x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the quarterly period ended September 30, 2018 |
or |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the transition period from to |
California | 95-4676679 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
630 E. Foothill Blvd, San Dimas, CA | 91773-1212 | |
(Address of Principal Executive Offices) | (Zip Code) |
California | 95-1243678 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
630 E. Foothill Blvd, San Dimas, CA | 91773-1212 | |
(Address of Principal Executive Offices) | (Zip Code) |
American States Water Company | Yes x No ¨ | |
Golden State Water Company | Yes x No ¨ |
American States Water Company | Yes x No ¨ | |
Golden State Water Company | Yes x No ¨ |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x | Smaller reporting company ¨ |
American States Water Company | Yes ¨ Nox | |
Golden State Water Company | Yes ¨ Nox |
• | the outcome of pending and future regulatory, legislative or other proceedings, investigations or audits, including decisions in GSWC's general rate cases and the results of independent audits of GSWC's construction contracting procurement practices or other independent audits of our costs; |
• | changes in the policies and procedures of the California Public Utilities Commission ("CPUC"); |
• | timeliness of CPUC action on GSWC rates; |
• | availability of GSWC's water supplies, which may be adversely affected by increases in the frequency and duration of droughts, changes in weather patterns, contamination, and court decisions or other governmental actions restricting the use of water from the Colorado River, the California State Water Project, and/or pumping of groundwater; |
• | liabilities of GSWC associated with the inherent risks of damage to private property and injuries to employees and the public if our or their property should come into contact with electrical current or equipment, including through downed power lines or equipment malfunctions; |
• | wildfires, which may become more common as a result of climate change in GSWC's electric division's service territory, as well as court decisions and regulatory actions that may affect our ability to recover the costs associated with such events or the defense or payment of resulting claims; |
• | the breakdown or failure of equipment at GSWC's electric division that can cause fires and unplanned electric outages, and whether GSWC will be subject to investigations, penalties, liabilities to customers or other third parties or other costs in connection with such events; |
• | the impact of storms, high winds, earthquakes, floods, mudslides, drought, wildfires and similar natural disasters, or acts of terrorism or vandalism, that affect customer demand, that damage or disrupt facilities, operations or information technology systems owned by us, our customers or third parties on whom we rely or that damage the property of our customers or other third parties or cause bodily injury resulting in liabilities that we may be unable to recover from insurance, other third parties and/or the U.S. government or that the CPUC or the courts do not permit us to recover from ratepayers; |
• | the impact on water utility operations during high fire threat conditions as a result of the Public Safety Power Shutdown (PSPS) program authorized by the CPUC and implemented by California regulated electric companies, including Southern California Edison and Pacific Gas and Electric, which serve GSWC facilities throughout the state; |
• | increases in the cost of obtaining insurance or in uninsured losses that may not be recovered in rates, or under our contracts with the U.S. government, including increases due to difficulties in obtaining insurance for certain risks, such as wildfires and earthquakes in California; |
• | increases in costs to reduce the risks associated with the increasing frequency of severe weather, including to improve the resiliency and reliability of our water production and delivery facilities and systems, and our electric transmission and distribution lines; |
• | increases in service disruptions if severe weather becomes more frequent as predicted by some scientists who study climate change; |
• | our ability to efficiently manage GSWC capital expenditures and operating and maintenance expenses within CPUC authorized levels and timely recover our costs through rates; |
• | the impact of opposition to GSWC rate increases on our ability to recover our costs through rates, including costs associated with construction and costs associated with damages to our property and that of others and injuries to persons arising out of more extreme weather events; |
• | the impact of opposition by GSWC customers to conservation rate design, including more stringent water-use restrictions if drought in California persists due to climate change, as well as potential future restrictions on water use mandated in California, which decreases adopted usage and increases customer rates; |
• | the impact of condemnation actions on future GSWC revenues and other aspects of our business if we do not receive adequate compensation for the assets taken, or recovery of all charges associated with the condemnation of such assets, as well as the impact on future revenues if we are no longer entitled to any portion of the revenues generated from such assets; |
• | our ability to forecast the costs of maintaining GSWC’s aging water and electric infrastructure; |
• | our ability to recover increases in permitting costs and costs associated with negotiating and complying with the terms of our franchise agreements with cities and counties and other demands made upon us by the cities and counties in which GSWC operates; |
• | changes in accounting valuations and estimates, including changes resulting from our assessment of anticipated recovery of GSWC's regulatory assets, settlement of liabilities and revenues subject to refund or regulatory disallowances and the timing of such recovery, and the amounts set aside for uncollectible accounts receivable, inventory obsolescence, pension and post-retirement liabilities, taxes and uninsured losses and claims, including general liability and workers' compensation claims; |
• | changes in environmental laws, health and safety laws and water and recycled water quality requirements and increases in costs associated with complying with these laws and requirements, including costs associated with GSWC's upgrading and building new water treatment plants, GSWC's disposing of residuals from our water treatment plants, handling and storing hazardous chemicals, upgrading electrical equipment to make it more resistant to extreme weather events, removal of vegetation near power lines, compliance monitoring activities and GSWC's securing alternative water supplies when necessary; |
• | our ability to obtain adequate, reliable and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our water and wastewater operations; |
• | our ability to attract, retain, train, motivate, develop and transition key employees; |
• | our ability to recover the costs associated with any contamination of GSWC’s groundwater supplies from parties responsible for the contamination or through the ratemaking process, and the time and expense incurred by us in obtaining recovery of such costs; |
• | adequacy of GSWC's electric division's power supplies and the extent to which we can manage and respond to the volatility of electricity and natural gas prices; |
• | GSWC's electric division's ability to comply with the CPUC’s renewable energy procurement requirements; |
• | changes in GSWC's long-term customer demand due to changes in customer usage patterns as a result of conservation efforts, regulatory changes affecting demand such as mandatory restrictions on water use, new landscaping or irrigation requirements, recycling of water by customers or purchase of recycled water supplied by other parties, unanticipated population growth or decline, changes in climate conditions, general economic and financial market conditions and cost increases, which may impact our long-term operating revenues if we are unable to secure rate increases in an amount sufficient to offset reduced demand; |
• | changes in accounting treatment for regulated utilities; |
• | effects of changes in or interpretations of tax laws, rates or policies; |
• | changes in estimates used in ASUS’s cost-to-cost method for revenue recognition of certain construction activities; |
• | termination, in whole or in part, of one or more of ASUS's military utility privatization contracts to provide water and/or wastewater services at military bases for the convenience of the U.S. government or for default; |
• | suspension or debarment of ASUS for a period of time from contracting with the government due to violations of laws or regulations in connection with military utility privatization activities; |
• | delays by the U.S. government in making timely payments to ASUS for water and/or wastewater services or construction activities at military bases because of fiscal uncertainties over the funding of the U.S. government or otherwise; |
• | delays in ASUS obtaining economic price or equitable adjustments to our prices on one or more of our contracts to provide water and/or wastewater services at military bases; |
• | disallowance of costs on any of ASUS's contracts to provide water and/or wastewater services at military bases because of audits, cost reviews or investigations by contracting agencies; |
• | inaccurate assumptions used by ASUS in preparing bids in our contracted services business; |
• | failure of wastewater systems that ASUS operates on military bases resulting in untreated wastewater or contaminants spilling into nearby properties, streams or rivers, the likelihood of which could increase from climate-change induced flooding and rainfall events; |
• | failure to comply with the terms of our military privatization contracts; |
• | failure of any of our subcontractors to perform services for ASUS in accordance with the terms of our military privatization contracts; |
• | competition for new military privatization contracts; |
• | issues with the implementation, maintenance or upgrading of our information technology systems; |
• | general economic conditions which may impact our ability to recover infrastructure investments and operating costs from customers; |
• | explosions, fires, accidents, mechanical breakdowns, the disruption of information technology and telecommunication systems, human error and similar events that may occur while operating and maintaining water and electric systems in California or operating and maintaining water and wastewater systems on military bases under varying geographic conditions; |
• | potential costs, lost revenues, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption due to a cyber-attack or other cyber incident; |
• | restrictive covenants in our debt instruments or changes to our credit ratings on current or future debt that may increase our financing costs or affect our ability to borrow or make payments on our debt; and |
• | our ability to access capital markets and other sources of credit in a timely manner on acceptable terms. |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Property, Plant and Equipment | ||||||||
Regulated utility plant, at cost | $ | 1,795,500 | $ | 1,722,421 | ||||
Non-utility property, at cost | 23,759 | 15,941 | ||||||
Total | 1,819,259 | 1,738,362 | ||||||
Less - Accumulated depreciation | (556,344 | ) | (533,370 | ) | ||||
Net property, plant and equipment | 1,262,915 | 1,204,992 | ||||||
Other Property and Investments | ||||||||
Goodwill | 1,116 | 1,116 | ||||||
Other property and investments | 26,386 | 24,070 | ||||||
Total other property and investments | 27,502 | 25,186 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 1,976 | 214 | ||||||
Accounts receivable — customers (less allowance for doubtful accounts of $844 in 2018 and $806 in 2017) | 29,915 | 26,127 | ||||||
Unbilled receivable | 25,215 | 26,411 | ||||||
Receivable from the U.S. government | 21,095 | 3,725 | ||||||
Other accounts receivable (less allowance for doubtful accounts of $59 in 2018 and $235 in 2017) | 2,411 | 8,251 | ||||||
Income taxes receivable | 730 | 4,737 | ||||||
Materials and supplies, at average cost | 5,622 | 4,795 | ||||||
Regulatory assets — current | 22,130 | 34,220 | ||||||
Prepayments and other current assets | 6,915 | 5,596 | ||||||
Contract assets (Note 2) | 18,889 | — | ||||||
Costs and estimated earnings in excess of billings on contracts (Note 2) | — | 41,387 | ||||||
Total current assets | 134,898 | 155,463 | ||||||
Regulatory and Other Assets | ||||||||
Receivable from the U.S. government (Note 2) | 33,873 | — | ||||||
Contract assets (Note 2) | 154 | — | ||||||
Costs and estimated earnings in excess of billings on contracts (Note 2) | — | 25,426 | ||||||
Other | 5,700 | 5,667 | ||||||
Total regulatory and other assets | 39,727 | 31,093 | ||||||
Total Assets | $ | 1,465,042 | $ | 1,416,734 |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Capitalization | ||||||||
Common shares, no par value | ||||||||
Authorized: 60,000,000 shares | ||||||||
Outstanding: 36,745,039 shares in 2018 and 36,680,794 shares in 2017 | $ | 253,251 | $ | 250,124 | ||||
Earnings reinvested in the business | 300,910 | 279,821 | ||||||
Total common shareholders’ equity | 554,161 | 529,945 | ||||||
Long-term debt | 281,010 | 321,039 | ||||||
Total capitalization | 835,171 | 850,984 | ||||||
Current Liabilities | ||||||||
Notes payable to bank | — | 59,000 | ||||||
Long-term debt — current | 40,320 | 324 | ||||||
Accounts payable | 50,448 | 50,978 | ||||||
Income taxes payable | 1,049 | 225 | ||||||
Accrued other taxes | 10,311 | 7,344 | ||||||
Accrued employee expenses | 11,633 | 12,969 | ||||||
Accrued interest | 6,560 | 3,861 | ||||||
Unrealized loss on derivative contracts | 1,143 | 2,941 | ||||||
Contract liabilities (Note 2) | 8,942 | 3,911 | ||||||
Other | 12,780 | 15,109 | ||||||
Total current liabilities | 143,186 | 156,662 | ||||||
Other Credits | ||||||||
Notes payable to bank | 70,000 | — | ||||||
Advances for construction | 67,467 | 67,465 | ||||||
Contributions in aid of construction — net | 123,686 | 123,602 | ||||||
