybersecurity systems and continues to address identified areas of improvement with respect to U.S. government regulations regarding cybersecurity of government contractors.
In July 2023, the CPUC approved a new power purchase agreement between BVES and a third party to procure renewable portfolio standard eligible energy and renewable energy credits as a bundled product. BVES will begin taking power under this long-term contract during the fourth quarter of 2024 to replace the existing expiring contracts.
In July 2023, the CPUC approved a new power purchase agreement between BVES and a third party to procure renewable portfolio standard eligible energy and renewable energy credits as a bundled product. BVES began taking power under this long-term contract during the fourth quarter of 2024 to replace the expired contracts.
A hypothetical 25-basis point decrease in the assumed discount rate would have decreased total net periodic pension expense for 2023 by approximately $46,000, which includes an increase in service cost that was more than offset by the decrease in interest cost , and would have increased the projected benefit obligation and accumulated benefit obligation at December 31, 2023 by a total of $6.1 million.
A hypothetical 25-basis point decrease in the assumed discount rate would have decreased total net periodic pension expense for 2024 by approximately $0.1 million, which includes an increase in service cost that was more than offset by the decrease in interest cost, and would have increased the projected benefit obligation and accumulated benefit obligation at December 31, 2024 by a total of $5.5 million.
Performance obligations related to firm-fixed-price contracts are satisfied over time as the ASUS’s performance typically creates or enhances 48 Table of Contents an asset that the U.S. government controls.
Performance obligations related to firm-fixed-price contracts are satisfied over time as ASUS’s performance typically creates or enhances an asset that the U.S. government controls.
From time to time, GSWC may purchase or temporarily use water rights from others for delivery to customers. GSWC has contracts to purchase water or water rights for an aggregate amount of $2.7 million as of December 31, 2023.
From time to time, GSWC may purchase or temporarily use water rights from others for delivery to customers. GSWC has contracts to purchase water or water rights for an aggregate amount of $2.3 million as of December 31, 2024.
GSWC expects to incur additional capital costs as well as increased operating costs to maintain or improve the quality of water delivered to its customers in light of anticipated stress on water resources associated with watershed and aquifer pollution, drought impacts, as well as to meet future water quality standards and consumer expectations.
GSWC expects to incur additional capital costs as well as increased operating costs to maintain or improve the quality of water delivered to its customers in light of anticipated stress on water resources associated with watershed and aquifer pollution, drought impacts, and consumer 63 Table of Contents expectations.
A 25-basis point decrease in the long-term return on pension-plan-asset assumption would have increased 2023 pension cost by approximatel y $456,000. In addition, changes in the fair value of plan assets will impact future pension cost and the Plan’s funded status. Changes in market conditions can affect the value of plan assets held to fund future long-term pension benefits.
A 25-basis point decrease in the long-term return on pension-plan-asset assumption would have increased 2024 pension cost by approximatel y $0.5 million. In addition, changes in the fair value of plan assets will impact future pension cost and the Plan’s funded status. Changes in market conditions can affect the value of plan assets held to fund future long-term pension benefits.
GSWC amortizes contributions in aid of construction at the same composite rate of depreciation for the related property. Cash Flows from Operating Activities : Net cash provided by operating activities was $54.3 million for the year ended December 31, 2023 as compared to $94.5 million for 2022.
GSWC amortizes contributions in aid of construction at the same composite rate of depreciation for the related property. Cash Flows from Operating Activities : Net cash provided by operating activities was $158.6 million for the year ended December 31, 2024 as compared to $54.3 million for 2023.
On June 30, 2023, GSWC filed an advice letter to establish the WCCM for 2023, which increased the 8.85% adopted return on equity in the decision to 9.36% effective July 31, 2023.
On June 30, 2023, GSWC filed an advice letter to establish the WCCM for 2023, which was approved by the CPUC and increased the 8.85% adopted return on equity in the decision to 9.36% effective July 31, 2023.
Due to the delay in finalizing the water general rate case, water revenues billed to customers for the year ended December 31, 2022 and for the period from January 1, 2023 to July 30, 2023 were based on 2021 adopted rates.
Due to the delay in finalizing the previous water general rate case, water revenues billed to customers for the year ended December 31, 2022 and for the period from January 1, 2023 to July 30, 2023 were based on 2021 adopted rates and new 2023 rate increases went into effect on July 31, 2023.
As of December 31, 2023, there is an aggregate cumulative balance of $52.8 million in CPUC-approved general rate case memorandum accounts that have been recognized as regulatory assets with a corresponding increase in water revenues.
As of December 31, 2024, there is an aggregate cumulative balance of $37.7 million in CPUC-approved general rate case memorandum accounts that have been recognized as regulatory assets with a corresponding increase in water revenues.
GSWC also incurs operating costs for testing to determine the levels, if any, of the constituents in its sources of supply, and additional expense to treat contaminants in order to meet the federal and state maximum contaminant level standards and consumer demands.
They also incur operating costs for testing to determine the levels, if any, of the constituents in its sources of supply, and additional expenses to treat contaminants in order to meet the federal and state maximum contaminant level standards and consumer demands.
Supply costs accounted for 33.1% and 30.1% of total operating expenses for the years ended December 31, 2023 and 2022, respectively. Water segment supply costs Two of the principal factors affecting water supply costs are the amount of water produced and the source of the water.
Supply costs accounted for 30.0% and 33.1% of total operating expenses for the years ended December 31, 2024 and 2023, respectively. 44 Table of Contents Water segment supply costs Two of the principal factors affecting water supply costs are the amount of water produced and the source of the water.
Contracted Services Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining the water and/or wastewater systems at various military bases. For the year ended December 31, 2023, revenues from contracted services increased $9.5 million to $120.4 million as compared to $110.9 million for 2022.
