SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended March 31, 20232024

or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from                    to                   
 
Commission file number   001-14431 
American States Water Company
(Exact Name of Registrant as Specified in Its Charter)
 
California 95-4676679
(State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
630 E. Foothill BlvdSan DimasCA91773-1212
(Address of Principal Executive Offices)(Zip Code)
(909) 394-3600
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Commission file number   001-12008 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbolName of each exchange on which registered
Common sharesAWRNew York Stock Exchange
Golden State Water Company
(Exact Name of Registrant as Specified in Its Charter)
California 95-1243678
(State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)
630 E. Foothill BlvdSan DimasCA91773-1212
(Address of Principal Executive Offices)(Zip Code)
(909) 394-3600
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading symbolName of each exchange on which registered
N/AN/AN/A



Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



American States Water CompanyYes
x
No¨
Golden State Water CompanyYes
x
No¨
 
Indicate by check mark whether Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files).
American States Water CompanyYes
x
No¨
Golden State Water CompanyYes
x
No¨

 Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

American States Water Company
Large accelerated filerxAccelerated filer¨Non-accelerated filer¨Smaller reporting companyEmerging growth company
Golden State Water Company
Large accelerated filer¨Accelerated filer¨Non-accelerated filerxSmaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

 Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
American States Water Company YesNox
Golden State Water Company YesNox

As of May 9, 2023,6, 2024, the number of common shares, no par value (“Common SharesShares”) outstanding of American States Water Company was 36,976,400 shares.37,228,883. As of May 9, 2023,6, 2024, all of the 171 outstanding Common Sharesshares of common stock, no par value, of Golden State Water Company were owned by American States Water Company.

Golden State Water Company meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form, in part, with the reduced disclosure format for Golden State Water Company.



AMERICAN STATES WATER COMPANY
and
GOLDEN STATE WATER COMPANY
FORM 10-Q
 
INDEX


3
 
 
 
 
 
 
 
 
 



GLOSSARY OF TERMS

The following terms and acronyms used in this Form 10-Q are defined below:
Term or AcronymDefinition
ASUSAmerican States Utility Services, Inc.
ATMAt-The-Market Offering Program
AWRAmerican States Water Company
BSUSBay State Utility Services LLC
BVESBear Valley Electric Service, Inc.
COCCost of Capital
CPUCCalifornia Public Utilities Commission
CWACalifornia Water Association
DDWDivision of Drinking Water
ECUSEmerald Coast Utility Services, Inc.
EPAEconomic Price Adjustment
EPSEarnings Per Share
Exchange ActSecurities Exchange Act of 1934, as amended
FBWSFort Bliss Water Services Company
FRUSFort Riley Utility Services, Inc.
GAAPGenerally Accepted Accounting Principles in the United States of America
gpcdGallons Per Capita Per Day
GSWCGolden State Water Company
IOWUInvestor-Owned Water Utility
LCRILead and Copper Rule Improvements
MCBAModified Cost Balancing Account
MCLMaximum Contamination Level
Moody’sMoody’s Investors Service
MWDMetropolitan Water District of Southern California
ODUSOld Dominion Utility Services, Inc.
OEISOffice of Energy Infrastructure Safety
ONUSOld North Utility Services, Inc.
PFASPerfluoroalkyl Substances
PFOAPerfluorooctanoic Acid
PRUSPatuxent River Utility Services LLC
PSUSPalmetto State Utility Services, Inc.
REARequest for Equitable Adjustment
RegistrantAmerican States Water Company and Golden State Water Company
SBSenate Bill
SECSecurities and Exchange Commission
SERPSupplemental Executive Retirement Plan
SWPState Water Project
SWRCBState Water Resources Control Board
TUSTerrapin Utility Services, Inc.
U.S.United States
WCCMWater Cost of Capital Mechanism
WMPWildfire Mitigation Plan
WRAMWater Revenue Adjustment Mechanism



INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect the current views of our senior management with respect to future events and our financial performance. These statements include forward-looking statements with respect to our business and industry in general. Statements that include the words “expect,” “intend,” “believe,” “estimate,” “may,” “can,” “will,” “likely,” “should,” “could,” “anticipate,” “plan” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:
the impact of laws, regulations and policies of regulatory agencies or the U.S. government applicable to water, wastewater and electric utility operations;
the ability of GSWC and BVES to recover their respective costs through regulated rates, including increased costs associated with addressing climate change risks, such as drought and wildfires in California, costs incurred in connection with complying with water quality regulations, and increased costs of operation and maintenance due to inflation, supply chain disruptions and increases in interest rates, while facing an increase in customer rate increase opposition and possible reluctance from the CPUC to pass through all such costs to customers;
customer dissatisfaction due to rising rates needed to recover the costs of replacing aging infrastructure, address climate change risks, comply with water quality, renewable energy and greenhouse gas regulation;
all of our contracts for providing services on military bases are provided to the U.S. government under long-term, fixed-price contracts subject to annual economic price adjustments;
all contracts for providing services on military bases may be terminated or suspended at any time by the government;
ASUS is subject to potential government audits or investigations of its business practices and compliance with government procurement statutes and regulations that could result in fines and penalties;
GSWC and BVES are subject to potential audit and investigations by the CPUC for failure to comply with regulations applicable to public utilities, including failure to comply with state and federal water quality requirements, wildfire mitigation plans, renewable energy legislation, greenhouse gas regulations and other climate related regulations that could result in fines and penalties;
we compete with other companies in bidding on providing utility services on military bases which involves estimating costs and potential profits that may not be realized;
the impact of water quality and wastewater quality regulations on military bases;
asset or business acquisitions may not yield the anticipated benefits;
the impact of climate change and extreme weather events, including droughts, storms, high wind events, wildfires, flash flooding and other natural disasters, and the effects they could have on our operations;
our assets at our regulated utilities are subject to condemnation by municipalities and other governmental subdivisions;
increases in the costs of obtaining and complying with the terms of franchise agreements;
damage to our reputation or adverse publicity may lead to increased regulatory oversight or sanctions;
costs and effects of legal and administrative proceedings, settlements, investigations and claims;
our ability to control operation and maintenance costs within the amounts that have been approved in rates or estimated in our military base contracts;
the outbreak of pandemics, such as COVID-19, and other events may cause region wide, statewide, nationwide or even global disruption, which could impact our businesses, operations, cash flows or financial results;
the inherent risk of damage to private property and injury to employees and the general public involved in the generation, transmission and distribution of electricity, the handling of hazardous materials and equipment, and being in close proximity to public utility construction and maintenance operations;
the impact of groundwater contamination and the increasing costs associated with treatment of groundwater due to contamination and increasing water quality regulation and mitigation of contaminants;
risks of incurring losses not covered by insurance or recoverable in rates;
the adequacy of water supplies due to fluctuations of weather, climate change and other uncontrollable factors;



the impact that water conservation efforts may have on GSWC’s operations and costs incurred;
changes in electricity and natural gas prices in California;
failure to make accurate estimates about financing and accounting matters;
changes in accounting, public utility, environmental and tax laws and regulations affecting our businesses;
changes in fair value of investments and other assets;
the performance of subcontractors engaged to assist us in the performance of contracted services on military bases;
incomplete or delayed reimbursement from the U.S. government and delays in obtaining decisions from the CPUC on regulated public utility rates that can adversely impact our financial condition and liquidity;
physical security of our critical assets, personnel and data critical to our business, employees, customers and vendors;
cybersecurity incidents that could disrupt operations and critical information technology systems, resulting in the inability to deliver services to customers, loss of financial and other information critical for operations and the breach of confidential information of our customers, employees and vendors;
our ability to attract, retain, train, motivate, develop, and transition key employees;
the failure of our employees to maintain required certifications and licenses or to complete required compliance training;
changes in interest rates and our ability to borrow funds and access bank and capital markets on reasonable terms;
the impact of inflation and supply chain disruptions on our operational costs and costs of capital that may not be recovered in rates for our regulated utilities and through economic price adjustments for our military bases;
results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions, delays in receiving general rate case decisions from the CPUC, and general market and economic conditions;
actions by credit rating agencies to downgrade AWR or GSWC’s credit ratings or to place those ratings on negative outlook;
our ability to finance the significant capital expenditures required by our operations, which are increasing;
volatility in the price of our Common Shares;
declines in the market prices of equity and fixed-income securities and resulting cash funding requirements for defined benefit pension plans and other post-retirement benefit plans;
our reliance on cash flow from our subsidiaries to meet our financial obligations and to pay dividends on our Common Shares;
the geographic concentration of our operations in California; and
other risks and uncertainties described under the heading “Item 1A. Risk Factors” in the Form 10-K that we filed with the SEC.
Although we believe that the expectations reflected in these forward-looking statements are reasonable based on our current knowledge of our business and operations, we cannot guarantee future results, levels of activity, performance or achievements. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statements you read in this Form 10-Q and the information incorporated herein by reference reflect our views as of their respective dates and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements and you should carefully consider all of the factors identified in this Form 10-Q and the information incorporated herein by reference that could cause actual results to differ. Forward-looking statements speak only as of the date they are made and except as required by law, Registrant expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


Table of Contents
PART I
Item 1. Financial Statements
General
 The basic financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
 Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments consisting of normal recurring items and estimates necessary for a fair statement of results for the interim period have been made.
 It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto in the latest Annual Report on Form 10-K of American States Water Company and its wholly owned subsidiary, Golden State Water Company. 
Filing Format
American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”), Bear Valley Electric Service, Inc. (“BVES”), and American States Utility Services, Inc. and its subsidiaries (“ASUS”).
This quarterly report on Form 10-Q is a combined report being filed by two separate Registrants: AWR and GSWC. For more information, please see Note 1 of the Notes to Consolidated Financial Statements and the heading entitledtitled “General” in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. GSWC makes no representations as to the information contained in this report other than with respect to itself.
Forward-Looking Information
     This Form 10-Q and the documents incorporated herein contain forward-looking statements intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are based on current estimates, expectations and projections about future events and assumptions regarding these events and include statements regarding management’s goals, beliefs, plans or current expectations, taking into account the information currently available to management.  Forward-looking statements are not statements of historical facts.  For example, when we use words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may” and other words that convey uncertainty of future events or outcomes, we are making forward-looking statements.  We are not able to predict all the factors that may affect future results.  We caution you that any forward-looking statements made by us are not guarantees of future performance and the actual results may differ materially from those in our forward-looking statements. 
Factors affecting our financial performance are summarized under Forward-Looking Information and under “Risk Factors” in our Form 10-K for the period ended December 31, 2022 filed with the SEC. Please consider our forward-looking statements in light of these risks as you read this Form 10-Q.  We qualify all of our forward-looking statements by these cautionary statements.

1

Table of Contents
AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)

(in thousands)(in thousands)March 31,
2023
December 31,
2022
(in thousands)March 31,
2024
December 31,
2023
Property, Plant and EquipmentProperty, Plant and Equipment  Property, Plant and Equipment 
Regulated utility plant, at costRegulated utility plant, at cost$2,357,966 $2,321,712 
Non-utility property, at costNon-utility property, at cost38,898 38,285 
TotalTotal2,396,864 2,359,997 
Less - Accumulated depreciation(616,403)(606,231)
Less - accumulated depreciation
Net property, plant and equipmentNet property, plant and equipment1,780,461 1,753,766 
Other Property and Investments
Other Property and Investments
Other Property and InvestmentsOther Property and Investments   
GoodwillGoodwill1,116 1,116 
Other property and investmentsOther property and investments38,408 36,907 
Total other property and investmentsTotal other property and investments39,524 38,023 
Current AssetsCurrent Assets  
Current Assets
Current Assets 
Cash and cash equivalentsCash and cash equivalents2,126 5,997 
Accounts receivable — customers (less allowance for doubtful accounts of $4,364 in 2023 and $4,387 in 2022)21,293 26,206 
Accounts receivable — customers (less allowance for doubtful accounts of $3,640 in 2024 and $3,537 in 2023)
Unbilled receivableUnbilled receivable22,444 20,663 
Receivable from the U.S. government (Note 2)Receivable from the U.S. government (Note 2)41,091 34,974 
Other accounts receivable (less allowance for doubtful accounts of $53 in 2023 and $53 in 2022)3,391 4,215 
Income taxes receivable35 3,901 
Materials and supplies, at weighted average cost16,282 14,623 
Other accounts receivable (less allowance for doubtful accounts of $53 in 2024 and 2023)
Materials and supplies
Regulatory assets — currentRegulatory assets — current11,032 14,028 
Prepayments and other current assetsPrepayments and other current assets11,690 5,450 
Purchase power contract derivative at fair value (Note 5)6,669 11,847 
Contract assets (Note 2)Contract assets (Note 2)3,637 9,390 
Total current assetsTotal current assets139,690 151,294 
Other Assets
Other Assets
Other AssetsOther Assets   
Unbilled revenue — receivable from the U.S. government (Note 2)Unbilled revenue — receivable from the U.S. government (Note 2)7,790 6,456 
Receivable from the U.S. government (Note 2)Receivable from the U.S. government (Note 2)50,207 50,482 
Contract assets (Note 2)Contract assets (Note 2)9,836 5,592 
Operating lease right-of-use assetsOperating lease right-of-use assets8,990 9,535 
Regulatory assetsRegulatory assets10,474 5,694 
OtherOther13,400 13,532 
Total other assetsTotal other assets100,697 91,291 
Total AssetsTotal Assets$2,060,372 $2,034,374 
Total Assets
Total Assets
 
The accompanying notes are an integral part of these consolidated financial statements.



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Table of Contents
AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)
(in thousands, except number of shares)(in thousands, except number of shares)March 31,
2023
December 31,
2022
(in thousands, except number of shares)March 31,
2024
December 31,
2023
CapitalizationCapitalization  Capitalization 
Common shares, no par valueCommon shares, no par value
Authorized: 60,000,000 sharesAuthorized: 60,000,000 shares
Outstanding: 36,976,284 shares in 2023 and 36,962,241 shares in 2022$261,792 $260,158 
Authorized: 60,000,000 shares
Authorized: 60,000,000 shares
Outstanding: 37,228,883 shares in 2024 and 36,980,612 shares in 2023
Outstanding: 37,228,883 shares in 2024 and 36,980,612 shares in 2023
Outstanding: 37,228,883 shares in 2024 and 36,980,612 shares in 2023
Retained earningsRetained earnings469,056 449,391 
Total common shareholders’ equityTotal common shareholders’ equity730,848 709,549 
Long-term debtLong-term debt576,431 446,547 
Total capitalizationTotal capitalization1,307,279 1,156,096 
Current Liabilities
Current Liabilities
Current LiabilitiesCurrent Liabilities   
Notes payable to banksNotes payable to banks175,500 255,500 
Long-term debt — currentLong-term debt — current404 399 
Accounts payableAccounts payable65,705 84,849 
Income taxes payableIncome taxes payable10,855 1,848 
Accrued other taxesAccrued other taxes14,257 16,257 
Accrued employee expensesAccrued employee expenses17,390 13,996 
Accrued interestAccrued interest8,411 5,308 
Regulatory liabilities2,097 4,574 
Contract liabilities (Note 2)Contract liabilities (Note 2)560 903 
Operating lease liabilitiesOperating lease liabilities1,906 1,892 
Purchase power contract derivative at fair value (Note 5)
OtherOther10,605 10,996 
Total current liabilitiesTotal current liabilities307,690 396,522 
Other Credits
Other Credits
Other CreditsOther Credits   
Notes payable to banksNotes payable to banks25,000 22,000 
Advances for constructionAdvances for construction64,097 64,351 
Contributions in aid of construction - netContributions in aid of construction - net148,456 147,918 
Deferred income taxesDeferred income taxes148,138 149,677 
Regulatory liabilitiesRegulatory liabilities1,783 40,602 
Unamortized investment tax creditsUnamortized investment tax credits1,064 1,082 
Accrued pension and other postretirement benefitsAccrued pension and other postretirement benefits34,796 33,636 
Operating lease liabilitiesOperating lease liabilities7,559 8,090 
OtherOther14,510 14,400 
Total other creditsTotal other credits445,403 481,756 
Commitments and Contingencies (Note 9)Commitments and Contingencies (Note 9)
Commitments and Contingencies (Note 9)
Commitments and Contingencies (Note 9)
Total Capitalization and LiabilitiesTotal Capitalization and Liabilities$2,060,372 $2,034,374 
Total Capitalization and Liabilities
Total Capitalization and Liabilities
 
The accompanying notes are an integral part of these consolidated financial statements.
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Table of Contents
AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 20232024 AND 20222023
(Unaudited)

Three Months Ended March 31, Three Months Ended March 31,
(in thousands, except per share amounts)(in thousands, except per share amounts)20232022(in thousands, except per share amounts)20242023
Operating RevenuesOperating RevenuesOperating Revenues 
WaterWater$112,712 $73,906 
ElectricElectric12,904 11,892 
Contracted servicesContracted services35,807 22,772 
Total operating revenuesTotal operating revenues161,423 108,570 
Operating Expenses
Operating Expenses
Operating ExpensesOperating Expenses 
Water purchasedWater purchased14,304 17,848 
Power purchased for pumpingPower purchased for pumping2,354 2,374 
Groundwater production assessmentGroundwater production assessment3,833 4,211 
Power purchased for resalePower purchased for resale4,986 5,166 
Supply cost balancing accountsSupply cost balancing accounts11,566 (6,343)
Other operationOther operation10,116 8,667 
Administrative and generalAdministrative and general23,547 22,972 
Depreciation and amortizationDepreciation and amortization11,203 10,114 
MaintenanceMaintenance3,150 3,140 
Property and other taxesProperty and other taxes6,295 5,853 
ASUS constructionASUS construction18,904 10,203 
Total operating expensesTotal operating expenses110,258 84,205 
Operating IncomeOperating Income51,165 24,365 
Operating Income
Operating Income
Other Income and Expenses
Other Income and Expenses
Other Income and ExpensesOther Income and Expenses 
Interest expenseInterest expense(9,481)(5,606)
Interest incomeInterest income1,864 283 
Other, netOther, net1,611 (419)
Total other income and expenses, netTotal other income and expenses, net(6,006)(5,742)
Income before income tax expenseIncome before income tax expense45,159 18,623 
Income before income tax expense
Income before income tax expense
Income tax expense
Income tax expense
Income tax expenseIncome tax expense10,752 4,461 
Net IncomeNet Income$34,407 $14,162 
Net Income
Net Income
Weighted Average Number of Common Shares Outstanding
Weighted Average Number of Common Shares Outstanding
Weighted Average Number of Common Shares OutstandingWeighted Average Number of Common Shares Outstanding36,968 36,944 
Basic Earnings Per Common ShareBasic Earnings Per Common Share$0.93 $0.38 
Weighted Average Number of Diluted SharesWeighted Average Number of Diluted Shares37,047 37,019 
Weighted Average Number of Diluted Shares
Weighted Average Number of Diluted Shares
Fully Diluted Earnings Per Common ShareFully Diluted Earnings Per Common Share$0.93 $0.38 
Dividends Paid Per Common ShareDividends Paid Per Common Share$0.3975 $0.365 
Dividends Paid Per Common Share
Dividends Paid Per Common Share
 
The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents
AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF CHANGES
IN COMMON SHAREHOLDERS' EQUITY
(Unaudited)



Three Months Ended March 31, 2023
Three Months Ended March 31, 2024Three Months Ended March 31, 2024
Common Shares  Common Shares 
Number   Number  
of Retained  of Retained 
(in thousands)(in thousands)SharesAmountEarningsTotal(in thousands)SharesAmountEarningsTotal
Balances at December 31, 202236,962 $260,158 $449,391 $709,549 
Balances at December 31, 2023
Add:Add:    Add:  
Net incomeNet income34,407 34,407 
Exercise of stock options and other issuances of Common Shares14— — 
Issuance of Common Shares from an at-the-market program, net of issuance costs
Issuances of Common Shares under stock-based compensation plans
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)1,587 1,587 
Dividend equivalent rights on stock-based awards not paid in cashDividend equivalent rights on stock-based awards not paid in cash47 47 
Deduct:Deduct: Deduct: 
Dividends on Common SharesDividends on Common Shares14,695 14,695 
Dividend equivalent rights on stock-based awards not paid in cashDividend equivalent rights on stock-based awards not paid in cash47 47 
Balances at March 31, 202336,976$261,792 $469,056 $730,848 
Balances at March 31, 2024
Three Months Ended March 31, 2022
Common Shares
Number
ofRetained
(in thousands)SharesAmountEarningsTotal
Balances at December 31, 202136,936 $258,442 $427,505 $685,947 
Add:
Net income14,162 14,162 
Exercise of stock options and other issuances of Common Shares20— — 
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)801 801 
Dividend equivalent rights on stock-based awards not paid in cash41 41 
Deduct:
Dividends on Common Shares13,485 13,485 
Dividend equivalent rights on stock-based awards not paid in cash41 41 
Balances at March 31, 202236,956$259,284 $428,141 $687,425 

Three Months Ended March 31, 2023
 Common Shares 
 Number  
 of Retained 
(in thousands)SharesAmountEarningsTotal
Balances at December 31, 202236,962 $260,158 $449,391 $709,549 
Add:    
Net income34,407 34,407 
Issuances of Common Shares under stock-based compensation plans14— — 
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)1,587 1,587 
Dividend equivalent rights on stock-based awards not paid in cash47 47 
Deduct: 
Dividends on Common Shares14,695 14,695 
Dividend equivalent rights on stock-based awards not paid in cash47 47 
Balances at March 31, 202336,976$261,792 $469,056 $730,848 

The accompanying notes are an integral part of these consolidated financial statements.
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AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 20232024 AND 20222023
(Unaudited)
Three Months Ended 
 March 31,
Three Months Ended 
 March 31,
(in thousands)(in thousands)20232022(in thousands)20242023
Cash Flows From Operating Activities:Cash Flows From Operating Activities:  Cash Flows From Operating Activities: 
Net incomeNet income$34,407 $14,162 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation and amortizationDepreciation and amortization11,572 10,208 
Provision for doubtful accountsProvision for doubtful accounts458 258 
Deferred income taxes and investment tax creditsDeferred income taxes and investment tax credits(3,286)1,552 
Stock-based compensation expenseStock-based compensation expense2,254 1,905 
(Gain) loss on investments held in a trust(1,630)1,653 
Gain on investments held in a trust
Other — netOther — net(71)83 
Changes in assets and liabilities:Changes in assets and liabilities:  Changes in assets and liabilities: 
Accounts receivable — customersAccounts receivable — customers4,455 7,627 
Unbilled receivableUnbilled receivable(3,115)2,451 
Other accounts receivableOther accounts receivable824 3,467 
Receivables from the U.S. governmentReceivables from the U.S. government(5,842)4,589 
Materials and suppliesMaterials and supplies(1,659)220 
Prepayments and other assetsPrepayments and other assets(5,656)(4,584)
Contract assetsContract assets1,509 (199)
Regulatory assets/liabilitiesRegulatory assets/liabilities(35,863)(5,713)
Accounts payableAccounts payable(8,542)341 
Income taxes receivable/payableIncome taxes receivable/payable12,873 (1,592)
Contract liabilitiesContract liabilities(343)(47)
Accrued pension and other postretirement benefitsAccrued pension and other postretirement benefits1,020 71 
Other liabilitiesOther liabilities3,599 1,574 
Net cash provided by6,964 38,026 
Net cash provided (used)
Cash Flows From Investing Activities:
Cash Flows From Investing Activities:
Cash Flows From Investing Activities:Cash Flows From Investing Activities:   
Capital expendituresCapital expenditures(49,337)(35,170)
Other investing activitiesOther investing activities172 121 
Net cash used in(49,165)(35,049)
Net cash provided (used)
Cash Flows From Financing Activities:Cash Flows From Financing Activities:  
Cash Flows From Financing Activities:
Cash Flows From Financing Activities: 
Proceeds from issuance of Common Shares, net of issuance costs
Receipt of advances for and contributions in aid of constructionReceipt of advances for and contributions in aid of construction2,064 1,795 
Refunds on advances for constructionRefunds on advances for construction(712)(833)
Repayments of long-term debtRepayments of long-term debt(109)(103)
Proceeds from the issuance of long-term debt, net of issuance costsProceeds from the issuance of long-term debt, net of issuance costs129,665 — 
Net change in notes payable to banks(77,000)16,000 
Net changes in notes payable to banks
Dividends paidDividends paid(14,695)(13,485)
Other financing activitiesOther financing activities(883)(1,188)
Net cash provided by38,330 2,186 
Net cash provided (used)
Net change in cash and cash equivalentsNet change in cash and cash equivalents(3,871)5,163 
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period5,997 4,963 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$2,126 $10,126 
Non-cash transactions:Non-cash transactions:
Non-cash transactions:
Non-cash transactions:
Accrued payables for investment in utility plant
Accrued payables for investment in utility plant
Accrued payables for investment in utility plantAccrued payables for investment in utility plant$29,746 $34,101 
Property installed by developers and conveyedProperty installed by developers and conveyed$364 $130 