Deferred income taxes | 114,925 | 115,703 | ||||||
Regulatory liabilities | 43,766 | 32,178 | ||||||
Unamortized investment tax credits | 1,384 | 1,436 | ||||||
Accrued pension and other postretirement benefits | 54,239 | 57,695 | ||||||
Other | 11,218 | 11,009 | ||||||
Total other credits | 486,685 | 409,088 | ||||||
Commitments and Contingencies (Note 9) | ||||||||
Total Capitalization and Liabilities | $ | 1,465,042 | $ | 1,416,734 |
Three Months Ended September 30, | ||||||||
(in thousands, except per share amounts) | 2018 | 2017 | ||||||
Operating Revenues | ||||||||
Water | $ | 87,689 | $ | 91,919 | ||||
Electric | 7,875 | 7,994 | ||||||
Contracted services | 28,618 | 24,505 | ||||||
Total operating revenues | 124,182 | 124,418 | ||||||
Operating Expenses | ||||||||
Water purchased | 21,842 | 20,576 | ||||||
Power purchased for pumping | 3,217 | 2,913 | ||||||
Groundwater production assessment | 5,961 | 5,870 | ||||||
Power purchased for resale | 2,647 | 2,439 | ||||||
Supply cost balancing accounts | (5,212 | ) | (4,621 | ) | ||||
Other operation | 8,355 | 7,657 | ||||||
Administrative and general | 21,570 | 21,823 | ||||||
Depreciation and amortization | 10,118 | 9,854 | ||||||
Maintenance | 3,422 | 3,222 | ||||||
Property and other taxes | 4,692 | 4,475 | ||||||
ASUS construction | 13,620 | 11,693 | ||||||
Gain on sale of assets | (25 | ) | (17 | ) | ||||
Total operating expenses | 90,207 | 85,884 | ||||||
Operating Income | 33,975 | 38,534 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (5,948 | ) | (5,775 | ) | ||||
Interest income | 641 | 321 | ||||||
Other, net | 1,223 | 434 | ||||||
Total other income and expenses, net | (4,084 | ) | (5,020 | ) | ||||
Income before income tax expense | 29,891 | 33,514 | ||||||
Income tax expense | 6,939 | 12,508 | ||||||
Net Income | $ | 22,952 | $ | 21,006 | ||||
Weighted Average Number of Common Shares Outstanding | 36,737 | 36,659 | ||||||
Basic Earnings Per Common Share | $ | 0.62 | $ | 0.57 | ||||
Weighted Average Number of Diluted Shares | 36,950 | 36,856 | ||||||
Fully Diluted Earnings Per Common Share | $ | 0.62 | $ | 0.57 | ||||
Dividends Declared Per Common Share | $ | 0.275 | $ | 0.255 |
Nine Months Ended September 30, | ||||||||
(in thousands, except per share amounts) | 2018 | 2017 | ||||||
Operating Revenues | ||||||||
Water | $ | 228,834 | $ | 239,057 | ||||
Electric | 25,548 | 26,108 | ||||||
Contracted services | 71,429 | 71,258 | ||||||
Total operating revenues | 325,811 | 336,423 | ||||||
Operating Expenses | ||||||||
Water purchased | 52,057 | 50,619 | ||||||
Power purchased for pumping | 7,141 | 6,667 | ||||||
Groundwater production assessment | 15,146 | 14,176 | ||||||
Power purchased for resale | 8,439 | 7,847 | ||||||
Supply cost balancing accounts | (11,110 | ) | (11,663 | ) | ||||
Other operation | 24,125 | 21,989 | ||||||
Administrative and general | 62,076 | 62,519 | ||||||
Depreciation and amortization | 29,794 | 29,184 | ||||||
Maintenance | 10,921 | 10,292 | ||||||
Property and other taxes | 13,863 | 13,386 | ||||||
ASUS construction | 35,168 | 34,589 | ||||||
Gain on sale of assets | (43 | ) | (8,318 | ) | ||||
Total operating expenses | 247,577 | 231,287 | ||||||
Operating Income | 78,234 | 105,136 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (17,919 | ) | (17,606 | ) | ||||
Interest income | 1,813 | 1,200 | ||||||
Other, net | 1,844 | 1,439 | ||||||
Total other income and expenses, net | (14,262 | ) | (14,967 | ) | ||||
Income before income tax expense | 63,972 | 90,169 | ||||||
Income tax expense | 13,890 | 33,670 | ||||||
Net Income | $ | 50,082 | $ | 56,499 | ||||
Weighted Average Number of Common Shares Outstanding | 36,728 | 36,625 | ||||||
Basic Earnings Per Common Share | $ | 1.36 | $ | 1.53 | ||||
Weighted Average Number of Diluted Shares | 36,935 | 36,813 | ||||||
Fully Diluted Earnings Per Common Share | $ | 1.35 | $ | 1.53 | ||||
Dividends Declared Per Common Share | $ | 0.785 | $ | 0.739 |
Nine Months Ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 50,082 | $ | 56,499 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 29,973 | 29,365 | ||||||
Provision for doubtful accounts | 588 | 720 | ||||||
Deferred income taxes and investment tax credits | (2,732 | ) | 9,004 | |||||
Stock-based compensation expense | 3,648 | 2,303 | ||||||
Gain on sale of assets | (43 | ) | (8,318 | ) | ||||
Other — net | (566 | ) | (802 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable — customers | (4,385 | ) | (10,683 | ) | ||||
Unbilled receivable | 1,196 | (1,442 | ) | |||||
Other accounts receivable | 5,849 | (1,951 | ) | |||||
Receivables from the U.S. government | (14,818 | ) | 1,355 | |||||
Materials and supplies | (827 | ) | (1,083 | ) | ||||
Prepayments and other assets | (1,319 | ) | (1,401 | ) | ||||
Contract assets | 11,345 | — | ||||||
Costs and estimated earnings in excess of billings on contracts | — | 7,576 | ||||||
Regulatory assets | 22,945 | 10,344 | ||||||
Accounts payable | (2,108 | ) | 5,337 | |||||
Income taxes receivable/payable | 4,831 | 23,657 | ||||||
Contract liabilities / Billings in excess of costs and estimated earnings on contracts | 5,031 | 203 | ||||||
Accrued pension and other post-retirement benefits | (2,305 | ) | (2,285 | ) | ||||
Other liabilities | 2,020 | 1,831 | ||||||
Net cash provided | 108,405 | 120,229 | ||||||
Cash Flows From Investing Activities: | ||||||||
Capital expenditures | (87,328 | ) | (77,896 | ) | ||||
Proceeds from sale of assets | 63 | 34,324 | ||||||
Other investing activities | (1,492 | ) | (1,299 | ) | ||||
Net cash used | (88,757 | ) | (44,871 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from stock option exercises | 348 | 884 | ||||||
Receipt of advances for and contributions in aid of construction | 4,363 | 6,132 | ||||||
Refunds on advances for construction | (3,223 | ) | (3,477 | ) | ||||
Retirement or repayments of long-term debt | (326 | ) | (320 | ) | ||||
Net change in notes payable to banks | 11,000 | (44,000 | ) | |||||
Dividends paid | (28,831 | ) | (27,064 | ) | ||||
Other financing activities | (1,217 | ) | (1,288 | ) | ||||
Net cash used | (17,886 | ) | (69,133 | ) | ||||
Net increase in cash and cash equivalents | 1,762 | 6,225 | ||||||
Cash and cash equivalents, beginning of period | 214 | 436 | ||||||
Cash and cash equivalents, end of period | $ | 1,976 | $ | 6,661 | ||||
Non-cash transactions: | ||||||||
Accrued payables for investment in utility plant | $ | 21,703 | $ | 21,978 | ||||
Property installed by developers and conveyed | $ | 1,968 | $ | 1,796 |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Utility Plant | ||||||||
Utility plant, at cost | $ | 1,795,500 | $ | 1,722,421 | ||||
Less - Accumulated depreciation | (546,310 | ) | (524,481 | ) | ||||
Net utility plant | 1,249,190 | 1,197,940 | ||||||
Other Property and Investments | 24,290 | 21,956 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 153 | 214 | ||||||
Accounts receivable-customers (less allowance for doubtful accounts of $844 in 2018 and $806 in 2017) | 29,915 | 26,127 | ||||||
Unbilled receivable | 19,987 | 18,852 | ||||||
Other accounts receivable (less allowance for doubtful accounts of $59 in 2018 and 2017) | 1,350 | 6,105 | ||||||
Income taxes receivable from Parent | 1,559 | 6,590 | ||||||
Materials and supplies, at average cost | 4,674 | 4,046 | ||||||
Regulatory assets — current | 22,130 | 34,220 | ||||||
Prepayments and other current assets | 5,796 | 5,090 | ||||||
Total current assets | 85,564 | 101,244 | ||||||
Regulatory and Other Assets | ||||||||
Other | 5,685 | 5,683 | ||||||
Total regulatory and other assets | 5,685 | 5,683 | ||||||
Total Assets | $ | 1,364,729 | $ | 1,326,823 |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Capitalization | ||||||||
Common Shares, no par value: | ||||||||
Authorized: 1,000 shares | ||||||||
Outstanding: 146 shares in 2018 and 2017 | $ | 244,716 | $ | 242,181 | ||||
Earnings reinvested in the business | 243,660 | 232,193 | ||||||
Total common shareholder’s equity | 488,376 | 474,374 | ||||||
Long-term debt | 281,010 | 321,039 | ||||||
Total capitalization | 769,386 | 795,413 | ||||||
Current Liabilities | ||||||||
Intercompany payable | 50,475 | 34,836 | ||||||
Long-term debt — current | 40,320 | 324 | ||||||
Accounts payable | 44,798 | 42,497 | ||||||
Accrued other taxes | 10,197 | 7,108 | ||||||
Accrued employee expenses | 10,046 | 11,338 | ||||||
Accrued interest | 6,298 | 3,585 | ||||||
Unrealized loss on derivative contracts | 1,143 | 2,941 | ||||||
Other | 11,469 | 14,705 | ||||||
Total current liabilities | 174,746 | 117,334 | ||||||
Other Credits | ||||||||
Advances for construction | 67,467 | 67,465 | ||||||
Contributions in aid of construction — net | 123,686 | 123,602 | ||||||
Deferred income taxes | 118,935 | 120,780 | ||||||
Regulatory liabilities | 43,766 | 32,178 | ||||||
Unamortized investment tax credits | 1,384 | 1,436 | ||||||
Accrued pension and other postretirement benefits | 54,239 | 57,695 | ||||||
Other | 11,120 | 10,920 | ||||||
Total other credits | 420,597 | 414,076 | ||||||
Commitments and Contingencies (Note 9) | ||||||||
Total Capitalization and Liabilities | $ | 1,364,729 | $ | 1,326,823 |
Three Months Ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Operating Revenues | ||||||||
Water | $ | 87,689 | $ | 91,919 | ||||
Electric | 7,875 | 7,994 | ||||||
Total operating revenues | 95,564 | 99,913 | ||||||
Operating Expenses | ||||||||
Water purchased | 21,842 | 20,576 | ||||||
Power purchased for pumping | 3,217 | 2,913 | ||||||
Groundwater production assessment | 5,961 | 5,870 | ||||||
Power purchased for resale | 2,647 | 2,439 | ||||||
Supply cost balancing accounts | (5,212 | ) | (4,621 | ) | ||||
Other operation | 6,570 | 6,493 | ||||||
Administrative and general | 16,367 | 16,929 | ||||||
Depreciation and amortization | 9,623 | 9,509 | ||||||
Maintenance | 2,709 | 2,692 | ||||||
Property and other taxes | 4,300 | 4,144 | ||||||
Gain on sale of assets | — | (17 | ) | |||||
Total operating expenses | 68,024 | 66,927 | ||||||
Operating Income | 27,540 | 32,986 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (5,781 | ) | (5,638 | ) | ||||
Interest income | 451 | 318 | ||||||
Other, net | 1,123 | 483 | ||||||
Total other income and expenses, net | (4,207 | ) | (4,837 | ) | ||||
Income before income tax expense | 23,333 | 28,149 | ||||||
Income tax expense | 5,414 | 10,813 | ||||||
Net Income | $ | 17,919 | $ | 17,336 |
Nine Months Ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Operating Revenues | ||||||||
Water | $ | 228,834 | $ | 239,057 | ||||
Electric | 25,548 | 26,108 | ||||||
Total operating revenues | 254,382 | 265,165 | ||||||
Operating Expenses | ||||||||
Water purchased | 52,057 | 50,619 | ||||||
Power purchased for pumping | 7,141 | 6,667 | ||||||
Groundwater production assessment | 15,146 | 14,176 | ||||||
Power purchased for resale | 8,439 | 7,847 | ||||||
Supply cost balancing accounts | (11,110 | ) | (11,663 | ) | ||||
Other operation | 19,423 | 18,142 | ||||||
Administrative and general | 46,693 | 48,285 | ||||||
Depreciation and amortization | 28,387 | 28,341 | ||||||
Maintenance | 9,034 | 8,662 | ||||||
Property and other taxes | 12,690 | 12,316 | ||||||
Gain on sale of assets | — | (8,318 | ) | |||||
Total operating expenses | 187,900 | 175,074 | ||||||
Operating Income | 66,482 | 90,091 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (17,397 | ) | (17,170 | ) | ||||
Interest income | 1,288 | 1,175 | ||||||
Other, net | 1,827 | 1,587 | ||||||
Total other income and expenses, net | (14,282 | ) | (14,408 | ) | ||||
Income before income tax expense | 52,200 | 75,683 | ||||||
Income tax expense | 11,743 | 29,235 | ||||||
Net Income | $ | 40,457 | $ | 46,448 |
Nine Months Ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 40,457 | $ | 46,448 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 28,566 | 28,522 | ||||||
Provision for doubtful accounts | 597 | 563 | ||||||
Deferred income taxes and investment tax credits | (3,797 | ) | 9,139 | |||||
Stock-based compensation expense | 3,264 | 1,970 | ||||||
Gain on sale of assets | — | (8,318 | ) | |||||
Other — net | (543 | ) | (866 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable — customers | (4,385 | ) | (10,683 | ) | ||||
Unbilled receivable | (1,135 | ) | (3,138 | ) | ||||
Other accounts receivable | 4,755 | (1,658 | ) | |||||
Materials and supplies | (628 | ) | (891 | ) | ||||
Prepayments and other assets | (708 | ) | (976 | ) | ||||
Regulatory assets | 22,945 | 10,344 | ||||||
Accounts payable | 726 | 5,999 | ||||||
Intercompany receivable/payable | (361 | ) | (623 | ) | ||||
Income taxes receivable/payable from/to Parent | 5,031 | 22,992 | ||||||
Accrued pension and other post-retirement benefits | (2,305 | ) | (2,285 | ) | ||||
Other liabilities | 1,283 | 1,905 | ||||||
Net cash provided | 93,762 | 98,444 | ||||||
Cash Flows From Investing Activities: | ||||||||
Capital expenditures | (79,240 | ) | (76,373 | ) | ||||
Proceeds from sale of assets | — | 34,324 | ||||||
Other investing activities | (1,492 | ) | (1,299 | ) | ||||
Net cash used | (80,732 | ) | (43,348 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Receipt of advances for and contributions in aid of construction | 4,363 | 6,132 | ||||||
Refunds on advances for construction | (3,223 | ) | (3,477 | ) | ||||
Retirement or repayments of long-term debt | (326 | ) | (320 | ) | ||||
Net change in intercompany borrowings | 16,000 | (32,000 | ) | |||||
Dividends paid | (28,850 | ) | (18,300 | ) | ||||
Other financing activities | (1,055 | ) | (1,086 | ) | ||||
Net cash used | (13,091 | ) | (49,051 | ) | ||||
Net increase in cash and cash equivalents | (61 | ) | 6,045 | |||||
Cash and cash equivalents, beginning of period | 214 | 209 | ||||||
Cash and cash equivalents, end of period | $ | 153 | $ | 6,254 | ||||
Non-cash transactions: | ||||||||
Accrued payables for investment in utility plant | $ | 21,703 | $ | 21,975 | ||||
Property installed by developers and conveyed | $ | 1,968 | $ | 1,796 |
(dollar in thousands) | Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | ||||||
Water: | ||||||||
Tariff-based revenues | $ | 87,204 | $ | 223,230 | ||||
CPUC-approved surcharges (cost-recovery activities) | 937 | 2,458 | ||||||
Other | 486 | 1,381 | ||||||
Water revenues from contracts with customers | 88,627 | 227,069 | ||||||