Contracted Services Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining the water and/or wastewater systems at various military bases. For the year ended December 31, 2024, revenues from contracted services increased $6.0 million to $126.4 million as compared to $120.4 million for 2023.
In addition, GSWC filed for the recovery of retroactive rate amounts accumulated through July 30, 2023 related to the CPUC approved rate increases for 2022 and 2023, and surcharges were implemented in October 2023 to recover the cumulative retroactive rate differences over 36-months.
GSWC filed for the implementation of the CPUC-approved rate increases that went into effect in July 2023. GSWC also filed for the recovery of retroactive rate amounts accumulated through July 30, 2023 related to the CPUC approved rate increases for 2022 and 2023. Surcharges were implemented in October 2023 to recover the cumulative retroactive rate differences over 36-months.
To determine the expected long-term rate of return on the plan assets, Registrant considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on plan assets will increase pension expense. The long-term expected return on the pension plan’s assets was 5.75% for 2023 and 2022.
To determine the expected long-term rate of return on the plan assets, Registrant considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on plan assets will increase pension expense.
In addition, GSWC and BVES upgrade their facilities in 56 Table of Contents accordance with industry standards, local and CPUC requirements and new legislation.
In addition, GSWC and BVES upgrade their facilities in accordance with industry standards, local and CPUC requirements and new legislation.
During 2024, the water and electric segments’ company-funded capital expenditures are estimated to be approximately $160 – $200 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues. These amounts include approximately $16.7 million estimated to be spent by BVES on wildfire mitigation projects.
During 2025, the water and electric segments’ company-funded capital expenditures are estimated to be approximately $170 - 210 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues. These amounts include approximately $9.1 million estimated to be spent by BVES on wildfire mitigation projects.
Cost of Capital ( “ COC ” ) Proceedings : 2024 COC Application: Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. GSWC’s next cost of capital application was scheduled to be filed on May 1, 2024 effective for the years 2025 - 2027.
Cost of Capital ( “ COC ” ) Proceedings 2026 COC Application Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. After receiving an extension in February 2024, GSWC’s next cost of capital application was scheduled to be filed on May 1, 2025 effective for the years 2026 - 2028.
Currently, changes in consumption generally do not have a significant impact on recorded revenues due to the CPUC-approved WRAM that is in place in all but one small rate-making area. GSWC records the difference between what it bills its water customers and that which is authorized by the CPUC in the WRAM accounts as regulatory assets or liabilities.
Changes in consumption have not had a significant impact on recorded revenues due to the CPUC-approved WRAM that has been in place in all but one small rate-making area. During 2024 and 2023, GSWC recorded the difference between what it bills its water customers and what is authorized by the CPUC in the WRAM accounts as regulatory assets or liabilities.
Item 1A. Risk Factors . Water and Electric Segments: GSWC’s and BVES’s revenues, operating income, and cash flows are earned primarily through delivering potable water to homes and businesses in California and electricity in the Big Bear area of San Bernardino County, California, respectively. Rates charged to GSWC and BVES customers are authorized by the CPUC.
Item 1A. Risk Factors . Water and Electric Segments: GSWC’s revenues, operating income and cash flows are earned primarily through delivering potable water to homes and businesses in California. BVES’s revenues, operating income and cash flows are primarily earned through delivering electricity in the Big Bear area of San Bernardino County, California.
In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and $10.0 million of equity to AWR. GSWC used the proceeds from both issuances to pay-off all of its outstanding intercompany borrowings from AWR at that time. On June 28, 2023, GSWC entered into an unsecured revolving credit facility.
In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and $10.0 million of equity to AWR. GSWC used the proceeds from both issuances to pay-off all of its outstanding intercompany borrowings from AWR at that time.
As of December 31, 2023, GSWC and BVES have unconditional purchase obligations for capital projects of approximately $105.2 million. During the years ended December 31, 2023, 2022 and 2021, GSWC and BVES had capital expenditures of $182.7 million, $174.3 million and $150.6 million, respectively.
As of December 31, 2024, GSWC and BVES have unconditional purchase obligations for capital projects of approximately $96.6 million. During the years ended December 31, 2024, 2023 and 2022, GSWC and BVES had capital expenditures of $244.0 million, $182.7 million and $174.3 million, respectively.
Cash Flows from Financing Activities : Net cash provided by financing activities was $110.6 million for the year ended December 31, 2023 as compared to $53.1 million for 2022.
Cash Flows from Financing Activities : Net cash provided by financing activities was $48.3 million for the year ended December 31, 2024 as compared to $110.6 million for 2023.
Administrative and general expenses at AWR (parent) during the year ended December 31, 2023 reflect the reversal of a previous accrual for a matter that was favorably resolved.
Administrative and general expenses at AWR (parent) during the year ended December 31, 2023 reflected the reversal of a previous accrual for a matter that was favorably resolved and did not recur in 2024.
When necessary, AWR obtains funds from external sources through the capital markets and from bank borrowings. Access to external financing on reasonable terms depends on the credit ratings of AWR and GSWC and current business conditions, including that of the water utility industry in general as well as conditions in the debt or equity capital markets.
Access to external financing on reasonable terms depends on the credit ratings of AWR and GSWC and current business conditions, including that of the water utility industry in general as well as conditions in the debt or equity capital markets.
These costs will be subject to review by the CPUC during the general rate case proceeding. 36 Table of Contents Contracted Services Segment: ASUS’s revenues, operating income and cash flows are earned by providing water and/or wastewater services, including operation and maintenance services and construction of facilities for the water and/or wastewater systems at various military installations, pursuant to an initial 50-year, firm-fixed-price contract, additional firm-fixed-price contracts, task order agreements and subcontracts with third party prime contractors on military bases.