The accompanying notes are an integral part of these consolidated financial statements.
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GOLDEN STATE WATER COMPANY
BALANCE SHEETS
ASSETS
(Unaudited)
(in thousands)(in thousands)March 31,
2023
December 31,
2022
(in thousands)March 31,
2024
December 31,
2023
Utility PlantUtility Plant  Utility Plant 
Utility plant, at costUtility plant, at cost$2,177,606 $2,147,643 
Less - Accumulated depreciation(539,575)(530,925)
Less - accumulated depreciation
Net utility plantNet utility plant1,638,031 1,616,718 
Other Property and InvestmentsOther Property and Investments36,159 34,655 
Other Property and Investments
Other Property and Investments
Current AssetsCurrent Assets  
Current Assets
Current Assets 
Cash and cash equivalentsCash and cash equivalents813 370 
Accounts receivable — customers (less allowance for doubtful accounts of $4,111 in 2023 and $4,143 in 2022)18,697 23,107 
Accounts receivable — customers (less allowance for doubtful accounts of $3,457 in 2024 and $3,394 in 2023)
Unbilled receivableUnbilled receivable13,399 15,006 
Other accounts receivable (less allowance for doubtful accounts of $53 in 2023 and $53 in 2022)2,316 2,721 
Other accounts receivable (less allowance for doubtful accounts of $53 in 2024 and 2023)
Intercompany receivableIntercompany receivable— 621 
Income taxes receivable from ParentIncome taxes receivable from Parent— 1,692 
Materials and supplies, at average cost6,338 6,120 
Materials and supplies
Regulatory assets — currentRegulatory assets — current11,032 14,028 
Prepayments and other current assetsPrepayments and other current assets8,347 4,464 
Total current assetsTotal current assets60,942 68,129 
Other AssetsOther Assets  
Other Assets
Other Assets 
Operating lease right-of-use assetsOperating lease right-of-use assets8,703 9,208 
Regulatory assets
OtherOther12,535 12,598 
Total other assetsTotal other assets21,238 21,806 
Total AssetsTotal Assets$1,756,370 $1,741,308 
Total Assets
Total Assets

The accompanying notes are an integral part of these financial statements.
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GOLDEN STATE WATER COMPANY
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)
(in thousands, except number of shares)(in thousands, except number of shares)March 31,
2023
December 31,
2022
(in thousands, except number of shares)March 31,
2024
December 31,
2023
CapitalizationCapitalization  Capitalization 
Common Shares, no par value:Common Shares, no par value:
Authorized: 1,000 shares Authorized: 1,000 shares
Outstanding: 171 shares in 2023 and 170 in 2022$369,770 $358,123 
Authorized: 1,000 shares
Authorized: 1,000 shares
Outstanding: 171 shares in 2024 and 2023
Outstanding: 171 shares in 2024 and 2023
Outstanding: 171 shares in 2024 and 2023
Retained earningsRetained earnings288,502 285,783 
Total common shareholder’s equityTotal common shareholder’s equity658,272 643,906 
Long-term debtLong-term debt541,627 411,748 
Total capitalizationTotal capitalization1,199,899 1,055,654 
Current LiabilitiesCurrent Liabilities  
Intercompany payable428 — 
Intercompany note payable45,000 — 
Current Liabilities
Current Liabilities 
Long-term debt — currentLong-term debt — current404 399 
Accounts payableAccounts payable47,860 65,944 
Accrued other taxesAccrued other taxes12,248 14,501 
Accrued employee expensesAccrued employee expenses13,841 11,233 
Accrued interestAccrued interest7,144 4,364 
Income taxes payable to ParentIncome taxes payable to Parent10,394 — 
Operating lease liabilitiesOperating lease liabilities1,794 1,788 
OtherOther9,754 10,152 
Total current liabilitiesTotal current liabilities148,867 108,381 
Other CreditsOther Credits  
Intercompany note payable— 129,000 
Other Credits
Other Credits 
Notes payable to banks
Advances for constructionAdvances for construction64,077 64,331 
Contributions in aid of construction — netContributions in aid of construction — net148,456 147,918 
Deferred income taxesDeferred income taxes135,921 138,788 
Regulatory liabilitiesRegulatory liabilities1,783 40,602 
Unamortized investment tax creditsUnamortized investment tax credits1,064 1,082 
Accrued pension and other postretirement benefitsAccrued pension and other postretirement benefits34,556 33,421 
Operating lease liabilitiesOperating lease liabilities7,397 7,878 
OtherOther14,350 14,253 
Total other creditsTotal other credits407,604 577,273 
Commitments and Contingencies (Note 9)Commitments and Contingencies (Note 9)
Commitments and Contingencies (Note 9)
Commitments and Contingencies (Note 9)
Total Capitalization and LiabilitiesTotal Capitalization and Liabilities$1,756,370 $1,741,308 
Total Capitalization and Liabilities
Total Capitalization and Liabilities
 
The accompanying notes are an integral part of these financial statements.
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GOLDEN STATE WATER COMPANY
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 20232024 AND 20222023
(Unaudited)

Three Months Ended March 31, Three Months Ended March 31,
(in thousands)(in thousands)20232022(in thousands)20242023
Operating RevenuesOperating RevenuesOperating Revenues 
WaterWater$112,712 $73,906 
Total operating revenuesTotal operating revenues112,712 73,906 
Operating Expenses
Operating Expenses
Operating ExpensesOperating Expenses 
Water purchasedWater purchased14,304 17,848 
Power purchased for pumpingPower purchased for pumping2,354 2,374 
Groundwater production assessmentGroundwater production assessment3,833 4,211 
Supply cost balancing accountsSupply cost balancing accounts12,625 (5,067)
Other operationOther operation7,271 6,354 
Administrative and generalAdministrative and general15,381 15,596 
Depreciation and amortizationDepreciation and amortization9,606 8,545 
MaintenanceMaintenance1,960 2,156 
Property and other taxesProperty and other taxes5,139 4,890 
Total operating expensesTotal operating expenses72,473 56,907 
Total operating expenses
Total operating expenses
Operating IncomeOperating Income40,239 16,999 
Operating Income
Operating Income
Other Income and Expenses
Other Income and Expenses
Other Income and ExpensesOther Income and Expenses 
Interest expenseInterest expense(6,922)(5,236)
Interest incomeInterest income1,428 91 
Other, netOther, net1,628 (598)
Total other income and expenses, netTotal other income and expenses, net(3,866)(5,743)
Income before income tax expenseIncome before income tax expense36,373 11,256 
Income before income tax expense
Income before income tax expense
Income tax expense
Income tax expense
Income tax expenseIncome tax expense8,910 2,689 
Net IncomeNet Income$27,463 $8,567 
Net Income
Net Income
 
The accompanying notes are an integral part of these consolidated financial statements.
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GOLDEN STATE WATER COMPANY
STATEMENTS OF CHANGES
IN COMMON SHAREHOLDER'S EQUITY
(Unaudited)
Three Months Ended March 31, 2023
Three Months Ended March 31, 2024Three Months Ended March 31, 2024
Common Shares  Common Shares 
Number   Number  
of Retained  of Retained 
(in thousands, except number of shares)(in thousands, except number of shares)SharesAmountEarningsTotal(in thousands, except number of shares)SharesAmountEarningsTotal
Balances at December 31, 2022170$358,123 $285,783 $643,906 
Add:    
Net income27,463 27,463 
Issuance of Common Share to Parent110,000 10,000 
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)1,603 1,603 
Dividend equivalent rights on stock-based awards not paid in cash44 44 
Deduct: 
Dividends on Common Shares24,700 24,700 
Dividend equivalent rights on stock-based awards not paid in cash44 44 
Balances at March 31, 2023171 $369,770 $288,502 $658,272 
Three Months Ended March 31, 2022
Common Shares
Number
ofRetained
(in thousands, except number of shares)SharesAmountEarningsTotal
Balances at December 31, 2021170$356,530 $259,156 $615,686 
Balances at December 31, 2023
Add:Add:Add: 
Net incomeNet income8,567 8,567 
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)742 742 
Dividend equivalent rights on stock-based awards not paid in cashDividend equivalent rights on stock-based awards not paid in cash39 39 
Deduct:Deduct:Deduct: 
Dividends on Common Shares13,500 13,500 
Dividend equivalent rights on stock-based awards not paid in cashDividend equivalent rights on stock-based awards not paid in cash39 39 
Balances at March 31, 2022170 $357,311 $254,184 $611,495 
Balances at March 31, 2024

Three Months Ended March 31, 2023
 Common Shares 
 Number  
 of Retained 
(in thousands, except number of shares)SharesAmountEarningsTotal
Balances at December 31, 2022170$358,123 $285,783 $643,906 
Add:    
Net income27,463 27,463 
Issuance of Common Share to Parent110,000 10,000 
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements (Note 4)1,603 1,603 
Dividend equivalent rights on stock-based awards not paid in cash44 44 
Deduct: 
Dividends on Common Shares24,700 24,700 
Dividend equivalent rights on stock-based awards not paid in cash44 44 
Balances at March 31, 2023171 $369,770 $288,502 $658,272 

The accompanying notes are an integral part of these financial statements.
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GOLDEN STATE WATER COMPANY
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 20232024 AND 20222023
(Unaudited)
 
Three Months Ended 
 March 31,
Three Months Ended 
 March 31,
(in thousands)(in thousands)20232022(in thousands)20242023
Cash Flows From Operating Activities:Cash Flows From Operating Activities:  Cash Flows From Operating Activities: 
Net incomeNet income$27,463 $8,567 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation and amortizationDepreciation and amortization9,947 8,610 
Provision for doubtful accountsProvision for doubtful accounts420 222 
Deferred income taxes and investment tax creditsDeferred income taxes and investment tax credits(4,348)1,305 
Stock-based compensation expenseStock-based compensation expense2,190 1,751 
(Gain) loss on investments held in a trust(1,630)1,653 
Gain on investments held in a trust
Gain on investments held in a trust
Gain on investments held in a trust
Other — netOther — net(105)84 
Changes in assets and liabilities:Changes in assets and liabilities:  Changes in assets and liabilities: 
Accounts receivable — customersAccounts receivable — customers3,990 7,499 
Unbilled receivableUnbilled receivable1,607 4,183 
Other accounts receivableOther accounts receivable405 1,944 
Materials and suppliesMaterials and supplies(218)797 
Prepayments and other assetsPrepayments and other assets(3,380)(3,268)
Regulatory assets/liabilitiesRegulatory assets/liabilities(34,059)(5,135)
Accounts payableAccounts payable(7,831)2,886 
Intercompany receivable/payableIntercompany receivable/payable1,077 428 
Income taxes receivable/payable from/to ParentIncome taxes receivable/payable from/to Parent12,086 (1,791)
Accrued pension and other postretirement benefitsAccrued pension and other postretirement benefits1,004 36 
Other liabilitiesOther liabilities2,259 1,494 
Net cash provided by10,877 31,265 
Net cash provided (used)
Cash Flows From Investing Activities:
Cash Flows From Investing Activities:
Cash Flows From Investing Activities:Cash Flows From Investing Activities:   
Capital expendituresCapital expenditures(42,005)(31,465)
Other investing activitiesOther investing activities171 117 
Net cash used in(41,834)(31,348)
Net cash provided (used)
Cash Flows From Financing Activities:Cash Flows From Financing Activities:  
Proceeds from issuance of Common Shares to Parent10,000 — 
Cash Flows From Financing Activities:
Cash Flows From Financing Activities: 
Proceeds from issuance of Common Shares to AWR (parent)
Receipt of advances for and contributions in aid of constructionReceipt of advances for and contributions in aid of construction2,064 1,759 
Refunds on advances for constructionRefunds on advances for construction(712)(833)
Repayments of long-term debtRepayments of long-term debt(109)(103)
Proceeds from the issuance of long-term debt, net of issuance costsProceeds from the issuance of long-term debt, net of issuance costs129,665 — 
Net change in intercompany borrowingsNet change in intercompany borrowings(84,000)18,000 
Net borrowings on notes payable to banks
Dividends paidDividends paid(24,700)(13,500)
Other financing activitiesOther financing activities(808)(1,088)
Net cash provided by31,400 4,235 
Net cash provided (used)
Net change in cash and cash equivalents
Net change in cash and cash equivalents
Net change in cash and cash equivalentsNet change in cash and cash equivalents443 4,152 
Cash and cash equivalents, beginning of periodCash and cash equivalents, beginning of period370 525 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$813 $4,677 
Non-cash transactions:Non-cash transactions:
Non-cash transactions:
Non-cash transactions:
Accrued payables for investment in utility plant
Accrued payables for investment in utility plant
Accrued payables for investment in utility plantAccrued payables for investment in utility plant$28,363 $32,439 
Property installed by developers and conveyedProperty installed by developers and conveyed$364 $130 

The accompanying notes are an integral part of these financial statements.
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AMERICAN STATES WATER COMPANY AND SUBSIDIARIES
AND
GOLDEN STATE WATER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)




Note 1 — Summary of Significant Accounting Policies
 
Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”), Bear Valley Electric Service Inc. (“BVES”), and American States Utility Services, Inc. (“ASUS”) (and its wholly owned subsidiaries:subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), Terrapin Utility Services, Inc. (“TUS”), Palmetto State Utility Services, Inc. (“PSUS”), Old North Utility Services, Inc. (“ONUS”), Emerald Coast Utility Services, Inc. (“ECUS”), and Fort Riley Utility Services, Inc. (“FRUS”), Bay State Utility Services LLC (“BSUS”), and Patuxent River Utility Services LLC (“PRUS”)). TheAWR and its subsidiaries of ASUS aremay be collectively referred to as the “Military Utility Privatization Subsidiaries”.“the Company.” AWR, through its wholly owned subsidiaries, serves over one million people in nineten states.
 GSWC and BVES are both California public utilities. GSWC is engaged in the purchase, production, distribution and sale of water throughout California serving approximately 263,400264,200 customer connections. BVES distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,70024,800 customer connections. The California Public Utilities Commission (“CPUC”) regulates GSWC’s and BVES’s businesses in matters including properties, rates, services, facilities, and transactions between GSWC, BVES, and their affiliates.
ASUS, through its wholly owned subsidiaries, operates, maintains and performs construction activities (including renewal and replacement capital work) on water and/or wastewater systems at various U.S. military bases pursuant to an initial 50-year firm fixed-price contracts with the U.S. government and one 15-year contract with the U.S. government. These contracts are subject to annual economic price adjustments and modifications for changes in circumstances, changes in laws and regulations, and additions to the contract value for new construction of facilities at the military bases. ASUS also from time to time performs construction services on military bases as a subcontractor or pursuant to a task order agreement.
In August and September of 2023, ASUS was awarded new contracts with the U.S. government to serve two military bases for which operations began in April 2024. After completion of the transition periods, ASUS has begun operating the water and wastewater utility systems at Naval Air Station Patuxent River in Maryland under a 50-year privatization contract with the U.S. government and at Joint Base Cape Cod in Massachusetts under a 15-year contract with the U.S. government. Operations commenced at Naval Air Station Patuxent River on April 1, 2024. The value of this contract is estimated at approximately $349 million over a 50-year period and is subject to an inventory adjustment and annual economic price adjustments. Operations at Joint Base Cape Cod commenced on April 15, 2024. Under this contract, ASUS will perform work through the annual issuance of task orders by the U.S. government over a 15-year period up to a maximum value to ASUS of $75.0 million subject to adjustments as task orders are issued. In April 2024, the U.S. government awarded a task order valued at $4.1 million to ASUS for the first year of operation, maintenance, and renewal and replacement services of the water and wastewater systems at Joint Base Cape Cod.
There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or the Military Utility Privatization Subsidiaries.any of its wholly owned subsidiaries.
Basis of Presentation: The consolidated financial statements and notes hereto are presented in a combined report filed by two separate Registrants: AWR and GSWC. References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. AWR owns all of the outstanding common shares of GSWC, BVES and ASUS. ASUS owns all of the outstanding common stockequity of the Military Utility Privatization Subsidiaries.its subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Intercompany transactions and balances have been eliminated in the AWR consolidated financial statements.
The consolidated financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  The December 31, 20222023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. In the opinion of management, all adjustments consisting of normal, recurring items, and estimates necessary for a fair statement of the results for the interim periods have been made. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 20222023 filed with the SEC.

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Related Party and Intercompany Transactions: As discussed below under Liquidity and Financing Plans, AWR currently borrows under a credit facility and provides funds to GSWC and ASUS in support of their operations.  Furthermore, GSWC, BVES and ASUS provide and/or receive various support serviceservices to and from their parent, AWR, and among themselves. GSWC also allocates certain corporate office administrative and general costs to its affiliates, BVES and ASUS, using allocation factors approved by the CPUC. During the three months ended March 31, 2023 and 2022, GSWC allocated corporate office administrative and general costs to BVES of approximately$936,000 and $1.3 million and $794,000, respectively. Duringduring the three months ended March 31, 2024 and 2023, and 2022,respectively. GSWC also allocated corporate office administrative and general costs to ASUS of approximately$1.6 million and $1.5 million during the three months ended March 31, 2024 and 2023, respectively. In addition, as discussed under Liquidity and Financing Activities, under AWR’s credit facility, AWR borrows and provides funds to ASUS in support of its operations.

Liquidity and Financing Activities: On February 27, 2024, AWR entered into an Equity Distribution Agreement with third-party sales agents, under which AWR, may offer and sell its Common Shares, from time to time at its sole discretion, through an at-the-market (“ATM”) offering program having an aggregate gross offering price of up to $200 million over a three-year period and pursuant to AWR’s effective shelf registration statement on Form S-3. AWR intends to use the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, including, but not limited to, repayment of debt and equity contributions to its subsidiaries. During the first quarter of 2024, AWR sold 227,981 Common Shares through this ATM offering program and raised proceeds of $16.2 million, net of $1.5 million247,000 in commissions paid under the terms of the Equity Distribution Agreement. AWR has also incurred $643,000 of other expenses, which was primarily legal and $1.6other costs to establish this ATM offering program. The net proceeds raised during the first quarter of 2024 were used to pay down outstanding borrowings under AWRs credit facility. As of March 31, 2024, approximately $183.5 million respectively.remained available for sale under the ATM offering program.
In JanuaryJune 2023, AWR and GSWC each entered into credit agreements with a term of five years provided by a syndicate of banks and financial institutions. Both credit agreements will mature in June 2028. The credit agreements currently provide AWR and GSWC unsecured revolving credit facilities with borrowing capacities of $165.0 million and $200.0 million, respectively. Under the Boardterms of Directors approved the issuance of onecredit agreements, the borrowing capacities for AWR and GSWC Common Sharemay currently be expanded up to an additional $60.0 million and $75.0 million, respectively, subject to the lenders’ approval.
AWR's credit facility is primarily used to provide support to AWR (parent) and ASUS. As of March 31, 2024, AWR’s outstanding borrowings under its credit facility of $130.5 million have been classified as non-current liabilities on AWR’s Consolidated Balance Sheet. GSWC’s credit facility provides support for $10.0 million. GSWC usedits water operations and is considered a short-term debt arrangement by the proceeds fromCPUC. Therefore, pursuant to the issuance of equityCPUC’s requirements, borrowings under GSWC’s credit facility are required to AWR and from the issuance of $130.0 millionbe paid-off in unsecured long-term notes on January 13, 2023 to pay-off all intercompany borrowings from AWR. The CPUC requires GSWC to fully pay-off all intercompany borrowings it has from AWRfull within a 24-month period.period after which GSWC may borrow under the credit facility again. GSWC’s next pay-off period ends in June 2025. Accordingly, GSWC’s outstanding borrowings under its credit facility of $164.0 million as of March 31, 2024 are classified as non-current liabilities on GSWC’s Balance Sheet.
BVES has a separate revolving credit facility without a parent guaranty that supports its electric operations and capital expenditures with a current borrowing capacity of $65.0 million. Currently, the credit agreement provides BVES an option to increase the borrowing capacity of the facility by an additional $10.0 million, subject to lender approval. BVES’s revolving credit facility is considered a short-term debt arrangement by the CPUC. Therefore, pursuant to the CPUC’s requirements, borrowings under this credit facility are required to be fully paid off within a 24-month period after which BVES may borrow under the credit facility again. BVES’s pay-off period for its credit facility ends in August 2024. Accordingly, the $43.0 million outstanding under BVES’s credit facility has been classified as a current liability in AWR’s Consolidated Balance Sheet as of March 31, 2024.
Recent Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07 (Segment Reporting: Improvements to Reportable Segment Disclosures). The new standard enhances reportable segment disclosures and expands the disclosures required for reportable segments in annual and interim consolidated financial statements, primarily through enhanced disclosures of significant segment expenses. Registrant is currently evaluating the impact of this standard on its segment disclosures and will adopt the updated accounting guidance in the Annual Report on Form 10-K for the year ended December 31, 2024 and interim periods beginning in 2025.


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Liquidity and Financing Plans: AWR borrows under a revolving credit facility with a current borrowing capacity of $280.0 million and provides funds to GSWC and ASUS in support of their operations through intercompany borrowing agreements on terms that are similar to that of the credit facility. The interest rate charged to GSWC and ASUS is comparable to the interest rate AWR pays under the credit facility. AWR's credit agreement was set to expire on May 23, 2023. On May 8, 2023, the credit facility was amended to extend the maturity date by two-months to provide adequate time to put in place a new credit agreement. The amendment extends the maturity date of the existing credit agreement to July 23, 2023 or an earlier date on which the credit agreement is either terminated or cancelled when superseded by a new agreement. All intercompany borrowing agreements will expire concurrent with the expiration of AWR’s credit facility. Therefore, the outstanding borrowings under the credit facility of $175.5 million as of March 31, 2023 have been classified as current liabilities on AWR’s Consolidated Balance Sheet, thus creating a negative working-capital condition for AWR of $168.0 million. Additionally, as of March 31, 2023, the $45.0 million of outstanding intercompany borrowings of GSWC from AWR have been classified as current liabilities on GSWC's Balance Sheet, also creating a negative working-capital condition for GSWC of $87.9 million. As of May 10, 2023, neither AWR nor GSWC have sufficient liquidity or capital resources to repay its credit facility or intercompany borrowings, respectively, without either extending its existing credit facility, entering into a new credit facility, or issuing new debt or equity.
AWR is confident and believes it is probable that it will be able to execute a new credit facility agreement with the needed borrowing capacities required to repay its existing credit facility and to run its operations given Registrant's ability to generate consistent cash flows, its A+ credit ratings, and its history in obtaining revolving credit facilities to meet its working-capital needs, as well as its history of successfully raising debt as recently done with GSWC's issuance of $130.0 million in unsecured long-term notes on January 13, 2023. In addition, management is considering a separate credit facility for GSWC to support its standalone water utility operations. Alternatively, AWR may enter into a new intercompany borrowing agreement with GSWC. Accordingly, management has concluded that Registrant will be able to satisfy its obligations, including those under its current credit facility, for at least the next twelve months from the issuance date of these financial statements. However, Registrant’s ability to access the capital markets or to otherwise obtain sufficient financing may be affected by future conditions and, accordingly, no assurances can be made that Registrant will be successful in implementing its financing plans.
BVES has a separate $35.0 million revolving credit facility without a parent guaranty that matures on July 1, 2024. As of March 31, 2023, there was $25.0 million outstanding borrowing under this credit facility. Under the terms of the credit agreement, BVES has the option to increase the facility by an additional $15.0 million, subject to lender approval. Interest rates under this facility are currently based on LIBOR. Effective July 1, 2023, all new borrowings under this credit agreement will be based on the Secured Overnight Financing Rate ("SOFR"). BVES does not believe the change from LIBOR to a new benchmark rate such as SOFR will have a material impact on its financing costs.
COVID-19 Impact: AWR and its subsidiaries continue to monitor the guidance provided by federal, state, and local health authorities and other government officials. On April 10, 2023, the Biden Administration terminated the COVID-19 national emergency. The COVID-19 emergency-related memorandum accounts for GSWC and BVES expired when the COVID-19 national emergency ended. Thus far, the COVID-19 pandemic has not had a material impact on ASUS's current operations.
During the first quarter of 2023, GSWC and BVES continue to incur some incremental costs in excess of their revenue requirements due to the lingering effects of the pandemic that are being tracked in COVID-19-related memorandum accounts and recorded as regulatory assets (Note 3).