WRAM under-collection (alternative revenue program) | (938 | ) | 1,765 | |||||
Total water revenues | 87,689 | 228,834 | ||||||
Electric: | ||||||||
Tariff-based revenues | 8,207 | 26,021 | ||||||
CPUC-approved surcharges (cost-recovery activities) | 62 | 172 | ||||||
Electric revenues from contracts with customers | 8,269 | 26,193 | ||||||
BRRAM over-collection (alternative revenue program) | (394 | ) | (645 | ) | ||||
Total electric revenues | 7,875 | 25,548 | ||||||
Contracted services: | ||||||||
Water | 16,909 | 44,134 | ||||||
Wastewater | 11,709 | 27,295 | ||||||
Contracted services revenues from contracts with customers | 28,618 | 71,429 | ||||||
Total revenues | $ | 124,182 | $ | 325,811 |
(dollar in thousands) | September 30, 2018 | January 1, 2018 | ||||||
Receivable from the U.S. government | $ | 54,968 | $ | 40,150 | ||||
Contract assets | $ | 19,043 | $ | 30,388 | ||||
Contract liabilities | $ | 8,942 | $ | 3,911 |
(dollars in thousands) | September 30, 2018 | December 31, 2017 | ||||||
GSWC | ||||||||
Water Revenue Adjustment Mechanism, net of Modified Cost Balancing Account | $ | 24,264 | $ | 29,556 | ||||
Costs deferred for future recovery on Aerojet case | 9,809 | 10,656 | ||||||
Pensions and other post-retirement obligations (Note 8) | 31,066 | 33,019 | ||||||
Derivative unrealized loss (Note 5) | 1,143 | 2,941 | ||||||
Low income rate assistance balancing accounts | 3,660 | 5,972 | ||||||
General rate case memorandum accounts | 6,798 | 10,522 | ||||||
Other regulatory assets | 15,506 | 14,875 | ||||||
Excess deferred income taxes (Note 7) | (81,912 | ) | (83,231 | ) | ||||
Flow-through taxes, net (Note 7) | (15,816 | ) | (17,716 | ) | ||||
Tax Cuts and Jobs Act ("Tax Act") memorandum accounts | (8,274 | ) | — | |||||
Various refunds to customers | (7,880 | ) | (4,552 | ) | ||||
Total | $ | (21,636 | ) | $ | 2,042 |
Basic: | For The Three Months Ended September 30, | For The Nine Months Ended September 30, | ||||||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 22,952 | $ | 21,006 | 50,082 | 56,499 | ||||||||||
Less: (a) Distributed earnings to common shareholders | 10,102 | 9,349 | 28,831 | 27,064 | ||||||||||||
Distributed earnings to participating securities | 54 | 50 | 151 | 139 | ||||||||||||
Undistributed earnings | 12,796 | 11,607 | 21,100 | 29,296 | ||||||||||||
(b) Undistributed earnings allocated to common shareholders | 12,727 | 11,546 | 20,991 | 29,147 | ||||||||||||
Undistributed earnings allocated to participating securities | 69 | 61 | 109 | 149 | ||||||||||||
Total income available to common shareholders, basic (a) + (b) | $ | 22,829 | $ | 20,895 | $ | 49,822 | $ | 56,211 | ||||||||
Weighted average Common Shares outstanding, basic | 36,737 | 36,659 | 36,728 | 36,625 | ||||||||||||
Basic earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 1.36 | $ | 1.53 |
Diluted: | For The Three Months Ended September 30, | For The Nine Months Ended September 30, | ||||||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Common shareholders earnings, basic | $ | 22,829 | $ | 20,895 | $ | 49,822 | $ | 56,211 | ||||||||
Undistributed earnings for dilutive stock-based awards | 69 | 61 | 109 | 149 | ||||||||||||
Total common shareholders earnings, diluted | $ | 22,898 | $ | 20,956 | $ | 49,931 | $ | 56,360 | ||||||||
Weighted average common shares outstanding, basic | 36,737 | 36,659 | 36,728 | 36,625 | ||||||||||||
Stock-based compensation (1) | 213 | 197 | 207 | 188 | ||||||||||||
Weighted average common shares outstanding, diluted | 36,950 | 36,856 | 36,935 | 36,813 | ||||||||||||
Diluted earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 1.35 | $ | 1.53 |
For The Three Months Ended September 30, | For The Nine Months Ended September 30, | |||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Fair value at beginning of the period | $ | (1,710 | ) | $ | (4,493 | ) | $ | (2,941 | ) | $ | (4,901 | ) | ||||
Unrealized gain on purchased power contracts | 567 | 656 | 1,798 | 1,064 | ||||||||||||
Fair value at end of the period | $ | (1,143 | ) | $ | (3,837 | ) | $ | (1,143 | ) | $ | (3,837 | ) |
September 30, 2018 | December 31, 2017 | |||||||||||||||
(dollars in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Financial liabilities: | ||||||||||||||||
Long-term debt—GSWC (1) | $ | 324,978 | $ | 389,438 | $ | 325,265 | $ | 424,042 |
For The Three Months Ended September 30, | ||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | SERP | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Components of Net Periodic Benefits Cost: | ||||||||||||||||||||||||
Service cost | $ | 1,335 | $ | 1,250 | $ | 48 | $ | 53 | $ | 274 | $ | 232 | ||||||||||||
Interest cost | 1,912 | 1,976 | 75 | 73 | 222 | 223 | ||||||||||||||||||
Expected return on plan assets | (2,793 | ) | (2,428 | ) | (123 | ) | (107 | ) | — | — | ||||||||||||||
Amortization of prior service cost (benefit) | — | — | — | — | — | 3 | ||||||||||||||||||
Amortization of actuarial (gain) loss | 314 | 231 | (212 | ) | (242 | ) | 262 | 194 | ||||||||||||||||
Net periodic pension cost under accounting standards | 768 | 1,029 | (212 | ) | (223 | ) | 758 | 652 | ||||||||||||||||
Regulatory adjustment — deferred | — | 266 | — | — | — | — | ||||||||||||||||||
Total expense recognized, before surcharges and allocation to overhead pool | $ | 768 | $ | 1,295 | $ | (212 | ) | $ | (223 | ) | $ | 758 | $ | 652 |
For The Nine Months Ended September 30, | ||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | SERP | ||||||||||||||||||||||
(dollars in thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Components of Net Periodic Benefits Cost: | ||||||||||||||||||||||||
Service cost | $ | 4,005 | $ | 3,750 | $ | 162 | $ | 171 | $ | 822 | $ | 696 | ||||||||||||
Interest cost | 5,736 | 5,928 | 219 | 243 | 666 | 669 | ||||||||||||||||||
Expected return on plan assets | (8,379 | ) | (7,278 | ) | (369 | ) | (351 | ) | — | — | ||||||||||||||
Amortization of prior service cost (benefit) | — | — | — | — | — | 9 | ||||||||||||||||||
Amortization of actuarial (gain) loss | 942 | 693 | (576 | ) | (582 | ) | 786 | 582 | ||||||||||||||||
Net periodic pension cost under accounting standards | 2,304 | 3,093 | (564 | ) | (519 | ) | 2,274 | 1,956 | ||||||||||||||||
Regulatory adjustment — deferred | — | 791 | — | — | — | — | ||||||||||||||||||
Total expense recognized, before surcharges and allocation to overhead pool | $ | 2,304 | $ | 3,884 | $ | (564 | ) | $ | (519 | ) | $ | 2,274 | $ | 1,956 |
As Of And For The Three Months Ended September 30, 2018 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 87,689 | $ | 7,875 | $ | 28,618 | $ | — | $ | 124,182 | ||||||||||
Operating income (loss) | 26,710 | 830 | 6,437 | (2 | ) | 33,975 | ||||||||||||||
Interest expense, net | 5,039 | 291 | (118 | ) | 95 | 5,307 | ||||||||||||||
Utility plant | 1,187,786 | 61,404 | 13,725 | — | 1,262,915 | |||||||||||||||
Depreciation and amortization expense (1) | 9,058 | 565 | 495 | — | 10,118 | |||||||||||||||
Income tax expense (benefit) | 5,247 | 167 | 1,606 | (81 | ) | 6,939 | ||||||||||||||
Capital additions | 24,590 | 1,140 | 2,816 | — | 28,546 |
As Of And For The Three Months Ended September 30, 2017 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 91,919 | $ | 7,994 | $ | 24,505 | $ | — | $ | 124,418 | ||||||||||
Operating income (loss) (2) | 31,408 | 1,578 | 5,551 | (3 | ) | 38,534 | ||||||||||||||
Interest expense, net | 4,974 | 346 | 58 | 76 | 5,454 | |||||||||||||||
Utility plant | 1,117,674 | 57,669 | 6,273 | — | 1,181,616 | |||||||||||||||
Depreciation and amortization expense (1) | 8,972 | 537 | 345 | — | 9,854 | |||||||||||||||
Income tax expense (benefit) | 10,544 | 269 | 1,944 | (249 | ) | 12,508 | ||||||||||||||
Capital additions | 30,536 | 559 | 905 | — | 32,000 |
As Of And For The Nine Months Ended September 30, 2018 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 228,834 | $ | 25,548 | $ | 71,429 | $ | — | $ | 325,811 | ||||||||||
Operating income (loss) | 62,012 | 4,470 | 11,759 | (7 | ) | 78,234 | ||||||||||||||
Interest expense, net | 15,095 | 1,014 | (255 | ) | 252 | 16,106 | ||||||||||||||
Utility plant | 1,187,786 | 61,404 | 13,725 | — | 1,262,915 | |||||||||||||||
Depreciation and amortization expense (1) | 26,693 | 1,694 | 1,407 | — | 29,794 | |||||||||||||||
Income tax expense (benefit) | 10,805 | 938 | 2,865 | (718 | ) | 13,890 | ||||||||||||||
Capital additions | 75,976 | 3,264 | 8,088 | — | 87,328 |
As Of And For The Nine Months Ended September 30, 2017 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 239,057 | $ | 26,108 | $ | 71,258 | $ | — | $ | 336,423 | ||||||||||
Operating income (loss) (2) | 84,200 | 5,891 | 15,055 | (10 | ) | 105,136 | ||||||||||||||
Interest expense, net | 14,924 | 1,071 | 214 | 197 | 16,406 | |||||||||||||||
Utility plant | 1,117,674 | 57,669 | 6,273 | — | 1,181,616 | |||||||||||||||
Depreciation and amortization expense (1) | 26,731 | 1,610 | 843 | — | 29,184 | |||||||||||||||
Income tax expense (benefit) | 27,739 | 1,496 | 5,152 | (717 | ) | 33,670 | ||||||||||||||
Capital additions | 74,113 | 2,260 | 1,523 | — | 77,896 |
September 30, | ||||||||
2018 | 2017 | |||||||
Net property, plant and equipment | $ | 1,262,915 | $ | 1,181,616 | ||||
Other assets | 202,127 | 304,870 | ||||||
Total consolidated assets | $ | 1,465,042 | $ | 1,486,486 |
Diluted Earnings per Share | ||||||||||||
Three Months Ended | ||||||||||||
9/30/2018 | 9/30/2017 | CHANGE | ||||||||||
Water | $ | 0.47 | $ | 0.44 | $ | 0.03 | ||||||
Electric | 0.02 | 0.03 | (0.01 | ) | ||||||||
Contracted services | 0.13 | 0.10 | 0.03 | |||||||||
Consolidated diluted earnings per share, as reported | $ | 0.62 | $ | 0.57 | $ | 0.05 |
• | An overall increase in the water gross margin, which increased net earnings by approximately $0.02 per share, was due primarily to third-year rate increases approved by the CPUC effective January 1, 2018. This increase was partially offset by the revenue impact from a lower authorized return on rate base approved in the cost of capital decision issued by the CPUC in March 2018, which was effective in 2018. The lower authorized return decreased the water gross margin during the three months ended September 30, 2018 by approximately $0.02 per share. |
• | An overall increase in operating expenses (other than supply costs), which decreased earnings by approximately $0.02 per share, was due primarily to higher employee-related benefits, depreciation expense and property taxes. |
• | A lower effective income tax rate (excluding the effects of the Tax Act), which increased earnings by approximately $0.03 per share, was due primarily to differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (primarily related to plant, rate case and compensation-related items). Flow-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase in another period. |
Diluted Earnings per Share | ||||||||||||
Nine Months Ended | ||||||||||||
9/30/2018 | 9/30/2017 | CHANGE | ||||||||||
Water, excluding one-time gain on sale of Ojai water system | $ | 1.02 | $ | 1.04 | $ | (0.02 | ) | |||||
Electric | 0.08 | 0.09 | (0.01 | ) | ||||||||
Contracted services | 0.24 | 0.26 | (0.02 | ) | ||||||||
AWR (parent) | 0.01 | 0.01 | — | |||||||||
Consolidated diluted earnings per share, adjusted | 1.35 | 1.40 | (0.05 | ) | ||||||||
Gain on sale of Ojai water system | — | 0.13 | (0.13 | ) | ||||||||
Consolidated diluted earnings per share, as reported | $ | 1.35 | $ | 1.53 | $ | (0.18 | ) |
• | An increase in the water gross margin, which increased net earnings by approximately $0.02 per share. This increase was due to the third-year rate increases effective January 1, 2018, partially offset by the revenue impact from the lower authorized return on rate base in the cost of capital proceeding approved by the CPUC and effective in 2018, as well as the cessation of the Ojai operations in June of 2017. The lower return on rate base beginning in 2018 is expected to decrease GSWC’s 2018 adopted annual revenue requirement by approximately $3.6 million, or about $0.07 per share. Before reflecting the effects of the new cost of capital and the Tax Act, third-year rate increases are expected to add approximately $4.5 million to the 2018 full year adopted water gross margin, net of the cessation of the Ojai water system. |
• | An overall increase in operating expenses (excluding supply costs), which lowered net earnings by approximately $0.03 per share resulting primarily from higher employee-related benefits, maintenance, depreciation and property taxes as compared to the same period in 2017. |
• | An increase in interest expense (net of interest and other income), which lowered net earnings at the water segment by approximately $0.02 per share, due primarily to (i) higher short-term borrowings to fund operations and a portion of GSWC’s capital expenditures, (ii) lower gains recorded on investments held to fund a retirement benefit plan resulting from recent market conditions, as compared to the same period in 2017, and (iii) amounts collected and recorded in 2017 from developers on certain outstanding balances, with no similar collections in 2018. |
• | A lower effective income tax rate (excluding the effects of the Tax Act), increasing earnings by approximately $0.03 per share resulting primarily from differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (primarily related to plant, rate case and compensation-related items). |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
OPERATING REVENUES | |||||||||||||||
Water | $ | 87,689 | $ | 91,919 | $ | (4,230 | ) | (4.6 | )% | ||||||
Electric | 7,875 | 7,994 | (119 | ) | (1.5 | )% | |||||||||
Contracted services | 28,618 | 24,505 | 4,113 | 16.8 | % | ||||||||||
Total operating revenues | 124,182 | 124,418 | (236 | ) | (0.2 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||
Water purchased | 21,842 | 20,576 | 1,266 | 6.2 | % | ||||||||||
Power purchased for pumping | 3,217 | 2,913 | 304 | 10.4 | % | ||||||||||
Groundwater production assessment | 5,961 | 5,870 | 91 | 1.6 | % | ||||||||||
Power purchased for resale | 2,647 | 2,439 | 208 | 8.5 | % | ||||||||||
Supply cost balancing accounts | (5,212 | ) | (4,621 | ) | (591 | ) | 12.8 | % | |||||||
Other operation | 8,355 | 7,657 | 698 | 9.1 | % | ||||||||||
Administrative and general | 21,570 | 21,823 | (253 | ) | (1.2 | )% | |||||||||