Contracted Services Segment: ASUS’s revenues, operating income and cash flows are earned by providing water and/or wastewater services, including operation and maintenance services and construction of facilities for the water and/or wastewater systems at various military installations, pursuant to an initial 50-year, firm fixed-price contract, additional firm fixed-price contracts, task order agreements and subcontracts with third party prime contractors on military bases.
Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. The overall actual percentages for purchased water for the years ended December 31, 2023 and 2022 were 43% and 45%, as compared to the adopted percentages of 41% and 34% for 2023 and 2022.
Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. The overall actual percentages for purchased water for the years ended December 31, 2024 and 2023 were 41% and 43%.
Water Supply GSWC During 2023, GSWC delivered approximately 54.3 million hundred cubic feet (“ccf”) of water to its customers, which is an average of about 342 acre-feet per day or 111 million gallons per day (an acre-foot is approximately 435.6 ccf or 326,000 gallons). Approximately 53% of GSWC’s supply came from groundwater produced from wells situated throughout GSWC’s service areas.
Water Supply GSWC During 2024, GSWC delivered approximately 56.7 million hundred cubic feet (“ccf”) of water to its customers, which is an average of about 357 acre-feet per day or 116 million gallons per day (an acre-foot is approximately 435.6 ccf or 326,000 gallons). Approximately 57% of GSWC’s supply came from groundwater produced from wells situated throughout GSWC’s service areas.
In October 2023, GSWC also filed with the CPUC to recover all retroactive rate amounts accumulated in memorandum accounts for the full 2022 year and for 2023 through July 30, 2023. Surcharges were implemented to recover the cumulative retroactive rate differences over 36 months.
In October 2023, surcharges were implemented to recover all retroactive rate differences accumulated in memorandum accounts for the full year of 2022 and for 2023 through July 30, 2023 over 36 months.
As of December 31, 2023, GSWC has a $1.1 million over-collection in its two- 49 Table of Contents way pension balancing account for the general office and water regions. As of December 31, 2023, BVES has a $277,000 over-collection in its two-way pension balancing account. Funding requirements for qualified defined benefit pension plans are determined by government regulations.
As of December 31, 2024, GSWC has a $1.7 million over-collection in its two-way pension balancing account for the general office and water regions. As of December 31, 2024, BVES has an insignificant balance in its two-way pension balancing account. Funding requirements for qualified defined benefit pension plans are determined by government regulations.
Overall debt levels are expected to increase to fund a portion of the costs of the capital expenditures that will be made by the regulated utilities. Net cash provided by financing activities was $129.2 million for the year ended December 31, 2023 as compared to cash provided of $50.3 million for 2022.
Overall debt levels are expected to increase to fund the costs of the capital expenditures that will be made by the regulated utilities. 55 Table of Contents Net cash provided by financing activities was $46.6 million for the year ended December 31, 2024 as compared to cash provided of $129.2 million for 2023.
In June 2022, the USEPA issued interim updated drinking-water health advisories for PFOA and PFOS, and also issued final health advisories for PFBS and other compounds known as GenX chemicals. In October 2022, DDW issued drinking-water notification and response levels of 3 ppt and 20 ppt, respectively, for perfluorohexane sulfonic acid (“PFHxS”).
EPA issued interim updated drinking-water health advisories for PFOA and PFOS, and also issued final health advisories for PFBS and other compounds known as GenX chemicals. In October 2022, DDW issued drinking-water notification and response levels of 3 ppt and 20 ppt, respectively, for perfluorohexane sulfonic acid (“PFHxS”). Drinking Water Maximum Contaminant Levels On April 10, 2024, the U.S.
Projected capital expenditures and other investments are subject to periodic review and revision. During 2024, the water and electric segments’ company-funded capital expenditures are estimated to be approximately $160 – $200 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues.
Projected capital expenditures and other investments are subject to periodic review and revision. During 2025, the regulated utilities’ company-funded capital expenditures are estimated to be approximately $170 – $210 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues.
ASUS’s subsidiaries operate facilities within the boundaries of military bases, which provide limited access to the general public. To further enhance security, in prior years, certain upgrades were completed at various military bases through contract modifications funded by the U.S. government.
ASUS’s subsidiaries operate facilities within the boundaries of military bases, which provide limited access to the general public. To further enhance security, in prior years, certain upgrades, such as key card requirements at all access points and security camera systems, were completed at military bases through contract modifications funded by the U.S. government.
Due to GSWC’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefit costs related to the pension plan have no material impact to earnings.
However, as a result of GSWC’s and BVES’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefit costs related to the pension plan have no material impact to earnings.
On January 22, 2024, GSWC filed a new financing application with the CPUC, pending approval, that requests the authorization for the issuance and sale of additional long-term debt and equity securities of up to $750.0 million.
Under the current financing application authorized by the CPUC, GSWC does not have any remaining funds available for the issuance of long-term financing. On January 22, 2024, GSWC filed a new financing application with the CPUC, pending approval, that requests authorization for the issuance and sale of additional long-term debt and equity securities of up to $750.0 million.
The CPUC requires GSWC to pay-off all intercompany borrowings it has from AWR within a 24-month period. GSWC’s borrowings under its new 53 Table of Contents credit facility will also be required to be paid-off in full within a 24-month period. GSWC’s next pay-off period ends in June 2025.
The CPUC requires GSWC to pay-off all intercompany borrowings it has from AWR within a 24-month period. GSWC’s borrowings under its credit facility will be required to be paid-off in full within a 24-month period after which GSWC may continue to borrow under its facility. GSWC’s next pay-off period ends in June 2025.
ASUS’s earnings are also impacted by the level of construction projects at its subsidiaries, which may or may not continue at current levels in future periods. Water For the year ended December 31, 2023, revenues from water operations increased by $92.9 million to $433.5 million, compared to 2022.
ASUS’s earnings are also impacted by the level of construction projects at its subsidiaries, which may or may not continue at current levels in future periods. Water For the year ended December 31, 2024, revenues from water operations decreased by $16.1 million to $417.4 million, compared to 2023.
