American States Water (AWR) Financial Report Summaries

Risks

• Regulated Water and Electric Utility Operations
• Contract Services Operations
• Our businesses are heavily regulated and, as a result, decisions by regulatory agencies or the U.S. government can significantly affect our businesses
• Delays in obtaining approval of general rate cases could adversely impact our liquidity
• Our assets at our regulated utilities are subject to condemnation
• Our costs of obtaining and complying with the terms of franchise agreements are increasing
• Our liquidity and earnings may be adversely affected by maintenance costs at our regulated utilities
• Adverse publicity and reputational risks can lead to increased regulatory oversight or sanctions
• Our liquidity and earnings may be adversely affected by wildfires
• We may, in certain circumstances, be held strictly liable for damages to property caused by our equipment even if we are not negligent
• We may be subject to financial losses, penalties and other liabilities if we fail to maintain safe work sites, equipment or facilities
• The generation, transmission and distribution of electricity are dangerous and involve inherent risks of damage to private property and injury to employees and the general public
• We may sustain losses that exceed or are excluded from our insurance coverage or for which we are not insured
• We operate in areas subject to natural disasters
• Our operations may be the target of terrorist activities
• Our costs involved in maintaining water quality and complying with environmental regulation have increased and are expected to continue to increase
• Our operating costs may increase as a result of groundwater contamination
• The adequacy of our water supplies depends upon weather and a variety of other uncontrollable factors
• Our liquidity may be adversely affected by changes in water supply costs
• Our liquidity and earnings may be adversely affected by our conservation efforts
• Our electric segment operates in a high wildfire risk area
• Our liquidity may be adversely affected by increases in electricity and natural gas prices in California
• We may not be able to procure sufficient renewable energy resources to comply with CPUC rules
• Our contracts for servicing military bases create certain risks that are different from our public utility operations
• Our contracts for the construction of infrastructure improvements on military bases create risks that are different from those of our public utility operations and maintenance activities
• We may be adversely affected by disputes with the U.S. government regarding our performance of contracted services on military bases
• We may not be fully reimbursed for all of our construction costs or may only receive payment on a delayed basis
• Risks associated with wastewater systems are different from those of our water distribution operations
• We may have responsibility for water quality at the military bases we serve
• Our earnings may be affected, to some extent, by weather during different seasons
• We continue to incur costs associated with the expansion of our military base contract activities
• We face intense competition for new military base contracts
• We must successfully maintain and/or upgrade our information technology systems as we are increasingly dependent on the continuous and reliable operation of these systems
• Cybersecurity incidents could disrupt our internal operations, and any such disruption could increase our expenses, damage our reputation and adversely affect our stock price
• Failure to attract, retain, train, motivate, develop and transition key employees could adversely affect our business
• Failure of our employees to maintain required certifications and licenses or to complete required compliance training could adversely impact our ability to operate and maintain our utility systems and provide services to our customers
• The accuracy of our judgments and estimates about financial and accounting matters will impact our operating results and financial condition
• Market conditions and demographic changes may adversely impact the value of our benefit plan assets and liabilities
• Our business requires significant capital expenditures and our inability to access the capital or financial markets could affect our ability to meet our liquidity needs and long-term commitments, which could adversely impact our operations and financial results
• Payment of our debt may be accelerated if we fail to comply with restrictive covenants in our debt agreements
• The price of our Common Shares may be volatile and may be affected by market conditions beyond our control
• AWR is a holding company that depends on cash flow from its subsidiaries to meet its financial obligations and to pay dividends on its Common Shares
• The final determination of our income tax liability may be materially different from our income tax provision
• Our operations are geographically concentrated in California