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Note 2 — Revenues
Most of Registrant’s revenues are derived from contracts with customers, including tariff-based revenues from its regulated utilities at GSWC and BVES. ASUS’s initial 50-year firm fixed-price long-term contracts with the U.S. government are considered service concession arrangements under ASC 853, Service ConcessionConcession Arrangements. ASUS’s military base contracts consist primarily of 50-year contracts and one 15-year contract with the U.S. government. 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 the Registrant’s balance sheets.
Although GSWC and BVES have a diversified customer base of residential, commercial, industrial, and other customers, revenues derived from residential and commercial customers generally account for approximately 90% of total water and electric revenues. Most of ASUS’s revenues are derived from contracts with the U.S. government. For the three months ended March 31, 20232024 and 2022,2023, disaggregated revenues from contracts with customers by segment were as follows:
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
Three Months Ended March 31,
(dollars in thousands)
(dollars in thousands)
(dollars in thousands)(dollars in thousands)20232022
Water:Water:
Water:
Water:
Tariff-based revenuesTariff-based revenues$100,541 $72,498 
Surcharges (cost-recovery activities)317 549 
Tariff-based revenues
Tariff-based revenues
CPUC-approved surcharges (cost-recovery activities)
CPUC-approved surcharges (cost-recovery activities)
CPUC-approved surcharges (cost-recovery activities)
Other
Other
OtherOther737 518 
Water revenues from contracts with customersWater revenues from contracts with customers101,595 73,565 
WRAM under/(over) collection (alternative revenue program)11,117 341 
Water revenues from contracts with customers
Water revenues from contracts with customers
WRAM under/(over)-collection (alternative revenue program)
WRAM under/(over)-collection (alternative revenue program)
WRAM under/(over)-collection (alternative revenue program)
Total water revenues (1)
Total water revenues (1)
Total water revenues (1)
Total water revenues (1)
112,712 73,906 
Electric:Electric:
Electric:
Electric:
Tariff-based revenuesTariff-based revenues13,063 12,552 
Surcharges (cost-recovery activities)149 27 
Tariff-based revenues
Tariff-based revenues
CPUC-approved surcharges (cost-recovery activities)
CPUC-approved surcharges (cost-recovery activities)
CPUC-approved surcharges (cost-recovery activities)
Electric revenues from contracts with customersElectric revenues from contracts with customers13,212 12,579 
BRRAM under/(over) collection (alternative revenue program)(308)(687)
Electric revenues from contracts with customers
Electric revenues from contracts with customers
BRRAM under/(over)-collection (alternative revenue program)
BRRAM under/(over)-collection (alternative revenue program)
BRRAM under/(over)-collection (alternative revenue program)
Total electric revenues
Total electric revenues
Total electric revenuesTotal electric revenues12,904 11,892 
Contracted services:Contracted services:
Contracted services:
Contracted services:
Water
Water
WaterWater22,488 13,546 
WastewaterWastewater13,319 9,226 
Wastewater
Wastewater
Contracted services revenues from contracts with customers
Contracted services revenues from contracts with customers
Contracted services revenues from contracts with customersContracted services revenues from contracts with customers35,807 22,772 
Total AWR revenuesTotal AWR revenues$161,423 $108,570 
Total AWR revenues
Total AWR revenues
(1) Water revenues for the three months ended March 31, 2023 includesinclude approximately $30 million, which represents the impact of the retroactive new rates for the full year of 2022 as a result of a proposed decision issued by the CPUC in April 2023 on GSWC’sGSWC's general rate case (Note 3).
The opening and closing balances of unbilled receivables,the receivable from the U.S. government, contract assets, and contract liabilities from contracts with customers, which are related entirely to ASUS, were as follows:    
(dollars in thousands)(dollars in thousands)March 31, 2023December 31, 2022(dollars in thousands)March 31, 2024December 31, 2023
Unbilled receivablesUnbilled receivables$15,167 $10,125 
Receivable from the U.S. governmentReceivable from the U.S. government$91,298 $85,456 
Contract assetsContract assets$13,473 $14,982 
Contract liabilitiesContract liabilities$560 $903 
Unbilled receivables and Receivable from the U.S. government represent receivables where the right to payment is conditional only by the passage of time.
Contract Assets - Contract assets are assets of ASUS and consist of unbilled revenues recognized from work-in-progress construction projects, where the right to payment is conditional on something other than the passage of time. The classification of this asset as current or noncurrent is based on the timing of when ASUS expects to bill these amounts.
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Contract Liabilities - Contract liabilities are liabilities of ASUS and consist of billings in excess of revenue recognized. The classification of this liability as current or noncurrent is based on the timing of when ASUS expects to recognize revenue.
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Revenues for the three months ended March 31, 2023,2024, which were included in contract liabilities at the beginning of the period were not material. Contracted services revenues recognized during the three months ended March 31, 20232024 from performance obligations satisfied in previous periods were also not material.
As of March 31, 2023,2024, AWR’s aggregate remaining performance obligations, which are entirely forfrom the contracted services segment, were $3.5$4.0 billion. AWRASUS expects to recognize revenue on these remaining performance obligations over the remaining term of each of the 50-year contracts, which range from 3215 to 4550 years. Each of the contracts with the U.S. government is subject to termination, in whole or in part, prior to the end of its 50-yearcontract term for convenience of the U.S. government.
Note 3 — Regulatory Matters
In accordance with accounting principles for rate-regulated enterprises, GSWC and BVES record regulatory assets, which represent probable future recovery of incurred costs from customers through the rate makingratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the rate makingratemaking process. At March 31, 2023,2024, GSWC and BVES had approximately $77.6$62.8 million of regulatory liabilities, net of regulatory assets, not accruing carrying costs. Of this amount, (i) $75.2$73.7 million of regulatoryregulatory liabilities are excess deferred income taxes arising from the lower federal income tax rate under the Tax Cuts and Jobs Act enacted in December 2017 that are being refunded to customers, (ii) $2.3(ii) $5.6 million of net regulatory assets relates to flowed-through deferred income taxes including the underfundedgross-up portion on the deferred tax resulting from the excess deferred income tax regulatory liability, (iii) $3.7 million of net regulatory liabilities relates to the overfunded position in Registrant'sRegistrant’s pension and other retirement obligations (not including the two-way pension balancing accounts), and (iii) $6.7(iv) $6.2 million of regulatory liability relatedassets relate to a memorandum accountaccounts authorized by the CPUC to track unrealized gains and losses on BVES’s purchase power contracts over the term of the contracts. The remainder relates to other items that do not provide for or incur carrying costs including flowed-through deferred income taxes.costs.
Regulatory assets represent costs incurred by GSWC and/or BVES for which they have received or expect to receive rate recovery in the future. In determining the probability of costs being recognized in other periods, GSWC and BVES consider regulatory rules and decisions, past practices, and other facts or circumstances that would indicate if recovery is probable. If the CPUC determines that a portion of either GSWC’s or BVES’s regulatory assets are not recoverable in customer rates, the applicable utility must determine if it has suffered an asset impairment that requires it to write down the asset’s value. Regulatory assets are offset against regulatory liabilities within each rate makingratemaking area. Amounts expected to be collected or refunded in the next twelve months have been classified as current assets and current liabilities by rate makingratemaking area. Regulatory liabilities,assets, less regulatory assets,liabilities, included in the consolidated balance sheets are as follows:
(dollars in thousands)(dollars in thousands)March 31,
2023
December 31,
2022
(dollars in thousands)March 31,
2024
December 31,
2023
GSWCGSWC
2022/2023 general rate case memorandum accounts (unbilled revenue)2022/2023 general rate case memorandum accounts (unbilled revenue)$38,419 $— 
Water revenue adjustment mechanism, net of the modified cost balancing account29,069 31,803 
COVID-19 memorandum account3,540 3,478 
2022/2023 general rate case memorandum accounts (unbilled revenue)
2022/2023 general rate case memorandum accounts (unbilled revenue)
Water revenue adjustment mechanism, net of modified cost balancing account
Asset retirement obligations
Flowed-through deferred income taxes, net
Low income rate assistance balancing accounts
Other regulatory assets
Excess deferred income taxesExcess deferred income taxes(71,418)(71,870)
Flowed-through income taxes447 (1,134)
Other regulatory assets22,390 19,964 
Pensions and other post-retirement obligations
Other regulatory liabilitiesOther regulatory liabilities(13,198)(8,815)
Total GSWCTotal GSWC$9,249 $(26,574)
BVESBVES
Derivative instrument memorandum account (Note 5)Derivative instrument memorandum account (Note 5)(6,669)(11,847)
Derivative instrument memorandum account (Note 5)
Derivative instrument memorandum account (Note 5)
Wildfire mitigation and other fire prevention related costs memorandum accountsWildfire mitigation and other fire prevention related costs memorandum accounts14,131 13,007 
Electric supply cost adjustment mechanism
Other regulatory assetsOther regulatory assets9,480 7,965 
Other regulatory liabilitiesOther regulatory liabilities(8,565)(8,005)
Total AWRTotal AWR$17,626 $(25,454)
Regulatory matters are discussed in the consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 20222023 filed with the SEC. The discussion below focuses on significant matters and developments since December 31, 2022.2023.
Pending
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Water General Rate Case and the 2022/2023 General Rate Case Memorandum Accounts:
In July 2020,June 2023, the CPUC adopted a final decision in GSWC filed as general rate case application for all of its water regions and its general office. This general rate caseoffice that determines new water rates for the years 2022–2024. On April 13, 2023, GSWC received a proposed decision on this application from the assigned administrative law judge at the CPUC. Among other things, the proposed decision approves and adopts in its entirety the settlement agreement between GSWC and the Public Advocates Office at the CPUC (“Public Advocates”) that had been filed with the CPUC in November 2021, and resolves all issues related to the 2022 annual revenue requirement in the general rate case application and allows for additional increases in adopted revenues for 2023. The new rates
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for 2022 and 2023 are effective and approved were retroactive to January 1, 2022 and January 1, 2023, respectively. As a result of2022. Upon receiving a proposedthe final decision, that approves the settlement agreement in its entirety, the impact of retroactive ratesGSWC filed for the full yearimplementation of 2022 and the estimated second-yearnew 2023 rate increases for the three months ended Marchthat went into effect on July 31, 2023 have been reflected in the 2023 first quarter results as it became probable that the approved retroactive rates for the full year of 2022 and the first three months of 2023 would be permitted to be billed to customers in the future. GSWC expects to receive a final decision during the second quarter of 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 three months ended March 31,period from January 1, 2023 to July 30, 2023 were based on 2021 adopted rates, pending a final decision by the CPUC. rates. GGSWC has beenSWC was authorized to create general rate case memorandum accounts to track the revenue differences between the 2021 adopted rates and the new 2022 and 2023 rates authorized by the CPUC.CPUC for future recovery. In October 2023, surcharges were implemented to recover the cumulative retroactive rate differences over 36 months. As of March 31, 2023,2024, there is an aggregate cumulative amount of $38.4$50.0 million in the general rate case memorandum accounts that relates to water revenues recorded during the three months ended March 31, 2023, and which represent the difference between the 2021 adopted rates billed to customers and the rates authorized in the proposed decision for the full year of 2022 and the estimated increases for the period ended March 31, 2023. Additional increases in adopted revenues for 2023 are subject to an earnings test and changes to the forecasted inflationary index values. The best estimate of 2023 rate increases have been computed at this time using inflationary index values as of March 31, 2023. Actual increases for 2023 will be determined when the filings to implement the new rate increases are approved by the CPUC, and will be calculated using the inflationary index values at that time. GSWC will file for the 2023 increases once the CPUC approves the final decision. Once a final decision is issued by the CPUC, GSWC will also request recovery through a surcharge of the cumulative amounts includedunder-collection in the general rate case memorandum accounts.
Furthermore, the proposed decision addressed the three remaining unresolved issues related to GSWC's requests for: (i) a medical insurance cost balancing account, (ii) a general liability insurance cost balancing account, and (iii) the consolidation of two of GSWC’s customer service areas. The proposed decision approved both balancing accounts and denied GSWC’s consolidation of its two customer service areas. The proposed decision also approved the recovery of previously incurred costs that were being tracked in other CPUC-authorized memorandum accounts. GSWC recorded the amounts tracked in the balancing and memorandum accounts that are being approved in the proposed decision, the net impact of which was not material to 2023 first quarter results.GSWC has recorded as regulatory assets for retroactive water revenues.
Alternative-Revenue Programs:
GSWC currently records the difference between what it bills its water customers and whatthat which is authorized by the CPUC using the Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”) approved by the CPUC. The over- or under-collection of the WRAM is aggregated with the MCBA over- or under-collection for the corresponding rate makingratemaking area and bears interest at the current 90-day commercial-paper rate. 
As of March 31, 2024, GSWC had an aggregated net regulatory asset of $47.5 million, which is comprised of a $50.0 million under-collection in the WRAM accounts and a $2.5 over-collection in the MCBA accounts. During the three months ended March 31, 2023,2024, GSWC recorded additional net under-collections in the WRAM/MCBA accounts of approximately $9.5$8.0 million due tothat resulted largely from lower-than-adopted water usage and to reflectas authorized in the authorized 2023 amounts. In addition, GSWC recorded a net reduction of $9.8 million of under-collection during the first quarter of 2023 to reflect the cumulative full-year impact of 2022 based on authorized 2022 amounts for both WRAM/MCBA accounts as a result of receiving the proposed water general rate case decision. Surcharges for the 2022 WRAM/ MCBA balance is expectedOn March 15, 2024, GSWC filed an advice letter to be requested after the final CPUC-decision is received on GSWC's general rate case. Surcharges and surcredits have been implemented forrecover all pre-2022pre-2024 WRAM/MCBA balances. As of March 31, 2023, GSWC had an aggregated regulatory asset of $29.1 million, which is comprised of a $28.9 million under-collection in the WRAM accounts and a $189,000 under-collection in the MCBA accounts.The surcharges were effective May 1, 2024.
As required by the accounting guidance for alternative revenue programs, GSWC is required to collect its WRAM balances within 24 months following the year in which an under-collection is recorded. As of March 31, 2023,2024, there were no materialsignificant WRAM under-collections that were estimated to be collected over more than 24 months.month period.
Cost of Capital Proceeding:
GSWC filed a cost of capital application in May 2021 currently pending CPUC approval. Hearings on this proceeding occurred in May 2022 and briefs were filed in June 2022. On May 9, 2023, GSWC received a proposed decision from the assigned administrative law judge at the CPUC on the cost of capital proceeding. Among other things, the proposed decision (i) adopts GSWC’s requested capital structure and cost of debt filed in the application; (ii) adopts a return on equity of 8.85% for GSWC as compared to 8.9% previously authorized; (iii) allows for the continuation of the Water Cost of Capital Mechanism (“WCCM”); and (iv) adopts the new cost of capital for the three-year period commencing January 1, 2022, through December 31, 2024. Comments on the proposed decision are due on May 30. In March 2023, the CPUC issued a decision that approved an extension of the statutory deadline for a final decision in the cost of capital proceeding to August 10, 2023.
Based on management’s analysis of this regulatory proceeding and the associated accounting to date, for the three months ended March 31, 2023 and 2022, GSWC reduced revenues by $1.8 million, and $1.4 million, respectively, and recorded a corresponding regulatory liability for revenues subject to refund based on its best estimate, which relates to the impact of GSWC’s lower cost of debt requested in its application and adopted in the proposed decision. Also, an additional reduction to revenues of $1.1 million was recorded during the first quarter of 2023 to reflect the incremental impact of revenues subject to refund from the new 2022 rates in the proposed water general rate case decision that results from the lower cost of debt in the
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pending cost of capital proceeding. As of March 31, 2023, GSWC had an aggregated regulatory liability of $9.3 million for the estimated revenues subject to refund from the pending cost of capital proceeding. However, at this time, management cannot predict the ultimate outcome and any changes that may be made to the final decision in the cost of capital application, and the associated impact on 2022 and 2023 revenues. Changes in estimates will be made, if necessary, as more information in this proceeding becomes available.
Furthermore, the proposed decision continues the WCCM for the years 2023 and 2024, which adjusts the return on equity and rate of return on rate base between the three-year cost of capital proceedings only if there is a positive or negative change of more than 100 basis points in the average of the Moody’s Aa utility bond rate as measured over the period October 1 through September 30. If there is a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. For the period from October 1, 2021 through September 30, 2022, the Moody’s rate increased by 103 basis points from the benchmark, which triggers the WCCM adjustment. GSWC recognized revenues for the first quarter of 2023 and all of 2022 based on the previously authorized return of equity of 8.9% that is presently being billed to water customers pending a final decision in the cost of capital proceeding.
COVID-19 Emergency Memorandum Accounts:
The CPUC has authorized GSWC and BVES to track incremental costs, including bad debt expense, in excess of what is included in their respective revenue requirements incurred as a result of the pandemic in COVID-19 emergency-related memorandum accounts. During the first quarter of 2023, GSWC and BVES incurred some incremental costs in excess of their revenue requirements due to the lingering effects of the pandemic that are being tracked in COVID-19-related memorandum accounts and recorded as regulatory assets, which GSWC and BVES intend to file with the CPUC for future recovery. As of March 31, 2023, GSWC and BVES had approximately $3.5 million and $500,000, respectively, in regulatory asset accounts related to bad debt expense in excess of their revenue requirements, the purchase of personal protective equipment, additional incurred printing costs, and other incremental COVID-19-related costs. Emergency-related memorandum accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are therefore recognized as regulatory assets for future recovery. As a result, the amounts recorded in the COVID-19 emergency-related memorandum accounts have not impacted GSWC’s or BVES’s earnings. On April 10, 2023, the Biden Administration terminated the COVID-19 national emergency. The COVID-19 emergency-related memorandum accounts for GSWC and BVES expired when the COVID-19 national emergency ended and no additional amounts will be included in these memorandum accounts.
The CPUC requires that amounts tracked in GSWC’s and BVES’s COVID-19 memorandum accounts for unpaid customer bills be first offset by any (i) federal and state relief for water or electric utility bill debt, and (ii) customer payments through payment plan arrangements, prior to receiving recovery from customers at large. After these offsets are made, GSWC will file with the CPUC for recovery of the remaining balance. BVES intends to include the remaining balance in its COVID-19 memorandum account for recovery once all alternative sources of funding have been exhausted and credited to eligible customer accounts.
The CPUC’s moratoriums on service disconnections for nonpayment for water and electric customers have ended. As a result, service disconnections due to nonpayment from delinquent residential customers resumed in June 2022.
Other BVES Regulatory Assets:
Wildfire Mitigation and Other Fire Prevention Related Costs Memorandum Accounts
The CPUC adopted regulations intended to enhance the fire safety of overhead electric power lines. Those regulations included increased minimum clearances around electric power lines. BVES was authorized to track incremental costs incurred to implement the regulations in a fire hazard prevention memorandum account for the purpose of obtaining cost recovery in a future general rate case. In August 2019, the CPUC issued a final decision on the electric general rate case, which set new rates for BVES through the year 2022. Among other things, the decision authorized BVES to record incremental costs related to vegetation management, such as costs for increased minimum clearances around electric power lines, in thea CPUC-approved memorandum account for future recovery. As of March 31, 2023,2024, BVES had approximately $9.3$12.5 million in incremental vegetation management costs recorded as a regulatory asset, whichasset. BVES has been includedrequested recovery of these costs in the newits general rate case application filed with the CPUC in August 2022 for future recovery. The incremental costs related to vegetation management included in the memorandum account will be subject to review during the general rate case proceeding.
California legislation enacted in September 2018 requires all investor-owned electric utilities to submit an annualhave a wildfire mitigation plan (“WMP”) toapproved by the CPUC for approval.Office of Energy Infrastructure Safety (“OEIS”) and ratified by the CPUC. The WMP must include a utility’s plans on constructing, maintaining, and operating its electrical lines and equipment to minimize the risk of catastrophic wildfire. In December 2022, the Office of Energy Infrastructure Safety under the California Natural Resources AgencyThe OEIS has approved BVES's 2022 WMP update. In February 2023,and the CPUC has ratified BVES’s current2023-2025 WMP. As of March 31, 2023,2024, BVES has approximately $4.8$6.2 million related to expenses accumulated in its other WMP memorandum accounts that have been recognized as regulatory assets for future recovery.
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All capital expenditures and other incremental costs incurred through March 31, 20232024 as a result of BVES'sBVES’s WMPs are not currently in rates and have been filedare being addressed for future recovery in BVES'sBVES’s general rate case application. These costs will beare subject to review during BVES'sBVES’s general rate case proceeding.
2023 Winter Storm Other Regulatory Asset
BVES activated a catastrophic emergency memorandum account (“CEMA”) to track the incremental costs incurred in response to a severe winter storm that occurred during the first quarter of 2023, which resulted in the declaration of an emergency by the governor of California. Incremental costs of approximately $810,000 were incurred and included in the CEMA account, which has been recorded as a regulatory asset as of March 31, 2023 for future recovery. The incremental costs included in the CEMA account will be subject to review and approval by the CPUC. CEMA accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are therefore recognized as regulatory assets for future recovery. As a result, the amounts recorded in this CEMA account did not impact BVES’s earnings.
Other Regulatory Assets:
Other regulatory assets represent costs incurred by GSWC or BVES for which they have received or expect to receive rate recovery in the future. Registrant believes that these regulatory assets are supported by regulatory rules and decisions, past practices, and other facts or circumstances that indicate recovery is probable. If the CPUC determines that a portion of either GSWC’s or BVES’s regulatory assets are not recoverable in customer rates, the applicable entity must determine if it has suffered an asset impairment has occurred that requires it to write down the regulatory asset to the amount that is probable of recovery.

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Note 4 — Earnings per Share/Capital Stock
In accordance with the accounting guidance for participating securities and earnings per share (“EPS”), Registrant uses the “two-class” method of computing EPS. The “two-class” method is an earnings allocation formula that determines EPS for each class of common stock and participating security. AWR has participating securities related to restricted stock units that earn dividend equivalents on an equal basis with AWR’s Common Shares, and that have been issued under AWR’s stock incentive plans for employees and the non-employee directors stock plans.  In applying the “two-class” method, undistributed earnings are allocated to both common sharesCommon Shares and participating securities.
The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used for calculatingto calculate basic net income per share:EPS:
Basic: For The Three Months Ended 
 March 31,
(in thousands, except per share amounts)20232022
Net income$34,407 $14,162 
Less: (a) Distributed earnings to common shareholders14,695 13,485 
Distributed earnings to participating securities37 31 
Undistributed earnings19,675 646 
          (b) Undistributed earnings allocated to common shareholders19,625 644 
Undistributed earnings allocated to participating securities50 
Total income available to common shareholders, basic (a)+(b)$34,320 $14,129 
Weighted average Common Shares outstanding, basic36,968 36,944 
Basic earnings per Common Share$0.93 $0.38 
Basic: For The Three Months Ended 
 March 31,
(in thousands, except per share amounts)20242023
Net income$23,135 $34,407 
Less: impact from participating securities56 87 
Total income available to common shareholders$23,079 $34,320 
Weighted average Common Shares outstanding, basic37,030 36,968 
Basic earnings per Common Share$0.62 $0.93 
Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with restricted stock units granted under AWR’s stock incentive plans for employees and the non-employee directors, stock plans, and net income. There were no stock options outstanding as of March 31, 20232024 and 20222023 under these plans. At March 31, 2023 and 2022, there were 106,817 and 96,586 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Registrant.

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The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculatingused to calculate diluted net income per share:EPS:
Diluted: For The Three Months Ended 
 March 31,
(in thousands, except per share amounts)20242023
Common shareholders earnings, basic$23,079 $34,320 
Undistributed earnings for dilutive stock options and restricted stock units17 50 
Total common shareholders earnings, diluted$23,096 $34,370 
Weighted average Common Shares outstanding, basic37,030 36,968 
Stock-based compensation (1)
77 79 
Weighted average Common Shares outstanding, diluted37,107 37,047 
Diluted earnings per Common Share$0.62 $0.93 
Diluted: For The Three Months Ended 
 March 31,
(in thousands, except per share amounts)20232022
Common shareholders earnings, basic$34,320 $14,129 
Undistributed earnings for dilutive stock-based awards50 
Total common shareholders earnings, diluted$34,370 $14,131 
Weighted average common shares outstanding, basic36,968 36,944 
Stock-based compensation (1)79 75 
Weighted average common shares outstanding, diluted37,047 37,019 
Diluted earnings per Common Share$0.93 $0.38 
(1)     AllIn applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in calculating diluted EPS, 128,668 and 106,817 and 96,586 restricted stock units, including performance awards to officers of the Company at March 31, 20232024 and 2022,2023, respectively, were deemed to be outstanding and included in the calculation of diluted EPS forEPS.
During the three months ended March 31, 20232024, AWR sold 227,981 Common Shares through its ATM offering program and 2022.raised proceeds of $16.2 million, net of
$247,000 in commissions paid (Note 1). During the three months ended March 31, 2024 and 2023, AWR also issued 20,290 and 2022, AWR issued14,043 Common Shares related 14,043 and 19,348 of common shares related to restricted stock units, respectively.respectively, pursuant to stock-based compensation plans.
During the three months ended March 31, 20232024 and 2022,2023, AWR paid $883,000$1.1 million and $1.2 million,$883,000, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. During the three months ended March 31, 20232024 and 2022,2023, GSWC paid $808,000$1.0 million and $1.1 million,$808,000, respectively, to taxing authorities on employees’ behalf for shares withheld related to net share settlements. These payments are included in the stock-based compensation caption of the statements of equity.
During the three months ended March 31, 2024 and 2023, AWR paid quarterly dividends of approximately $15.9 million, or $0.4300 per share, and $14.7 million, or $0.3975 per share, respectively. GSWC did not pay a dividend to AWR during the three months ended March 31, 2024. During the three months ended March 31, 2023, GSWC paid dividends of $24.7 million to AWR. During the three months ended March 31, 2023, GSWC issued one Common Share to AWR for $10.0 million. Proceeds from the stock issuance were used to pay down a portion of intercompany borrowings owed to AWR.
During the three months ended March 31, 2023 and 2022, AWR paid quarterly dividends of approximately $14.7 million, or $0.3975 per share, and $13.5 million, or $0.365 per share, respectively. During the three months ended March 31, 2023 and 2022, GSWC paid dividends of $24.7 million and $13.5 million, respectively, to AWR during these periods.
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Note 5 — Derivative Instruments
BVES has purchasedentered into long-term fixed price contracts to purchase power under long-term contracts at a fixed cost over three- and five-year terms depending on the amount of power and period during which the power is purchased under the contracts.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. 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. The 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.
Among other things, theThe CPUC authorized the use of a regulatory asset and liability memorandum account to offset the mark-to-market entries required by the accounting guidance.  Accordingly, all unrealized gains and losses generated from the purchasedderivative instruments in purchase power contracts are deferred on a monthly basis into a non-interest bearingnon-interest-bearing regulatory memorandum account that tracks the changes in fair value of the derivative throughout the terms of the contracts. As a result, these unrealized gains and losses do not impact Registrant’s earnings. As of March 31, 2023,2024, there was a $6.7$6.2 million derivative assetliability at fair value for the derivatives in the power purchase contracts, with a corresponding regulatory liabilityasset recorded in the derivative instrument memorandum account for the purchased power contract as a result of overall fixed prices under BVES’s purchase power contracts being lowerhigher than future energy prices. The notional volume of derivatives remaining under these long-term contracts as of March 31, 20232024 was 184,979653,396 megawatt hours.
The accounting guidance for fair value measurements applies to all financial assets and financial liabilities that are measured and reported on a fair value basis. Under the accounting guidance, BVESRegistrant has made fair value measurements that are classified and disclosed in one of the following three categories:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
To value the derivatives in the purchase power contracts, RegistrantBVES utilizes various inputs that include quoted market prices for energy over the duration of the contracts. The market prices used to determine the fair value for thisthe derivative instrumentinstruments were estimated based on
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independent sources such as broker quotes and publications that are not observable in or corroborated by the market.  When such inputs have a significant impact on the measurement of fair value, the instruments are categorized as Level 3. Accordingly, the valuation of the derivatives on Registrant’s purchasedwithin BVES’s purchase power contract hascontracts have been classified as Level 3 for all periods presented.
The following table presents changes in the fair value of the Level 3 derivatives for the three months ended March 31, 20232024 and 2022.2023. The change in fair value was due to the change in market energy prices during the three months ended March 31, 20232024 and 2022.2023.
 For The Three Months Ended 
 March 31,
For The Three Months Ended
March 31,
For The Three Months Ended
March 31,
(dollars in thousands)(dollars in thousands)20232022(dollars in thousands)20242023
Fair value at beginning of the periodFair value at beginning of the period$11,847 $4,441 
Unrealized (losses) gains on purchased power contracts(5,178)2,579 
Unrealized (losses) gains on purchase power contracts
Fair value at end of the periodFair value at end of the period$6,669 $7,020 
Note 6 — Fair Value of Financial Instruments
For cash and cash equivalents, accounts receivable, accounts payable and short-term debt, the carrying amount is assumed to approximate fair value due to the short-term nature of these items.
Investments held in a Rabbi Trust for the supplemental executive retirement plan (“SERP”) are measured at fair value and totaled $29.2$36.2 million as of March 31, 20232024 and $27.5$34.1 million as of December 31, 2022.2023. All equity investments in the Rabbi Trust are Level 1 investments in mutual funds. The investments held in the Rabbi Trust are included in "Other“Other Property and Investments"Investments” on Registrant'sRegistrant’s balance sheets.