Depreciation and amortization | 10,118 | 9,854 | 264 | 2.7 | % | ||||||||||
Maintenance | 3,422 | 3,222 | 200 | 6.2 | % | ||||||||||
Property and other taxes | 4,692 | 4,475 | 217 | 4.8 | % | ||||||||||
ASUS construction | 13,620 | 11,693 | 1,927 | 16.5 | % | ||||||||||
Gain on sale of assets | (25 | ) | (17 | ) | (8 | ) | 47.1 | % | |||||||
Total operating expenses | 90,207 | 85,884 | 4,323 | 5.0 | % | ||||||||||
OPERATING INCOME | 33,975 | 38,534 | (4,559 | ) | (11.8 | )% | |||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Interest expense | (5,948 | ) | (5,775 | ) | (173 | ) | 3.0 | % | |||||||
Interest income | 641 | 321 | 320 | 99.7 | % | ||||||||||
Other, net | 1,223 | 434 | 789 | 181.8 | % | ||||||||||
(4,084 | ) | (5,020 | ) | 936 | (18.6 | )% | |||||||||
INCOME BEFORE INCOME TAX EXPENSE | 29,891 | 33,514 | (3,623 | ) | (10.8 | )% | |||||||||
Income tax expense | 6,939 | 12,508 | (5,569 | ) | (44.5 | )% | |||||||||
NET INCOME | $ | 22,952 | $ | 21,006 | $ | 1,946 | 9.3 | % | |||||||
Basic earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 0.05 | 8.8 | % | |||||||
Fully diluted earnings per Common Share | $ | 0.62 | $ | 0.57 | $ | 0.05 | 8.8 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
WATER OPERATING REVENUES (1) | $ | 87,689 | $ | 91,919 | $ | (4,230 | ) | (4.6 | )% | ||||||
WATER SUPPLY COSTS: | |||||||||||||||
Water purchased (1) | $ | 21,842 | $ | 20,576 | $ | 1,266 | 6.2 | % | |||||||
Power purchased for pumping (1) | 3,217 | 2,913 | 304 | 10.4 | % | ||||||||||
Groundwater production assessment (1) | 5,961 | 5,870 | 91 | 1.6 | % | ||||||||||
Water supply cost balancing accounts (1) | (5,639 | ) | (5,245 | ) | (394 | ) | 7.5 | % | |||||||
TOTAL WATER SUPPLY COSTS | $ | 25,381 | $ | 24,114 | $ | 1,267 | 5.3 | % | |||||||
WATER GROSS MARGIN (2) | $ | 62,308 | $ | 67,805 | $ | (5,497 | ) | (8.1 | )% | ||||||
ELECTRIC OPERATING REVENUES (1) | $ | 7,875 | $ | 7,994 | $ | (119 | ) | (1.5 | )% | ||||||
ELECTRIC SUPPLY COSTS: | |||||||||||||||
Power purchased for resale (1) | $ | 2,647 | $ | 2,439 | $ | 208 | 8.5 | % | |||||||
Electric supply cost balancing accounts (1) | 427 | 624 | (197 | ) | (31.6 | )% | |||||||||
TOTAL ELECTRIC SUPPLY COSTS | $ | 3,074 | $ | 3,063 | $ | 11 | 0.4 | % | |||||||
ELECTRIC GROSS MARGIN (2) | $ | 4,801 | $ | 4,931 | $ | (130 | ) | (2.6 | )% | ||||||
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 5,820 | $ | 5,817 | $ | 3 | 0.1 | % | |||||||
Electric Services | 750 | 676 | 74 | 10.9 | % | ||||||||||
Contracted Services | 1,785 | 1,164 | 621 | 53.4 | % | ||||||||||
Total other operation | $ | 8,355 | $ | 7,657 | $ | 698 | 9.1 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 14,268 | $ | 15,223 | $ | (955 | ) | (6.3 | )% | ||||||
Electric Services | 2,099 | 1,706 | 393 | 23.0 | % | ||||||||||
Contracted Services | 5,201 | 4,891 | 310 | 6.3 | % | ||||||||||
AWR (parent) | 2 | 3 | (1 | ) | (33.3 | )% | |||||||||
Total administrative and general | $ | 21,570 | $ | 21,823 | $ | (253 | ) | (1.2 | )% |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 9,058 | $ | 8,972 | $ | 86 | 1.0 | % | |||||||
Electric Services | 565 | 537 | 28 | 5.2 | % | ||||||||||
Contracted Services | 495 | 345 | 150 | 43.5 | % | ||||||||||
Total depreciation and amortization | $ | 10,118 | $ | 9,854 | $ | 264 | 2.7 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 2,421 | $ | 2,513 | $ | (92 | ) | (3.7 | )% | ||||||
Electric Services | 288 | 179 | 109 | 60.9 | % | ||||||||||
Contracted Services | 713 | 530 | 183 | 34.5 | % | ||||||||||
Total maintenance | $ | 3,422 | $ | 3,222 | $ | 200 | 6.2 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 4,033 | $ | 3,887 | $ | 146 | 3.8 | % | |||||||
Electric Services | 267 | 257 | 10 | 3.9 | % | ||||||||||
Contracted Services | 392 | 331 | 61 | 18.4 | % | ||||||||||
Total property and other taxes | $ | 4,692 | $ | 4,475 | $ | 217 | 4.8 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 5,472 | $ | 5,290 | $ | 182 | 3.4 | % | |||||||
Electric Services | 309 | 348 | (39 | ) | (11.2 | )% | |||||||||
Contracted Services | 73 | 62 | 11 | 17.7 | % | ||||||||||
AWR (parent) | 94 | 75 | 19 | 25.3 | % | ||||||||||
Total interest expense | $ | 5,948 | $ | 5,775 | $ | 173 | 3.0 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 433 | $ | 316 | $ | 117 | 37.0 | % | |||||||
Electric Services | 18 | 2 | 16 | * | |||||||||||
Contracted Services | 191 | 4 | 187 | * | |||||||||||
AWR (parent) | (1 | ) | (1 | ) | — | — | % | ||||||||
Total interest income | $ | 641 | $ | 321 | $ | 320 | 99.7 | % |
Three Months Ended September 30, 2018 | Three Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 5,247 | $ | 10,544 | $ | (5,297 | ) | (50.2 | )% | ||||||
Electric Services | 167 | 269 | (102 | ) | (37.9 | )% | |||||||||
Contracted Services | 1,606 | 1,944 | (338 | ) | (17.4 | )% | |||||||||
AWR (parent) | (81 | ) | (249 | ) | 168 | (67.5 | )% | ||||||||
Total income tax expense | $ | 6,939 | $ | 12,508 | $ | (5,569 | ) | (44.5 | )% |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
OPERATING REVENUES | |||||||||||||||
Water | $ | 228,834 | $ | 239,057 | $ | (10,223 | ) | (4.3 | )% | ||||||
Electric | 25,548 | 26,108 | (560 | ) | (2.1 | )% | |||||||||
Contracted services | 71,429 | 71,258 | 171 | 0.2 | % | ||||||||||
Total operating revenues | 325,811 | 336,423 | (10,612 | ) | (3.2 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||
Water purchased | 52,057 | 50,619 | 1,438 | 2.8 | % | ||||||||||
Power purchased for pumping | 7,141 | 6,667 | 474 | 7.1 | % | ||||||||||
Groundwater production assessment | 15,146 | 14,176 | 970 | 6.8 | % | ||||||||||
Power purchased for resale | 8,439 | 7,847 | 592 | 7.5 | % | ||||||||||
Supply cost balancing accounts | (11,110 | ) | (11,663 | ) | 553 | (4.7 | )% | ||||||||
Other operation | 24,125 | 21,989 | 2,136 | 9.7 | % | ||||||||||
Administrative and general | 62,076 | 62,519 | (443 | ) | (0.7 | )% | |||||||||
Depreciation and amortization | 29,794 | 29,184 | 610 | 2.1 | % | ||||||||||
Maintenance | 10,921 | 10,292 | 629 | 6.1 | % | ||||||||||
Property and other taxes | 13,863 | 13,386 | 477 | 3.6 | % | ||||||||||
ASUS construction | 35,168 | 34,589 | 579 | 1.7 | % | ||||||||||
Gain on sale of assets | (43 | ) | (8,318 | ) | 8,275 | (99.5 | )% | ||||||||
Total operating expenses | 247,577 | 231,287 | 16,290 | 7.0 | % | ||||||||||
OPERATING INCOME | 78,234 | 105,136 | (26,902 | ) | (25.6 | )% | |||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Interest expense | (17,919 | ) | (17,606 | ) | (313 | ) | 1.8 | % | |||||||
Interest income | 1,813 | 1,200 | 613 | 51.1 | % | ||||||||||
Other, net | 1,844 | 1,439 | 405 | 28.1 | % | ||||||||||
(14,262 | ) | (14,967 | ) | 705 | (4.7 | )% | |||||||||
INCOME BEFORE INCOME TAX EXPENSE | 63,972 | 90,169 | (26,197 | ) | (29.1 | )% | |||||||||
Income tax expense | 13,890 | 33,670 | (19,780 | ) | (58.7 | )% | |||||||||
NET INCOME | $ | 50,082 | $ | 56,499 | $ | (6,417 | ) | (11.4 | )% | ||||||
Basic earnings per Common Share | $ | 1.36 | $ | 1.53 | $ | (0.17 | ) | (11.1 | )% | ||||||
Fully diluted earnings per Common Share | $ | 1.35 | $ | 1.53 | $ | (0.18 | ) | (11.8 | )% |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
WATER OPERATING REVENUES (1) | $ | 228,834 | $ | 239,057 | $ | (10,223 | ) | (4.3 | )% | ||||||
WATER SUPPLY COSTS: | |||||||||||||||
Water purchased (1) | $ | 52,057 | $ | 50,619 | $ | 1,438 | 2.8 | % | |||||||
Power purchased for pumping (1) | 7,141 | 6,667 | 474 | 7.1 | % | ||||||||||
Groundwater production assessment (1) | 15,146 | 14,176 | 970 | 6.8 | % | ||||||||||
Water supply cost balancing accounts (1) | (12,478 | ) | (13,785 | ) | 1,307 | (9.5 | )% | ||||||||
TOTAL WATER SUPPLY COSTS | $ | 61,866 | $ | 57,677 | $ | 4,189 | 7.3 | % | |||||||
WATER GROSS MARGIN (2) | $ | 166,968 | $ | 181,380 | $ | (14,412 | ) | (7.9 | )% | ||||||
ELECTRIC OPERATING REVENUES (1) | $ | 25,548 | $ | 26,108 | $ | (560 | ) | (2.1 | )% | ||||||
ELECTRIC SUPPLY COSTS: | |||||||||||||||
Power purchased for resale (1) | $ | 8,439 | $ | 7,847 | $ | 592 | 7.5 | % | |||||||
Electric supply cost balancing accounts (1) | 1,368 | 2,122 | (754 | ) | (35.5 | )% | |||||||||
TOTAL ELECTRIC SUPPLY COSTS | $ | 9,807 | $ | 9,969 | $ | (162 | ) | (1.6 | )% | ||||||
ELECTRIC GROSS MARGIN (2) | $ | 15,741 | $ | 16,139 | $ | (398 | ) | (2.5 | )% | ||||||
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 17,307 | $ | 16,100 | $ | 1,207 | 7.5 | % | |||||||
Electric Services | 2,116 | 2,042 | 74 | 3.6 | % | ||||||||||
Contracted Services | 4,702 | 3,847 | 855 | 22.2 | % | ||||||||||
Total other operation | $ | 24,125 | $ | 21,989 | $ | 2,136 | 9.7 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 40,833 | $ | 43,037 | $ | (2,204 | ) | (5.1 | )% | ||||||
Electric Services | 5,860 | 5,248 | 612 | 11.7 | % | ||||||||||
Contracted Services | 15,376 | 14,226 | 1,150 | 8.1 | % | ||||||||||
AWR (parent) | 7 | 8 | (1 | ) | (12.5 | )% | |||||||||
Total administrative and general | $ | 62,076 | $ | 62,519 | $ | (443 | ) | (0.7 | )% |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 26,693 | $ | 26,731 | $ | (38 | ) | (0.1 | )% | ||||||
Electric Services | 1,694 | 1,610 | 84 | 5.2 | % | ||||||||||
Contracted Services | 1,407 | 843 | 564 | 66.9 | % | ||||||||||
Total depreciation and amortization | $ | 29,794 | $ | 29,184 | $ | 610 | 2.1 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 8,236 | $ | 8,111 | $ | 125 | 1.5 | % | |||||||
Electric Services | 798 | 551 | 247 | 44.8 | % | ||||||||||
Contracted Services | 1,887 | 1,630 | 257 | 15.8 | % | ||||||||||
Total maintenance | $ | 10,921 | $ | 10,292 | $ | 629 | 6.1 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 11,889 | $ | 11,517 | $ | 372 | 3.2 | % | |||||||
Electric Services | 801 | 799 | 2 | 0.3 | % | ||||||||||
Contracted Services | 1,173 | 1,070 | 103 | 9.6 | % | ||||||||||
Total property and other taxes | $ | 13,863 | $ | 13,386 | $ | 477 | 3.6 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 16,352 | $ | 16,092 | $ | 260 | 1.6 | % | |||||||
Electric Services | 1,045 | 1,078 | (33 | ) | (3.1 | )% | |||||||||
Contracted Services | 271 | 228 | 43 | 18.9 | % | ||||||||||
AWR (parent) | 251 | 208 | 43 | 20.7 | % | ||||||||||
Total interest expense | $ | 17,919 | $ | 17,606 | $ | 313 | 1.8 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 1,257 | $ | 1,168 | $ | 89 | 7.6 | % | |||||||
Electric Services | 31 | 7 | 24 | * | |||||||||||
Contracted Services | 526 | 14 | 512 | * | |||||||||||
AWR (parent) | (1 | ) | 11 | (12 | ) | * | |||||||||
Total interest income | $ | 1,813 | $ | 1,200 | $ | 613 | 51.1 | % |
Nine Months Ended September 30, 2018 | Nine Months Ended September 30, 2017 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 10,805 | $ | 27,739 | $ | (16,934 | ) | (61.0 | )% | ||||||
Electric Services | 938 | 1,496 | (558 | ) | (37.3 | )% | |||||||||
Contracted Services | 2,865 | 5,152 | (2,287 | ) | (44.4 | )% | |||||||||
AWR (parent) | (718 | ) | (717 | ) | (1 | ) | 0.1 | % | |||||||
Total income tax expense | $ | 13,890 | $ | 33,670 | $ | (19,780 | ) | (58.7 | )% |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares That May Yet Be Purchased under the Plans or Programs (3) | |||||||||
July 1 – 31, 2018 | 12,738 | $ | 60.05 | — | — | ||||||||
August 1 – 31, 2018 | 16,000 | $ | 59.80 | — | — | ||||||||
September 1 – 30, 2018 | 43,795 | $ | 59.38 | — | — | ||||||||
Total | 72,533 | (2) | $ | 59.59 | — |
3.1 | ||
3.2 | ||
3.3 | ||
3.4 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
10.1 | Second 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 | Note Agreement dated as of May 15, 1991 between Golden State Water Company and Transamerica Occidental Life Insurance Company incorporated herein by reference to Registrant's Form 10-Q with respect to the quarter ended June 30, 1991 (File No. 1-14431) | |
10.3 | Schedule of omitted Note Agreements, dated May 15, 1991, between Golden State Water Company and Transamerica Annuity Life Insurance Company, and Golden State Water Company and First Colony Life Insurance Company incorporated herein by reference to Registrant's Form 10-Q with respect to the quarter ended June 30, 1991 (File No. 1-14431) | |
10.4 | ||
10.5 | Agreement for Financing Capital Improvement dated as of June 2, 1992 between Golden State Water Company and Three Valleys Municipal Water District incorporated herein by reference to Registrant's Form 10-K with respect to the year ended December 31, 1992 (File No. 1-14431) | |
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
10.13 | ||
10.14 | ||
10.15 | ||
10.16 | ||
10.17 | ||
10.18 | ||
10.19 | ||
10.20 | ||
10.21 | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25 | ||
10.26 | ||
10.27 | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31 | ||
10.32 | ||
10.33 | ||
10.34 | ||
10.35 | ||
10.36 | ||
10.37 | ||
31.1 | ||
31.1.1 | ||
31.2 | ||
31.2.1 | ||
32.1 | ||
32.2 | ||
101.INS | XBRL Instance Document (3) | |
101.SCH | XBRL Taxonomy Extension Schema (3) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase (3) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase (3) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase (3) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase (3) | |
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: | November 5, 2018 |
Dated: | November 5, 2018 | By: | /s/ ROBERT J. SPROWLS | |
Robert J. Sprowls | ||||
President and Chief Executive Officer |
Dated: | November 5, 2018 | By: | /s/ EVA G. TANG | |
Eva G. Tang | ||||
Senior Vice President-Finance, Chief Financial | ||||
Officer, Corporate Secretary and Treasurer |
Dated: | November 5, 2018 | By: | /s/ ROBERT J. SPROWLS | |
Robert J. Sprowls | ||||
President and Chief Executive Officer |
Dated: | November 5, 2018 | By: | /s/ EVA G. TANG | |
Eva G. Tang | ||||
Senior Vice President-Finance, Chief Financial | ||||
Officer and Secretary |
/s/ ROBERT J. SPROWLS | |||
Robert J. Sprowls | |||
President and Chief Executive Officer | |||
Date: | November 5, 2018 |
/s/ EVA G. TANG | |||
Eva G. Tang | |||
Senior Vice President-Finance, Chief Financial Officer, | |||
Corporate Secretary and Treasurer | |||
Date: | November 5, 2018 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 02, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | AMERICAN STATES WATER CO | |
