Welcome to the American States Water Company conference call discussing third quarter 2009 results. If you have not received a copy of this morning’s news release, announcing earnings for the quarter please call 909-394-3600, Extension 651 and one will be fax or e-mail to you. If you would like to listen to the replay of this call, it will begin this afternoon at approximately 2:00 pm Pacific Time and run through Wednesday, November 11, 2009. The toll-free number for the replay is 800-642-1687 and the conference ID is 36158753. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) At this time, I would like to turn the call over to Eva Tang, Chief Financial Officer of American States Water Company.

Thank you. Good morning or good afternoon. I’m Eva Tang; Chief Financial Officer of the company, Bob Sprowls, President and CEO is also with me. I want to thank you for joining us today and for your continued interest in American States Water Company. Following the conclusion of our prepared remarks the call will be opened up for questions. I will like to remind you that certain matters discussed during this conference call are maybe forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. Please review a description of the company’s risks and uncertainties in our most recent Form 10-K and 10-Qs on file with the Securities and Exchange Commission. All forward-looking statements are made as of today. The company’s under no obligation to update such statements. During our presentation today, Bob and I may refer to American States Water Company as AWR, Golden State Water Company as GSWC and Chaparral City Water Company as CCWC and American States Utility Services as ASUS. I will begin with the results for the third quarter of 2009. Basic and fully diluted earnings as reported for the quarter ended September 30, 2009 were $0.52 per share as compared to basic and fully diluted earnings of $0.26 per share for the third quarter of 2008. Removing the effects of unrealized loss on purchase of water, contracts of $0.13 per share from the 2008 results, diluted EPS as suggested would have been $0.09 per share for third quarter of 2008. In comparison the $0.52 per share for the third quarter of 2009 is $0.13 per share higher than the same period of 2008 as suggested. As discussed in previous quarters even though we do have unrealized losses and/or gains on the purchase power…

Thank you, Eva and once again good morning or good afternoon, ladies and gentlemen. Now I will discuss the status of key regulatory filings and other matters for the company. Recently we were pleased to receive final decisions on some long awaited general rate case proceedings. Golden State Water Company’s Bear Valley Electric Services Division received a final decision on October 15, 2009, regarding its general rate case filed last year. The decision approves a comprehensive settlement agreement between the division of rate fair advocates DRA and Bear Valley Electric. The decision authorizes a return on equity of 10.5% with a corresponding return on rate base of 9.15%. The annual increases approved in the decision are $4.8 million for 2009, $1.2 million for 2010, $209,000 for 2011 and $168,000 for 2012. Since the new rates went into effect on November 1, 2009, the revenue increase for 2009 would be approximately $800,000. Among other things, the decision allows for an update to Bear Valley Electric’s rates into 2010 for the corporate headquarters cost based on the California Public Utility Commissions adoption by the end of 2009 of new rates for Golden State Water’s current general rate case. Including the recovery of expenses associated with its corporate headquarters. Based on the decision Bear Valley Electric is also allowed to establish a base revenue requirement adjustment mechanism to decouple usage from revenue. In June 2009 the CPUC had authorized the electric division to track the difference between the 2007 adopted general office cost allocation to Bear Valley Electric and the 1996 adopted general office allocation to Bear Valley Electric. In a memorandum account effective and retroactive to June 4, 2009. The amount in the memorandum account was about $761,000 at the end of September. However, the decision issued in October did not address…

(Operator Instructions) Your first question comes from Nancy Doyle - MetLife.

I just wanted to know what method you’re going to be using for financing your CapEx of next year. Do you plan on doing any debt issuance?

Eva, let you answer that one.

I don’t think we are going to financing the debt equity probably for next year unless there’s some unexpected capital expenditure comes up. We do have a syndicated facility that expires June 2010. We’re considering up that facility a little bit, currently the facility is at $115 million. So we think we’ll have enough funding next year to support our capital expenditures, but things could change during the year if something happens respectively.

So Eva, we have significant cushion in our revolver to cover our CapEx.

Right now as of end of September 30, we have $83 million on the line.

Your next question comes from Debra Coy - Janney Montgomery.

Couple of follow-up questions; one, to go back to the beginning of your presentation, Bob, on Bear Valley, the $4.8 million that you received, you’re only getting $800,000 of it since it was not effective until November. Is that how it works for the electric sides? On the water side, you’re getting retroactive to the beginning of the period rate increases, but essentially you just forego $4 million of the $4.8 million of the ‘09 decision?

Yes, that’s right. That’s how it works. Now, we do have this potential retroactive recovery associated with the general office clause, but really the only piece that would be retroactive.

That would be relatively small, any adjustments there?

Yes, that’s roughly about $800,000 at the amount in that account is $761,000 at the end of September.

There could be a decision to either give you the whole, since they haven’t made a decision, you get the whole $760,000, you would get some portion of that or get none?

I think it would either be, you either get it all or you get none.

When would you expect to hear on that?