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The table below estimates the fair value of long-term debt held by AWR and GSWC, respectively. The fair values as of March 31, 20232024 and December 31, 20222023 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. Changes in the assumptions will produce different results.
March 31, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
(dollars in thousands)(dollars in thousands)Carrying AmountFair ValueCarrying AmountFair Value(dollars in thousands)Carrying AmountFair ValueCarrying AmountFair Value
Financial liabilities:Financial liabilities:    Financial liabilities: 
Long-term debt—AWR (1)
Long-term debt—AWR (1)
$580,264 $564,605 $450,373 $424,151 
March 31, 2023December 31, 2022
March 31, 2024
March 31, 2024
March 31, 2024December 31, 2023
(dollars in thousands)(dollars in thousands)Carrying AmountFair ValueCarrying AmountFair Value(dollars in thousands)Carrying AmountFair ValueCarrying AmountFair Value
Financial liabilities:Financial liabilities:
Long-term debt—GSWC (2)
Long-term debt—GSWC (2)
$545,264 $530,671 $415,373 $391,198 
Long-term debt—GSWC (2)
Long-term debt—GSWC (2)
__________________
(1) Excludes debt issuance costs of approximately $3.4$3.0 million and $3.1 million as of March 31, 20232024 and December 31, 2022.2023, respectively.
(2) Excludes debt issuance costs of approximately $3.2$2.9 million and $3.0 million as of March 31, 20232024 and December 31, 2022.2023, respectively.
Note 7 — Income Taxes
AWR’s effective income tax rate (“ETR”) was 23.8%24.2% and 24.0%23.8% for the three months ended March 31, 20232024 and 2022,2023, respectively. GSWC’s ETR was 24.5%24.7% and 23.9%24.5% for the three months ended March 31, 2024 and 2023, and 2022, respectively.
The AWR and GSWC ETRs differed from the federal corporate statutory tax rate of 21% primarily due to (i) state taxes; (ii) permanent differences, including certain tax effects from stock compensation; (iii) the ongoing amortization of the excess deferred income tax liability; and (iv) differences between book and taxable income that are treated as flowed-through adjustments in accordance with regulatory requirements (principally from plant, rate-case, and compensation-related items). As a regulated utility,utilities, GSWC treatsand BVES treat certain temporary differences as being flowed-through to customers in computing itstheir income tax expense consistent with the income tax method used in itstheir CPUC-jurisdiction rate making. Flowed-through items either increase or decrease tax expense and thus impact the ETR.
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Note 8 — Employee Benefit Plans
The components of net periodic benefit costs for Registrant’s pension plan, postretirement medical benefit plan and SERP for the three months ended March 31, 20232024 and 20222023 were as follows:
For The Three Months Ended March 31,
For The Three Months Ended March 31,For The Three Months Ended March 31,
Pension BenefitsOther
Postretirement
Benefits
SERP Pension BenefitsOther
Postretirement
Benefits
SERP
(dollars in thousands)(dollars in thousands)202320222023202220232022(dollars in thousands)202420232024202320242023
Components of Net Periodic Benefits Cost:Components of Net Periodic Benefits Cost:      Components of Net Periodic Benefits Cost: 
Service costService cost$846 $1,480 $33 $33 $312 $298 
Interest costInterest cost2,513 1,844 25 16 411 256 
Expected return on plan assetsExpected return on plan assets(2,623)(3,292)(120)(147)— — 
Amortization of prior service costAmortization of prior service cost108 109 — — — — 
Amortization of actuarial (gain) lossAmortization of actuarial (gain) loss— — (240)(412)(8)145 
Net periodic benefits costs under accounting standardsNet periodic benefits costs under accounting standards844 141 (302)(510)715 699 
Regulatory adjustment - deferred cost(92)— — — — — 
Regulatory adjustments - deferred
Total expense (benefit) recognized, before surcharges and allocation to overhead poolTotal expense (benefit) recognized, before surcharges and allocation to overhead pool$752 $141 $(302)$(510)$715 $699 
In 2023,2024, Registrant expects to contribute approximately $3.0$3.3 million to its pension plan.
As authorized by the CPUC in the water and electric general rate case decisions, GSWC and BVESBVES each utilize two-way balancing accounts to track differences between the forecasted annual pension expenses in rates, or expected to be in rates, and the actual annual expense recorded in accordance with the accounting guidance for pension costs. During the three months ended
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March 31, 2024, GSWC’s actual pension expense was lower than the amounts included in water customer rates by $134,000. During the three months ended March 31, 2023, GSWC’s actual pension expense was higher than the amounts included in water customer rates by $92,000 for the three months ended March 31, 2023. During the three months ended March 31, 2022, GSWC’s actual pension expense was lower than the amounts included in water customer rates.$92,000. BVES’s actual expense was lower than the amounts included in electric customer rates for all periods presented. Over-collections are recorded as a reduction in revenues. As of March 31, 2023,2024, GSWC and BVES had over-collections in their net over-collections in their two-way pension balancing accounts of $1,227,000$1,231,000 and $574,000,$368,000, respectively, that have been included as part of regulatory assets and liabilities (Note 3).
Note 9 — Contingencies
Environmental Clean-Up and Remediation at GSWC:
GSWC has been involved in environmental remediation and cleanup at one of its plant sites that contained an underground storage tank which was used to store gasoline for its vehicles. This tank was removed from the ground in July 1990 along with the dispenser and ancillary piping. Since then, GSWC has been involved in various remediation activities at this site. Analysis indicates that off-site monitoring wells may be necessary to document effectiveness of remediation.
As of March 31, 2023,2024, the total amount spent to clean upclean-up and remediate GSWC’sthe plant facilitysite was approximately $6.2$6.6 million, of which $1.5 million has been paid by the State of California Underground Storage Tank Fund. Amounts paid by GSWC have been included in rate base and approved by the CPUC for recovery. As of March 31, 2023,2024, GSWC has a regulatory asset and an accrued liability for the estimated additionalremaining cost of $1.3 million to complete the cleanupclean-up at the site. The estimate includes costs for continued activities of groundwater cleanup and monitoring, future soil treatment and site-closure-related activities. The ultimate cost may vary as there are many unknowns in remediation of underground gasoline spills and this is an estimate based on currently available information. Management also believes it is probable that the estimated additional costs will continue to be approved in rate base by the CPUC.
Contracted Services:
ASUS’s utility privatization contract services are provided to the U.S. government pursuant to the terms of the initial 50-year firm, fixed-price contract and additional firm, fixed-price contracts subject to annual economic price adjustments. Entering into contracts with the U.S. government subjects ASUS to potential government audits or investigations of its business practices and compliance with government procurement statutes and regulations. ASUS is currently under a civil government investigation over bidding and estimating practices used in certain capital upgrade projects. ASUS is cooperating fully with the investigation and management does not currently believe that the investigation will have a material adverse effect on its consolidated results of operations, financial condition, or liquidity. However, at this time, management cannot predict the final outcome or recommendations that may result from the investigation or determine the amount, if any, of penalties and damages that may be assessed.
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CPUC as approved historically.
Other Litigation:
Registrant is also subject to other ordinary routine litigation incidental to its business, some of which may include claims for compensatory and punitive damages. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against, among other things, property, general liability, employment, and workers’ compensation claims incurred in the ordinary course of business. Insurance coverage may not cover certain claims involving punitive damages. Registrant does not believe the outcome from any pending suits or administrative proceedings will have a material effect on Registrant'sRegistrant’s consolidated results of operations, financial position, or cash flows.

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Note 10 — Business Segments
AWR has three reportable segments: water, electric and contracted services. GSWC has one segment, water. On a stand-alone basis, AWR has no material assets or liabilities other than its equity investments in its subsidiaries, notes payablenote payables to bank, deferred taxes and intercompany note receivables with its subsidiaries.receivables.  
All of GSWC’sGSWC and BVES’sBVES business activities are conducted in California. Activities of ASUS and the Military Utility Privatization Subsidiariesits subsidiaries are conducted in California, Florida, Georgia, Kansas, Maryland, Massachusetts, New Mexico, North Carolina, South Carolina, Texas and Virginia. Some of ASUS’s wholly owned subsidiaries are regulated by the state in which the subsidiary primarily conducts water and/or wastewater operations. Fees charged for operations and maintenance and renewal and replacement services are based upon the terms of the contracts with the U.S. government, which have been filed, as appropriate, with the commissions in the states in which ASUS’s subsidiaries are incorporated.
The tables below set forth information relating to AWR’s operating segments and AWR Parent.(parent). The utility plant balancebalances are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash and exclude U.S. government-funded and third-party prime contractor funded capital expenditures for ASUS, and property installed by developers and conveyed to GSWC and BVES.
As Of And For The Three Months Ended March 31, 2023 As Of And For The Three Months Ended March 31, 2024
ContractedAWRConsolidated ContractedAWRConsolidated
(dollars in thousands)(dollars in thousands)WaterElectric ServicesParentAWR(dollars in thousands)WaterElectric ServicesParentAWR
Operating revenuesOperating revenues$112,712 $12,904 $35,807 $— $161,423 
Operating income (loss)Operating income (loss)40,239 3,631 7,296 (1)51,165 
Interest expense, net5,494 573 227 1,323 7,617 
Interest expense (income), net
Net property, plant and equipmentNet property, plant and equipment1,638,031 125,093 17,337 — 1,780,461 
Depreciation and amortization expense (1)
Depreciation and amortization expense (1)
9,606 748 849 — 11,203 
Income tax expense (benefit)Income tax expense (benefit)8,910 701 1,685 (544)10,752 
Capital additionsCapital additions42,005 6,652 680 — 49,337 

As Of And For The Three Months Ended March 31, 2022 As Of And For The Three Months Ended March 31, 2023
ContractedAWRConsolidated ContractedAWRConsolidated
(dollars in thousands)(dollars in thousands)WaterElectric ServicesParentAWR(dollars in thousands)WaterElectricServicesParentAWR
Operating revenuesOperating revenues$73,906 $11,892 $22,772 $— $108,570 
Operating income (loss)Operating income (loss)16,999 3,598 3,770 (2)24,365 
Interest expense (income), netInterest expense (income), net5,145 113 (135)200 5,323 
Net property, plant and equipmentNet property, plant and equipment1,523,665 107,114 19,080 — 1,649,859 
Depreciation and amortization expense (1)
Depreciation and amortization expense (1)
8,545 654 915 — 10,114 
Income tax expense (benefit)Income tax expense (benefit)2,689 952 944 (124)4,461 
Capital additionsCapital additions31,465 3,468 237 — 35,170 
(1)     Depreciation computed on GSWC’s and BVES’s transportation equipment is recorded in other operation expenses and totaled $368,000$163,000 and $94,000$368,000 for the three months ended March 31, 20232024 and 2022,2023, respectively. For the three months ended March 31, 2023, approximately $212,000 of additional depreciation expense on GSWC'sGSWC’s transportation equipment was recorded that relates to the cumulative retroactive impact for the full year of 2022 approved in the CPUC proposedCPUC’s final decision in GSWC’s general rate case that resulted fromin an increase to the transportation equipment composite depreciation rates that are retroactive to January 1, 2022.



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The following table reconciles total net property, plant and equipment (a key figure for rate making)ratemaking) to total consolidated assets (in thousands):
 March 31,
 20232022
Total net property, plant and equipment$1,780,461 $1,649,859 
Other assets279,911 264,073 
Total consolidated assets$2,060,372 $1,913,932 


 March 31,
 20242023
Total net property, plant and equipment$1,933,694 $1,780,461 
Other assets359,202 279,911 
Total consolidated assets$2,292,896 $2,060,372 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General
The following discussion and analysis provides information on AWR’s consolidated operations and assets, and includes specific references to (i) GSWC, AWR’s individual segmentsregulated water utility segment, (ii) BVES, AWR’s regulated electric utility segment, (iii) ASUS and its subsidiaries, (GSWC, BVES,collectively, AWR’s contracted services segment, and ASUS and its subsidiaries), and(iv) AWR (parent) where applicable. The subsidiaries of ASUS are collectively referred to as the “Military Utility Privatization Subsidiaries.”
Included in the following analysis is a discussion of AWR’sRegistrant’s operations in terms of earnings per share by business segment and AWR (parent), which equals each business segment'ssegment’s earnings divided by AWR’s weighted average number of diluted common shares. Furthermore, the gains and losses generated on the investments held to fund oneCommon Shares. The impact of the Company’s retirement plans duringwater general rate case including the three months ended March 31, 2023 and 2022 have been excluded when communicating the results to help facilitate comparisons of AWR’s performance from period to period. Also, the impact of retroactive new rates related to the full year 2022 recorded induring the three months ended March 31, 2023 resulting from the proposed decision on the water general rate case, hasand the impact from the estimates of revenues subject to refund recorded during the three months ended March 31, 2023 resulting from the pending costs of capital pending at that time have been excluded in this analysis when communicating AWR��sAWR’s consolidated and water segment’ssegment results for the three months ended March 31, 20232024 and 20222023 to help facilitate comparisons of AWR’sRegistrant’s performance from period to period. Diluted earnings per share by business segment and adjusted diluted earnings per share
All of the measures discussed above are derived from consolidated financial information of Registrant, but are not presented in our financial statements that are prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). These items constitute “non-GAAP financial measures” under the Securities and Exchange Commission rules, which supplement our GAAP disclosures but should not be considered as an alternative to the respective GAAP measures. Furthermore, the non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other registrants. All of these measures are derived from consolidated financial information of the Registrant, but are not presented in our financial statements that are prepared in accordance with GAAP.
AWR uses earnings per share by business segment as an important measure in evaluating its operating results and believes it provides investors with clarity surrounding the performance of its segments. AWR reviews this measurement regularly and compares it to historical periods and to its operating budget. A reconciliation to AWR’s consolidated diluted earnings per share prepared in accordance with GAAP is included in the discussion under the section titled “Summary of First Quarter Results by Segment.
Overview
Factors affecting our financial performance are summarized under “Risk“Risk Factors” in our Form 10-K for the period ended December 31, 20222023 filed with the SEC.
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 CaliforniaCalifornia. BVES’ revenues, operating income and cash flows are primarily earned through delivering electricity in the Big Bear area of San Bernardino County, California, respectively.California. Rates charged to GSWC and BVES customers are determinedauthorized 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. Capital expenditures in future years at GSWC and BVES are expected to remain at substantially higher levels than depreciation expense. When necessary, GSWC and BVES may obtain funds from external sources in the capital markets and through bank borrowings.
Pending General Rate Case Filings and Other Matters:
Water General Rate Case for the Years 20222024:years 2025–2027:
In July 2020,On August 14, 2023, GSWC filed a general rate case application for all of its water regions and itsthe general office. This general rate case determineswill determine new water rates for the years 2025 – 2027. Among other things, GSWC requested capital budgets of approximately $611.4 million for the three-year capital cycle. GSWC also requested the continuation of mechanisms to accommodate fully decoupled revenues and sales, and track differences between recorded and CPUC-authorized supply-related expenses. The CPUC discontinued the use of the Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”) at water utilities after 2024. However, on September 30, 2022, – 2024. On April 13, 2023,the governor of California signed Senate Bill (“SB”) 1469 which allows Class A water utilities, including GSWC, receivedto continue requesting the use of a proposedrevenue decoupling mechanism in their next general rate case. With the passage of SB 1469, GSWC’s request to continue using a revenue decoupling mechanism will be subject to CPUC approval. A decision fromin the assigned administrative law judge at the CPUC on GSWC's water general rate case is scheduled for the fourth quarter of 2024, with new rates retroactive to become effective January 1, 2022. Among other items, the proposed2025. No assurance can be given that a decision approves and adopts in its entirety the settlement agreement between GSWC and the Public Advocates Officewill be received at the CPUC (“Public Advocates”) that had been filed with the CPUC in November 2021, and resolves all issues related to the 2022 annual revenue requirement in the general rate case application and allows for additional increases in adopted revenues for 2023. The new rates for 2022 and 2023 are effective and retroactive to January 1, 2022 and 2023, respectively. As a result of receiving a proposed decision that approves the settlement agreement in its entirety, the impact of retroactive new rates for the full year of 2022 and the estimated second-year rate increases for the three months ended March 31, 2023 have been reflected in the 2023 first quarter results as it became probable that the approved retroactive rates for the full year of 2022 and first three months of 2023 would be permitted to be billed to customers in the future. GSWC expects to receive a final decision during the second quarter of 2023.
The settlement agreement approved in the proposed decision (i) authorizes GSWC to invest approximately $404.8 million in capital infrastructure over the three-year cycle (excluding advice letter projects); (ii) increases the 2022 adopted revenues (excluding the advice letter project revenues) by approximately $30.3 million, or $0.59 per share, as compared to the 2021 adopted revenues, and increases the 2022 adopted supply costs by $9.6 million, or $0.19 per share, as compared to the 2021such time.
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Water General Rate Case for 20222024 and Changes in Rates for 2023 and 2024:
In June 2023, the CPUC adopted a final decision in GSWC’s general rate case application for all its water regions and its general office that determined new water rates for the years 2022–2024 retroactive to January 1, 2022. 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 three months ended March 31, 2023.
The third-year rate increases for 2024, which were effective January 1, 2024, have been reflected in the three months ended March 31, 2024 results. There was an increase in recorded water operating revenues of $5.2 million largely as a result of the third-year rate increases for 2024 that reflects, among other things, a higher revenue requirement for increases in recorded supply costs of $511,000, which combined is an increase of $0.40$0.09 per share; (iii) adopts new operating expense levels for 2022 including a higher depreciation expense resulting from overall higher composite depreciation rates basedshare. Actual water supply costs are tracked against adopted costs in the revenue requirement, and passed through to customers on a new depreciation study adopteddollar-for-dollar basis by way of the CPUC-approved water supply cost balancing accounts. The increase in water supply costs results in a corresponding increase in water operating revenues and has no net impact on the proposed decision; and (iv) allows for additional increases in adopted revenues for 2023 and 2024 subject to an earnings test and changes to the forecasted inflationary index values.
water segment's profitability. 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 three months ended March 31,period from January 1, 2023 to July 30, 2023 were based on 2021 adopted rates pending a final decision byand new 2023 rate increases went into effect on July 31, 2023. In October 2023, GSWC also filed with the CPUC. As a result of receiving a proposed decision that approves the settlement agreementCPUC to recover all retroactive rate amounts accumulated in its entirety, the impact of retroactive new ratesmemorandum accounts for the full 2022 year of 2022 of $0.36 per share has been reflected in the 2023 first quarter results and included primarily (i) the increase in 2022’s adopted revenues and supply costs that is consistent with the settlement agreement, or $0.40 per share as discussed above; (ii) a reduction to revenues of $1.1 million, or $0.02 per share, to reflect the incremental impact of revenues subject to refund from the new 2022 rates as a result of the lower cost of debt in the pending cost of capital proceeding; and (iii) higher overall depreciation expense for 2022 of approximately $790,000, or $0.02 per share, resulting from updated composite depreciation rates adopted in the proposed decision and which are reflected in the 2022 adopted revenue requirement.
The estimated second-year increases for 2023 have also been reflected inthrough July 30, 2023. Surcharges were implemented to recover the 2023 first quarter results for the three months ended March 31, 2023. This included increases in revenues of approximately $8.7 million, or $0.17 per share, compared to the adopted 2021 rates currently being billed, and increases in supply costs of approximately $1.6 million, or $0.03 per share, which combined is an increase of $0.14 per share for the three months ended March 31, 2023. The best estimate of 2023 rates have been computed at this time using inflationary index values as of March 31, 2023. Actual increases for 2023 will be determined when the filings to implement the newcumulative retroactive rate increases are approved by the CPUC, and will be calculated using the inflationary index values at that time. GSWC will file for the 2023 increases once the CPUC approves the final decision.
differences over 36 months. As of March 31, 2023,2024, there is an aggregate cumulative amountbalance of $38.4 $50.0 million in CPUC-approved general rate case memorandum accounts that relates to water revenues recorded during the three months ended March 31, 2023, and which represent the difference between the 2021 adopted rates billed to customers and the rates authorized in the proposed decision for the full year of 2022 and estimated increases for the three months ended March 31, 2023. Once a final decision is issued by the CPUC, GSWC will request recovery through a surcharge of the cumulative amounts included in the general rate case memorandum accounts.
Furthermore, the proposed decision addressed the three remaining unresolved issues related to GSWC’s requests for: (i) a medical insurance cost balancing account, (ii) a general liability insurance cost balancing account, and (iii) the consolidation of two of GSWC’s customer service areas. The proposed decision approved both balancing accounts and denied GSWC’s consolidation of its two customer service areas. The proposed decision also approved the recovery of previously incurred costs that were being tracked in other CPUC-authorized memorandum accounts. As a result, GSWC recorded the cumulative amounts tracked in these balancing and memorandum accounts that are being approved in the proposed decision, the net impact of which was not material to 2023 first quarter results.have been recognized as regulatory assets.
Cost of Capital Proceeding:(“COC”) Proceedings:
Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. 2021 COC Application:
GSWC filed aits last cost of capital application with the CPUC in May 2021 currently pending final approval, which requested a capital structure of 57% equity and 43% debt, a return on equity of 10.5%, an embedded cost of debt of 5.1%, and a return on rate base of 8.18%. Hearings on this proceeding occurred in May 2022 and briefs were filed in2021. On June 2022. On May 9,29, 2023, GSWC received a proposed decision from the assigned administrative law judge at the CPUC on the cost of capital proceeding. Amongadopted a final decision that, among other things, the proposed decision (i) adopts GSWC’s requested capital structure and cost of debt filed in the application; (ii) adopts a return on equity of 8.85% for GSWC as compared to 8.9% previously authorized; (iii) allowsallowed for the continuation of the Water Cost of Capital Mechanism (“WCCM”); and (iv) adopts the new cost of capital for the three-year period commencing January 1, 2022, through December 31, 2024. Comments on the proposed decision are due on May 30. In March 2023, the CPUC issued a decision that approved an extension of the statutory deadline for a final decision in the cost of capital proceeding to August 10, 2023.
The 5.1% cost of debt adopted in the proposed decision is lower than the previously authorized amount of 6.6%. The new cost of debt is expected to lower 2023 and 2022 adopted water revenues by approximately $8.2 million, or $0.16 per share, and $7.5 million, or $0.15 per share, respectively, as compared to 2021 adopted water revenues at the currently authorized cost of debt of 6.6% that is presently being billed to water customers until a final decision is issued in this proceeding. Based on management's analysis of this regulatory proceeding and the associated accounting in 2022 and through March 31, 2023, GSWC has reduced revenues and recorded a corresponding regulatory liability for revenues subject to refund based on its best estimate at this time, which includes the impact of GSWC’s lower cost of debt adopted in the proposed decision. For the three months ended March 31, 2023 and 2022, GSWC reduced revenues by $1.8 million and $1.4 million, respectively, that are subject to refund. Furthermore, an additional reduction to revenues of $1.1 million, or $0.02 per share, related to the full year of 2022 was recorded during the first quarter of 2023 to reflect the incremental impact of revenues subject to refund from the new 2022 rates approved in the proposed water general rate case decision. As of March 31, 2023, GSWC had a cumulative regulatory liability of $9.3
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million for the estimated revenues subject to refund from the pending cost of capital proceeding covering the period January 1, 2022 through March 31, 2023. However, management cannot predict the ultimate outcome and any changes that may be made to the final decision in the cost of capital application, and the associated impact on 2023 and 2022 revenues. Changes in estimates will be made, if necessary, as more information in this proceeding becomes available.
Furthermore, the proposed decision continues the WCCM for the years 2023 and 2024, which adjusts the return on equity and rate of return on rate base between the three-year cost of capital proceedings only if there is a positive or negative change of more than 100 basis points in the average of the Moody’s Aa utility bond rate as measured over the period October 1 through September 30. If there is a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. For the period from October 1, 20212022 through September 30, 2022,2023, the Moody’s Aa utility bond rate increased by 103139.7 basis points from the benchmark, which triggers thetriggered a WCCM adjustment. GSWC recognized revenuesadjustment 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. GSWC’s next cost of capital application was scheduled to be filed on May 1, 2024 effective for the first quarteryears 2025 - 2027. However, GSWC, along with three other Class A investor-owned water utilities in California, filed a joint request with the CPUC to defer the filing deadline of 2023 and allthe next cost of 2022 basedcapital applications by one year, which was approved on February 2, 2024. The joint request asked that the previously authorized return of equity of 8.9% that is presently being billed to water customers pending a final decision inutilities keep the cost of capital proceeding.
Final Decisioncurrently authorized for 2024 in effect through 2025, and file new cost of capital applications by May 1, 2025 to set the First Phasecost of the Low-Income Affordability Rulemaking: 
In August 2020, the CPUC issued a final decision in the first phase of the CPUC’s Order Instituting Rulemaking evaluating the low income ratepayer assistancedebt, return on equity and affordability objectives contained in the CPUC’s 2010 Water Action Plan. This decision also addressed other issues, including the discontinued use of the Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”). The MCBA is a full-cost balancing account used to track the difference between adopted and actual water supply costs (including the effects of changes in both rates and volume). Based on the final decision, any general rate case application filed by GSWC and the other California water utilities after August 27, 2020 may not include a proposal to continue the use of the WRAM or MCBA, but may instead include a proposal to use a limited price adjustment mechanism and an incremental supply cost balancing account. Since its implementation in 2008, the WRAM and MCBA have helped mitigate fluctuations in GSWC’s earnings due to changes in water consumption by its customers or changes in water supply mix. Replacing them with mechanisms recommended in the final decision will likely result in more volatility in GSWC’s future earnings and could result in less than, or more than, full recovery of its authorized revenue and supply costs.
The August 2020 decision provides that the WRAM and MCBA for GSWC would be discontinued after 2024. However, on September 30, 2022, the governor of California signed Senate Bill (“SB”) 1469. Effectivecapital structure starting January 1, 2023, SB 1469 allows Class A water utilities, including GSWC, to2026. GSWC’s current authorized rate of return on rate base is 7.93% effective January 1, 2024, which will continue requestingin effect through December 31, 2025. Additionally, GSWC’s WCCM will remain active through the use of the WRAM in their next general rate case. With the passage of SB 1469, GSWC will be able to request the continued use of the WRAM in its next general rate case to be filed in 2023 that will establish new rates for the years 2025 – 2027. GSWC’s request to continue using the WRAM in its next general rate case will be subject to CPUC approval.
In October 2020, GSWC, three other investor-owned water utilities (“IOWUs”) operating in California, and the California Water Association (“CWA”) filed applications with the CPUC for rehearing on the discontinuation of the WRAM and MCBA, which the CPUC denied in September 2021. GSWC, the three other IOWUs and CWA each separately filed a petition with the California Supreme Court (“Court”) to review the CPUC’s decision revoking prior authorization of the WRAM and MCBA. In May 2022, the Court granted the petition for writ of review. The Court ordered GSWC, along with the other IOWUs and CWA, to file opening briefs, which were filed on September 1, 2022. The CPUC’s answer to the opening brief was originally due on November 15, 2022 and reply briefs were due on December 15, 2022. However, as a result of SB 1469, in October 2022 the CPUC filed a motion to dismiss the IOWUs and CWA’s petition with the Court, and also requested that the Court suspend the proceeding schedule until it rules on the motion to dismiss. The Court granted the CPUC’s request to suspend the proceeding schedule until it ruled on the motion to dismiss. In November 2022, the Court denied the motion to dismiss resulting in the CPUC filing their answer brief on December 9, 2022 and reply briefs were filed on January 13, 2023. There is no timeline for the Court to complete their review. At this time, management cannot predict the final outcome of this matter.one year deferral period.
Electric General Rate Case for the years 20232026:
On August 30, 2022, BVES filed a general rate case application that will determine new electric rates for the years 2023 – 2026. In DecemberElectric revenues billed to customers for 2023 were based on 2022 a pre-hearing conference was held to discussadopted rates and will remain in effect until finalization of the scope of issues and schedule for the proceeding. In February 2023, a scoping memo and ruling that set the final schedule and scope of issues in BVES’spending general rate case proceeding was issued by the CPUC. Based on the schedule, a proposed decision is expected in the fourth quarter of 2023.application. On December 15, 2022, the CPUC approved a decision for BVES to establish a general rate case memorandum account that makes the new 2023 rates effective and retroactive to January 1, 2023. When a decision is issued in the electric general rate case, cumulative adjustments will be recorded at that time. A proposed decision was issued that extends the statutory deadline of the general rate case to September 30, 2024. Therefore, a decision on the general rate case is scheduled to be issued by the end of the third quarter of 2024. No assurance can be given that a decision will be received at such time.
Among other things, BVES requested (i) capital budgets of approximately $62.0 million for the four-year rate cycle, and another $6.2 million for a large line replacement capital project to be filed for revenue recovery through an advice letter when the project is completed, and (ii) a capital structure for BVES of 61.8% equity and 38.2% debt, a return on equity of 11.25%, an embedded cost of debt of 5.51%, and a return on rate base of 9.05%. Furthermore, includedIncluded in the general rate case application is a request for recovery of all capital expenditures and other incremental costs incurred over the last few years in connection with BVES’s wildfire mitigation plans that are currently not included in customer rates. These costs will beare subject to review by the CPUC during the general rate case proceeding.