Entity Central Index Key | 0001056903 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,745,039 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Common Stock, Shares Authorized | 60,000,000 | 60,000,000 |
Accounts receivable - customers, allowance for doubtful accounts | $ 844 | $ 806 |
Other accounts receivable, allowance for doubtful accounts | $ 59 | $ 235 |
Common Stock, Shares, Outstanding | 36,745,039 | 36,680,794 |
Golden State Water Company | ||
Common Stock, Shares Authorized | 1,000 | 1,000 |
Accounts receivable - customers, allowance for doubtful accounts | $ 844 | $ 806 |
Other accounts receivable, allowance for doubtful accounts | $ 59 | $ 59 |
Common Stock, Shares, Outstanding | 146 | 146 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Operating Revenues | ||||
Water | $ 87,689 | $ 91,919 | $ 228,834 | $ 239,057 |
Electric Revenue | 7,875 | 7,994 | 25,548 | 26,108 |
Contracted services | 28,618 | 24,505 | 71,429 | 71,258 |
Revenues | 124,182 | 124,418 | 325,811 | 336,423 |
Operating Expenses | ||||
Water purchased | 21,842 | 20,576 | 52,057 | 50,619 |
Power purchased for pumping | 3,217 | 2,913 | 7,141 | 6,667 |
Groundwater production assessment | 5,961 | 5,870 | 15,146 | 14,176 |
Utilities Operating Expense, Purchased Power | 2,647 | 2,439 | 8,439 | 7,847 |
Supply cost balancing accounts | (5,212) | (4,621) | (11,110) | (11,663) |
Other operation | 8,355 | 7,657 | 24,125 | 21,989 |
Administrative and general | 21,570 | 21,823 | 62,076 | 62,519 |
Depreciation and amortization | 10,118 | 9,854 | 29,794 | 29,184 |
Maintenance | 3,422 | 3,222 | 10,921 | 10,292 |
Property and other taxes | 4,692 | 4,475 | 13,863 | 13,386 |
ASUS construction | 13,620 | 11,693 | 35,168 | 34,589 |
Gain on sale of assets | (25) | (17) | (43) | (8,318) |
Total operating expenses | 90,207 | 85,884 | 247,577 | 231,287 |
Operating Income | 33,975 | 38,534 | 78,234 | 105,136 |
Other Income and Expenses | ||||
Interest expense | (5,948) | (5,775) | (17,919) | (17,606) |
Interest income | 641 | 321 | 1,813 | 1,200 |
Other, net | 1,223 | 434 | 1,844 | 1,439 |
Total other income and expenses | (4,084) | (5,020) | (14,262) | (14,967) |
Income from operations before income tax expense | 29,891 | 33,514 | 63,972 | 90,169 |
Income tax expense | 6,939 | 12,508 | 13,890 | 33,670 |
Net Income | $ 22,952 | $ 21,006 | $ 50,082 | $ 56,499 |
Weighted Average Number of Shares Outstanding, Basic | 36,737 | 36,659 | 36,728 | 36,625 |
Basic Earnings Per Common Share (in dollars per share) | $ 0.62 | $ 0.57 | $ 1.36 | $ 1.53 |
Weighted Average Number of Diluted Shares (in shares) | 36,950 | 36,856 | 36,935 | 36,813 |
Fully Diluted Earnings Per Common Share (in dollars per share) | $ 0.62 | $ 0.57 | $ 1.35 | $ 1.53 |
Dividends Paid Per Common Share (in dollars per share) | $ 0.275 | $ 0.255 | $ 0.785 | $ 0.739 |
Golden State Water Company | ||||
Operating Revenues | ||||
Water | $ 87,689 | $ 91,919 | $ 228,834 | $ 239,057 |
Electric Revenue | 7,875 | 7,994 | 25,548 | 26,108 |
Revenues | 95,564 | 99,913 | 254,382 | 265,165 |
Operating Expenses | ||||
Water purchased | 21,842 | 20,576 | 52,057 | 50,619 |
Power purchased for pumping | 3,217 | 2,913 | 7,141 | 6,667 |
Groundwater production assessment | 5,961 | 5,870 | 15,146 | 14,176 |
Utilities Operating Expense, Purchased Power | 2,647 | 2,439 | 8,439 | 7,847 |
Supply cost balancing accounts | (5,212) | (4,621) | (11,110) | (11,663) |
Other operation | 6,570 | 6,493 | 19,423 | 18,142 |
Administrative and general | 16,367 | 16,929 | 46,693 | 48,285 |
Depreciation and amortization | 9,623 | 9,509 | 28,387 | 28,341 |
Maintenance | 2,709 | 2,692 | 9,034 | 8,662 |
Property and other taxes | 4,300 | 4,144 | 12,690 | 12,316 |
Gain on sale of assets | 0 | (17) | 0 | (8,318) |
Total operating expenses | 68,024 | 66,927 | 187,900 | 175,074 |
Operating Income | 27,540 | 32,986 | 66,482 | 90,091 |
Other Income and Expenses | ||||
Interest expense | (5,781) | (5,638) | (17,397) | (17,170) |
Interest income | 451 | 318 | 1,288 | 1,175 |
Other, net | 1,123 | 483 | 1,827 | 1,587 |
Total other income and expenses | (4,207) | (4,837) | (14,282) | (14,408) |
Income from operations before income tax expense | 23,333 | 28,149 | 52,200 | 75,683 |
Income tax expense | 5,414 | 10,813 | 11,743 | 29,235 |
Net Income | $ 17,919 | $ 17,336 | $ 40,457 | $ 46,448 |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”) and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), 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")). The subsidiaries of ASUS are collectively referred to as the “Military Utility Privatization Subsidiaries.” GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water in California serving approximately 260,000 customers. GSWC also distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,000 customers through its Bear Valley Electric Service (“BVES”) division. The California Public Utilities Commission (“CPUC”) regulates GSWC’s water and electric businesses in matters including properties, rates, services, facilities and transactions by GSWC with its 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 50-year firm fixed-price contracts. These contracts are subject to 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. In September 2017, ASUS was awarded a new 50-year contract by the U.S. government to operate, maintain, and provide construction management services for the water distribution and wastewater collection and treatment facilities at Fort Riley, a United States Army installation located in Kansas. The contract over the 50-year period is subject to annual economic price adjustments. ASUS began operations at Fort Riley in July 2018. There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or any of its wholly owned subsidiaries. Basis of Presentation: The consolidated financial statements and notes thereto 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 and ASUS. ASUS owns all of the outstanding Common Shares of the Military Utility Privatization Subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries, all of which are wholly owned. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. 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, 2017 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. 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 those 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, 2017 filed with the SEC. GSWC's Related Party Transactions: GSWC and ASUS provide and/or receive various support services to and from their parent, AWR, and among themselves. GSWC also allocates certain corporate office administrative and general costs to its affiliate, ASUS, using allocation factors approved by the CPUC. GSWC allocated corporate office administrative and general costs to ASUS of approximately $1.2 million and $1.0 million during the three months ended September 30, 2018 and 2017, respectively, and approximately $3.2 million and $3.0 million during the nine months ended September 30, 2018 and 2017, respectively. AWR has a $150.0 million syndicated credit facility, which was renewed in May 2018. As of September 30, 2018, AWR had $70.0 million outstanding under this facility. All amounts borrowed by AWR under the renewed facility are contractually due in May 2023 pursuant to the new terms and are generally priced off a spread to LIBOR. AWR borrows under this facility and provides funds to its subsidiaries, GSWC and ASUS, in support of their operations. The interest charged to GSWC and ASUS is sufficient to cover AWR’s interest expense under the credit facility. Amounts owed to AWR by GSWC, including for allocated expenses, are included in GSWC's intercompany payable under "Current Liabilities" as of September 30, 2018 and December 31, 2017. GSWC Long-Term Debt: In March of 2019, $40 million of GSWC's 6.70% senior note will mature. This note has been included in "Current Liabilities" in Registrant's balance sheets as of September 30, 2018. GSWC intends to issue additional common shares to AWR, borrow under its intercompany borrowing arrangement with AWR and/or issue additional long-term debt to fund the repayment of this note as well as to maintain normal operations and to meet its capital and other financing requirements. Recently Issued Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). Under this guidance, an entity recognizes revenue when it transfers goods or services to customers in an amount that reflects what the entity expects in exchange for the goods or services. Registrant adopted this guidance under the modified retrospective approach beginning January 1, 2018. The adoption of this guidance did not have a material impact on Registrant's measurement or timing of revenue recognition but required additional disclosures (see Note 2). In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the financial statement presentation for the costs of defined benefit pension plans and other retirement benefits. Prior to this guidance, the components of net benefit cost for retirement plans (such as service cost, interest cost, expected return on assets, and the amortization of prior service costs and actuarial gains and losses) were aggregated as operating costs for financial statement presentation purposes. Under the new guidance, the service cost component continues to be presented as operating costs, while all other components of net benefit cost are presented outside of operating income. The new guidance also limits any capitalization of net periodic benefits cost to the service cost component. Registrant adopted the new guidance beginning January 1, 2018, which did not have a material impact on its financial statements. Registrant used its prior year's disclosure of its pension and other employee benefit plans as an estimation for applying the retrospective presentation requirements of this guidance. The components of net periodic benefits cost, other than the service cost component, have been included in the line item “Other, net” in Registrant's income statements (see Note 8). In November of 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. The guidance requires restricted cash to be combined with cash and cash equivalents when reconciling the beginning and end of period cash balances in the statement of cash flows. The adoption of this new guidance in 2018 did not have an impact on Registrant's cash flow statements. In August 2016, the FASB also issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The adoption of this new guidance in 2018 did not have an impact on Registrant's cash flow statements. In February 2016, the FASB issued a new lease accounting standard, Leases (ASC 842). Under the new standard, lessees will recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease). For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Registrant is assessing whether to elect the practical expedients available under this standard. Registrant will apply the new lease standard as of January 1, 2019 and recognize a cumulative-effect adjustment (if any) to the opening balance of retained earnings. Any periods presented prior to January 1, 2019 will not be adjusted to conform to the new lease standard. Registrant continues to assess the impact of this standard to its financial statements. In August 2018, the FASB issued ASU 2018-15—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under this standard, entities that enter into cloud computing service arrangements will apply existing internal-use software guidance to determine which implementation costs are eligible for capitalization. Under that guidance, implementation costs are capitalized or expensed depending on the nature of the costs and the project stage during which they are incurred. The new guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. Registrant is currently evaluating the impact of adopting this guidance. In August 2018, the FASB issued ASU 2018-14—Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. This update removes disclosures to pension plans and other postretirement benefit plans that no longer are considered cost beneficial, clarifies the specific disclosure requirements and adds disclosure requirements deemed relevant. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and will be applied on a retrospective basis to all periods presented. |
Revenue from Contract with Customer Revenue from Contract with Customer |