The impact of retroactive rates for the full year of 2022 as well as second-year rate increases for 2023 have been reflected in the results of operations for the year ended December 31, 2023.
The impact of retroactive rates for the full year of 2022 as well as the 2023 estimated second-year rate increases have been reflected in the results of operations for the year ended December 31, 2023. The third-year rate increases for 2024, which were effective January 1, 2024, have been reflected in the year ended December 31, 2024 results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRegistrant believes a breach of customer personally identifiable information is one of the most significant financial risks to it as the costs incurred could exceed the amount of its cybersecurity insurance coverage. 26 Table of Contents Nevertheless, in order to continue meeting Registrant’s technological business needs and as more vendors build solutions in the cloud, Registrant expects to further expand its use of cloud-computing environments.
Biggest changeNevertheless, in order to continue meeting Registrant’s technological business needs and as more vendors build solutions in the cloud, Registrant expects to further expand its use of cloud-computing environments. As such, Registrant expects risks from cyberattacks and data breaches to increase due to the growth of its technological footprint in the cloud environments.
Threats can come from many sources, including, but not limited to, ransomware, malicious software, credential loss or theft, supervisory control and data acquisition (“SCADA”) system takeover, equipment theft, supply chain attacks, phishing attacks, identity-based attacks, denial-of-service attacks or the actions of employees either intentional or accidental.
Threats can come from many sources, including, but not limited to, ransomware, malicious software, credential loss or theft, supervisory control and data acquisition system takeover, equipment theft, supply chain attacks, phishing attacks, identity-based attacks, denial-of-service attacks or the actions of employees either intentional or accidental.
The communication will include but not be limited to, the nature and status of the cyber-attack and Registrant’s plan to contain and mitigate the cyber threat and ultimately the remediation and recovery plan to return to “business as usual” state. Registrant’s CFO has over 15 years overseeing the Company’s risk management area.
The communication will include but not be limited to, the nature and status of the cyberattack and Registrant’s plan to contain and mitigate the cyber threat and ultimately the remediation and recovery plan to return to “business as usual” state. Registrant’s CFO has over 15 years overseeing the Company’s risk management area.
The Board satisfies its oversight responsibility by obtaining information from the ERM liaison and senior management of Registrant, with input from the senior management of Registrant’s subsidiaries as necessary. On a quarterly basis, Registrant’s senior management will discuss the implementation status of plans to mitigate cybersecurity risks with the ERM liaison.
The Board satisfies its oversight responsibility by obtaining information from the ERM liaison and senior management of Registrant, with input from the senior management of Registrant’s subsidiaries as necessary. On a quarterly basis, Registrant’s senior management will discuss plans to mitigate cybersecurity risks with the ERM liaison.
Tools are in place within Registrant’s environment to monitor for anomalous behavior and provide alerting and, in some cases, automated responses to threats. Registrant’s cybersecurity team meets regularly with product vendors for these tools to ensure optimal configurations are in place to protect its environment.
Tools are in place within Registrant’s environment to monitor for anomalous behavior and provide rapid alerting for emerging threats and, in some cases, automated responses to threats. Registrant’s cybersecurity team meets regularly with product vendors for these tools to ensure optimal configurations are in place to protect its environment.
If a cyber-attack were to occur, continuous engagement, communication and collaboration between Registrant’s cybersecurity team and members of its CIRT as well as third parties would likely be necessary in order to gather accurate and complete information, perform a comprehensive evaluation and assessment of the cyber-attack, manage and contain the cybersecurity threat, and develop and execute a remediation and recovery plan.
If a cyberattack were to occur, continuous engagement, communication and collaboration between Registrant’s cybersecurity team and members of its CIRT as well as third parties would likely be necessary in order to gather accurate and complete information, perform a comprehensive evaluation and assessment of the cyberattack, manage and contain the cybersecurity threat, and develop and execute a remediation and recovery plan.
To ensure threat and vulnerability information is up-to-date, the cybersecurity team subscribes to multiple national and state-level threat and vulnerability information disclosure services, both general-purpose and industry-specific in nature. Updates from these sources include general information delivered on a daily basis and more threat-specific information delivered as required.
To keep threat and vulnerability information up-to-date, the cybersecurity team subscribes to multiple national and state-level threat and vulnerability information disclosure services, both general-purpose and industry-specific in nature. Updates from these sources include general information delivered on a daily basis and more threat-specific information delivered as required.
Registrant could also be assessed penalties if it is determined that applicable data privacy laws have been violated. 28 Table of Contents
Registrant could also be assessed penalties if it is determined that applicable data privacy laws have been violated. 29 Table of Contents
The cost of responding to a cyber-attack could be significant depending on the severity of the cyber-attack and could go beyond financial costs as operations and services provided by Registrant could be delayed and coordinated resources in response could be significant.
The cost of responding to a cyberattack could be significant depending on the severity of the cyberattack and could go beyond financial costs as operations and services provided by Registrant could be delayed and coordinated resources in response could be significant.
To ensure that members of Registrant’s Board are informed of material cyber-attacks, Registrant’s CFO and IT Director have been designated as key members of management that will provide current updates to Registrant’s ERM liaison and the Board.
To ensure that members of Registrant’s Board are informed of material cyberattacks, Registrant’s CFO and IT Director have been designated as key members of management that will provide current updates to Registrant’s ERM liaison and the Board.
Cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect Registrant, including its business strategy, results of operations or financial condition. However, the risk of cybersecurity threats could be significant if the cyber-attack disrupts Registrant’s critical operations, service or financial systems.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect Registrant, including its business strategy, results of operations or financial condition. However, the risk of cybersecurity threats could be significant if a cyberattack disrupts Registrant’s critical operations, service or financial systems.