Should be shortly, Debra, we’re trying to file an amended application to have the commission taking care of this item. So that’s in the process. I don’t know when the final order will be on this one, but we’re working on that. Hopefully we can resolve the issue in the fourth quarter.

Then if you got a favorable resolution, you would take a onetime benefit?.

Yes, that’s right.

So that’s what happened in the fourth quarter. Then looking ahead onto the Virginia bases and the others that you outlined under ASUS, I’m trying to get a sense of how to calibrate the amounts this. You walked us on the timing and the various actions that you’re filing, but you didn’t give us any numbers. Is that because those are not public filings, like when you filed rate cases, obviously we have the amounts and something to think about going forward? I don’t have a good sense of what’s the aggregate or the individual amounts of these various REA and price redetermination filings. Can you give us any help on that?

I think we have some numbers, Debra, in our 10-Q that will be issued tomorrow afternoon. So look through the MD&A session, of the overview session, that we talk about our REAs and dollar amounts, and I’ll be happy to walk you through once the 10-Q is issued tomorrow.

Just from a policy standpoint in terms of how you’re handling these. So your intent would be that you’ll disclose the amounts of the REA filings, and then a number of price re-determinations you mentioned, but which haven’t actually been filed, when you do file those at the end of this year, would you disclose the amounts of those, as well like a normal rate case?

I think that’s something we would consider. I don’t believe at this point, we have those in the Q, do we, Eva?

I think they will need a certain basis and we are turning in those dollar amount put in the Q.

Some of them you don’t know, yet.

Right.

Just from a broader standpoint, do we have a number of bases to track, and this will be kind of like tracking individual rate cases, but even from an aggregate amount in terms of forward modeling, and I presume that similar to public utility rate cases, you don’t necessarily get the full amount of what you file, but it would certainly be helpful to us to in terms of trying to understand what the potential improvements might be over the next one, two, three, years to have some sense of what the amounts of filings are?

It will be a negotiated process after you do your filings, and there is a certain amount of negotiations that do take place.

So whatever information we can get on that will be helpful and then finally you did mention that you got the contract modifications that outline about $7 million in construction projects for calendar ‘10. I believe that was all at Fort Jackson. Correct?

No, it’s really spread across several bases. The Fort Jackson piece was $1.1 million and the rest of them are at several different bases.

So that’s an additional $7 million in construction projects that you have outlying now, but that doesn’t mean there couldn’t still be other additional ones that could arise over the course of the year.

That’s right. These sort of special projects. The fiscal year for the government ends September 30, so it was kind of a rush to get these dollars appropriated, in effect, and so contract modification then follow it. So to the degree, there are special projects then we would get contract modifications for those and we have had, I think, at least one special project every year since we’ve been in, I think, well, ‘06, ‘07, ‘08 and ‘09, last four years.

We still have ongoing R&R projects every year.

That’s right. That’s right, because when you do put these contracts there’s at least two different revenue streams, there’s the renewal and replacement, which is just the ordinary replacement of the system through CapEx and so those are going to be some, we will have construction expenditures associated with those projects, as well.

As I recollect, you had the O&M expenses, you have the and R&R expenses later on top of that, but those are built in for quicker pass through or recovery, if you will, as opposed to the special projects.

Yes, they’re sort of already included in the cash flow stream. When you establish a contract with a particular base, there’s two revenue streams you get and it’s sort of a fixed amount. Those are probably revenue isn’t the right term, cash flow streams. I guess it’s revenue on the O&M side, but cash flow on the renewal and replacement side, because you’re really not allowed to book. I’m not sure actually doing the construction work that some cases we’re getting the cash ahead of when we do the work in other cases, where doing the work ahead of when we get the cash. I know if that confused the issue, or not, but there’s also something called initial capital upgrades where some of these bases are in need of initial upgrades to the system, and so those are identified and you get a separate revenue stream for that, as well.

They are built in, right and I understand that your cash outlays for the actual work may not match precisely, but those are built in initially and then it’s the special projects or any of the other adjustments and in the amount of infrastructure or whatever, that all gets rolled into either the REAs and then also the inflation gets rolled into the price re-determinations.

That’s right.

I think I understand that and then my final question is coming back to the California legislation that passed early this morning, we’ve had a number of conversations over the past two or three years, with you guys, about this whole issue of water rights and the value of the water rights portfolio and certainly Golden State has done a lot to perfect its portfolio of water rights and storage capabilities. It sounds like that may begin to be put more to the test. Can you talk a little bit more about how you envision that playing out or is it simply that all of your customers are going to see the same level of water cut backs that everyone else is at 10% already, and another 20% that they’re calling for in this legislation. How do you envision that at this point base on what you know so far?