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Revenue from Contract with Customers | Revenues from Contracts with Customers Most of Registrant's revenues are accounted for under the revenue recognition accounting standard, "Revenue from Contracts with Customers - (Topic 606)." The adoption of this accounting standard effective January 1, 2018 did not have a material impact on Registrant's measurement or timing of revenue recognition. GSWC provides water and electric utility services to customers as specified by the CPUC. The transaction prices for water and electric revenues are based on tariff rates authorized by the CPUC, which include both quantity-based and flat charges. Tariff revenues represent the adopted revenue requirement authorized by the CPUC intended to provide GSWC with an opportunity to recover its costs and earn a reasonable return on its net capital investment. The annual revenue requirements are comprised of operation and maintenance costs, administrative and general costs, depreciation and taxes in amounts authorized by the CPUC and a return on rate base consistent with the capital structure authorized by the CPUC. Water and electric revenues are recognized over time as customers simultaneously receive and use the utility services provided. Water and electric revenues include amounts billed to customers on a cyclical basis, nearly all of which are based on meter readings for services provided. Customer bills also include surcharges for cost-recovery activities, which represent CPUC-authorized balancing and memorandum accounts that allow for the recovery of previously incurred operating costs. Revenues from these surcharges result in no impact to earnings as they are offset by corresponding increases in operating expenses to reflect the recovery of the associated costs. Customer payment terms are approximately 20 business days from the billing date. Unbilled revenues are amounts estimated to be billed for usage since the last meter-reading date to the end of the accounting period. Historical customer usage forms the basis for estimating unbilled revenue. GSWC bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and use taxes are franchise fees, which GSWC pays to various municipalities and counties (based on their ordinances) in order to use public rights of way for utility purposes. GSWC bills these franchise fees to its customers based on a CPUC-authorized rate for each ratemaking area as applicable. These franchise fees, which are required to be paid regardless of GSWC’s ability to collect them from its customers, are accounted for on a gross basis. GSWC’s franchise fees billed to customers and recorded as operating revenue were approximately $1.0 million for each of the three months ended September 30, 2018 and 2017, and $2.8 million for each of the nine months ended September 30, 2018 and 2017. When GSWC acts as an agent, and a tax is not required to be remitted if it is not collected from customers, the tax is accounted for on a net basis. GSWC revenues tracked under the Water Revenue Adjustment Mechanism (“WRAM”) regulatory accounts for its water segment, and the Base Revenue Requirement Adjustment Mechanism ("BRRAM") regulatory account for its electric segment, are alternative revenue programs accounted for under Accounting Standards Codification ("ASC") Topic 980, Regulated Operations. For ASUS, performance obligations consist of (i) performing ongoing operation and maintenance of the water and/or wastewater systems and treatment plants for each military base served, and (ii) performing construction activities (including renewal and replacement capital work) on each military base served. The transaction price for each performance obligation is either delineated in, or initially derived from, the applicable 50-year contract and/or any subsequent contract modifications. Depending on the state in which operations are conducted, the Military Utility Privatization Subsidiaries are also subject to certain state non-income tax assessments, which are accounted for on a gross basis and have been immaterial to date. The ongoing performance of operation and maintenance of the water and/or wastewater systems and treatment plants is viewed as a single performance obligation for each 50-year contract with the U.S. government. Registrant recognizes revenue for operations and maintenance fees monthly using the "right to invoice" practical expedient under ASC Topic 606. ASUS has a right to consideration from the U.S. government in an amount that corresponds directly to the value to the U.S. government of ASUS’s performance completed to date. The contractual operations and maintenance fees are firm-fixed, and the level of effort or resources expended in the performance of the operations-and-maintenance-fees performance obligation is largely consistent over the 50-year term. Therefore, Registrant has determined that the monthly amounts invoiced for operations and maintenance performance are a fair reflection of the value transferred to the U.S. government. Invoices to the U.S. government for operations and maintenance service, as well as construction activities, are due upon receipt. ASUS's construction activities consist of various projects to be performed. Each of these projects' transaction prices is delineated either in the 50-year contract or through a specific contract modification for each construction project, which includes the transaction price for that project. Each construction project is viewed as a separate, single performance obligation. Therefore, it is generally not necessary to allocate a construction transaction price to more than one construction performance obligation. Revenues for construction activities are recognized over time, with progress toward completion measured based on the input method using costs incurred relative to the total estimated costs (cost-to-cost method). Due to the nature of these construction projects, Registrant has determined the cost-to-cost input measurement to be the best method to measure progress towards satisfying its construction contract performance obligations, as compared to using an output measurement such as units produced. Changes in job performance, job site conditions, change orders and/or estimated profitability may result in revisions to costs and income for ASUS, and are recognized in the period in which any such revisions are determined. Pre-contract costs for ASUS, which consist of design and engineering labor costs, are deferred if recovery is probable, and are expensed as incurred if recovery is not probable. Deferred pre-contract costs have been immaterial to date. Contracted services revenues recognized during the three and nine months ended September 30, 2018 from performance obligations satisfied in previous periods were not material. Although GSWC has a diversified base of residential, commercial, industrial and other customers, revenues derived from residential and commercial customers account for approximately 90% of total water revenues, and 90% of total electric revenues. For the three and nine months ended September 30, 2018, disaggregated revenues from contracts with customers by segment are as follows:
The opening and closing balances of the receivable from the U.S. government, contract assets and contract liabilities from contracts with customers, which related entirely to ASUS, are as follows:
As a result of the adoption of ASC Topic 606, amounts previously reported under "Costs and estimated earnings in excess of billings on contracts" are now reflected as either "Receivable from U.S. government" or "Contract assets," depending on whether receipt of these amounts is conditional on something other than the passage of time. Amounts previously reported under "Billings in excess of costs and estimated earnings on contracts" are now reflected as "Contract liabilities." Contract Assets - Contract assets are those 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. Contract Liabilities - Contract liabilities are those 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. Revenue for the three and nine months ended September 30, 2018 that were included in contract liabilities at the beginning of the period were $3.4 million and $3.7 million, respectively. As of September 30, 2018, Registrant's aggregate remaining performance obligations, all of which are for the contracted services segment, was $3.2 billion. Registrant expects to recognize revenue on these remaining performance obligations over the remaining terms of each of the 50-year contracts, which range from 36 to 50 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-year term for the convenience of the U.S. government. |
Regulatory Matters |
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Regulatory Matters | Regulatory Matters In accordance with accounting principles for rate-regulated enterprises, Registrant records regulatory assets, which represent probable future recovery of costs from customers through the ratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the ratemaking process. At September 30, 2018, Registrant had approximately $59.6 million of regulatory liabilities, net of regulatory assets not accruing carrying costs. Of this amount, (i) $81.9 million of regulatory liabilities are excess deferred income taxes arising from the lower federal income tax rate due to the Tax Cuts and Jobs Act ("Tax Act") enacted in December 2017 that are expected to be refunded to customers, (ii) $15.8 million of regulatory liabilities are from flowed-through deferred income taxes, (iii) $33.5 million of regulatory assets relates to the underfunded position in Registrant's pension and other post-retirement obligations (not including the two-way pension balancing accounts), and (iv) $1.1 million of regulatory assets relates to a memorandum account authorized by the CPUC to track unrealized gains and losses on BVES's purchase power contracts over the term of the contracts. Regulatory assets represent costs incurred by GSWC for which it has received or expects to receive rate recovery in the future. In determining the probability of costs being recognized in other periods, GSWC considers regulatory rules and decisions, past practices, and other facts and circumstances that would indicate if recovery is probable. If the CPUC determines that a portion of GSWC’s assets are not recoverable in customer rates, GSWC must determine if it has suffered an asset impairment requiring it to write down the asset's value. Regulatory assets are offset against regulatory liabilities within each ratemaking area. Amounts expected to be collected or refunded in the next 12 months have been classified as current assets and current liabilities by ratemaking area. Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:
Regulatory matters are discussed in detail in the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2017 filed with the SEC. The discussion below focuses on significant matters and developments since December 31, 2017. Alternative-Revenue Programs: GSWC records the difference between what it bills its water customers and that which is authorized by the CPUC using the Water Revenue Adjustment Mechanism (“WRAM”) and Modified Cost Balancing Account (“MCBA”) accounts approved by the CPUC. The over- or under-collection of the WRAM is aggregated with the MCBA over- or under-collection for the corresponding ratemaking area and bears interest at the current 90-day commercial paper rate. As required by the accounting guidance for alternative revenue programs, GSWC is required to collect its WRAM balances, net of its MCBA, within 24 months following the year in which an under-collection is recorded in order to recognize such amounts as revenue. The recovery periods for the majority of GSWC's WRAM/MCBA balances are primarily within 12 to 24 months. GSWC has implemented surcharges to recover its WRAM/MCBA balances as of December 31, 2017. For the three months ended September 30, 2018 and 2017, surcharges (net of surcredits) of approximately $7.7 million and $11.4 million, respectively, were billed to customers to recover previously incurred under-collections in the WRAM/MCBA accounts. For the nine months ended September 30, 2018 and 2017, surcharges (net of surcredits) of approximately $17.5 million and $24.8 million, respectively, were billed to customers. During the nine months ended September 30, 2018, GSWC recorded additional net under-collections in the WRAM/MCBA accounts of $12.2 million mainly due to higher than adopted supply costs. As of September 30, 2018, GSWC had an aggregated regulatory asset of $24.3 million, which is comprised of a $3.4 million under-collection in the WRAM accounts and a $20.9 million under-collection in the MCBA accounts. Other Regulatory Matters: Tax Cuts and Jobs Act ("Tax Act"): On December 22, 2017, the Tax Act was signed into federal law. The provisions of this major tax reform were generally effective January 1, 2018. The most significant provisions of the Tax Act impacting GSWC are the reduction of the federal corporate income tax rate from 35% to 21% and the elimination of bonus depreciation for regulated utilities. Pursuant to a CPUC directive, the 2018 impact of the Tax Act on the water segment’s adopted revenue requirement is being captured in a memorandum account effective January 1, 2018. For the three and nine months ended September 30, 2018, approximately $944,000 and $7.4 million, respectively, of reduced water-revenue requirements were tracked and recorded as a regulatory liability, which were largely offset by decreases in income tax expense. In March 2018, GSWC filed updated testimony revising the revenue requirements to reflect the impacts of the Tax Act in its pending water general rate case that will set new rates for the years 2019 - 2021. On July 1, 2018, new lower water rates, which incorporate the new federal income tax rate, were implemented for all water ratemaking areas. The CPUC also ordered GSWC to update its pending electric general rate case filing, which will determine new electric rates for the years 2018 - 2021, to reflect the lower federal corporate income tax rate. As a result, for the three and nine months ended September 30, 2018, GSWC reduced electric revenues by approximately $125,000 and $848,000, respectively, and recorded a corresponding regulatory liability that will be satisfied as part of implementing overall new rates from the general rate case retroactive to January 1, 2018. Reductions in the water and electric revenue requirements resulting from the impacts of the Tax Act are largely offset by decreases in GSWC's income tax expense, resulting in no material impact to earnings (see Note 7). Cost of Capital Proceeding: In March 2018, the CPUC issued a final decision in the cost of capital proceeding for GSWC and three other water utilities for the years 2018 - 2020. Among other things, the final decision adopted for GSWC's water segment a return on equity of 8.90%, with a return on rate base of 7.91%. The previously authorized return on equity for GSWC’s water segment was 9.43%, with a return on rate base of 8.34%. Including the effects of the Tax Act, the lower return on equity and rate base are expected to decrease GSWC’s annual adopted revenue requirement beginning in 2018 by approximately $3.6 million. In April 2018, GSWC implemented new water rates to incorporate the cost of capital decision. For the nine months ended September 30, 2018, GSWC recorded a regulatory liability with a corresponding decrease in water revenues of approximately $955,000 representing the revenue difference between the old and new cost of capital rates through April 2018. Pending General Rate Case Filings: In July 2017, GSWC filed a general rate case application with the CPUC for all of GSWC’s water regions and the general office. This general rate case will determine new water rates for the years 2019 - 2021. On August 15, 2018, GSWC and the CPUC’s Public Advocates Office ("CalPA"), formerly the Office of Ratepayer Advocates, filed a joint motion to adopt a settlement agreement between GSWC and CalPA in connection with this general rate case. If approved by the CPUC, this settlement agreement will resolve all of the issues in the general rate case. GSWC and CalPA informed the assigned Administrative Law Judge ("ALJ”) that hearings would not be needed in light of the settlement agreement. Subsequently, the ALJ issued a ruling requesting additional information on a number of items in the general rate case. GSWC has provided the additional information requested by the ALJ and believes it has satisfied all of the questions raised. Both the ALJ’s request and GSWC’s response are public information. At this time, GSWC is awaiting a proposed decision by the ALJ, which is expected during the fourth quarter of 2018, with a final decision by the CPUC expected by the first quarter of 2019. When approved, the new rates will become effective January 1, 2019. In May 2017, GSWC filed its electric general rate case application with the CPUC to determine new electric rates for the years 2018 through 2021. GSWC and CalPA have reached a tentative settlement, which resolves all revenue requirement issues in this general rate case. A settlement conference with all parties in the rate case is scheduled for November 2018. Among other things, the tentative settlement incorporates a previous stipulation in the case, which authorizes a new return on equity for GSWC's electric segment of 9.60%. GSWC’s prior authorized return on equity for its electric segment was 9.95%. The stipulation also included a capital structure and debt cost similar to those approved by the CPUC in March 2018 in connection with GSWC's water segment cost of capital proceeding, as discussed above. Because of the delay in finalizing the electric general rate case, year-to-date 2018 billed electric revenues have been based on 2017 adopted rates, pending a final decision by the CPUC in this rate case application. When a final decision is approved, the new electric rates will be retroactive to January 1, 2018. |