Members of its CIRT team would work together to determine whether a cybersecurity breach is material and required to be reported to the Board and publicly under applicable law.
Members 28 Table of Contents of its CIRT team would work together to determine whether a cybersecurity breach is material and required to be reported to the Board and publicly under applicable law and regulation.
Registrant’s Board of Directors (“the Board”) oversees enterprise risk management, or ERM, performed under the direction of Registrant’s senior management team.
Registrant’s Board of Directors (the “Board”) oversees enterprise risk management, or ERM, performed under the direction of Registrant’s senior management team.
To determine the risk to Registrant’s systems, it engages in a continuous vulnerability management lifecycle process to identify and remediate vulnerable systems and system configurations. In this regard, Registrant leverages the National Institute of Standards and Technologies cybersecurity framework.
To determine the risk to Registrant’s systems, it engages in a continuous vulnerability management lifecycle process to identify and remediate vulnerable systems and system configurations. In this regard, Registrant leverages the NIST cybersecurity frameworks.
Despite the actions Registrant has taken and is taking and the fact that, to its knowledge, it has yet to experience a cybersecurity incident, there can be no assurance that Registrant will not experience a cybersecurity incident.
Registrant is also taking actions intended to strengthen its cybersecurity posture and to improve its cybersecurity incident response plans and operating procedures. Despite the actions Registrant has taken and is taking and the fact that, to its knowledge, it has yet to experience a cybersecurity incident, there can be no assurance that Registrant will not experience a cybersecurity incident.
Registrant also conducts specialized training for ASUS employees annually on protecting certain types of information relating to the work ASUS and its subsidiaries do with the U.S. government to comply with U.S. government contracting requirements. In addition, Registrant conducts periodic and unannounced phishing tests with all employees and vulnerability assessment and penetration tests.
Registrant conducts mandatory quarterly cybersecurity training for all employees. Registrant also conducts specialized training for ASUS employees annually on protecting certain types of information relating to the work ASUS and its subsidiaries do with the U.S. government to comply with U.S. government contracting requirements.
In addition, Registrant’s plans require members of its senior management, such as its CEO and CFO, as well as members of management from its, and its subsidiaries’, Operations, Information Technology, Human Capital Management, Accounting and Legal teams participate in Registrant’s Cybersecurity Incident Response Team (“CIRT”) to be kept current on all aspects related to a cyber-attack, if a cybersecurity incident were to occur. 27 Table of Contents Responses to cyber-attacks are fast-moving and dynamic and would require an assessment of actual or potential damage performed by Registrant’s cybersecurity team.
In addition, Registrant’s plans require members of its senior management, such as its CEO and CFO, as well as members of management from its, and its subsidiaries’, Operations, Information Technology, Human Capital Management, Accounting and Legal teams to participate in Registrant’s Cybersecurity Incident Response Team (“CIRT”) and to be kept current on all aspects related to a cyberattack, if a cybersecurity incident were to occur.
In addition, Registrant has dedicated employees with cybersecurity technical expertise and also leverages outside cybersecurity firms. Registrant has adopted multi-layered safeguards and educational measures to protect its operations, assets and digital information. Registrant conducts mandatory quarterly cybersecurity training for all employees.
Its platform was designed to be consistent with industry best practices such as the U.S. National Institute of Standards and Technology (“NIST”) 27 Table of Contents cybersecurity frameworks. In addition, Registrant has dedicated employees with cybersecurity technical expertise and also leverages outside cybersecurity firms. Registrant has adopted multi-layered safeguards and educational measures to protect its operations, assets and digital information.
Threat actors using ransomware have also increased their use of data, not only for direct ransom and data destruction, but also to release the data to the public.
Threat actors using ransomware have also increased their use of data, not only for direct ransom and data destruction, but also to release the data to the public. Registrant believes a breach of customer personally identifiable information is one of the most significant financial risks to it as the costs incurred could exceed the amount of its cybersecurity insurance coverage.
Registrant has adopted a cybersecurity incident response policy, plan and set of specific instructions, which are annually reviewed by the IT cybersecurity team members. Registrant is also taking actions intended to strengthen its cybersecurity posture and to improve its cybersecurity incident response plans and operating procedures.
In addition, Registrant conducts periodic and unannounced phishing tests with all employees and vulnerability assessment and penetration tests. Registrant has adopted a cybersecurity incident response policy, plan and set of specific instructions, which are annually reviewed by the IT cybersecurity team members.
As such, Registrant expects risks from cyberattacks and data breaches to increase due to the growth of its technological footprint in the cloud environments. Registrant expects to continue to increase its investment in information technology to monitor and address cyber threats and attempted cyber-attacks, and to improve its posture in addressing security vulnerabilities.
As cyberattacks have become more frequent and sophisticated, including against third-party technology providers, Registrant expects to continue to increase its investment in information and operational technology to monitor and address cyber threats and attempted cyberattacks, and to improve its posture in addressing security vulnerabilities. Registrant has implemented robust cybersecurity systems and controls to prevent any unauthorized access to information.
Added
Responses to cyberattacks are fast-moving and dynamic and would require an assessment of actual or potential damage performed by Registrant’s cybersecurity team.

Item 2. Properties

Properties — owned and leased real estate

7 edited+0 added−0 removed9 unchanged
Biggest changeASUS leases office facilities in Virginia and North Carolina, and owns service centers in Florida, Maryland, South Carolina, Virginia, Texas, North Carolina and Kansas. Mortgage and Other Liens As of December 31, 2023, neither AWR, GSWC, BVES, ASUS, nor any of its subsidiaries, had any mortgage debt or liens securing indebtedness outstanding.
Biggest changeASUS leases office facilities in Virginia, North Carolina and Maryland, and owns service centers in Florida, Maryland, South Carolina, Virginia, Texas, North Carolina and Kansas. Mortgage and Other Liens As of December 31, 2024, neither AWR, GSWC, BVES, ASUS, nor any of its subsidiaries, had any mortgage debt or liens securing indebtedness outstanding.