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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-pricefirm-fixed-price contract, additional firm-fixed-price contracts, task order agreements and additional firm fixed-price contracts.subcontracts with third party prime contractors on military bases. Currently, ASUS has one subsidiary that has entered into a task order agreement with the U.S. government that has a term of 15 years. The contract price for each of thesethe contracts and recurring task order agreements is subject to annual economic price adjustments. Additional revenues generated by contract operations are primarily dependent on annual economic price adjustments, and new construction activities under contract modifications with the U.S. government or agreements with other third-party prime contractors. ASUS’s subsidiaries continue to enter into U.S. government-awarded contract modifications and agreements with third-party prime contractors for new construction projects at the military bases served.
Entering intoIn August and September of 2023, ASUS was awarded new contracts with the U.S. government subjectsto serve two military bases for which operations began in April 2024. After completion of the transition periods, ASUS to potential government audits or investigations of its business practiceshas begun operating the water and compliance with government procurement statutes and regulations. ASUS is currentlywastewater utility systems at Naval Air Station Patuxent River in Maryland under a civil government investigation over bidding and estimating practices used in certain capital upgrade projects. ASUS is cooperating fully50-year privatization contract with the investigationU.S. government and management does not currently believe thatat Joint Base Cape Cod in Massachusetts under a 15-year contract with the investigationU.S. government. Operations commenced at Naval Air Station Patuxent River on April 1, 2024. The value of this contract is estimated at approximately $349 million over a 50-year period and is subject to an inventory adjustment and annual economic price adjustments. Operations at Joint Base Cape Cod commenced on April 15, 2024. Under this contract, ASUS will haveperform work through the annual issuance of task orders by the U.S. government over a material adverse effect on its consolidated results15-year period up to a maximum value to ASUS of operations, financial condition, or liquidity. However,$75 million subject to adjustments as task orders are issued. In April 2024, the U.S. government awarded a task order to ASUS valued at this time, management cannot predict$4.1 million for the final outcome or recommendations that may result from the investigation or determine the amount, if any,first year of penaltiesoperation, maintenance, and damages that may be assessed.
COVID-19:
AWRrenewal and its subsidiaries continue to monitor the guidance provided by federal, state, and local health authorities and other government officials. Thus far, the COVID-19 pandemic has not had a material impact on ASUS’s current operations.
During 2023, GSWC and BVES incurred some incremental costs in excess of their revenue requirements due to the lingering effectsreplacement services of the pandemic that are being tracked in COVID-19-related memorandum accountswater and recorded as regulatory assets. The CPUC has authorized GSWC and BVES to track incremental costs, including bad debt expense, in excess of what is included in their respective revenue requirements incurred as a result of the pandemic in COVID-19 emergency-related memorandum accounts, which GSWC and BVES intend to file with the CPUC for future recovery. As of March 31, 2023, GSWC and BVES had approximately $3.5 million and $500,000, respectively, in regulatory asset accounts related to bad debt expense in excess of their revenue requirements, the purchase of personal protective equipment, additional incurred printing costs, and other incremental COVID-19-related costs. Emergency-type memorandum accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are therefore recognized as regulatory assets for future recovery. As a result, the amounts recorded in the COVID-19 emergency-related memorandum accounts have not impacted GSWC’s or BVES’s earnings.wastewater systems at Joint Base Cape Cod.
The CPUC requires that amounts tracked in GSWC’s and BVES’s COVID-19 memorandum accounts for unpaid customer bills be first offset by any (i) federal and state relief for water or electric utility bill debt, and (ii) customer payments through payment plan arrangements, prior to receiving recovery from customers at large. After these offsets are made, GSWC will file with the CPUC for recovery of the remaining balance. BVES intends to include the remaining balance in its COVID-19 memorandum account for recovery once all alternative sources of funding have been exhausted and credited to eligible customer accounts.
On April 10, 2023, the Biden Administration terminated the COVID-19 national emergency. The COVID-19 emergency-related memorandum accounts for GSWC and BVES expired when the COVID-19 national emergency ended and no additional amounts will be included in these memorandum accounts.
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Summary of First Quarter Results by Segment
The table below sets forth the first quarter diluted earnings per share by business segment and for the parent company:
 Diluted Earnings per Share
 Three Months Ended 
 3/31/20233/31/2022CHANGE
Water, adjusted (2023 excludes the impact of retroactive rates related to 2022 from the CPUC proposed decision in the general rate case)$0.38 $0.23 $0.15 
Electric0.06 0.07 (0.01)
Contracted services0.15 0.08 0.07 
AWR (parent)(0.02)— (0.02)
Consolidated diluted earnings per share, as adjusted0.57 0.38 0.19 
Impact of retroactive rates related to the full year of 2022 from the proposed decision in the water general rate case (approximately $0.08 per share relates to first quarter of 2022)0.36 — 0.36 
Consolidated diluted earnings per share, as recorded$0.93 $0.38 $0.55 
 Diluted Earnings per Share
 Three Months Ended 
 3/31/20243/31/2023CHANGE
Water$0.48 $0.74 $(0.26)
Electric0.05 0.06 (0.01)
Contracted services0.13 0.15 (0.02)
AWR (parent)(0.03)(0.02)(0.01)
  Consolidated diluted earnings per share, as recorded (GAAP)0.62 0.93 (0.31)
Adjustments to GAAP measure:
Impact of retroactive rates related to the full year of 2022 from the decision in the water general rate case*— (0.38)0.38 
Impact of estimated revenues subject to refund recorded in 2023*— 0.05 (0.05)
Consolidated diluted earnings per share, as adjusted (Non-GAAP)*$0.62 $0.60 $0.02 
Water diluted earnings per share, as adjusted (Non-GAAP)*$0.48 $0.41 $0.07 
Note: Certain amounts in the table above may not foot or crossfoot due to rounding.
*All adjustments to 2023’s recorded diluted earnings per share relate to the water segment. The water segment’s adjusted earnings for 2023 exclude both the impact of the water general rate case proposed decision that included retroactive rates related to the full year of 2022, and the impact of lower revenues due to the recording of estimates related to revenues subject to refund shown separately in the table above. Lower revenues were recorded during the three months ended March 31, 2023 related to an estimate of revenues subject to refund recorded at that time from the pending cost of capital proceeding that were subsequently reversed in June 2023 upon receiving the final decision in this proceeding that made all adjustments to rates prospective.
For the three months ended March 31, 2023,2024, AWR’s recorded consolidated diluted earnings were $0.93$0.62 per share, as compared to $0.38$0.93 per share for the same period in 2022, an increase2023, a decrease of $0.55$0.31 per share, which includesinclude: (i) the impact of the water general rate case, largely from the impact of retroactive new rates related to the full 2022 year, of $0.36$0.38 per share that was recorded in the first quarter 2023 as a result of receiving the proposed decision in April 2023 on the water general rate case. The impact of retroactive rates related to the full year of 2022 is shown separately in the table above and included primarily: (i) the increase in 2022’s adopted revenues and supply costs that is consistent with the settlement agreement, or $0.40 per share as previously discussed; (ii) a reduction to revenues of $1.1 million, or $0.02 per share, to reflect the incremental impact of revenues subject to refund from the new 2022 rates as a result of the lower cost of debt in the pending cost of capital proceeding; and (iii) higher overall depreciation expense for 2022 of approximately $790,000, or $0.02 per share, resulting from higher composite depreciation rates adopted in the proposed decision and which are reflected in the 2022 adopted revenue requirement.
Excluding the impact of retroactive rates related to the full 2022 year of $0.36 per share that was recorded in the first quarter of 2023 and is shown on a separate line in the table above, adjusted consolidated diluted earnings for the three months ended March 31, 2023 were $0.57 per share. The proposed decision on the water general rate case set new rates for 2022 and 2023, retroactive to January 1, 2022 and January 1, 2023, respectively, and cumulative adjustments were recorded in the first quarter of 2023 to reflect the impact of retroactive rates to the full year 2022 and the three months ended March 31, 2023.
Also included in the results for the first quarter ended March 31, 2023 were gains totaling $1.6 million, or approximately $0.03 per share, on investments held to fund one of the Company’s retirement plans, as compared to losses of $1.7 million, or approximately $0.03 per share, for the same period in 2022, both due to financial market conditions. Excluding the gains and losses on investments from both periods, and excluding the impact of retroactive rates related to the full year of 2022 of $0.36 per share recorded in the three months ended March 31, 2023, adjusted consolidated diluted earnings for the first quarter of 2023 were $0.54 per share as compared to adjusted diluted earnings of $0.41 per share for the same period in 2022, an adjusted increase of $0.13 per share largely due to the 2023 estimated second-year rate increases recorded as a result of receiving a proposed decision in GSWC’sthe water general rate case, proceeding.and (ii) the impact of approximately $0.05 per share resulting from estimated revenues subject to refund related to the pending cost of capital proceeding at that time, both shown separately in the table above. The $0.05 per share of estimated revenues subject to refund consisted of $0.03 per share related to the first quarter of 2023 and $0.02 per share related to the incremental impact from recording the retroactive rates for the full year of 2022 in the first quarter of 2023. Excluding these items from the first quarter of 2023, adjusted consolidated diluted earnings were $0.60 per share, compared to adjusted and recorded consolidated earnings of $0.62 per share for the three months ended March 31, 2024.
The following is a computation and reconciliation of recorded diluted earnings per share from the measure of operating income by business segment as disclosed in Note 10 to the Unaudited Consolidated Financial Statements to AWR’s consolidated fully diluted earnings per common share (as recorded), for the three months ended March 31, 20232024 and 2022:2023:
WaterElectricContracted ServicesAWR (Parent)Consolidated (GAAP)
WaterWaterElectricContracted ServicesAWR (Parent)Consolidated (GAAP)
(in thousands, except per share amounts)(in thousands, except per share amounts)Q1 2023Q1 2022Q1 2023Q1 2022Q1 2023Q1 2022Q1 2023Q1 2022Q1 2023Q1 2022(in thousands, except per share amounts)Q1 2024Q1 2023Q1 2024Q1 2023Q1 2024Q1 2023Q1 2024Q1 2023Q1 2024Q1 2023
Operating income (loss) (Note 10)Operating income (loss) (Note 10)$40,239 $16,999 $3,631 $3,598 $7,296 $3,770 $(1)$(2)$51,165 $24,365 
Other (income) and expense3,866 5,743 560 (30)257 (171)1,323 200 6,006 5,742 
Other (income) and expenses, net
Income tax expense (benefit)Income tax expense (benefit)8,910 2,689 701 952 1,685 944 (544)(124)10,752 4,461 
Net income (loss)Net income (loss)$27,463 $8,567 $2,370 $2,676 $5,354 $2,997 $(780)$(78)$34,407 $14,162 
Weighted Average Number of Diluted SharesWeighted Average Number of Diluted Shares37,047 37,019 37,047 37,019 37,047 37,019 37,047 37,019 37,047 37,019 
Diluted earnings per share$0.74 $0.23 $0.06 $0.07 $0.15 $0.08 $(0.02)$— $0.93 $0.38 
Diluted earnings (loss) per share

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

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Water Segment:
For the three months ended March 31, 2023,2024, recorded diluted earnings from the water utility segment were $0.74$0.48 per share, as compared to $0.23$0.74 per share for the same period in 2022, an increase2023, a decrease of $0.51$0.26 per share, which includes (i)share. Excluding the impact of the water general rate case including retroactive new rates for the full year of 2022 of $0.36 per share that was recorded in the first quarter 2023 and is shown separately in the table above, and (ii) gains totaling $1.6 million, or approximately $0.03 per share, incurred during the first quarter of 2023 on investments held to fund one of the Company’s retirement plans, as compared to losses of $1.7 million, or approximately $0.03 per share, recorded for the same period in 2022.
Excluding the gains and losses on investments from both periods, and excluding the impact of retroactive rates related to the full 2022 year of 2022 recorded$0.38 per share as a result of receiving a proposed decision in the first quarterwater general rate case, and the impact of 2023,approximately $0.05 per share resulting from estimated revenues subject to refund related to the pending cost of capital proceeding at the time, adjusted diluted earnings for the first quarter of 2023 at the water segment were $0.35$0.41 per share, as compared to adjusted and recorded diluted earnings of $0.26$0.48 per share for the same period in 2022,first quarter of 2024, an adjusted increase at the water segment of $0.09$0.07 per share, or a 17.1% increase, due primarilylargely to the following items:
An increase in water operating revenues of approximately $9.0$5.2 million was largely as a result of the estimated second-yearthird-year rate increases for 2023 that will be effective as of January 1, 2023 and have been reflected in the 2023 first quarter results. Approved 2023 rates will be subjectrelated to an earnings test and changes to inflationary index values. Because water revenues recorded during the three months ended March 31, 2022 were based on 2021 adopted rates, the2024. The increase in water revenues during the first quarter of 20232024 represents the difference from the 2021 adopted rates andthird-year rate increases compared to the 2023 estimated second-year rate increases forrecorded during the three months period ended March 31, 2023.2023 as a result of receiving a proposed decision in the water general rate case at that time.
An increase in water supply costs of $1.6 million,$511,000, which consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. AdoptedThe increase in water supply costs for the first quarter of 2023 were based on 2023 authorized amounts, pending a final decision by the CPUCis primarily related to an increase in thecustomer water general rate case application.usage and an increase in overall actual supply costs in 2024. Actual water supply costs are tracked against adopted costs in the revenue requirement, and passed through to customers on a dollar-for-dollar basis by way of the CPUC-approved water supply cost balancing accounts. The increase in water supply costs results in a corresponding increase in water operating revenues and has no net impact on the water segment’s profitability.
An overall increase in operating expenses of $1.3 million$862,000 (excluding supply costs) mainly due primarily to increases in (i) overall labor costs (ii)and other operation expenses resulting primarily from higher water treatment and transportation costs, (iii)employee-related benefits, (ii) administrative and general expenses resulting largely from higher employee-related expenses and outside-serviceoutside-services costs and (iv) depreciationinsurance costs, and amortization expenses resulting from additions to utility plant and the higher composite depreciation rates based on a revised depreciation study approved(iii) property taxes; partially offset by decreases in the proposed decision on the water general rate case. timing of other operation and maintenance expenses.
An increase in interest expenseexpenses (net of interest income) of $1.1$1.6 million resulting primarily from an overall increase in interest rates, as well as an overall increase in total borrowing levels to support, among other things, the capital expenditures programexpenditure programs at GSWC, partially offset by higher interest income earned on regulatory assets bearing interest at the current 90-day commercial-paper rate, which increased compared to 2022’s2023’s rates, as well as an increase in the level of regulatory assets recorded resulting, in large part, from the proposed decision on the water general rate case.recorded.
An overall increase in other expensesincome (net of other income)expense) of $1.1 million$704,000 due primarily to an increase of $440,000 in the non-service cost components relatedgains generated on investments held to GSWC’s benefitfund one of the Company’s retirement plans resulting from changes in actuarial assumptions including expected returns on plan assets. However, as a result of GSWC’s two-way pension balancing accounts authorized byfor the CPUC, changes in total net periodic benefit costs relatedthree months ended March 31, 2024 compared to the pension plan have no material impactsame period in 2023, due to earnings.financial market conditions.
Changes in certain flowed-through income taxes and permanent items included in GSWC’s income tax expense for the three months ended March 31, 20232024 as compared to the same period in 20222023 that favorably impacted the water segment’s earnings. As a regulated utility, GSWC treats certain temporary differences as being flowed-through in computing its income tax expense consistent with the income tax method used in its CPUC-jurisdiction rate making. Changes in the magnitude of flowed-through items either increase or decrease tax expense, thereby affecting diluted earnings per share.
Electric Segment:
Diluted earnings from the electric utility segment decreased by $0.01 per share for the three months ended March 31, 2023first quarter of 2024 as compared to the same period in 2022,2023, largely resulting from not having new rates in 2023 while awaiting the processing of the pending electric general rate case that will set new rates for 2023 – 2026, while also experiencing continued increases in overall operating expenses and interest costs. When a decision is issued in the electric general rate case, new rates are expected to be retroactive to January 1, 2023 and cumulative adjustments will be recorded at that time.

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Contracted Services Segment:
Diluted earnings from the contracted services segment increased by $0.07decreased $0.02 per share for the three months ended March 31, 20232024 as compared to the same period in 2022, largely2023, due to an increasea decrease in construction activity due tolargely resulting from the timing differencesdifference of when construction work was performed in 20232024 as compared to the same period in 2022,2023 and an overall increase in operating expenses, partially offset by an increase in management fee revenue resulting from the resolution of various economic price adjustments, partially offset by higher overall operating expenses and interest costs as compared to the same period of 2022.adjustments. The contracted services segment is expected to contribute $0.45$0.50 to $0.49$0.54 per share for the full 20232024 year.

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AWR (Parent):
For the three months ended March 31, 2023,2024, diluted earningslosses from AWR (parent) decreased $0.02increased by $0.01 per share compared to the same period in 20222023 due primarily to an increase in interest expense resulting from higher short-term interest rates onand higher borrowings made under AWR’s revolving credit facility, as well as changes in state unitary taxes.

facility.
The following discussion and analysis for the three months ended March 31, 20232024 and 20222023 provide information on AWR’s consolidated operations and assets and, where necessary, includes specific references to AWR’s individual segments and subsidiaries: GSWC, BVES and ASUS and its subsidiaries.
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Consolidated Results of Operations — Three Months Ended March 31, 20232024 and 20222023 (amounts in thousands, except per share amounts):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
OPERATING REVENUES    
Water$112,712 $73,906 $38,806 52.5 %
Electric12,904 11,892 1,012 8.5 %
Contracted services35,807 22,772 13,035 57.2 %
Total operating revenues161,423 108,570 52,853 48.7 %
OPERATING EXPENSES    
Water purchased14,304 17,848 (3,544)(19.9)%
Power purchased for pumping2,354 2,374 (20)(0.8)%
Groundwater production assessment3,833 4,211 (378)(9.0)%
Power purchased for resale4,986 5,166 (180)(3.5)%
Supply cost balancing accounts11,566 (6,343)17,909 *
Other operation10,116 8,667 1,449 16.7 %
Administrative and general23,547 22,972 575 2.5 %
Depreciation and amortization11,203 10,114 1,089 10.8 %
Maintenance3,150 3,140 10 0.3 %
Property and other taxes6,295 5,853 442 7.6 %
ASUS construction18,904 10,203 8,701 85.3 %
Total operating expenses110,258 84,205 26,053 30.9 %
OPERATING INCOME51,165 24,365 26,800 110.0 %
OTHER INCOME AND EXPENSES    
Interest expense(9,481)(5,606)(3,875)69.1 %
Interest income1,864 283 1,581 558.7 %
Other, net1,611 (419)2,030 *
 (6,006)(5,742)(264)4.6 %
INCOME BEFORE INCOME TAX EXPENSE45,159 18,623 26,536 142.5 %
Income tax expense10,752 4,461 6,291 141.0 %
NET INCOME$34,407 $14,162 $20,245 143.0 %
Basic earnings per Common Share$0.93 $0.38 $0.55 144.7 %
Fully diluted earnings per Common Share$0.93 $0.38 $0.55 144.7 %
* not meaningful
Three Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
OPERATING REVENUES    
Water$90,265 $112,712 $(22,447)(19.9)%
Electric12,205 12,904 (699)(5.4)%
Contracted services32,781 35,807 (3,026)(8.5)%
Total operating revenues135,251 161,423 (26,172)(16.2)%
OPERATING EXPENSES    
Water purchased13,761 14,304 (543)(3.8)%
Power purchased for pumping2,832 2,354 478 20.3 %
Groundwater production assessment4,854 3,833 1,021 26.6 %
Power purchased for resale4,332 4,986 (654)(13.1)%
Supply cost balancing accounts(608)11,566 (12,174)(105.3)%
Other operation9,623 10,116 (493)(4.9)%
Administrative and general25,347 23,547 1,800 7.6 %
Depreciation and amortization10,722 11,203 (481)(4.3)%
Maintenance3,225 3,150 75 2.4 %
Property and other taxes6,487 6,295 192 3.1 %
ASUS construction15,702 18,904 (3,202)(16.9)%
Total operating expenses96,277 110,258 (13,981)(12.7)%
OPERATING INCOME38,974 51,165 (12,191)(23.8)%
OTHER INCOME AND EXPENSES    
Interest expense(12,855)(9,481)(3,374)35.6 %
Interest income2,070 1,864 206 11.1 %
Other, net2,342 1,611 731 45.4 %
 (8,443)(6,006)(2,437)40.6 %
INCOME BEFORE INCOME TAX EXPENSE30,531 45,159 (14,628)(32.4)%
Income tax expense7,396 10,752 (3,356)(31.2)%
NET INCOME$23,135 $34,407 $(11,272)(32.8)%
Basic earnings per Common Share$0.62 $0.93 $(0.31)(33.3)%
Fully diluted earnings per Common Share$0.62 $0.93 $(0.31)(33.3)%

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Operating Revenues:
General
GSWC and BVES rely upon approvals by the CPUC forof rate increases to recover operating expenses and to provide for a return on invested and borrowed capital used to fund utility plant. ASUS relies on economic price and equitable adjustments by the U.S. government in order to recover operating expenses and provide a profit margin for ASUS.  Current operating revenues and earnings may be negatively impacted if the Military Utility Privatization SubsidiariesASUS’s subsidiaries do not receive adequate rate relief orprice adjustments in a timely manner. ASUS’s earnings are also impacted by the level of additional construction projects at the Military Utility Privatization Subsidiaries,its subsidiaries, which may or may not continue at current levels in future periods.
Water
For the three months ended March 31, 2023,2024, revenues from water operations increaseddecreased by $38.8$22.4 million to $112.7$90.3 million as compared to the same period in 2022. 2023. The increasedecrease in water revenues was largely as a result of receiving in April 2023 a proposed decision in the pending general rate case application. As a result of receiving a proposed decision that approves the November 2021 settlement agreement in its entirety, due to the impact of retroactive new adopted rates forrelated to the full 2022 year of 2022approximately $30 million recorded in the first quarter of 2023, partially offset by $30.3 million and the estimated 2023 revenue increases for the three months ended March 31, 2023 of $8.7 million were recordedincrease in water revenues during the first quarter of 2024 that represents the third-year rate increases recorded during the three months period ended March 31, 2024 as compared to the second-year rate increases for the same period in 2023.
Billed water consumption for the first quarter of 20232024 was lowerhigher by approximately 17% 3.2%as compared to the same period in 20222023 due primarily to above average rainfall in Californialower amounts of seasonal precipitation in the first quarter of 20232024 as compared to the same period in 2022, which was the driest on record for this three month period.first quarter of 2023. 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 betweenbetween what it bills its water customers and what is authorized by the CPUC in the WRAM accounts as regulatory assets or liabilities.
Electric
Electric revenues for the three months ended March 31, 2023 increased2024 decreased by $1.0 million$699,000 to $12.9$12.2 million due, in large part, to the proposed decision issued in the water general rate case proceeding that updatesupdated the costs allocated from the general corporate office to the electric segment.segment retroactive to January 1, 2022. The proposed decision authorizesauthorized an increase in the allocation ratio to the electric segment. The increase in general corporate office expenses allocated and recorded to the electric segment as discussed later,in 2023 related to 2022 also includesincluded a corresponding and offsetting increase in adopted electric revenues as provided in BVES’s last general rate case proceeding, resulting in no impact to earnings. There was also an increase in electric revenues from an advice letter filing related to a completed capital project.
Electric usage for the first quarter of 20232024 was lower by 2.5% as2.1% compared to the same period in 2022.2023. Due to the CPUC-approved Base Revenue Requirement Adjustment Mechanism, which adjusts certain revenues to adopted levels authorized by the CPUC, changes in usage do not have a significant impact on earnings.
Contracted Services
Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining water and/or wastewater systems at various military bases.  For the three months ended March 31, 2023,2024, revenues from contracted services increased $13.0decreased by $3.0 million to $35.8$32.8 million as compared to $22.8$35.8 million for the same period in 2022.2023. The increasedecrease was largely due to higherresulting from timing difference of when construction activity and an increasework was performed in management fee revenue from annual economic price adjustments2024 as compared to the same period of 2022.2023, partially offset by an overall increase in management fees from economic price adjustments and transition revenues at the new bases.
ASUS’s subsidiaries continue to enter into U.S. government-awarded contract modifications, and agreements with third-party prime contractors for new construction projects at the military bases served. During the three months ended March 31, 2023, ASUS has been awarded approximately $4.6 million in new construction projects for completion in 2023 through 2025. This is in addition to $34.4 million of new construction projects awarded in 2022, which are being completed from late 2022 through 2025.served and task order agreements. Earnings and cash flows from modifications to the initial 15- and 50-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects, which may or may not continue at current levels in future periods.
Operating Expenses:
Supply Costs
Total supply costs at the regulated utilities comprise the largest segment of total consolidated operating expenses. Supply costs accounted for approximately 33.6%26.1% and 27.6%33.6% of total operating expenses for the three months ended March 31, 2024 and 2023, and 2022, respectively.