Both currently we purchased roughly 45% of our supply and so that’s the piece that’s really most impacted by what is going on with the delta and what is done with the particular legislation. However, the legislation could have impacted to a certain degree some of our supply as well, when it comes to water rights, we work very hard to include a certain amount of water right protection in the bills that were being passed and I think we were successful in getting some coverage there for that. Now, of course, these bills haven’t been signed by the governor, yet, but I believe the view is that the bills will get signed by the governor. So, sort of getting back to protecting our customers, as I said 55% of our supply is owned supply and 45% is purchased. It is really the purchase component that kind of gives us the difficult management process, and we’re having mandatory conservation in many of our particular districts, because they do rely a portion of their supply, is a function of what is coming from the Metropolitan Water District, and what’s coming from the State Water project. So, I mean, we’re going to continue to work very closely with our customers to inform them on what the rules and requirements are we have been doing that already through public participation hearings, unfortunately the cost of our supply is going up because of these delta issues and as I mentioned, the increase from the Metropolitan Water District.

Is it possible that your mix could change? Do you have room on the 55% side where that could increase and the purchase water percentage could go down or is that pretty much set?

I think if you just looked at the mix to date you will see that we were using a little more of our supply to serve our customers to try to get them water. That’s not sustainable long term, though. I mean it is basically a 55, 45 mix. However, we are looking at and this is a little more long term, but we are looking at adding various other pieces to our water supply portfolio, you’ve probably read that we’ve been interested in this continues project that’s being done. We’ve also looked at desalination and possibly getting involved in one of the new plants that’s going up, but nothing definitive there. We also would like to get regulatory approval before we change our supply mix, because, you don’t want to go there and commit and then have the commission not approve that as being an additional component in your supply, because then you don’t get recovery. So, we’re very much aware of what’s going on around us and we’re very much in the middle of the process. Even the delta package that looks like it’s going to get approved, I mean, it isn’t going to fix things overnight. It is going to take 10 to 15 years to resolve some of the issues. So, we’re going to stay focused on getting water to our customers, but right now we don’t have enough water to give them.

Your final question comes from Garik Shmois - Longbow Research.

On the 9% lower consumption, I know it’s offset by the [Ramnium] CBA, but is it possible to perhaps parcel out how much of that was actually conservation lower organic consumption versus if there’s any weather impact or any impact from the decline in the construction activity?

It will be difficult, I guess. One thing we’ve seen is our number of customers has not gone down. So that’s the drop in number of customers isn’t contributing to the drop in terms of weather. I think this year was pretty normal year in terms of weather, if I’m not mistaken.

We implemented mandatory rationing in a lot of our service area and that has probably contributed to somehow this consumption decline, too.

I mean, if I had to take an educated guess here, I would say nearly all of it is conservation driven.

Given what you’re seeing in the legislative environment, this high single digit low teen run rate going forward is to be expected, I guess?

I think for the near term that 9% reduction is, we’re going to see that going forward. I don’t think it will be a one year phenomenon. Now, if we get a good year from a precipitation standpoint and then we can relax some of these things, but some of these mandatory conservation efforts, but we’re going to obviously sort of take our lead from member agencies of Metropolitan Water District, because that’s our key supplier for nearly all of the 45% that we purchase.

Just lastly real quick on interest expense, Eva, do you have an estimate for 2010, what that might look like?

It should be pretty inline with these quarterly expenses, if we don’t have new debt issuance: If you take the quarter and maybe just come forward pretty much it will give you a pretty good number. One more warnings that we going to do our credit facility in June of 2010, we expect a spread it will be much larger than we have right now, because the facility we have now is a five year facility. So I think back in 2005, which is the spread, was very low. So we expect the spread will be around 180 basis points range. So short term interest rate will go up for next year.

I mean we’ve been paying interest rates on the short term borrowings in the 1% range, and it was LIBOR plus 62.5 and because of our people in the financial markets, and the fact that the LIBOR rate has gone down. The spread to LIBOR, I mean, even good, strong credits like our company are going to have to pay more, a greater spread to LIBOR. So we’re going to negotiate the best deal we can with the banks and try to get as many bitters in the mix, but other folks who have done this are seeing their increases in their short term borrowing costs.

Actually one more question, if you could talk a little bit about status of any bids that you might have for any new military base contracts, if there’s anything in the pipeline there that you’re close to?

It’s difficult to predict what bases we’re going to win. We have been on some other bases. What generally as happened has been the military has been slower to grant bases to various companies and so though we think we’ve got a couple of good bids out there, it’s not clear that we’re going to win those, but it’s very difficult for us to give anything to help you predict what bases we’re going to get.

There are no further questions at this time. I would like to turn the conference over to Mr. Sprowls, for any closing remarks.

Well, again thank you all for your participation today and for your continued interest in investment in American States Water Company. We really appreciate that interest and that’s it.

This concludes today’s American States Water Company conference call. As a reminder, the call will be available for replay beginning at approximately 2:00 pm Pacific Time. The number for the replay is 800-642-1687 and the conference ID number is 36158753. You may also access the replay at www.aswater.com. Thank you for your participation. You may now disconnect.