Under the terms of certain debt instruments, AWR, GSWC and BVES are prohibited from issuing any secured debt, without providing equal and ratable security to the holders of this existing debt. 29 Table of Contents Condemnation of Properties The laws of the state of California provide for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation, where doing so constitutes a more necessary use.
Under the terms of certain debt instruments, AWR, GSWC and BVES are prohibited from issuing any secured debt, without providing equal and ratable security to the holders of this existing debt. 30 Table of Contents Condemnation of Properties The laws of the state of California provide for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation, where doing so constitutes a more necessary use.
Properties Water Properties As of December 31, 2023, GSWC’s physical properties consisted of water transmission and distribution systems, which included 2,878 miles of pipeline together with services, meters and fire hydrants, and approximately 450 parcels of land generally less than 1 acre each, on which are located wells, pumping plants, reservoirs and other water utility facilities, including five surface water treatment plants.
Properties Water Properties As of December 31, 2024, GSWC’s physical properties consisted of water transmission and distribution systems, which included 2,882 miles of pipeline together with services, meters and fire hydrants, and approximately 450 parcels of land generally less than 1 acre each, on which are located wells, pumping plants, reservoirs and other water utility facilities, including five surface water treatment plants.
Surface water rights are quantified and managed by the SWRCB, unless the surface water rights originated prior to 1914. As of December 31, 2023, GSWC had adjudicated groundwater rights and surface water rights of 69,409 and 11,335 acre-feet per year, respectively.
Surface water rights are quantified and managed by the SWRCB, unless the surface water rights originated prior to 1914. As of December 31, 2024, GSWC had adjudicated groundwater rights and surface water rights of 70,794 and 11,335 acre-feet per year, respectively.
As of December 31, 2023, GSWC owned 239 wells, of which 167 are active with an aggregate production capacity of approximately 164 million gallons per day. GSWC has 59 connections to the water distribution facilities of the MWD, and other municipal water agencies. GSWC’s storage reservoirs and tanks have an aggregate capacity of approximately 119 million gallons.
As of December 31, 2024, GSWC owned 238 wells, of which 176 are active with an aggregate production capacity of approximately 180 million gallons per day. GSWC has 59 connections to the water distribution facilities of the MWD, and other municipal water agencies. GSWC’s storage reservoirs and tanks have an aggregate capacity of approximately 119 million gallons.
As of December 31, 2023, BVES owned and operated approximately 87.8 miles of overhead 34.5 kilovolt (kv) sub-transmission lines (17.43 circuit miles are insulated), 6.49 miles of underground 34.5 kv sub-transmission lines, 493.41 miles of overhead 4.16 kv or 2.4 kv distribution lines (36.2 circuit miles are insulated), 114.22 miles of underground cable, 13 sub-stations and a natural gas-fueled 8.4 MW peaking generation facility.
As of December 31, 2024, BVES owned and operated approximately 87.8 miles of overhead 34.5 kilovolt (kv) sub-transmission lines (21.94 circuit miles are insulated), 6.49 miles of underground 34.5 kv sub-transmission lines, 494.36 miles of overhead 4.16 kv or 2.4 kv distribution lines (45.01 circuit miles are insulated), 114.52 miles of underground cable, 13 sub-stations and a natural gas-fueled 8.4 MW peaking generation facility.
GSWC owns no dams. The following table provides, in greater detail, information regarding the water utility plant of GSWC: Pumps Distribution Facilities Reservoirs Well Booster Mains* Services Hydrants Tanks Capacity* 239 387 2,878 264,097 26,852 145 119 (1) * Reservoir capacity is measured in millions of gallons. Mains are in miles.
GSWC owns no dams. The following table provides, in greater detail, information regarding the water utility plant of GSWC: Pumps Distribution Facilities Reservoirs Well Booster Mains* Services Hydrants Tanks Capacity* 238 378 2,882 264,696 27,087 144 119 (1) * Reservoir capacity is measured in millions of gallons. Mains are in miles.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+2 added−1 removed6 unchanged
Biggest changeThe following table provides information about AWR repurchases of its Common Shares during the fourth quarter of 2023: 32 Table of Contents Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares That May Yet Be Purchased under the Plans or Programs (1)(3) October 1 - 31, 2023 468 $ 77.22 — — November 1 - 30, 2023 203 $ 80.11 — — December 1 - 31, 2023 3,086 $ 79.55 — — Total 3,757 (2) $ 79.29 — (1) None of the Common Shares were repurchased pursuant to any publicly announced stock repurchase program.
Biggest changeOther Information The shareholders of AWR have approved the material features of all equity-compensation plans under which AWR directly issues equity securities. 33 Table of Contents The following table provides information about AWR repurchases of its Common Shares during the fourth quarter of 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares That May Yet Be Purchased under the Plans or Programs (1)(3) October 1 - 31, 2024 11,425 $ 83.37 — — November 1 - 30, 2024 302 $ 83.86 — — December 1 - 31, 2024 3,143 $ 84.87 — — Total 14,870 (2) $ 83.70 — (1) None of the Common Shares were repurchased pursuant to any publicly announced stock repurchase program.
In accordance with SEC guidance, the returns of the seven utilities included in the peer group are weighted according to their respective market capitalizations. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Common Shares, and in the common stock in the index and in the peer group on December 31, 2018.
In accordance with SEC guidance, the returns of the seven utilities included in the peer group are weighted according to their respective market capitalization. An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Common Shares, and in the common stock in the index and in the peer group on December 31, 2019.