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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. Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. The overall actual percentages of purchased water for the three months ended March 31, 20232024 and 20222023 were approximately 42%40% and 48%42%, respectively, as comparedrespectively. The decrease in the actual percentage of purchased water resulted primarily from wells coming back on-line that had previously been out of service. This trend is expected to be consistent during the authorized adopted percentagesremainder of 38% and 30% for the three months ended March 31, 2023 and 2022, respectively.year.
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Table of Contents
Under the current CPUC-approved Modified Cost Balancing Account (“MCBA”),MCBA, GSWC tracks adopted and actual expense levels for purchased water, power purchased for pumping and pump taxes. GSWC records the variances (which include the effects of changes in both rate and volume) between adopted and actual purchased water, purchased power and pump tax expenses. GSWC recovers from, or refunds to, customers the amount of such variances. GSWC tracks these variances individually for each water rate makingratemaking area.
Supply costs for the water segment consist of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. For the three months ended March 31, 20232024 and 2022,2023, water supply costs consisted of the following amounts (in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water purchasedWater purchased$14,304 $17,848 $(3,544)-19.9 %Water purchased$13,761 $$14,304 $$(543)(3.8)(3.8)%
Power purchased for pumpingPower purchased for pumping2,354 2,374 (20)-0.8 %Power purchased for pumping2,832 2,354 2,354 478 478 20.3 20.3 %
Groundwater production assessmentGroundwater production assessment3,833 4,211 (378)-9.0 %Groundwater production assessment4,854 3,833 3,833 1,021 1,021 26.6 26.6 %
Water supply cost balancing accounts *Water supply cost balancing accounts *12,625 (5,067)17,692 **Water supply cost balancing accounts *(17)12,625 12,625 (12,642)(12,642)(100.1)(100.1)%
Total water supply costsTotal water supply costs$33,116 $19,366 $13,750 71.0 %Total water supply costs$21,430 $$33,116 $$(11,686)(35.3)(35.3)%
* The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $11,566,000$(608,000) and $(6,343,000)$11.6 million for the three months ended March 31, 2024 and 2023, and 2022, respectively.
** not meaningful
Purchased water costs for the first quarter of 20232024 decreased to $14.3$13.8 million as compared to $17.8$14.3 million for the same period in 20222023 primarily due to decreasesa decrease in water consumption and production that was driven by above-average rainfall in 2023 and drought conditions experienced in 2022 that resulted in related water use restrictions, as well as a lower mix of purchased water compared to the same period in 2022, allresulting from wells coming back online, partially offset by increases in wholesale water costs. GroundwaterThe increases in power purchased for pumping and groundwater production assessments decreased largely due toare also as a decreaseresult of wells coming back online and an overall increase in water consumption andwell production compared to the three months ended March 31, 2022 due primarily to above-average rainfallsame period in 2023.2023, as well as increases in electricity provider rates and increases in pump tax rates.
For the three months ended March 31, 2023,2024, the water supply cost balancing account had a $12.6 million over-collection$17,000 under-collection as compared to a $5.1$12.6 million under-collectionover-collection during the same period in 2022.2023. The increasechange in the over-collectionwater supply cost balancing accounts was primarily due to updated adopted supply costs from the proposed decision received in April 2023 in the water general rate case proceeding. This increase includes largelyproceeding recorded in 2023. The over-collection recorded in 2023 included the full year impact of 2022 to reflectthat reflected the new adopted supply costs retroactive to January 1, 2022, with a corresponding and offsetting2022. In addition, the increase in adoptedunder-collection was attributed to an increase in customer water revenues, resultingusage and increases in no impact to earnings.overall actual supply costs in 2024.
Electric segment supply costs
Supply costs for the electric segment consist primarily of purchased power for resale, the cost of natural gas used by BVES’s generating unit, the cost of renewable energy credits and changes in the electric supply cost balancing account. For the three months ended March 31, 20232024 and 2022,2023, electric supply costs consisted of the following amounts (in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Power purchased for resalePower purchased for resale$4,986 $5,166 $(180)-3.5 %Power purchased for resale$4,332 $$4,986 $$(654)(13.1)(13.1)%
Electric supply cost balancing account *Electric supply cost balancing account *(1,059)(1,276)217 -17.0 %Electric supply cost balancing account *(591)(1,059)(1,059)468 468 (44.2)(44.2)%
Total electric supply costsTotal electric supply costs$3,927 $3,890 $37 1.0 %Total electric supply costs$3,741 $$3,927 $$(186)(4.7)(4.7)%
* The sum of the water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $11,566,000$(608,000) and $(6,343,000)$11.6 million for the three months ended March 31, 20232024 and 2022,2023, respectively.
For the three months ended March 31, 2023,2024, the cost of power purchased for resale to BVES’s electric customers decreased by $180,000$654,000 to $5.0$4.3 million as compared to $5.2$5.0 million during the same period in 20222023 due to a decrease in customer usage and lower average prices per megawatt-hour that include all fixed costs. The average price per megawatt-hour, including fixed costs, decreased from $141.21$94.73 for the three months ended March 31, 20222023 to $94.73$81.66 for the same period in 2023.2024. The decrease in average price per megawatt-hour resulted in a decrease in the under-collection in the electric supply cost balancing account which decreased by $217,000$468,000 as compared to the three months ended March 31, 2022.2023 due to lower customer usage.

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Other Operation
The primary components of other operation expenses include payroll costs, materials and supplies, chemicals and water treatment costs and outside-service costs of operating the regulated water systems, including the costs associated with water transmission and distribution, pumping, water quality, meter reading, billing, and operations of district offices and the electric system.  Registrant’s contracted services operations incur many of the same types of expenses.  For the three months ended March 31, 20232024 and 2022,2023, other operation expenses by business segment consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$7,271 $6,354 $917 14.4 %Water Services$6,580 $$7,271 $$(691)(9.5)(9.5)%
Electric ServicesElectric Services1,059 876 183 20.9 %Electric Services989 1,059 1,059 (70)(70)(6.6)(6.6)%
Contracted ServicesContracted Services1,786 1,437 349 24.3 %Contracted Services2,054 1,786 1,786 268 268 15.0 15.0 %
Total other operationTotal other operation$10,116 $8,667 $1,449 16.7 %Total other operation$9,623 $$10,116 $$(493)(4.9)(4.9)%
For the three months ended March 31, 2023, the increaseThe decrease in other operation expenses at the water segment was primarily due primarily to higher operation-related labor, water treatment, and vehiclelower transportation and equipment costs. Asexpenses, as well as timing differences in spending under GSWC’s water conservation programs. In addition, as a result of receiving in April 2023 the proposed decision in the water general rate case, the increase at the water segment alsothree months ended March 31, 2023 included a cumulative depreciation adjustment for 2022 of $212,000 on GSWC’s transportation equipment, which is recorded in other operation expenses.
The increase in electric segment was due primarily to operation-related labor and transportation expense. The increaseother operation expenses at the contracted services segment was due primarily to higher operation-related labor, water treatment chemicals, and outsidevehicle-related services. Transportation costs were higher due, in part, to increases in fuel and maintenance costs compared to the same period in 2022.
Administrative and General
Administrative and general expenses include payroll costs related to administrative and general functions, all employee-related benefits, insurance expenses, outside legal and consulting fees, regulatory-utility-commission expenses, expenses associated with being a public company and general corporate expenses charged to expense accounts. For the three months ended March 31, 20232024 and 2022,2023, administrative and general expenses by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands): 
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$15,381 $15,596 $(215)(1.4)%Water Services$16,977 $$15,381 $$1,596 10.4 10.4 %
Electric ServicesElectric Services2,673 2,166 507 23.4 %Electric Services2,483 2,673 2,673 (190)(190)(7.1)(7.1)%
Contracted ServicesContracted Services5,492 5,208 284 5.5 %Contracted Services5,886 5,492 5,492 394 394 7.2 7.2 %
AWR (parent)AWR (parent)(1)(50.0)%AWR (parent)— — — — %
Total administrative and generalTotal administrative and general$23,547 $22,972 $575 2.5 %Total administrative and general$25,347 $$23,547 $$1,800 7.6 7.6 %
Administrative and general expenses decreased forincreased at the water segment due, in large part, to an increase in outside-services costs, labor and employee-related expenses, and insurance costs. Also, recorded during the three months ended March 31, 2023 was a reduction of approximately $447,000 to reflect the April 2023 proposed decision onin the water general rate case forthat authorized the one-time recovery of previously incurred costsadministrative and general expenses that were being tracked in CPUC-authorized memorandum accounts. This was offset by an increase in outside-service costs, labor and employee-related expenses, partially offset by a decrease in the service cost component of GSWC’s defined-benefit pension plan. 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.
Administrative and general expenses increaseddecreased at the electric segment primarily due to an increase in costs allocated from the general corporate office as a result of the allocation ratio update authorized in the proposed decision on the water general rate case. The2023 increase in general corporate office expenses allocated to the electric segment also includesretroactive to 2022 that included a corresponding and offsetting increase in adopted electric revenues as provided in BVES’s last general rate case proceeding, resulting in no impact to earnings.earnings, partially offset by higher outside service and labor costs.
Administrative and general expenses increased at the contracted services segment mainly due to higheran increase in labor, general liability insurance, and outside services.travel-related costs.

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Depreciation and Amortization
For the three months ended March 31, 20232024 and 2022,2023, depreciation and amortization by business segment consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$9,606 $8,545 $1,061 12.4 %Water Services$9,034 $$9,606 $$(572)(6.0)(6.0)%
Electric ServicesElectric Services748 654 94 14.4 %Electric Services884 748 748 136 136 18.2 18.2 %
Contracted ServicesContracted Services849 915 (66)(7.2)%Contracted Services804 849 849 (45)(45)(5.3)(5.3)%
Total depreciation and amortizationTotal depreciation and amortization$11,203 $10,114 $1,089 10.8 %Total depreciation and amortization$10,722 $$11,203 $$(481)(4.3)(4.3)%
The water general rate case proposed decision issued in April 2023 approves overall higher composite depreciation rates based on a revised depreciation study. The increase in composite depreciation rates increases the adopted water revenue requirement, with a corresponding increase in adopted depreciation expense, resulting in no impact to net earnings. Therefore, the overall increasedecrease in depreciation and amortization expenses at the water segment includedis primarily due to the retroactive impact for the full year of 2022 of approximately $576,000. There was also an increase$576,000 recorded in depreciationfirst quarter of 2023 as a result of receiving a proposed decision in the water general rate case as well as asset retirements and fully depreciated assets at the water segment, partially offset by an increase to depreciation and electric segments dueamortization expense attributed to additions to utility plant and other fixed assets since the first quarter of 2022.at both regulated utilities.
Maintenance
For the three months ended March 31, 20232024 and 2022,2023, maintenance expense by business segment consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$1,960 $2,156 $(196)(9.1)%Water Services$1,828 $$1,960 $$(132)(6.7)(6.7)%
Electric ServicesElectric Services321 250 71 28.4 %Electric Services373 321 321 52 52 16.2 16.2 %
Contracted ServicesContracted Services869 734 135 18.4 %Contracted Services1,024 869 869 155 155 17.8 17.8 %
Total maintenanceTotal maintenance$3,150 $3,140 $10 0.3 %Total maintenance$3,225 $$3,150 $$75 2.4 2.4 %
MaintenanceOverall maintenance expense decreased for theat water segment due, in part, to a reduction of approximately $98,000 to reflect the April 2023 proposed decision on the water general rate case for recovery of previously incurred costs that were tracked in CPUC-authorized memorandum accounts. Maintenance expense also decreased at the water segmentsegments due to timing oflower planned and unplanned maintenance activitiescosts as compared to the same period in 2022.2023 some of which is due to timing.
MaintenanceOverall maintenance expense increased at the electric and contracted services segments due to higher maintenance planned and unplanned activitiesmaintenance costs as compared to the same period in 2022.2023.
Property and Other Taxes
For the three months ended March 31, 20232024 and 2022,2023, property and other taxes by business segment consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$5,139 $4,890 $249 5.1 %Water Services$5,249 $$5,139 $$110 2.1 2.1 %
Electric ServicesElectric Services545 458 87 19.0 %Electric Services594 545 545 49 49 9.0 9.0 %
Contracted ServicesContracted Services611 505 106 21.0 %Contracted Services644 611 611 33 33 5.4 5.4 %
Total property and other taxesTotal property and other taxes$6,295 $5,853 $442 7.6 %Total property and other taxes$6,487 $$6,295 $$192 3.1 3.1 %
The increase to propertyProperty and other taxes wasincreased at both regulated utilities primarily attributeddue to an increase in franchise fees at the water segmentproperty taxes resulting from an increase in capital additions and higher assessed values. Also, during the first quarter of 2023, additional franchise fee expense of $228,000 was recognized that reflected the impact of having recorded the full year of 2022 water revenues recognized in 2023 comparedas a result of the proposed decision that was retroactive to January 1, 2022.
ASUS Construction
For the three months ended March 31, 2023,2024, construction expenses for contracted services were $18.9$15.7 million, increasing $8.7a decrease of $3.2 million compared to the same period in 20222023 primarily due to an increasea decrease in construction activity resulting from timing differences of when such work was performed in 20232024 as compared to the same period of 2022.2023.

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Interest Expense
For the three months ended March 31, 20232024 and 2022,2023, interest expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$6,922 $5,236 $1,686 32.2 %Water Services$9,392 $$6,922 $$2,470 35.7 35.7 %
Electric ServicesElectric Services834 112 722 644.6 %Electric Services1,196 834 834 362 362 43.4 43.4 %
Contracted ServicesContracted Services416 62 354 571.0 %Contracted Services520 416 416 104 104 25.0 25.0 %
AWR (parent)AWR (parent)1,309 196 1,113 567.9 %AWR (parent)1,747 1,309 1,309 438 438 33.5 33.5 %
Total interest expenseTotal interest expense$9,481 $5,606 $3,875 69.1 %Total interest expense$12,855 $$9,481 $$3,374 35.6 35.6 %
AWR’s borrowings consist of bank debtnotes under revolving credit facilities, while GSWC and BVES borrowings consist of revolving credit facilities and long-term debt issuances at GSWC and BVES.issuances. Consolidated interest expense increased as compared to the same period in 20222023 resulting primarily from an increase in total borrowing levels to support, among other things, the capital expenditures programprograms at the regulated utilities, as well as an overall increase in average interest rates both short- and long-term. On January 13, 2023, GSWC issued $130.0 million unsecured private-placement notes consisting of: $100.0 million in aggregate notes at a coupon rate of 5.12% due January 31, 2033, and $30.0 million in aggregate notes at a coupon rate of 5.22% due January 31, 2038. In April 2022, BVES issued $35.0 million in unsecured private-placement notes consisting of 10 and 15 year term notes with interest rates at 4.548% and 4.949%, respectively.rates.
Interest Income
For the three months ended March 31, 20232024 and 2022,2023, interest income by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$1,428 $91 $1,337 *Water Services$1,511 $$1,428 $$83 5.8 5.8 %
Electric ServicesElectric Services261 (1)262 *Electric Services331 261 261 70 70 26.8 26.8 %
Contracted ServicesContracted Services189 197 (8)(4.1)%Contracted Services203 189 189 14 14 7.4 7.4 %
AWR (parent)AWR (parent)(14)(4)(10)*AWR (parent)25 (14)(14)39 39 **
Total interest incomeTotal interest income$1,864 $283 $1,581 *Total interest income$2,070 $$1,864 $$206 11.1 11.1 %
*not meaningful
For the three months ended March 31, 2023,2024, overall interest income increased by $1.6 million$206,000 as compared to the same period in 20222023 due primarily to higher interest income earned on regulatory assets at the water segmentregulated utilities bearing interest at the current 90-day commercial-paper rate,rates, which have increased compared to 2022’s rates in 2023, as well as an overall increase in recorded regulatory assets recorded. Also, as a result of receiving the proposed decision in the water general rate case received in April 2023.2023, $393,000 of interest income was recorded in the first quarter of 2023 related to regulatory assets for the full year of 2022 as the decision was retroactive to January 1, 2022.
Other Income and (Expense)(Expenses), net
For the three months ended March 31, 20232024 and 2022,2023, other income and (expense)(expenses), net by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Water Services$1,628 $(598)$2,226 *
Electric Services13 143 (130)(90.9)%
Contracted Services(30)36 (66)*
Total other income and (expense), net$1,611 $(419)$2,030 *
* not meaningful    
Three Months Ended 
 March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water Services$2,332 $1,628 $704 43.2 %
Electric Services26 13 13 100.0 %
Contracted Services(16)(30)14 (46.7)%
Total other income and (expenses), net$2,342 $1,611 $731 45.4 %
For the three months ended March 31, 2023,2024, other incomeexpenses (net of other expense)income) increased mostly as a resultbecause of gains of $1.6$2.1 million recorded on investments held to fund one of the Company’s retirement plans, as compared to lossesgains of $1.7$1.6 million generated during the same periodrecorded in 2022, both due to financial market conditions. This2023. In addition, there was partially offset by an increasea decrease in the non-service cost components of net periodic benefit costs related to the Company’s defined-benefit pension plan and other retirement benefits. However,benefits in 2024 as compared to the same period in 2023. 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.

