American States Water (AWR) Gets Cost of Capital App Approval from CPUC
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American States Water Company (NYSE: AWR) announced today that the California Public Utilities Commission ("CPUC") has approved the Cost of Capital application filed by its wholly-owned subsidiary Golden State Water Company ("GSWC") for its authorized cost of capital for 2012 through 2014.
This decision approves and authorizes GSWC a Return on Equity ("ROE") of 9.99% and a rate-making capital structure of 55% equity and 45% debt. The weighted cost of capital (rate of return on ratebase) of 8.64% includes the most recent embedded debt cost. This rate of return authorized by the CPUC will be implemented into water rates on a company-wide basis retroactive to January 1, 2012.
Among other things, this decision maintains the automatic adjustment mechanism called the Water Cost of Capital Mechanism, previously adopted by the CPUC, to adjust the ROE and rate of return on ratebase between cost of capital proceedings. Rates to customers will be adjusted only if there is a positive or negative change of more than 100 basis points in the average of the Moody's Aa utility bond rate as measured over the period October 1 through September 30. If the average interest rate changes by over 100 basis points from the benchmark, the ROE will be adjusted by one half of the difference.
Certain matters discussed in this news release with regard to the Company's expectations may be forward-looking statements that involve risks and uncertainties. The assumptions and risk factors that could cause actual results to differ materially, include those described in the Company's Form 10-Q and Form 10-K filed with the Securities and Exchange Commission.
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This decision approves and authorizes GSWC a Return on Equity ("ROE") of 9.99% and a rate-making capital structure of 55% equity and 45% debt. The weighted cost of capital (rate of return on ratebase) of 8.64% includes the most recent embedded debt cost. This rate of return authorized by the CPUC will be implemented into water rates on a company-wide basis retroactive to January 1, 2012.
Among other things, this decision maintains the automatic adjustment mechanism called the Water Cost of Capital Mechanism, previously adopted by the CPUC, to adjust the ROE and rate of return on ratebase between cost of capital proceedings. Rates to customers will be adjusted only if there is a positive or negative change of more than 100 basis points in the average of the Moody's Aa utility bond rate as measured over the period October 1 through September 30. If the average interest rate changes by over 100 basis points from the benchmark, the ROE will be adjusted by one half of the difference.
Certain matters discussed in this news release with regard to the Company's expectations may be forward-looking statements that involve risks and uncertainties. The assumptions and risk factors that could cause actual results to differ materially, include those described in the Company's Form 10-Q and Form 10-K filed with the Securities and Exchange Commission.
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