The following table lists the amounts of dividends paid on Common Shares of American States Water Company: 2023 2022 First Quarter $ 0.3975 $ 0.3650 Second Quarter $ 0.3975 $ 0.3650 Third Quarter $ 0.4300 $ 0.3975 Fourth Quarter $ 0.4300 $ 0.3975 Total $ 1.6550 $ 1.5250 AWR’s ability to pay dividends is subject to the requirement in its revolving credit facility to maintain compliance with all covenants described in Note 9 Bank Debt included in Part II, Item 8, in the Notes to Consolidated Financial Statements .
The following table lists the amounts of dividends paid on Common Shares of American States Water Company: 2024 2023 First Quarter $ 0.4300 $ 0.3975 Second Quarter $ 0.4300 $ 0.3975 Third Quarter $ 0.4655 $ 0.4300 Fourth Quarter $ 0.4655 $ 0.4300 Total $ 1.7910 $ 1.6550 AWR’s ability to pay dividends is subject to the requirement in its revolving credit facility to maintain compliance with all covenants described in Note 9 Bank Debt included in Part II, Item 8, in the Notes to Consolidated Financial Statements .
(2) Of these amounts, zero Common Shares were acquired on the open market for employees pursuant to the 401(k) plan. The remainder of the shares were acquired on the open market for participants in the DRP.
(2) Of these amounts, 11,016 Common Shares were acquired on the open market for employees pursuant to the 401(k) plan. The remainder of the shares were acquired on the open market for participants in the DRP.
GSWC is prohibited under the terms of its senior notes from paying dividends if, after giving effect to the dividend, its total indebtedness to capitalization ratio (as defined) would be more than 0.6667-to-1. GSWC would have to issue additional debt of $716.3 million to invoke this covenant as of December 31, 2023.
GSWC is prohibited under the terms of its senior notes from paying dividends if, after giving effect to the dividend, its total indebtedness to capitalization ratio (as defined) would be more than 0.6667-to-1. GSWC would have to issue additional debt of $881.7 million to invoke this covenant as of December 31, 2024.
Under the least restrictive of the California tests, approximately $776.1 million was available to pay dividends to AWR’s common shareholders and repurchase shares from AWR’s common shareholders at December 31, 2023.
Under the least restrictive of the California tests, approximately $920.1 million was available to pay dividends to AWR’s common shareholders and repurchase shares from AWR’s common shareholders at December 31, 2024.
AWR did not issue any unregistered equity securities during 2023.
AWR did not issue any unregistered equity securities during 2024.
As a result, there is no public trading market in its common shares. Approximate Number of Holders of Common Shares As of February 20, 2024, there were 1,854 holders of record of the 36,988,764 outstanding Common Shares of American States Water Company. AWR owns all of the outstanding common shares of GSWC, BVES and ASUS.
As a result, there is no public trading market in its common shares. Approximate Number of Holders of Common Shares As of February 18, 2025, there were 1,739 holders of record of the 38,156,568 outstanding Common Shares of American States Water Company. AWR owns all of the outstanding common shares of GSWC, BVES and ASUS.
AWR paid $61.2 million in dividends to shareholders for the year ended December 31, 2023, as compared to $56.4 million for the year ended December 31, 2022. GSWC paid dividends of $55.4 million and $27.0 million to AWR in 2023 and 2022, respectively.
AWR paid $67.0 million in dividends to shareholders for the year ended December 31, 2024, as compared to $61.2 million for the year ended December 31, 2023. GSWC paid dividends of $35.1 million and $55.4 million to AWR in 2024 and 2023, respectively. BVES did not pay dividends to AWR in 2024 and 2023.
Approximately $703.8 million was available for GSWC to pay dividends to AWR at December 31, 2023, and approximately $72.3 million was available for BVES to pay dividends to AWR at December 31, 2023.
Approximately $805.8 million was available for GSWC to pay dividends to AWR at December 31, 2024, and approximately $102.1 million was available for BVES to pay dividends to AWR at December 31, 2024.
Relative performance is tracked through December 31, 2023. 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 American States Water Company $ 100.00 $ 131.19 $ 122.32 $ 161.78 $ 147.31 $ 130.43 S&P 500 $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Peer Group $ 100.00 $ 134.93 $ 157.90 $ 194.95 $ 166.87 $ 142.93 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 31 Table of Contents Market Information Relating to Common Shares Common Shares of American States Water Company are traded on the New York Stock Exchange (“NYSE”) under the symbol “AWR.” GSWC is a wholly-owned subsidiary of AWR.
Relative performance is tracked through December 31, 2024. 12/2019 12/2020 12/2021 12/2022 12/2023 12/2024 American States Water Company $ 100.00 $ 93.24 $ 123.32 $ 112.29 $ 99.42 $ 98.24 S&P 500 $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 Peer Group $ 100.00 $ 117.02 $ 144.49 $ 123.67 $ 105.94 $ 101.00 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 32 Table of Contents Market Information Relating to Common Shares Common Shares of American States Water Company are traded on the New York Stock Exchange (“NYSE”) under the symbol “AWR.” GSWC is a wholly-owned subsidiary of AWR.
Removed
BVES did not pay dividends to AWR in 2023 and paid dividends of $14.7 million to AWR in 2022. ASUS paid dividends of $16.0 million and $14.7 million to AWR in 2023 and 2022, respectively. Other Information The shareholders of AWR have approved the material features of all equity-compensation plans under which AWR directly issues equity securities.
Added
ASUS paid dividends of $16.0 million to AWR in 2024 and 2023. Unregistered Sales of Equity Securities On December 30, 2024, GSWC issued 2.7586 common shares to AWR in exchange for a contribution of $39,999,700.