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Income Tax Expense
For the three months ended March 31, 20232024 and 2022,2023, income tax expense by business segment, including AWR (parent), consisted of the following (dollar amounts in thousands):
Three Months Ended 
 March 31, 2023
Three Months Ended 
 March 31, 2022
$
CHANGE
%
CHANGE
Three Months Ended
March 31, 2024
Three Months Ended
March 31, 2024
Three Months Ended 
 March 31, 2023
$
CHANGE
%
CHANGE
Water ServicesWater Services$8,910 $2,689 $6,221 231.3 %Water Services$5,824 $$8,910 $$(3,086)(34.6)(34.6)%
Electric ServicesElectric Services701 952 (251)(26.4)%Electric Services560 701 701 (141)(141)(20.1)(20.1)%
Contracted ServicesContracted Services1,685 944 741 78.5 %Contracted Services1,560 1,685 1,685 (125)(125)(7.4)(7.4)%
AWR (parent)AWR (parent)(544)(124)(420)338.7 %AWR (parent)(548)(544)(544)(4)(4)0.7 0.7 %
Total income tax expenseTotal income tax expense$10,752 $4,461 $6,291 141.0 %Total income tax expense$7,396 $$10,752 $$(3,356)(31.2)(31.2)%
Consolidated income tax expense for the three months ended March 31, 2023 increased2024 decreased by $6.3$3.4 million primarily due to an increasea decrease in pretax income as compared to the same period in 2022, partially offset by a decrease in the consolidated effective income tax rate (“ETR”).2023. AWR’s ETR was 23.8%24.2% and 24.0%23.8% for the three months ended March 31, 20232024 and 2022,2023, respectively. GSWC’s ETR was 24.5%24.7% and 23.9%24.5% for the three months ended March 31, 2024 and 2023, and 2022, respectively. GSWC’s income tax expense was affected by net changes in certain flowed-through and permanent items. The increase in the tax benefit recorded at AWR (parent) during the three months ended March 31, 2023 compared to the same period in 2022 was primarily due to an increase in pretax loss at AWR (parent) resulting from higher interest expense, as well as changes in state unitary taxes.
For a comparison of the financial results for the first quarter of 2022 to 2021, see “Consolidated Results of Operations-Three Months Ended March 31, 2022 and March 31, 2021” in Registrant’s Form 10-Q for the period ended March 31, 2022 filed with the SEC.
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Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those that are important to the portrayal of AWR’sRegistrant’s financial condition, results of operations and cash flows and require the most difficult, subjective or complex judgments of AWR’sRegistrant’s management. The need to make estimates about the effect of items that are uncertain is what makes these judgments difficult, subjective and/or complex. Management makes subjective judgments about the accounting and regulatory treatment of many items. These judgments are based on AWR’sRegistrant’s historical experience, terms of existing contracts, AWR’sits observance of trends in the industry, and information available from other outside sources, as appropriate. Actual results may differ from these estimates under different assumptions or conditions. 
The critical accounting policies used in the preparation of Registrant’s financial statements are ones that it believes affect the more significant judgments and estimates used in the preparation of its consolidated financial statements presented in this report and are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations—Critical Accounting Policies and Estimates” included in Registrant’s Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC. There have been no material changes to Registrant’s critical accounting policies.
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. AWR anticipates that interest expense will increase in future periods due to the need for additional external capital to fund construction programs at its regulated utilities and asif market interest rates increase. In addition, as the capital investment program continues to increase, coupled with the elimination of bonus depreciation for regulated utilities due to tax reform enacted in 2017, AWR and its subsidiaries anticipate they will need to access external financing more often. AWR believes that costs associated with capital used to fund construction at GSWC and BVES will continue to be recovered through water and electric rates charged to customers.
AWR funds its operating expenses and pays dividends on its outstanding Common Shares primarily through dividends from its wholly owned subsidiaries. The ability of GSWC and BVES to pay dividends to AWR is restricted by California law. Under these restrictions, approximately $658.3$723.2 million was available for GSWC to pay dividends to AWR on March 31, 2023.2024. Approximately $67.2$74.1 million was available for BVES to pay dividends to AWR as of March 31, 2023.2024. ASUS’s ability to pay dividends to AWR is dependent upon state laws in which each Military Utility Privatization SubsidiaryASUS subsidiary operates, as well as ASUS’s ability to pay dividends under California law.
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.
On February 27, 2024, AWR entered into an Equity Distribution Agreement with third-party sales agents, under which AWR may offer and sell Common Shares, from time to time at its sole discretion, through an at-the-market (“ATM”) offering program having an aggregate gross offering price of up to $200 million over a three-year period and pursuant to AWR’s effective shelf registration statement on Form S-3. AWR intends to use the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, including, but not limited to, repayment of debt and equity contributions to its subsidiaries. During the first quarter of 2024, AWR sold 227,981 Common Shares through this ATM offering program and raised proceeds of $16.2 million, net of $247,000 in commissions paid under the terms of the Equity Distribution Agreement. The net proceeds raised during the first quarter of 2024 were used to pay down outstanding borrowings under AWRs credit facility. As of March 31, 2024, approximately $183.5 million remained available for sale under the ATM offering program.
In June 2023, AWR and GSWC each entered into credit agreements with a term of five years provided by a syndicate of banks and financial institutions. Both credit agreements will mature in June 2028. The credit agreements currently borrows under aprovide AWR and GSWC unsecured revolving credit facilities with borrowing capacities of $165.0 million and $200.0 million, respectively. Under the terms of the credit agreements, the borrowing capacities for AWR and GSWC may currently be expanded up to an additional $60.0 million and $75.0 million, respectively, subject to the lenders’ approval. AWR’s credit facility primarily provides support to AWR (parent) and ASUS, while GSWC’s credit agreement provides support to its water operations and capital expenditures. AWR’s and GSWC’s outstanding borrowings under its credit facilities were $130.5 million and $164.0 million, respectively, as of March 31, 2024.
BVES has a separate revolving credit facility without a parent guaranty that supports its electric operations and capital expenditures with a current borrowing capacity of $280.0$65.0 million and provides funds to GSWC and ASUS in support of their operations through intercompany borrowing agreementsthat matures on terms that are similar to that of the credit facility. The interest rate charged to GSWC and ASUS is comparable to the interest rate AWR pays under the credit facility.  AWR’s credit agreement was set to expire on May 23, 2023. On May 8, 2023, the credit facility was amended to extend the maturity date by two-months to provide adequate time to put in place a new credit agreement. The amendment extends the maturity date of the existing credit agreement to July 23, 2023 or an earlier date on which1, 2026. Currently, the credit agreement is either terminated or cancelled when supersededprovides BVES an option to increase the borrowing capacity of the facility by a new agreement. All intercompany borrowing agreements will expire concurrent with the expiration of AWR’s credit facility. Therefore, the outstandingan additional $10.0 million, subject to lender approval. The CPUC requires BVES to completely pay off all borrowings under theits revolving credit facility of $175.5within a 24-month period after which BVES may again borrow under this facility. BVES’s pay-off period for its credit facility ends in August 2024. Accordingly, the $43.0 million as of March 31, 2023 haveoutstanding under BVES’s credit facility has been classified as a current liabilities onliability in AWR’s Consolidated Balance Sheet thus creating a negative working-capital condition for AWR of $168.0 million. Additionally, as of March 31, 2023, the $45.0 million2024.
Our primary sources of outstanding intercompany borrowings of GSWC from AWR have been classified as current liabilities on GSWC's Balance Sheet, also creating a negative working-capital condition for GSWC of $87.9 million. As of May 10, 2023, neither AWR nor GSWC have sufficient liquidity or capital resources to repay its credit facility or intercompany borrowings, respectively, without either extending its existing credit facility, entering into a new credit facility, or issuing new debt or equity.
AWR is confident and believes it is probable that it willfund operations continue to be able to execute a new credit facility agreement with the needed borrowing capacities required to repay its existing credit facility and to run its operations given Registrant's ability to generate consistent cash flows, its A+ credit ratings, and its history in obtaining revolving credit facilities to meet its working-capital needs, as well as its history of successfully raising debt as recently done with GSWC’s issuance of $130 million in unsecured long-term notes on January 13, 2023. In addition, management is considering a separate credit facility for GSWC to support its standalone water utility operations. Alternatively, AWR may enter into a new intercompany borrowing agreement with GSWC. Accordingly, management has concluded that Registrant will be able to satisfy its obligations, including those under its current credit facility, for at least the next twelve months from the issuance daterecovery of these financial statements. However, Registrant’s abilitycosts charged to accesscustomers at our regulated utilities and the collection of payments from the U.S government. We believe that capital markets or to otherwise obtain sufficient financing may be affected by future conditions and, accordingly, no assurances can be made that Registrant will be successful in implementing its financing plans.investment costs associated
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BVES has a separate $35.0 million revolvingwith our capital programs at our regulated utilities will continue to be recovered through water and electric rates charged to customers, as well as funds from credit facilities from our regulated utilities. In addition, AWR’s credit facility without a parent guarantywill continue to be used to support ASUS’s operations and AWR (parent). The long-term capital-intensive nature of our regulated utilities have required us to continually seek future financing opportunities beyond the short-term. Future long-term financing at GSWC and BVES will consist of both long-term debt and equity issuances in order to manage to the CPUC-authorized capital structure. Under the current financing applications authorized by the CPUC, GSWC and BVES have $105.0 million and $40.0 million, respectively, remaining available that matures on July 1, 2024. Asprovides for long-term financing and which are expected to be used over the next 6-18 months to pay down portions of March 31, 2023, there were $25.0 million ofthe outstanding borrowings under this facility. Under the termsrespective credit facilities.
On January 22, 2024, GSWC filed a new financing application with the CPUC, pending approval from the CPUC, that requests authorization for the issuance and sale of additional long-term debt and equity securities of up to $750.0 million. On April 29, 2024, the CPUC issued a ruling on GSWC’s pending financing application stating that a proposed decision is expected to be received no later than 90 days from the date of the credit agreement,ruling. In June 2023, BVES has the option to increase the facility by an additional $15.0 million, subject to lender approval. Interest rates under this facility are currently based on LIBOR. Effective July 1, 2023, all new borrowings under this credit agreement will be based on SOFR. BVES does not believe the change from LIBOR tofiled a new benchmark rate such as SOFR will havefinancing application with the CPUC that is also pending approval, and that requests authorization for the issuance and sale of additional long-term debt and equity securities of up to $120.0 million. The CPUC issued a material impactruling on itsJanuary 8, 2024 on BVES’s pending financing costs.
In June 2022, Standard and Poor’s Global Ratings (“S&P”) affirmed an A+ credit rating for both AWR and GSWC. S&P also affirmed its negative outlook for both companies. S&P’s debt ratings rangeapplication stating that a proposed decision is expected to be received no later than 90 days from AAA (highest possible)the date of the ruling. A proposed decision has yet to D (obligation is in default). In January 2023, Moody’s Investors Service (“Moody’s”) affirmed its A2 rating with a stable outlook for GSWC. Securities ratings are not recommendations to buy, sell or hold a security, and are subject to change or withdrawal at any timebe issued by the rating agencies. CPUC as of the date of this filing.
Management believes that AWR’s and GSWC’s sound capital structures and A+strong credit ratings, combined with its financial discipline, will enable AWR to access the debt and equity markets. However, unpredictable financial market conditions in the future may limit its access or impact the timing of when to access the market, in which case AWR may choose to temporarily reduce its capital spending. 
AWR’s ability to pay cash dividends on its Common Shares outstanding depends primarily upon cash flows from its subsidiaries. AWR intends to continue paying quarterly cash dividends on or about March 1, June 1, September 1 and December 1, subject to earnings and financial conditions, regulatory requirements and such other factors as the Board of Directors may deem relevant. On May 8, 2023,6, 2024, AWR’s Board of Directors approved a second quarter dividend of $0.3975$0.43 per share on AWR’s Common Shares. Dividends on the Common Shares will be paid on June 1, 20233, 2024 to shareholders of record at the close of business on May 19, 2023. AWR20, 2024. Registrant has paid commonCommon Share dividends every year since 1931, and has increased the dividends received by shareholders each calendar year for 6869 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. AWRAWR’s quarterly dividend rate has achievedgrown at a 9.2% compound annual growth rate in its annual dividend payments from 2012 – 2022.(“CAGR”) of 9.4% over the last five calendar years. AWR’s current policy is to achieve a compound annual growth rateCAGR in the dividend of more than 7% over the long-term.
Cash Flows from Operating Activities:
Cash flows from operating activities have generally provided sufficient cash to fund operating requirements, including a portion of construction expenditures at GSWC and BVES, and construction expenses at ASUS, and to pay dividends. AWR’s future cash flows from operating activities are expected to be affected by a number of factors, including, among other things, utility regulation; changes in tax law; maintenance expenses; inflation; compliance with environmental, health and safety standards; production costs; customer growth; per-customer usage of water and electricity; weather and seasonality; conservation efforts; compliance with local governmental requirements, including mandatory restrictions on water use; the lingering effects of the COVID-19 pandemic on its customers’ ability to pay utility bills; and required cash contributions to pension and post-retirement plans. 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. For further information regarding the risks faced by Registrant, see Item 1A, Risk Factors, in our annual report on Form 10-K for the period ended December 31, 2023.
ASUS funds its operating expenses primarily through internal operating sources, which include U.S. government funding under 15- and 50-year contracts with the U.S. government for operations and maintenance costs and construction activities, as well as investments by, or loans from, AWR. ASUS, in turn, provides funding to its subsidiaries. ASUS’s subsidiaries may also from time to time provide funding to ASUS or other subsidiaries of ASUS.
Cash flows from operating activities are primarily generated by net income, adjusted for non-cash expenses such as depreciation and amortization, and deferred income taxes. Cash generated by operations varies during the year. Net cash provided by operating activities of AWR was $7.0$45.8 million for the three months ended March 31, 20232024 as compared to $38.0$7.0 million for the same period in 2022. During the first quarter of 2022, GSWC and BVES received $9.5 million and $321,000, respectively, in COVID-19 relief funds from the state of California to provide assistance to customers for delinquent water and electric customer bills incurred during the pandemic. There were no relief funds received during the first quarter of 2023.
The decreaseincrease in operating cash flows was alsolargely due to a 17% decrease inthe implementation of new CPUC-approved billed water consumption,rates and surcharges in the second-half of 2023 as well asa result of receiving the continuedfinal water general rate case decision in June 2023. With the delay in receiving the water general rate case final decision, as billed water revenues in 2022 and2023 through July 30, 2023 were based on 2021 adopted rates pending a final CPUC decision, while operating expenses continued to rise primarily due to inflation. On April 13,GSWC filed for the implementation of the CPUC-approved rate increases that went into effect in July 2023. In addition, GSWC filed for the recovery of retroactive rate amounts accumulated through July 30, 2023 GSWC received a proposed decision on its water generalrelated to the CPUC approved rate case withincreases for 2022 and 2023, rates and surcharges were implemented in October 2023 to recover the cumulative
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retroactive rate differences over 36-months. Furthermore, in March 2024, GSWC received $3.5 million in additional COVID-19 relief funds from the state of California to January 1, 2022 and 2023, respectively. A final decision by the CPUC is expectedprovide assistance to customers for delinquent water customer bills incurred during the second quarter of 2023. Once a final decision is received, GSWC will request recovery through a surcharge of all revenues accumulated since 2022 with retroactive new rates, and will also file forpandemic.

Finally, the 2023 second-year rate increases. Furthermore, decreaseschange in operating cash flows waswere also due to a 3.2% increase in billed water consumption, the differences in the timing of vendor payments and the timing of billing of and cash receipts for construction work at military bases. The billings (and cash receipts) for this construction work generally occur at completion of the work or in accordance with a billing schedule contractually agreed to with the U.S. government and/or other prime contractors. Thus, cash flow from construction-
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relatedconstruction-related activities may fluctuate from period to period with such fluctuations representing timing differences of when the work is being performed and when the cash is received for payment of the work. TheThese increases in operating cash flows were partially offset by differences in the timing of cash receipts and disbursements related to other working capital items also affectedincome tax payments between the change in net cash provided by operating activities.
two periods. The timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.
Cash Flows from Investing Activities:
Net cash used in investing activities was $49.2$47.4 million for the three months ended March 31, 20232024 as compared to $35.0$49.2 million for the same period in 2022,2023, which is mostly related to capital expenditures at the regulated utilities for both periods.utilities. AWR invests capital to provide essential services to its regulated customer base, while working with the CPUC to have the opportunity to earn a fair rate of return on investment. AWR’s infrastructure investment plan consists of both infrastructure renewal programs (to replace infrastructure, including those to mitigate wildfire risk) and major capital investment projects (to construct new water treatment, supply and delivery facilities and electric facilities). The regulated utilities may also be required from time to time to relocate existing infrastructure in order to accommodate local infrastructure improvement projects. Projected capital expenditures and other investments are subject to periodic review and revision.
For the year 2023,2024, the regulated utilities’ company-funded capital expenditures are expected to be between $140$160 million and $160$200 million, barring any delays resulting from changes in capital improvement schedules due to supply-chainunfavorable weather conditions and supply chain issues.
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 banks, (iii) the proceeds from unsecured revolving credit facilities for AWR, GSWC and (ii)BVES, and (iv) the payment of dividends on Common Shares. In order to finance new infrastructure, GSWC also receives customer advances (net of refunds) for, and contributions in aid of, construction. Borrowings on AWR’s credit facility are primarily used to support AWR parent and its contracted services subsidiary, and borrowings on GSWC and BVES’s credit facilities are used to fund GSWC and BVES capital expenditures, respectively, until long-term financing is arranged. AWR may also from time to time make equity contributions to GSWC and to BVES. 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 $38.3$4.5 million for the three months ended March 31, 20232024 as compared to $2.2cash provided of $38.3 million during the same period in 2022.2023. The increasedecrease in net cash provided by financing activities in 20232024 was due primarily to an increasea decrease in total borrowing levelsactivities in 2024 necessary to support operations affected by a significant decreaseas compared to the same period in 2023 due, in large part, to an increase in cash flows from operating activities and to support, among other things, the capital expenditures program at the regulated utilities.activities. In January 2023, GSWC issued $130.0 million of unsecured private-placement 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 AWRits credit facility. During the three months ended March 31, 2023, AWR had net payments on its credit facilities of $77.0 million, while during the three months ended March 31, 2022,2024, AWR had a net increase in borrowings on its credit facilities of $16.0$4.0 million to support operations and capital expenditures.     expenditures, while during the three months ended March 31, 2023, AWR used the proceeds from the issuance of long-term debt that resulted in a net payment on its credit facilities of $77.0 million.
In addition, for the three months ended March 31, 2024, AWR sold 227,981 Common Shares through its ATM offering program and raised proceeds net of issuance costs of $16.1 million.
GSWC
GSWC funds its operating expenses, payments on its debt, dividends to AWR on its outstanding common shares, and a portion of its construction expenditures through internal sources. Internal sources of cash flow are provided primarily by retention of a portion of earnings from operating activities. Internal cash generation is influenced by, among other things, factors such as weather patterns, conservation efforts, environmental regulation, litigation, changes in tax law and deferred taxes, changes in supply costs and regulatory decisions affecting GSWC’s ability to recover these supply costs, timing of rate relief, increases in maintenance expenses and capital expenditures, surcharges authorized by the CPUC to enable GSWC to recover expenses previously incurred from customers, and CPUC requirements to refund amounts previously charged to customers. Internal cash flows may also be impacted by delays in receiving payments from GSWC customers due to the lingering effects of the COVID-19 pandemic. For further information regarding the risks faced by Registrants, see Item 1A, Risk Factors, in our annual report on Form 10-K for the period ended December 31, 2023.
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GSWC may, at times, utilize external sources for long-term financing, as well as obtain funds from equity investments and intercompany borrowings from its parent, AWR, to help fund a portion of its operations and construction expenditures. AWR borrows underGSWC has its own separate credit agreement that provides for a $200.0 million unsecured revolving credit facility to support GSWC’s operations and provides funds to GSWC in support of its operations under intercompany borrowing arrangements. On April 22, 2022, the AWR credit facility was amended to increase the borrowing capacity from $200.0 million to $280.0 million, which provided an increase incapital expenditures. GSWC’s borrowing capacity under itsthis credit agreement may be expanded up to an additional $75.0 million, subject to the lenders’ approval.
The CPUC requires GSWC to pay-off all intercompany borrowing agreement. All intercompany borrowing agreements expire concurrently with the expiration of AWR’sborrowings it has from AWR within a 24-month period. GSWC’s borrowings under its credit facility will also be required to be paid-off in July 2023. Uponfull within a 24-month period after which GSWC may continue to borrow under this facility. GSWC’s next pay-off period ends in June 2025. Under the expiration of GSWC's intercompany borrowing agreement with AWR,current financing application authorized by the CPUC, GSWC intendshas $105.0 million remaining available that provides for long-term financing and which are expected to either execute a new intercompany borrowing agreement consistent with a new credit facility at AWR, or enter into its own separate credit facility. As of March 31, 2023, GSWC had $45.0 million outstanding under its intercompany borrowing arrangement with AWR that has been classified as a current liability on GSWC’s Balance Sheet, creating a negative working-capital condition for GSWC of $87.9 million. As of May 10, 2023, GSWC does not have sufficient liquidity or capital resources to repay its intercompany borrowings from AWR without either issuing new long-term debt, or entering into a new short-term borrowing arrangement, which is confident it will be
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able to achieve. On January 13, 2023, GSWC issued unsecured private placement notes totaling $130.0 million. GSWC used over the proceedsnext 6-18 months to pay offdown portions of the majority of outstanding borrowings under GSWC’s credit facility. On January 22, 2024, GSWC filed a new financing application with the intercompany borrowing arrangement with AWR.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. On April 29, 2024, the CPUC issued a ruling on GSWC’s pending financing application stating that a proposed decision is expected to be received no later than 90 days from the date of the ruling.
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 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 $10.9$31.0 million for the three months ended March 31, 20232024 as compared to $31.3$10.9 million for the same period in 2022.  During2023.The increase in operating cash flow was due primarily to the first quarterimplementation of 2022,new CPUC-approved billed water rates and surcharges in the second-half of 2023 as a result of receiving the final water general rate case decision in June 2023. Furthermore, in March 2024, GSWC received $9.5$3.5 million in additional COVID-19 relief funds from the state of California to provide assistance to customers for delinquent water customer bills incurred during the pandemic. There were no relief funds received during the first quarter of 2023. The decrease in operating cash flowincrease was also due to a 17% decrease3.2% increase in billed water consumption as well as the continued delay in receiving the final water general rate case decision as billed water revenues in 2022 and 2023 were based on 2021 adopted rates pending a final CPUC decision, while operating expenses continued to rise due to inflation. On April 13, 2023, GSWC received a proposed decision on its water general rate case with 2022 and 2023 rates retroactive to January 1, 2022 and 2023, respectively. A final decision by the CPUC is expected during the second quarter of 2023. Once a final decision is received, GSWC will request recovery through a surcharge of all revenues accumulated since 2022 with retroactive new rates, and will also file for 2023 second-year rate increases. Furthermore, decreases in operating cash flows was also due to differences in the timing of vendor payments.
These increases in operating cash flows were partially offset by differences in the timing of income tax payments between the two periods. The timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.
Cash Flows from Investing Activities:
Net cash used in investing activities was $41.8$41.1 million for the three months ended March 31, 20232024 as compared to $31.3$41.8 million for the same period in 2022,2023, which is mostly related to spending under GSWC’s infrastructure investment plans that are consistent with capital budgets authorized in its general rate cases.
Cash Flows from Financing Activities:
Net cash provided by financing activities was $31.4$14.4 million for the three months ended March 31, 20232024 as compared to $4.2$31.4 million net cash provided for the same period in 2022.  2023.  The decrease in net cash provided by financing activities in 2024 was due primarily to a decrease in total borrowing levels necessary to support water operations affected by an increase in cash flows from operating activities and to support, among other things, the capital expenditures program at GSWC.
In addition, in January 2023, GSWC issued $130.0 million of unsecured private-placement notes in a private placement and also issued $10$10.0 million of equity to AWR. GSWC used the proceeds from its issuance of private-placement notes and the issuance of equityboth issuances to pay-off all of its outstanding intercompany borrowings from AWR. The CPUC requires GSWC to fully pay-off all intercompany borrowings it has from AWR within a 24-month period. As a result, during the three months ended March 31, 2023, GSWC had net payments on intercompany borrowings of $84.0 million. During the three months ended March 31, 2022, GSWC had an increase in net intercompany borrowings of $18.0 million from AWR parent.at that time.
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Contractual Obligations and Other Commitments
Registrant has various contractual obligations, which are recorded as liabilities in the consolidated financial statements. Other items, such as certain purchase commitments, are not recognized as liabilities in the consolidated financial statements but are required to be disclosed. In addition to contractual maturities, Registrant has certain debt instruments that contain an annual sinking fund or other principal payments. 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. 
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations Commitments and Off-Balance Sheet Arrangements”Commitments” section of the Registrant’s Form 10-K for the year ended December 31, 20222023 filed with the SEC for a detailed discussion of contractual obligations and other commitments.
Contracted Services
Under the terms of utility privatizationthe contracts with the U.S. government, each contract’s price is subject to an economic price adjustment (“EPA”) on an annual basis. In the event that ASUS (i) is managing more assets at specific military bases than were included in the U.S. government’s request for proposal, (ii) is managing assets that are in substandard condition as compared to what was disclosed in the request for proposal, (iii) prudently incurs costs not contemplated under the terms of the utility privatization contract, and/or (iv) becomes subject to new regulatory requirements, such as more stringent water-quality standards, ASUS is permitted to file, and has filed, requests for equitable adjustment (“REAs”). The timely filing for and receipt of EPAs and/or REAs continues to be critical in order for the Military Utility Privatization SubsidiariesASUS’s subsidiaries to recover increasing costs of operating, maintaining, renewing and replacing the water and/or wastewater systems at the military bases it serves.
During sequestration or automatic spending cuts, the Military Utility Privatization Subsidiariessubsidiaries of ASUS did not experience any earnings impact to their existing operations and maintenance and renewal and replacement services, as utility privatization contracts are an “excepted service.” With the expiration of sequestration, similar issues including further sequestration pursuant to the Balanced Budget and Emergency Deficit Control Act may arise as part of the fiscal uncertainty and/or future debt-ceiling limits imposed by Congress. Any future impact on ASUS and its operations through the Military Utility Privatization Subsidiariesits subsidiaries will likely be limited to (a) the timing of funding to pay for services rendered, (b) delays in the processing of EPAs and/or REAs, (c) the timing of the issuance of contract modifications for new construction work not already funded by the U.S. Government, and/or (d) delays in solicitation for and/or awarding of new contracts under the Department of Defense utility privatization program.contracting programs.
At times, the DCAADefense Contract Auditing Agency and/or the DCMADefense Contract Management Agency may, at the request of a contracting officer, perform audits/reviews of contractors for compliance with certain government guidance and regulations, such as the Federal Acquisition Regulations and Defense Federal Acquisition Regulation Supplements. Certain audit/review findings, such as system deficiencies for government-contract-business-system requirements, may result in delays in the resolution of filings submitted to and/or the ability to file new proposals with the U.S. government.
Regulatory Matters
An update on various regulatory matters is included in the discussion under the section titled “Overview” in this Form 10-Q’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations.. The discussion below focuses on otherkey regulatory matters and developments.
Water Segment:
Recent Changes in Rates
Rates that GSWC is authorized to charge are determined by the CPUC in general rate cases. Water revenues billed to customers for the three monthsyear ended MarchDecember 31, 2022 and from January 1, 2023 and 2022through July 30, 2023 were based on 2021 adopted rates, pending a final decision by the CPUC. GSWC has a pending general rate case that will determine new water rates for the years 2022–2024.rates. On April 13,June 29, 2023, GSWC received a proposedfinal decision from the assigned administrative law judge at the CPUC on GSWC'sits water general rate case withapplication that determined new rates for 2022 and 2023 and are effective and retroactive to January 1, 2022. Among other items, the proposed decision approves2022 and adopts in its entirety the settlement agreement between GSWC and Public Advocates in November 2021 that had been filed with the CPUC, and resolves all issues related to the 2022 annual revenue requirement in the general rate case application.January 1, 2023, respectively. The settlement agreement also allows for additional increases in adopted revenues for 2023 and 2024 subject to an earnings test and changes to the forecasted inflationary index values. As a result of receiving a proposed decision that approves the settlement agreement in its entirety, the impact of retroactive new rates for the full year of 2022 and the estimated second-year 2023 rate increases were reflected in the results for the three months of 2023. In addition, the third-year rate increases for 2024, which were effective January 1, 2024, have been reflected in the three months ended March 31, 2023 have been reflected in the 2023 first quarter2024 results.