Earnings per Share/Capital Stock |
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Earnings per Share/Capital Stock | 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 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 shares and participating securities. The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used for calculating basic net income per share:
Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with stock options and restricted stock units granted under AWR’s stock incentive plans for employees and the non-employee directors stock plans, and net income. At September 30, 2018 and 2017, there were 47,792 and 70,702 options outstanding, respectively, under these plans. At September 30, 2018 and 2017, there were also 198,613 and 195,457 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Registrant. The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:
(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 47,792 and 70,702 stock options at September 30, 2018 and 2017, respectively, were deemed to be outstanding in accordance with the accounting guidance on earnings per share. All of the 198,613 and 195,457 restricted stock units at September 30, 2018 and 2017, respectively, were included in the calculation of diluted EPS for the three and nine months ended September 30, 2018 and 2017. No stock options outstanding at September 30, 2018 had an exercise price greater than the average market price of AWR’s Common Shares for the three and nine months ended September 30, 2018. There were no stock options outstanding at September 30, 2018 or 2017 that were anti-dilutive. During the nine months ended September 30, 2018 and 2017, AWR issued 64,245 and 107,815 Common Shares, for approximately $348,000 and $884,000, respectively, under Registrant’s Common Share Purchase and Dividend Reinvestment Plan, the 401(k) Plan, the 2000 and 2008 Stock Incentive Plans and the 2003 and 2013 Non-Employee Directors Stock Plans. During the three months ended September 30, 2018 and 2017, AWR paid quarterly dividends of approximately $10.1 million, or $0.275 per share, and $9.3 million, or $0.255 per share, respectively. During the nine months ended September 30, 2018 and 2017, AWR paid quarterly dividends to shareholders of approximately $28.8 million, or $0.785 per share, and $27.1 million, or $0.739 per share, respectively. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments Derivative financial instruments are used to manage exposure to commodity price risk. Commodity price risk represents the potential impact that can be caused by a change in the market value of a commodity. BVES purchases power under long-term contracts at a fixed cost depending on the amount of power and the period during which the power is purchased under such contracts. In December 2014, the CPUC approved an application that allowed BVES to immediately execute new long-term purchased power contracts with energy providers. BVES began taking power under these long-term contracts effective January 1, 2015 at a fixed cost over three-and five-year terms depending on the amount of power and the period during which the power is purchased under the contracts. BVES's long-term contracts are subject to the accounting guidance for derivatives and require mark-to-market derivative accounting. Among other things, the CPUC also authorized GSWC to establish 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 purchased power contracts are deferred monthly into a non-interest bearing regulatory memorandum account that tracks the changes in fair value of the derivatives throughout the term of the contracts. As a result, these unrealized gains and losses do not impact GSWC’s earnings. As of September 30, 2018, there was a $1.1 million unrealized loss in the memorandum account for the purchased power contracts as a result of the drop in energy prices. The notional volume of derivatives remaining under these long-term contracts as of September 30, 2018 was approximately 123,000 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, GSWC makes 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 contracts, Registrant applies the Black-76 model, utilizing 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 these derivative instruments were estimated based on independent sources such as broker quotes and publications that are not observable in or corroborated by the market. Registrant received one broker quote to determine the fair value of its derivative instruments. 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 purchased power contract has been classified as Level 3 for all periods presented. The following table presents changes in the fair value of GSWC’s Level 3 derivatives for the three and nine months ended September 30, 2018 and 2017:
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Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 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 the amounts. Investments held in a Rabbi Trust for the supplemental executive retirement plan ("SERP") are measured at fair value and totaled $17.8 million as of September 30, 2018. 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 Property and Investments on Registrant's balance sheets. The table below estimates the fair value of long-term debt held by GSWC. The fair values as of September 30, 2018 and December 31, 2017 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. The interest rates used for the September 30, 2018 valuation increased as compared to December 31, 2017, decreasing the fair value of long-term debt as of September 30, 2018. Changes in the assumptions will produce different results.
___________________ (1) Excludes debt issuance costs and redemption premiums. |
Income Taxes |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the Tax Act was signed into federal law. The provisions of this major tax reform were generally effective January 1, 2018. Among its significant provisions, the Tax Act reduced the federal corporate income tax rate from 35% to 21% and eliminated bonus depreciation for regulated utilities. AWR's effective tax rate (“ETR”) was 23.2% and 37.3% for the three months ended September 30, 2018 and 2017, respectively, and was 21.7% and 37.3% for the nine months ended September 30, 2018 and 2017, respectively. GSWC's ETR was 23.2% and 38.4% for the three months ended September 30, 2018 and 2017, respectively, and was 22.5% and 38.6% for the nine months ended September 30, 2018 and 2017, respectively. Both decreases were due primarily to the reduction in the federal corporate income tax rate. AWR's ETR differed from the new federal statutory rate primarily as a result of the differences between GSWC's ETR and the new federal statutory rate. These differences resulted primarily from: (i) state taxes, (ii) permanent differences including the excess tax benefits from share-based payments, which were reflected in the income statements and resulted in a reduction to income tax expense during the three and nine months ended September 30, 2018 and 2017, (iii) differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (principally from plant, rate-case, and compensation expenses), and (iv) commencement of the amortization of the excess deferred income tax liability brought about by the lower federal corporate income tax rate. There were no material updates to the excess deferred income tax liability balance during the three and nine months ended September 30, 2018 in accordance with Staff Accounting Bulletin 118. |
Employee Benefit Plans |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan and the supplemental executive retirement plan ("SERP") for the three and nine months ended September 30, 2018 and 2017 are as follows:
In accordance with new accounting guidance (Note 1), effective January 1, 2018, Registrant changed the financial statement presentation for the costs of its defined benefit pension plans and other retirement benefits. The components of net periodic benefits cost, other than the service cost component, have been included in the line item “Other, net” in Registrant's income statements. Prior period amounts have been reclassified on the income statements to conform to the current-period presentation. During the nine months ended September 30, 2018, Registrant contributed $6.0 million to its pension plan. Regulatory Adjustment: As authorized by the CPUC in the most recent water and electric general rate case decisions, GSWC utilizes two-way balancing accounts for its water and electric regions and the general office to track differences between the forecasted annual pension expenses in rates, or expected to be in rates, and the actual annual expense recorded by GSWC in accordance with the accounting guidance for pension costs. As of September 30, 2018, GSWC had a $2.5 million over-collection in the two-way pension balancing accounts included as part of the pension regulatory asset (Note 3). |
Contingencies and Gain on Sale of Assets |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies and Gain on Sale of Assets | Contingencies and Gain on Sale of Assets Condemnation of Properties: The laws of the State of California provide for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation, where doing so is necessary and in the public interest. In addition, these laws provide that the owner of utility property (i) may contest whether the condemnation is necessary and in the public interest, and (ii) is entitled to receive the fair market value of its property if the property is ultimately taken. Ojai Water System and Gain on Sale of Assets: Pursuant to a settlement agreement, on June 8, 2017, Casitas Municipal Water District (“Casitas”) acquired the operating assets of GSWC’s 2,900-connection Ojai water system by eminent domain for $34.3 million in cash, including payments for customer receivables and regulatory assets. As a result of this transaction, GSWC recorded a pretax gain of $8.3 million on the sale of the Ojai water system during the second quarter of 2017. The terms of the settlement agreement resolved the eminent domain action and dismissed all claims against GSWC brought by Casitas and another third party. Environmental Clean-Up and Remediation: GSWC has been involved in environmental remediation and cleanup at a plant site that contained an underground storage tank that had been used to store gasoline for its vehicles. The 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 the site. Analyses indicate that off-site monitoring wells may be necessary to document the effectiveness of remediation. As of September 30, 2018, the total spent to clean-up and remediate GSWC’s plant facility was approximately $5.4 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 September 30, 2018, GSWC has a regulatory asset and an accrued liability for the estimated additional cost of $1.3 million to complete the cleanup at the site. The estimate includes costs for two years of 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 believes it is probable that the estimated additional costs will be approved in rate base by the CPUC. 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. However, Registrant does not believe the outcome from any pending suits or administrative proceedings will have a material effect on Registrant's consolidated results of operations, financial position or cash flows. |
Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments AWR has three reportable segments, water, electric and contracted services, whereas GSWC has two segments, water and electric. On a stand-alone basis, AWR has no material assets other than its investments in its subsidiaries. All activities of GSWC, a rate-regulated utility, are located within California. Activities of ASUS and its subsidiaries are conducted in California, Florida, Georgia, Kansas, Maryland, New Mexico, North Carolina, South Carolina, Texas and Virginia. Each of ASUS’s wholly owned subsidiaries is regulated, if applicable, 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 GSWC’s operating segments, ASUS and its subsidiaries and other matters. Total assets by segment are not presented below, as certain of Registrant’s assets are not tracked by segment. The utility plant amounts are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash, and exclude U.S. government- and third-party contractor-funded capital expenditures for ASUS and property installed by developers and conveyed to GSWC.