Added
These shares were issued in a private placement, and the proceeds were used to pay outstanding borrowings under GSWC’s credit agreement and to fund GSWC’s operations and capital expenditures. GSWC issued the common shares upon the exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

2 edited+0 added−1 removed5 unchanged
Biggest changeIn addition, both the impact of retroactive rates related to the full year 2022 recorded during the year ended December 31, 2023 resulting from the final decision on the water general rate case, and the impact from the estimates of revenues subject to refund recorded in 2022 and changes to estimates recorded in 2023 following the receipt of a final cost of capital decision in June 2023 have been excluded when communicating AWR’s consolidated and water segment results for the years ended December 31, 2023 and 2022 to help facilitate comparisons of the Company’s performance from period to period.
Biggest changeThe impact of retroactive rates related to the full year of 2022 recorded during the year ended December 31, 2023 resulting from the final decision in the water general rate case approved in June 2023 and the impact from the reversal of revenues subject to refund recorded in 2022 due to a change in estimates recorded in 2023 following the receipt of a final cost of capital decision in June 2023 have been excluded in this analysis when communicating AWR’s consolidated and water segment results for the years ended December 31, 2024 and 2023 to help facilitate comparisons of Registrant’s performance from period to period.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides information on AWR’s consolidated operations and assets, and includes specific references to AWR’s individual segments and its subsidiaries (GSWC, BVES, and ASUS and its subsidiaries), and AWR (parent) where applicable.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis provides information on AWR’s consolidated operations and assets, and includes specific references to (i) GSWC, AWR’s regulated water utility segment, (ii) BVES, AWR’s regulated electric utility segment, (iii) ASUS and its subsidiaries, collectively, AWR’s contracted services segment, and (iv) AWR (parent) where applicable.
Removed
The gains and losses generated on the investments held to fund one of the Company’s retirement plans during the years ended December 31, 2023 and 2022 have been excluded when communicating the results to help facilitate comparisons of AWR’s performance from period to period.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−0 removed3 unchanged
Biggest changeThe new contract provides for the purchase of electricity during a delivery period from November 1, 2024 through December 31, 2035. Under this contract, there is an embedded derivative that also requires mark-to-market accounting. The CPUC authorized the use of a regulatory asset and liability memorandum account to offset the mark-to-market entries required by the accounting guidance.
Biggest changeThe new 67 Table of Contents contract provides for the purchase of electricity during a delivery period from November 1, 2024 through December 31, 2035. Under this contract, there is an embedded derivative that also requires mark-to-market accounting.
In July 2023, the CPUC approved a new power purchase agreement between BVES and a third party to procure renewable portfolio standard eligible energy and RECs as a bundled product. BVES will begin taking power under this long-term contract during the fourth quarter of 2024 to replace the existing expiring contracts.
In July 2023, the CPUC approved a new power purchase agreement between BVES and a third party to procure renewable portfolio standard eligible energy and RECs as a bundled product. BVES began taking power under this long-term contract during the fourth quarter of 2024 to replace the existing expiring contracts.
Except as discussed above, Registrant has had no other derivative financial instruments, financial instruments with significant off-balance sheet risks or financial instruments with concentrations of credit risk. 64 Table of Contents
Except as discussed above, Registrant has had no other derivative financial instruments, financial instruments with significant off-balance sheet risks or financial instruments with concentrations of credit risk. 68 Table of Contents
A hypothetical ten percent change in market interest rates would result in an increase or decrease of approximately $21.8 million in the fair value of Registrant’s long-term debt. Registrant is also exposed to risk resulting from changes in interest rates as a result of its issuances of short-term debt through unsecured revolving credit facilities.
A hypothetical ten percent change in market interest rates would result in an increase or decrease of approximately $21.4 million in the fair value of Registrant’s long-term debt. Registrant is also exposed to risks resulting from changes in interest rates as a result of its issuances of short-term debt through unsecured revolving credit facilities.
Interest Rate Risk A significant portion of Registrant’s capital structure is comprised of fixed-rate debt consisting of notes and debentures. Market risk related to our fixed-rate debt is deemed to be the potential increase in fair value resulting from a decrease in interest rates. At December 31, 2023, the fair value of Registrant’s long-term debt was $556.2 million.
Interest Rate Risk A significant portion of Registrant’s capital structure is comprised of fixed-rate debt consisting of notes and debentures. A market risk related to our fixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. At December 31, 2024, the fair value of Registrant’s long-term debt was $608.2 million.
BVES has entered into long-term fixed price contracts to purchase power over three and five-year terms. These long-term contracts will expire during the fourth quarter of 2024 and are subject to the accounting guidance for derivatives and require mark-to-market derivative accounting.
BVES has entered into long-term fixed price contracts to purchase power over three and five -year terms. These long-term contracts expired during the fourth quarter of 2024 and were subject to the accounting guidance for derivatives and required mark-to-market derivative accounting.
At December 31, 2023, Registrant had outstanding consolidated borrowings under its credit facilities of $333.5 million that are exposed to variable short-term interest rate risk. The impact of a 100-basis point change in interest rates on pretax income is approximately $3.3 million as of December 31, 2023.
At December 31, 2024, Registrant had outstanding consolidated borrowings under its credit facilities of $289.0 million that are exposed to variable short-term interest rate risk. The impact of a 100-basis point change in interest rates on pretax income is approximately $2.9 million as of December 31, 2024.
As of December 31, 2023, there was a $2.4 million derivative liability at fair value for the derivatives in the purchase power contracts, with a corresponding regulatory asset recorded in the derivative instrument memorandum account as a result of overall fixed prices under BVES’s purchase power contracts being higher than future energy prices.
As of December 31, 2024, the fair value of the derivative liability was $8.8 million for the purchase power contract, with a corresponding regulatory asset recorded in the derivative instrument memorandum account as a result of overall fixed prices under BVES’s purchase power contracts being higher than future energy prices.
Added
The CPUC authorized the use of a regulatory asset and liability memorandum account to offset the mark-to-market entries required by the accounting guidance.

Other AWR 10-K year-over-year comparisons