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Water General Rate Case for the years 2025–2027
On August 14, 2023, GSWC expectsfiled a general rate case application for all its water regions and the general office. This general rate case will determine new water rates for the years 2025 – 2027. Among other things, GSWC requested capital budgets of approximately $611.4 million for the three-year capital cycle. GSWC also requested the continuation of mechanisms to receiveaccommodate fully decoupled revenues and sales and track differences between recorded and CPUC-authorized supply-related expenses. GSWC has requested the CPUC to permit it to continue using a finalrevenue decoupling mechanism. A proposed decision duringin the secondwater general rate case is scheduled for the fourth quarter of 2023. Once a final decision is issued, GSWC will request recovery of the cumulative amounts related2024, with new rates to 2022 rate increases through a surcharge. Actual increases for 2023 will be determined when the filings to implement the new rate increases are approved by the CPUC, and will be calculated using the inflationary index values at that time. GSWC will file for the 2023 increases once the CPUC approves the final decision.become effective January 1, 2025.
Cost of Capital Proceeding
GSWC also hasIn June 2023, a pendingfinal decision was adopted by the CPUC in the cost of capital proceeding that, will determine a new return on rate base for the years 2022 – 2024. On May 9, 2023, GSWC received a proposed decision from the assigned administrative law judge at the CPUC on the cost of capital proceeding. Amongamong other things, the proposed decision (i) adopts GSWC’s requested capital structure andstructure; (ii) adopts a cost of debt filed in the application; (ii)of 5.1% for GSWC as compared to 6.6% previously authorized; (iii) adopts a return on equity of 8.85% for GSWC as compared to 8.9% previously authorized; (iii)(iv) allows for the continuation of the Water Cost of Capital Mechanism (“WCCM”);WCCM through December 31, 2024; and (iv)(v) adopts the new cost of capital for the three-year period commencing January 1, 2022 through December 31, 2024. CommentsBased on the proposedfinal decision issued in June 2023, all adjustments to rates were prospective and not retroactive. In June 2023, GSWC filed an advice letter to establish the WCCM for 2023, which was approved by the CPUC and increased GSWC’s 8.85% adopted return on equity to 9.36%. GSWC filed an advice letter that implemented the new cost of capital effective July 31, 2023.
In October 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 duerequired 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 30. In March 2023,1, 2024 effective for the years 2025 - 2027. However, GSWC, along with three other Class A investor-owned water utilities in California, filed a joint request with the CPUC issued a decision that approved an extensionto defer the filing deadline of the statutory deadlinenext cost of capital applications by one year, which was approved on February 2, 2024. The joint request asked that the utilities keep the cost of capital currently authorized for 2024 in effect through 2025, and file new cost of capital applications by May 1, 2025 to set the cost of debt, return on equity and capital structure starting January 1, 2026. GSWC’s current authorized rate of return on rate base is 7.93% effective January 1, 2024, which will continue in effect through December 31, 2025. Additionally, GSWC’s WCCM will remain active through the one year deferral period.
Final Decision in the First Phase of the Low-Income Affordability Rulemaking:
In August 2020, the CPUC issued a final decision in the costfirst phase of capital proceeding to August 10, 2023.
While this proceeding is pending, the previously authorized return, which includes a cost of debt of 6.6%, has beenCPUC’s Order Instituting Rulemaking evaluating the low income ratepayer assistance and is presently being billed to water customers during 2022 and 2023 until a final decision is issued in this proceeding. In the pending cost of capital proceeding, GSWC requested an updated cost of debt of 5.1%, which is being adoptedaffordability objectives contained in the proposed decision. Based on management's analysisCPUC’s 2010 Water Action Plan. This decision also addressed other issues, including mandating discontinuance of this regulatory proceedingthe WRAM and the associated accountingMCBA that would be effective for years after 2024. However, on September 30, 2022, the governor of California signed SB 1469 that allows Class A water utilities, including GSWC, to continue requesting the use of a full revenue decoupling mechanism in 2022 and through March 31,their general rate case. With the passage of SB 1469, GSWC was able to request the continued use of a full revenue decoupling mechanism, similar to the WRAM in its general rate case application filed on August 14, 2023 GSWC has reduced revenues and recordedthat establishes new rates for the years 2025 – 2027. GSWC’s request to continue using a corresponding regulatory liability for revenuesfull revenue decoupling mechanism in its general rate case is subject to refund basedCPUC approval.
In October 2020, GSWC, three other investor-owned water utilities (“IOWUs”) operating in California, and the California Water Association (“CWA”) filed applications with the CPUC for rehearing on its best estimate at this time,the discontinuation of the WRAM and MCBA, which includes the impact of GSWC’s lower cost of debt adopted in the proposed decision. ForCPUC denied. GSWC, the three months ended March 31, 2023other IOWUs and CWA each separately filed a petition with the California Supreme Court to review the CPUC’s decision revoking prior authorization of the WRAM and MCBA. In May 2022, the Court granted the petition for writ of review. The Court ordered GSWC, reduced revenuesalong with the other IOWUs and CWA, to file opening briefs, which were filed in September 2022. The CPUC’s answer to the opening briefs was originally due by $1.8 million and $1.4 million, respectively, that are subject to refund. An additional reduction to revenues of $1.1 million was recorded during the first quarter of 2023 to reflect the incremental impact of revenues subject to refund from the new 2022 rates recordedNovember 2022; however, as a result of SB 1469, in October 2022 the proposed water general rate case decision. As of March 31, 2023, CPUC filed a motion to dismiss the IOWUs and CWA’s petition with the Court, and also requested that the Court suspend the proceeding schedule until it rules on the motion to dismiss. The Court granted the CPUC’s request to suspend the proceeding schedule. In November 2022, the Court denied the CPUC’s motion to dismiss and established a new proceeding schedule whereby the CPUC filed their answer brief on December 9, 2022 and the IOWUs filed their reply brief in January 2023. In April 2024, the Court scheduled an oral argument session for May 8, 2024. GSWC had an aggregated regulatory liability of $9.3 million for the estimated revenues subject to refundanticipates a decision from the pending costCourt before the end of capital proceeding. However, atthis calendar year. At this time, management cannot predict the ultimatefinal outcome of this matter.
San Juan Oaks Mutual Acquisition:
In August 2023, GSWC entered into an agreement to purchase the water and any changes that may be madewastewater system assets from San Juan Oaks Mutual Water Company (“SJO Mutual”) in San Benito County, California. The new master-planned community, known
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as San Juan Oaks, will serve up to an estimated 1,300 customers once the final decision incommunity is built as planned. The transaction is subject to CPUC approval. In December 2023, GSWC filed an application to establish the cost of capital application,new service area and the associated impact on 2022to set water and 2023 revenues. Changes in estimates will be made, if necessary, as more information in this proceeding becomes available.
Furthermore, the proposed decision continues the WCCMsewer rates for the years 2023 andSan Juan Oaks service area in San Benito County, California. On March 26, 2024, which adjusts the return on equity and rate of return on rate base between the three-year cost of capital proceedings only if there isCPUC issued a positive or negative change of more than 100 basis points in the average of the Moody’s Aa utility bond rate as measured over the period October 1 through September 30. If there isscoping ruling that established a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. For the period from October 1, 2021 through September 30, 2022, the Moody’s rate increased by 103 basis points from the benchmark, which triggers the WCCM adjustment. GSWC recognized revenuesschedule that provides for the first quarter of 2023 and all of 2022 based on the previously authorized return of equity of 8.9% that is presently being billed to water customers pending a final decision in the cost of capital proceeding.by October 2024.
Electric Segment:
Recent Changes in Rates
On August 30, 2022, BVES filed a new general rate case application with the CPUC to determine new rates for the years 2023–2026. Electric revenues billed to customers for 2023 were based on 2022 adopted rates and will remain in effect until finalization of the pending general rate case application. On December 15, 2022, the CPUC approved a decision for BVES to establish a general rate case memorandum account that makes the new 2023 rates effective and retroactive to January 1, 2023. Based on the established schedule in this proceeding,Because new rates are expected to be retroactive to January 1, 2023, when a proposed decision is expectedissued in the fourth quarter of 2023.
Vegetation Management, Wildfire Mitigation Plans and Legislation
The CPUC adopted regulations intended to enhance the fire safety of overhead electric power lines. Those regulations included increased minimum clearances around electric power lines. BVES was authorized to track incremental costs incurred to implement the regulations in a fire hazard prevention memorandum account for the purpose of obtaining cost recovery in a future general rate case. The August 2019 final decision also authorized BVES to record incremental costs related to vegetation management, such as costs for increased minimum clearances around electric power lines, in the CPUC-approved memorandum account for future recovery. As of March 31, 2023, BVES had approximately $9.3 million in incremental vegetation management costs recorded as a regulatory asset. As part of its general rate case, application filing with the CPUC in August 2022, BVES requested recovery of the costs accumulated in this memorandum account, whichcumulative adjustments will be subject to CPUC review.
California legislation enacted in September 2018 requires all investor-owned electric utilities to have a wildfire mitigation plan (“WMP”) approved byrecorded at that time. A proposed decision was issued that extends the Officestatutory deadline of Energy Infrastructure Safety (“OEIS”) and ratified by the CPUC. The WMP must include a utility’s plans on constructing, maintaining, and operating its electrical lines and equipment to minimize the risk of catastrophic wildfire. BVES submitted an update to its WMP in May 2022 to OEIS for approval prior to going to the
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CPUC for ratification. In December 2022, OEIS issued a final decision of approval to BVES for its 2022 WMP update. In February 2023, the CPUC ratified BVES’s current WMP. As of March 31, 2023, BVES has approximately $4.8 million related to expenses accumulated in its WMP memorandum accounts that have been recognized as regulatory assets for future recovery. All capital expenditures and other costs incurred through March 31, 2023 as a result of BVESs WMPs are not currently in rates and have been filed for future recovery in BVES’s general rate case application in August 2022, which willto September 30, 2024. A decision on the general rate case is scheduled to be subject to CPUC review.
Additionally,issued by the governor of California approved Assembly Bill (“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. 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 reasonablenessend of the utility’s conduct. In September 2021, OEIS under the California Natural Resources Agency approved BVES’s latest safety certification filing. In December 2022, OEIS issued a renewal of its safety certification to BVES.
2023 Winter Storm Other Regulatory Asset
BVES activated a catastrophic emergency memorandum account (“CEMA”) to track the incremental costs incurred in
response to a severe winter storm that occurred during the firstthird quarter of 2023, which resulted in the declaration of an emergency by the governor of California. Incremental costs of approximately $810,000 were incurred and included in the CEMA account, which has been recorded as a regulatory asset as of March 31, 2023 for future recovery. The incremental costs included in the CEMA account will be subject to review and approval by the CPUC. CEMA accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are therefore recognized as regulatory assets for future recovery. As a result, the amounts recorded in this CEMA account did not impact BVES’s earnings.2024.
See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Matters” section of the Registrant’s Form 10-K for the year-ended December 31, 20222023 filed with the SEC for a discussion of other regulatory matters.
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Environmental Matters
AWR’s subsidiaries are subject to stringent environmental regulations. GSWC is required to comply with the safe drinking water standards established by the U.S. Environmental Protection Agency (“U.S. EPA”) and the Division of Drinking Water (“DDW”), under the State Water Resources Control Board (“SWRCB”). TheUnder the Federal Safe Drinking Water Act and its implementing regulations, the U.S. EPA regulates contaminants that may have adverse health effects that are known or likely to occur at levels of public health concern, and the regulation of which will provide a meaningful opportunity for health risk reduction. The DDW, acting on behalf of the U.S. EPA, administers the U.S. EPA’s program in California. Similar state agencies administer these rules in the other states in which Registrant operates.
GSWC currently tests its water supplies and water systems according to, among other things, requirements listed in the Federal Safe Drinking Water Act (“SDWA”).Act. GSWC works proactively with third parties and governmental agencies to address issues relating to known contamination threatening GSWC water sources. 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. 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. The CPUC rate makingratemaking process provides GSWC with the opportunity to recover prudently incurred capital and operating costs in future filings associated with achieving water quality standards. Management believes that such incurred and expected future costs should be authorized for recovery by the CPUC.
Drinking Water NotificationMaximum Contaminant Levels and proposed Maximum Contamination Levels:
In July 2018, DDW issued drinking water notification levels for certain fluorinated organic chemicals used to make certain fabrics and other materials, and used in various industrial processes. These chemicals were also present in certain fire suppression agents. These chemicals are referred to as perfluoroalkyl substances (“PFAS”). 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. Assembly Bill 756, signed into law in July 2019 and effective in January 2020, requires, among other things, additional notifications by water systems when they detect levels of PFAS above response levels.
GSWC is in the process of collecting and analyzing samples for PFAS under the direction of DDW. GSWC has removed some wells from service, installed treatment in some wells and expects to incur additional costs to treat impacted wells. GSWC has provided customers with information regarding PFAS detection, and provided updated information via its website.
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To date, DDW has established advisory drinking water notification and response levels for four individual PFAS chemicals namely, perfluorooctanoic acid (“PFOA”), perfluorooctane sulfonate (“PFOS”), perfluorobutane sulfonate (“PFBS”), and perfluorohexane sulfonate (“PFHxS”).
In March 2023,On April 10, 2024, the U.S. EPA proposedannounced the final National Primary Drinking Water Regulation and established maximum contaminant levels (“MCLs”) for six specific PFASper- and polyfluoroalkyl substances (“PFAS”) compounds in drinking water. The proposed rule addresses PFOSregulation established MCLs for Perfluorooctanoic Acid (“PFOA”), Perfluorooctanesulfonic Acid (“PFOS”), and PFOA asseveral other contaminants with individual constituents and addresses the other four PFAS constituents as a mixture of chemicals. The proposed MCLs arethat range from 4 parts per trillion (“ppt”) to 10 ppt. In addition, the regulation established MCL for PFOAPFAS mixtures containing at least two of certain of the regulated PFAS compounds for the combined and PFOS and a hazard indexco-occurring levels of 1 for PFBS, PFHxS, perfluorononanoic acid (“PFNA”) and GenX chemicals.
When finalized, the proposed regulation will requirePFAS in drinking water. The final rule requires public water systems to monitorimplement PFAS monitoring and treatreporting within three years (2027), and where exceedances are identified, to implement solutions within five years (2029) to reduce PFAS levels to below the MCLs. Currently, there are more than forty sources at GSWC that have exceeded one or more of the PFAS MCLs. These new MCLs are expected to increase GSWC’s capital investments and operations and maintenance expenses over the next five years. In addition, due to the volatility of the supply chain and demand for these chemicals. It will also require water systemsPFAS treatment components, both the capital investments and operations and maintenance expenses are likely to notifyfurther increase. 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 customers and reduceCPUC for future recovery.
On April 17, 2024, the levels if it exceedsSWRCB voted to adopt the regulatory standards.final hexavalent chromium MCL of 10 parts per billion. The U.S. EPA anticipates finalizing and adopting this rule by the end of 2023. Once thefinal rule is finalized,expected to be effective October 1, 2024. Depending on the size of the water system, water systems will be requiredhave two to comply with the MCLs after a specified implementation period, which is currently anticipated to be threefour years from the rule-adoption date.effective date to come into compliance with the MCL. Currently, there are approximately eight sources at GSWC that exceed or are within eighty percent of the MCL. These proposed MCLs once finalized, are also expected to increase GSWC’s capital investments and operations and maintenance expenses.
The CPUC ratemaking process provides GSWC with the opportunity to recover prudently incurred capital and operating costs in future filings associated with achieving water quality standards. Management believes that such incurred and expected future costs should be authorized for recovery by the CPUC for both PFAS compounds and hexavalent chromium.
Designation of PFOA and PFOS as CERCLA Hazardous Substances
On April 19, 2024, the U.S. EPA issued a final rule to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). This designation is expected to increase GSWC’s water treatment and other operatingdisposal costs. The CPUC has authorized GSWC to track incurred incremental expenses as a result of PFAS contamination in a memorandum account to be filed with the CPUC for future recovery.
Lead and Copper Rule Revisions:Revisions
On December 16, 2021, the U.S. EPA announced the leadLead and copper rule revisionsCopper Rule Revisions under an executive order with a compliance date of October 16, 2024. Additionally, the U.S. EPA announced its intention to develop a new proposed rule, the Lead and Copper Rule Improvements (“LCRI”) that will further strengthen the regulatory framework prior to the October 2024 compliance date. The proposed LCRI was published in November 2023, and the U.S. EPA has received a significant number of comments on the proposed rule. There are still many unknowns regarding the implementation of the rule. Some of the LCRI requirements may include timely replacement of customer lead service lines, corrosion control treatment, revised lead action levels and customer communications. The details of the requirements will be better understood over the next year once the LCRI is published and a final rule is approved.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Environmental Matters” section of the Registrant’s Form 10-K for the year-ended December 31, 20222023 filed with the SEC for a discussion of environmental matters applicable to AWR and its subsidiaries.

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Water Supply
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—California Drought”Water Supply” section of the Registrant’s Form 10-K for the year-ended December 31, 20222023 filed with the SEC for a discussion of water supply issues. The discussion below focuses on significant matters and changes since December 31, 2022.2023.
Drought Impact:
In May 2018, theThe California Legislature passed two bills in 2018 that provide a framework for long-term water-use efficiency standards and drought planning and resiliency. The initial steps in implementation of this legislation have been laid out in a summary documentframework sets aggressive water use objective standards and performance metrics that water suppliers will be required to meet by the California Department of Water Resources (“DWR”) and State Water Resources Control Board (“SWRCB”).year 2030 with interim milestones. A notablekey milestone is the establishment of an indoor water use standard of 55 gallons per capita per day (“gpcd”) until 2025. Legislation signed by the Governor into law in September 2022 has set more stringent indoor standard targets than initially set forth in the 2018 legislation. The indoor standard will now be set at 47 gpcd in 2025 and then reduced to 42 gpcd in 2030 (previously had been set at 52.5 gpcd and 50 gpcd, respectively). The California SWRCB will beginreleased a formal rulemaking processdraft of the Conservation Regulation in mid-year 2023 followed by a revised draft in March 2024. The SWRCB is expected to consider the next several months and consider adoption of athe regulation by August 2024. Water suppliers including GSWC have provided extensive comments to date on the draft regulation and will work with the State Agencies on the final regulation forand its implementation. Each purveyor will have an overall conservation standards by the end of this yearwater use objective that will include theboth an indoor standard as well as outdoor use standards.
California started the 2023California’s 2022-23 water year beginningended on October 1, 2022,September 30, 2023 with improved water supply conditions. The water year began as a potentially fourth driest consecutive year of drought. However, a series of nine atmospheric storm events between Januaryoccurring during the first half of 2023 followed by Tropical Storm Hilary in August brought record breaking precipitation throughout California and March 2023 have delivered a promising outlook to the State’s supply conditions. As of May 2, 2023, the U.S. Drought Monitor reported that none of California was in “Extreme Drought” as compared to 41% one year ago, and none of California is in “Severe Drought” as compared to 33% just three months ago and 95% one year ago. On April 27, 2023, the DWR reported that the statewide snowpack is at 211% of average for April 1 and 54 inches of snow water equivalent making this year’s snowpack one of the largest since the 1950’s.
Southwest. At the start of 2023, DWRCalifornia Department of Water Resources (“DWR”) initially set the California State Water Project (“SWP”) allocations at 5%. However, due to improved precipitation and snow levels experienced state-wide, DWR increased the SWP allocation to 75%, and as a result, the Metropolitan Water District of Southern California (“MWD”) lifted restrictions that had impacted SWP dependent service areas of Simi Valley and Claremont that had been in place since mid-2022. DWR again increased the SWP allocation to 100% on April 20, 2023, which is the first time the full contracted SWP allocation has been at this level since 2006.
OnWater year 2023-24, which began on October 1, 2023, started with below normal Sierra snowpack and precipitation. However, a series of atmospheric storm events in the first few months of 2024 have provided a promising outlook to the State’s supply conditions. The majority of the State’s reservoirs are nearing capacity with Lake Oroville at 89% of capacity and the Sierra snowpack at 127% of normal levels for the Northern Sierra. The SWP allocation was increased to 40% on April 23, 2024 from 30% as of March 15, 2023,22, 2024 after an initial value of only 10% set in December 2023. As of April 30, 2024, the governorU.S. Drought Monitor reported that none of California issued an executive order modifying thewas in drought restrictions that were issuedwith only 3% identified as “abnormally dry” as compared to a year ago when 8% was in March 2022. The order ended the voluntary water use requirement as well as the required stage 2 implementation of the water supply contingency plans but did not end all water use restrictions. GSWC will continue to work with its local suppliers to assess water supply conditions and water-use restrictions in its service areas and make appropriate adjustments as needed. In response to improving supply conditions in much of the State, GSWC has made an advice letter filing with the CPUC to move from stage 2 to stage 1 effective on May 14, 2023 in all of GSWC's service areas except for three coastal systems that are still experiencing depressed groundwater water levels.“moderate drought.”
Prolonged drought conditions still existcontinue on the Colorado River System, which is experiencinghas experienced historically low reservoir levels in Lake Mead and Lake Powell.Powell in 2023. Reservoir levels have improved in 2024 with Lake Powell and Lake Mead combined water storage on April 9th up over 5 million acre feet as compared to a year ago. Urgent action to reduce water demand on the lower river by 2 to 4 million acre feet annually has been requested by the US Bureau of Reclamation (the “Bureau”). TheIn December 2023, several California water agencies signed agreements with the Bureau prepared a supplemental environmental impact statementto conserve up to 643,000 acre-feet of water in Lake Mead through 2025. This includes contracts with options that may resultthe Coachella Valley Water District, the Quechan Indian Tribe and the Imperial Irrigation District. Additional contracts are expected to be signed by the Palo Verde Irrigation District in modifications to current agreements. This may resultcooperation with MWD in water delivery cuts by all of2024. In 2026, operational agreements on how the Colorado River is managed expire. Reclamation is working with both the upper and lower states including California.

on a revised set of agreements and a draft is expected by the end of 2024. GSWC will continue to monitor developments related to the Colorado River System and assess its impact on GSWC.
Other Climate Change Matters
Climate change is one area that we focus on as we develop and execute our business strategy and financial planning, both in the short- and long-term. The risks posed by climate variability increase the need for us to plan for and address supply resiliency. Climate change has also impacted electric utilities in California increasing wildfire risks and requiring the need to develop robust wildfire mitigation plans. We address these and other climate change risks by planning, assessing, mitigating, and investing in our infrastructure for the long-term benefit of our communities. See “Item 1. Business Overview” section of Registrant’s Form 10-K for the year-ended December 31, 20222023 filed with the SEC for a discussion of climate change planning, risks and opportunities.
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Cybersecurity Matters
The increase in cyberattacks results inCyberattacks represent a greater threat to water, wastewater and electric utility systems and thereby the safety and security of our communities. We continue to increase our investments in information technology to monitor and address these threats and attempted cyber-attacks and tothat improve our posture in addressing security vulnerabilities. See “Item 1. Business Overview”1A. Risk Factors” and “Item 1C. Cybersecurity” section of Registrant’s Form 10-K for the year-ended December 31, 20222023 filed with the SEC for a discussion of cybersecurity matters.
New Accounting Pronouncements
Registrant is subject to newly issued requirements as well as changes in existing requirements issued by the Financial Accounting Standards Board. There are no current accounting pronouncements that Registrant believes will significantly impact it. See Note 1 ofto the Unaudited Notes to Consolidated Financial Statements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Registrant is exposed to certain market risks, including fluctuations in interest rates, commodity price risk primarily relating to changes in the market price of electricity at BVES, and other economic conditions. Market risk is the potential loss arising from adverse changes in prevailing market rates and prices.
The quantitative and qualitative disclosures about market risk are discussed in Item 7A-Quantitative and Qualitative Disclosures About Market Risk, contained in Registrant’s Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC.
There have been no material changes to our quantitative and qualitative disclosures about market risk from what was previously disclosed in Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), we haveRegistrant has carried out an evaluation, under the supervision and with the participation of ourits management, including ourits Chief Executive Officer (“CEO”) and ourits Chief Financial Officer (“CFO”), of the effectiveness, as of the end of the fiscal quarter covered by this report, of the design and operation of ourRegistrant’s “disclosure controls and procedures” as defined in Rule 13a-15(e) and 15d-15(e) promulgated by the SEC under the Exchange Act. Based upon that evaluation, the CEO and the CFO concluded that Registrant’s disclosure controls and procedures, as of the end of such fiscal quarter, were adequate and effective to ensure that information required to be disclosed by usRegistrant in the reports that we fileRegistrant files or submitsubmits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to ourRegistrant’s management, including ourits CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls over Financial Reporting
There has been no change in ourRegistrant’s internal control over financial reporting during the quarter ended March 31, 2023,2024, that has materially affected or is reasonably likely to materially affect ourRegistrant’s internal control over financial reporting.
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PART II

Item 1. Legal Proceedings
Registrant is subject to ordinary routine litigation incidental to its business, some of which may include claims for compensatory and punitive damages. No legal proceedings are pending, which are believedmanagement believes to be material. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against, among other things, property, general liability, employment, and workers’ compensation claims incurred in the ordinary course of business. Insurance coverage may not cover certain claims involving punitive damages.  
Item 1A. Risk Factors
There have been no significant changes in the risk factors disclosed in our 20222023 Annual Report on Form 10-K filed with the SEC.
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Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds, and Issuer Purchases of Equity Securities
The shareholders of AWR have approved the material features of all equity compensation plans under which AWR issues equity securities. The following table provides information about repurchases of Common Shares by AWR during the first quarter of 2023:2024:
PeriodTotal 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)
January 1 – 31, 2023296  $93.57 — — 
February 1 – 28, 2023227  $94.17 — — 
March 1 – 31, 20238,857  $86.05 — — 
Total9,380 (2)$86.48 — 
PeriodTotal 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)
January 1 – 31, 20246,780  $80.56 — — 
February 1 – 29, 2024572  $76.37 — — 
March 1 – 31, 202410,178  $71.27 — — 
Total17,530 (2)$75.03 — 
(1)      None of the Common Shares were purchased pursuant to any publicly announced stock repurchase program.
(2)      Of these amounts, 6,204These Common Shares were acquired on the open market for employees pursuant to theGSWC’s 401(k) Plan. The remainder of the shares were acquired on the open marketplan and for participants in the Common Share Purchase and Dividend Reinvestment Plan.
(3)  Neither the 401(k) plan nor the Common Share Purchase and Dividend Reinvestment Plan contain a maximum number of Common Shares that may be purchased in the open market.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosure
Not applicable
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Item 5. Other Information
(a)    On May 8, 2023,6, 2024, AWR’s Board of Directors approved a second quarter dividend of $0.3975$0.43 per share on AWR’s Common Shares. Dividends on the Common Shares will be paid on June 1, 20233, 2024 to shareholders of record at the close of business on May 19, 2023.20, 2024.
(b)    There have been no material changes during the first quarter of 20232024 to the procedures by which shareholders may nominate persons to the Board of Directors of AWR.
(c)    During the quarter ended March 31, 2024, no officer or director adopted, terminated, or modified any Rule 10b5-1 plans or non-Rule 10b5-1 plans.




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Item 6. Exhibits
(a) The following documents are filed as Exhibits to this report: 
3.1
3.2
3.3
3.4
4.1
4.2
4.3
4.4
10.1Second Sublease dated October 5, 1984 between Golden State Water Company and Three Valleys Municipal Water District incorporated herein by reference to Registrant's Registration Statement on Form S-2, Registration No. 33-5151
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.10
10.11
10.12
10.1310.12
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10.1410.13
47

Table of Contents
10.1510.14
10.1610.15
10.1710.16
10.18
10.1910.17
10.2010.18
10.2110.19
10.2210.20
10.2310.21
10.2410.22
10.2510.23
19.1
31.1
31.1.1
31.2
31.2.1
32.1
32.2
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema (3)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase (3)
101.DEFInline XBRL Taxonomy Extension Definition Linkbase (3)
101.LABInline XBRL Taxonomy Extension Label Linkbase (3)
101.PREInline XBRL Taxonomy Extension Presentation Linkbase (3)
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(1)        Filed concurrently herewith 
(2)        Management contract or compensatory arrangement 
(3)        Furnished concurrently herewith

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and as its principal financial officer.
   AMERICAN STATES WATER COMPANY (“AWR”):
  By:/s/ EVA G. TANG
Eva G. Tang
   Senior Vice President - Finance, Chief Financial
   Officer, Corporate Secretary and Treasurer
   GOLDEN STATE WATER COMPANY (“GSWC”):
  By:/s/ EVA G. TANG
Eva G. Tang
   Senior Vice President - Finance, Chief Financial
   Officer and Secretary
  Date:May 10, 20237, 2024
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