(1) Depreciation computed on GSWC’s transportation equipment is recorded in other operating expenses and totaled $58,000 and $61,000 for the three months ended September 30, 2018 and 2017, respectively, and $179,000 and $181,000 for the nine months ended September 30, 2018 and 2017, respectively. (2) Adjusted to conform to current-year presentation pursuant to the adoption of ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The following table reconciles total utility plant (a key figure for ratemaking) to total consolidated assets (in thousands):
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Summary of Significant Accounting Policies: (Policies) |
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Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”) and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), 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")). The subsidiaries of ASUS are collectively referred to as the “Military Utility Privatization Subsidiaries.” GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water in California serving approximately 260,000 customers. GSWC also distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,000 customers through its Bear Valley Electric Service (“BVES”) division. The California Public Utilities Commission (“CPUC”) regulates GSWC’s water and electric businesses in matters including properties, rates, services, facilities and transactions by GSWC with its 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 50-year firm fixed-price contracts. These contracts are subject to 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. In September 2017, ASUS was awarded a new 50-year contract by the U.S. government to operate, maintain, and provide construction management services for the water distribution and wastewater collection and treatment facilities at Fort Riley, a United States Army installation located in Kansas. The contract over the 50-year period is subject to annual economic price adjustments. ASUS began operations at Fort Riley in July 2018. There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or any of its wholly owned subsidiaries. Basis of Presentation: The consolidated financial statements and notes thereto 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 and ASUS. ASUS owns all of the outstanding Common Shares of the Military Utility Privatization Subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries, all of which are wholly owned. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. 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, 2017 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. 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 those 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, 2017 filed with the SEC. |
GSWC's Related Party Transactions | GSWC's Related Party Transactions: GSWC and ASUS provide and/or receive various support services to and from their parent, AWR, and among themselves. GSWC also allocates certain corporate office administrative and general costs to its affiliate, ASUS, using allocation factors approved by the CPUC. GSWC allocated corporate office administrative and general costs to ASUS of approximately $1.2 million and $1.0 million during the three months ended September 30, 2018 and 2017, respectively, and approximately $3.2 million and $3.0 million during the nine months ended September 30, 2018 and 2017, respectively. AWR has a $150.0 million syndicated credit facility, which was renewed in May 2018. As of September 30, 2018, AWR had $70.0 million outstanding under this facility. All amounts borrowed by AWR under the renewed facility are contractually due in May 2023 pursuant to the new terms and are generally priced off a spread to LIBOR. AWR borrows under this facility and provides funds to its subsidiaries, GSWC and ASUS, in support of their operations. The interest charged to GSWC and ASUS is sufficient to cover AWR’s interest expense under the credit facility. Amounts owed to AWR by GSWC, including for allocated expenses, are included in GSWC's intercompany payable under "Current Liabilities" as of September 30, 2018 and December 31, 2017. |
GSWC Long-Term Debt | GSWC Long-Term Debt: In March of 2019, $40 million of GSWC's 6.70% senior note will mature. This note has been included in "Current Liabilities" in Registrant's balance sheets as of September 30, 2018. GSWC intends to issue additional common shares to AWR, borrow under its intercompany borrowing arrangement with AWR and/or issue additional long-term debt to fund the repayment of this note as well as to maintain normal operations and to meet its capital and other financing requirements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). Under this guidance, an entity recognizes revenue when it transfers goods or services to customers in an amount that reflects what the entity expects in exchange for the goods or services. Registrant adopted this guidance under the modified retrospective approach beginning January 1, 2018. The adoption of this guidance did not have a material impact on Registrant's measurement or timing of revenue recognition but required additional disclosures (see Note 2). In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the financial statement presentation for the costs of defined benefit pension plans and other retirement benefits. Prior to this guidance, the components of net benefit cost for retirement plans (such as service cost, interest cost, expected return on assets, and the amortization of prior service costs and actuarial gains and losses) were aggregated as operating costs for financial statement presentation purposes. Under the new guidance, the service cost component continues to be presented as operating costs, while all other components of net benefit cost are presented outside of operating income. The new guidance also limits any capitalization of net periodic benefits cost to the service cost component. Registrant adopted the new guidance beginning January 1, 2018, which did not have a material impact on its financial statements. Registrant used its prior year's disclosure of its pension and other employee benefit plans as an estimation for applying the retrospective presentation requirements of this guidance. The components of net periodic benefits cost, other than the service cost component, have been included in the line item “Other, net” in Registrant's income statements (see Note 8). In November of 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. The guidance requires restricted cash to be combined with cash and cash equivalents when reconciling the beginning and end of period cash balances in the statement of cash flows. The adoption of this new guidance in 2018 did not have an impact on Registrant's cash flow statements. In August 2016, the FASB also issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The adoption of this new guidance in 2018 did not have an impact on Registrant's cash flow statements. In February 2016, the FASB issued a new lease accounting standard, Leases (ASC 842). Under the new standard, lessees will recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease). For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Registrant is assessing whether to elect the practical expedients available under this standard. Registrant will apply the new lease standard as of January 1, 2019 and recognize a cumulative-effect adjustment (if any) to the opening balance of retained earnings. Any periods presented prior to January 1, 2019 will not be adjusted to conform to the new lease standard. Registrant continues to assess the impact of this standard to its financial statements. In August 2018, the FASB issued ASU 2018-15—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under this standard, entities that enter into cloud computing service arrangements will apply existing internal-use software guidance to determine which implementation costs are eligible for capitalization. Under that guidance, implementation costs are capitalized or expensed depending on the nature of the costs and the project stage during which they are incurred. The new guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. Registrant is currently evaluating the impact of adopting this guidance. In August 2018, the FASB issued ASU 2018-14—Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans. This update removes disclosures to pension plans and other postretirement benefit plans that no longer are considered cost beneficial, clarifies the specific disclosure requirements and adds disclosure requirements deemed relevant. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and will be applied on a retrospective basis to all periods presented. |
Revenue from Contract with Customer (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | For the three and nine months ended September 30, 2018, disaggregated revenues from contracts with customers by segment are as follows:
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Schedule of Contract Assets and Contract LiabilitiesRevenue from Contract with Customer | The opening and closing balances of the receivable from the U.S. government, contract assets and contract liabilities from contracts with customers, which related entirely to ASUS, are as follows:
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Regulatory Matters: (Tables) |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of regulatory assets, less regulatory liabilities in the consolidated balance sheets for continuing operations | Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:
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Earnings per Share/Capital Stock: (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of Registrant's net income and weighted average Common Shares outstanding for calculating basic net income per share |
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Schedule of reconciliation of Registrant's net income and weighted average Common Shares outstanding for calculating diluted net income per share | The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:
(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 47,792 and 70,702 stock options at September 30, 2018 and 2017, respectively, were deemed to be outstanding in accordance with the accounting guidance on earnings per share. All of the 198,613 and 195,457 restricted stock units at September 30, 2018 and 2017, respectively, were included in the calculation of diluted EPS for the three and nine months ended September 30, 2018 and 2017. |
Derivative Instruments (Tables) |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents changes in the fair value of GSWC’s Level 3 derivatives for the three and nine months ended September 30, 2018 and 2017:
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Fair Value of Financial Instruments: (Tables) |
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Schedule of estimates of the fair value of long-term debt | The table below estimates the fair value of long-term debt held by GSWC. The fair values as of September 30, 2018 and December 31, 2017 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. The interest rates used for the September 30, 2018 valuation increased as compared to December 31, 2017, decreasing the fair value of long-term debt as of September 30, 2018. Changes in the assumptions will produce different results.
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Employee Benefit Plans: (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic benefit costs, before allocation to the overhead pool, for Registrant's pension plan, postretirement plan, and SERP | The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan and the supplemental executive retirement plan ("SERP") for the three and nine months ended September 30, 2018 and 2017 are as follows:
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Business Segments: (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reporting segments information | The tables below set forth information relating to GSWC’s operating segments, ASUS and its subsidiaries and other matters. Total assets by segment are not presented below, as certain of Registrant’s assets are not tracked by segment. The utility plant amounts are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash, and exclude U.S. government- and third-party contractor-funded capital expenditures for ASUS and property installed by developers and conveyed to GSWC.
(1) Depreciation computed on GSWC’s transportation equipment is recorded in other operating expenses and totaled $58,000 and $61,000 for the three months ended September 30, 2018 and 2017, respectively, and $179,000 and $181,000 for the nine months ended September 30, 2018 and 2017, respectively. (2) Adjusted to conform to current-year presentation pursuant to the adoption of ASU 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. |
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Schedule of reconciliation of total utility plant (a key figure for rate-making) to total consolidated assets | The following table reconciles total utility plant (a key figure for ratemaking) to total consolidated assets (in thousands):
|
Revenue from Contract with Customer - Contract Assets and Contract Liabilities (Details) - American States Utility Services - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Receivable from the U.S. government | $ 54,968 | $ 40,150 |
Contract assets | 19,043 | 30,388 |
Contract liabilities | $ 8,942 | $ 3,911 |
Minimum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Performance obligation fulfillment period | 36 years | |
Maximum | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Performance obligation fulfillment period | 50 years | |
Contracted Services | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Period of fixed price contracts to operate and maintain the water and/or wastewater systems at various military bases | 50 years |
Regulatory Matters: CPUC Rehearing Matter and Procurement Audits (Details) - Golden State Water Company - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Regulatory matters: | ||
Net Regulatory Assets | $ (21,636) | $ 2,042 |
Water Revenue Adjustment Mechanism [Member] | ||
Regulatory matters: | ||
Net Regulatory Assets | 3,400 | |
General rate case memorandum accounts | ||
Regulatory matters: | ||
Net Regulatory Assets | $ 6,798 | $ 10,522 |
Earnings per Share/Capital Stock: (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|||
Basic | ||||||
Net income | $ 22,952 | $ 21,006 | $ 50,082 | $ 56,499 | ||
Less: (a) Distributed earnings to common shareholders | 10,102 | 9,349 | 28,831 | 27,064 | ||
Less: Distributed earnings to participating securities | 54 | 50 | 151 | 139 | ||
Undistributed earnings | 12,796 | 11,607 | 21,100 | 29,296 | ||
(b) Undistributed earnings allocated to common shareholders | 12,727 | 11,546 | 20,991 | 29,147 | ||
Undistributed earnings allocated to participating securities | 69 | 61 | 109 | 149 | ||
Common shareholders earnings, basic | $ 22,829 | $ 20,895 | $ 49,822 | $ 56,211 | ||
Weighted average Common Shares outstanding, basic | 36,737 | 36,659 | 36,728 | 36,625 | ||
Basic earnings per Common Share (in dollars per share) | $ 0.62 | $ 0.57 | $ 1.36 | $ 1.53 | ||
Diluted | ||||||
Common shareholders earnings, basic | $ 22,829 | $ 20,895 | $ 49,822 | $ 56,211 | ||
Undistributed earnings for dilutive stock-based awards | 69 | 61 | 109 | 149 | ||
Total common shareholders earnings, diluted | $ 22,898 | $ 20,956 | $ 49,931 | $ 56,360 | ||
Weighted average Common Shares outstanding, basic | 36,737 | 36,659 | 36,728 | 36,625 | ||
Stock-based compensation (in shares) | [1] | 213 | 197 | 207 | 188 | |
Weighted average common shares outstanding, diluted | 36,950 | 36,856 | 36,935 | 36,813 | ||
Diluted earnings per Common Share (in dollars per share) | $ 0.62 | $ 0.57 | $ 1.35 | $ 1.53 | ||
|
Earnings per Share/Capital Stock: (Details 2) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Additional disclosure | ||||
Options outstanding (in shares) | 47,792 | 70,702 | 47,792 | 70,702 |
Anti-dilutive stock options not included in the computation of diluted EPS (in shares) | 0 | 0 | 0 | |
Common Shares issued under DRP and the 2000 and 2008 Employee Plans | 64,245 | 107,815 | ||
Value of Common Shares issued under DRP and the 2000 and 2008 Employee Plans | $ 348 | $ 884 | ||
Less: (a) Distributed earnings to common shareholders | $ 10,102 | $ 9,349 | 28,831 | 27,064 |
Dividends paid | $ 28,831 | $ 27,064 | ||
Quarterly dividends paid, per share of common stock (in dollars per share) | $ 0.275 | $ 0.255 | $ 0.785 | $ 0.739 |
Restricted Stock Units | ||||
Additional disclosure | ||||
Restricted stock units outstanding (in shares) | 198,613 | 195,457 | 198,613 | 195,457 |
Fair Value of Financial Instruments: (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Golden State Water Company | Carrying Amount | ||
Financial liabilities: | ||
Long-term debt - GSWC | $ 324,978 | $ 325,265 |
Golden State Water Company | Fair Value | ||
Financial liabilities: | ||
Long-term debt - GSWC | 389,438 | $ 424,042 |
Mutual Funds | Fair Value, Inputs, Level 1 | ||
Financial liabilities: | ||
Rabbi trust fair value of investments held | $ 17,800 |
Income Taxes: (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Golden State Water Company | ||||
Effective income tax rate | ||||
ETRs (as a percent) | 23.20% | 38.40% | 22.50% | 38.60% |
Parent | ||||
Effective income tax rate | ||||
ETRs (as a percent) | 23.20% | 37.30% | 21.70% | 37.30% |
Contingencies and Gain on Sale of Assets (Details) |
9 Months Ended | ||
---|---|---|---|
Jun. 08, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Proceeds from sale of assets | $ 63,000 | $ 34,324,000 | |
Amount spent in clean-up and remediation activities | 1,500,000 | ||
Golden State Water Company | |||
Loss Contingencies [Line Items] | |||
Proceeds from sale of assets | 0 | 34,324,000 | |
Environmental remediation expense | 5,400,000 | ||
Environmental Clean-Up and Remediation | Golden State Water Company | |||
Loss Contingencies [Line Items] | |||
Accrued liability for the estimated additional cost to complete the clean-up at the site | $ 1,300,000 | ||
Ojai Water System | |||
Loss Contingencies [Line Items] | |||
Loss contingency number of customers served | 2,900 | ||
Ojai Water System | Golden State Water Company | |||
Loss Contingencies [Line Items] | |||
Proceeds from sale of assets | $ 34,300,000 | ||
Gain (loss) on sale of properties | $ 8,300,000 |
Business Segments: (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Details of reportable segment | |||||
Income tax expense (benefit) | $ 6,939 | $ 12,508 | $ 13,890 | $ 33,670 | |
Net property, plant and equipment | 1,262,915 | 1,181,616 | 1,262,915 | 1,181,616 | $ 1,204,992 |
Other assets | 202,127 | 304,870 | 202,127 | 304,870 | |
Total Assets | 1,465,042 | 1,486,486 | 1,465,042 | 1,486,486 | 1,416,734 |
Golden State Water Company | |||||
Details of reportable segment | |||||
Income tax expense (benefit) | 5,414 | 10,813 | 11,743 | 29,235 | |
Depreciation on transportation equipment | 58 | $ 61 | 179 | $ 181 | |
Net property, plant and equipment | 1,249,190 | 1,249,190 | 1,197,940 | ||
Total Assets | $ 1,364,729 | $ 1,364,729 | $ 1,326,823 |
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