American States Water Company - Earnings Call - Q2 2011
August 8, 2011
Transcript
Speaker 2
Ladies and gentlemen, thank you for standing by. Today is August 8, 2011. Welcome to the American States Water Company conference call discussing second quarter 2011 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 710, and one will be faxed or emailed to you. If you would like to listen to the replay of this conference, it will begin this afternoon at approximately 2:00 P.M. Pacific Time and run through Monday, August 15, 2011. After logging onto the website, click the Investors button at the top of the page. The archive is located just above the stock quote section. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session.
If you would like to ask a question during that time, you may press star and then one using a touch-tone telephone. If you would like to withdraw your question, you may press star and then two on your telephone keypad. As a reminder, today's conference is recorded and will be limited to no more than one hour. At this time, I would like to turn the conference call over to Ms. Eva Tang, Chief Financial Officer of American States Water Company. Ma'am, please go ahead.
Speaker 4
Thank you. Welcome again to American States Water Company's second quarter earnings call. Thank you for joining us today. With me here is Bob Sprowls, our President and CEO. Before I begin, I would like to remind you that certain matters discussed during this conference call may be 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-Q on file with the Securities and Exchange Commission. All forward-looking statements are made as of today. The company is under no obligation to update such statements. With that, I will start with our financial results for the quarter. I'm pleased to report a very strong quarter for all of our business segments.
Our earnings per share for the second quarter of 2011 increased by 77% compared to the same period in 2010. Basic and diluted earnings for the second quarter of 2011 were $0.85 per share as compared to $0.48 per share for the second quarter of 2010. I'd like to discuss earnings from continuing operations first. Basic and fully diluted earnings from continuing operations increased by 45% to $0.68 per share as compared to $0.47 per share for the second quarter of 2010, an increase of $0.21 per share. The $0.21 per share increase over the prior year's second quarter consists of a $0.09 per share increase from our regulated water operations, a $0.03 per share increase from our electric division, and a $0.09 per share increase from our contracted services segment. I'll first discuss the results from water operations under our regulated subsidiaries, Golden State Water Company.
Diluted earnings per share for our water operations increased by $0.09 per share to $0.51 per share for the second quarter of 2011 as compared to $0.42 per share for last year's second quarter. The improvement in earnings was primarily due to a higher water margin of $6.4 million or $0.20 per share during the three months ended June 30, 2011. Golden State Water received an increase of $5.9 million in water rates for all water regions effective January 1, 2011. In addition, three increases for Golden State Water's Region 2, 3, and the General Office were approved in November of 2010, and retroactive revenues were recorded in the fourth quarter last year. The increase in water margin was partially offset by an increase of $1.9 million or $0.06 per share in operating expenses other than supply costs.
This was due to a higher depreciation expense of $1.3 million and an increase in labor costs. Interest and other expenses net of interest income also increased by $1.3 million or $0.04 per share due to the issuance of $62 million in new notes in April of this year and costs associated with the redemption of $22 million of notes with higher interest rates. These costs, as well as the cost of new debts, have been included in our cost of capital application for future recovery that was filed in May of 2011. Also, partially offsetting the increase in diluted earnings per share for the water segment was an increase in the effective tax rate, which negatively impacts earnings by approximately $0.01 per share during the second quarter of 2011.
This was due to changes between book and taxable income that are treated as flow-through adjustments in accordance with the regulatory requirements. Moving on to the electric division of Golden State Water Company, diluted earnings for our electric business increased by $0.03 per share during the second quarter of 2011 due primarily to rate increases approved by the California Public Utility Commission effective January 1, 2011, and the lower operating expenses during the second quarter of 2011. The CPUC approved electric rate increases in 2011, which is expected to increase revenue by approximately $2 million for the year. Earnings from our contracted services business under American States Utility Services, or ASUS, also improved during this quarter. Diluted earnings from ASUS increased by $0.09 per share during the three months ended June 30, 2011.
Pre-tax operating income increased by $2.9 million primarily due to the effect of a change in estimated costs related to a pipeline project at the Fort Bragg Military Base. This change in estimate increased the revenue by $2.9 million under the percentage of completion accounting method. It was a result of a successful negotiation with contractors who provide construction services for ASUS. The project is scheduled to be completed by early 2014. I will now provide an update on the sale of Shopro City Water Company and discuss its quarterly results, which are included in discontinued operations. Basic and diluted earnings from discontinued operations for the second quarter of 2011 were $0.17 per share, a $0.16 per share increase as compared to the same period of 2010. On May 31, 2011, American States Water Company completed the sale of Shopro City Water Company to EPCOR Water USA Inc.
Approximately $29 million in cash was received by American States Water Company on May 31, 2011. The purchase price was subject to certain adjustments for changes in retained earnings based on a final audit result. We expect to collect additional cash for this adjustment in the third quarter. A gain of $2.3 million net of taxes and transaction costs, or $0.12 per share, was recognized during the second quarter of 2011. In addition, depreciation expense decreased by $496,000, or $0.01 per share, as a result of reporting Shopro City Water Company as a discontinued operation. In accordance with GAAP, no depreciation was recorded for discontinued operations.
We also recorded approximately $959,000 of pre-tax income, or $0.03 per share, due primarily to a $760,000 gain pertaining to settlement proceeds received in 2005 for the removal of a well based on a favorable decision issued by the Arizona Corporation Commission on April 7, 2011. A more detailed discussion of our results for the quarter and the year to date is included in our earnings release issued this morning and will be provided in our Form 10-Q, which will be filed later today. Now on to an update of our liquidity and capital resources. Cash from operating activities for the six months ended June 30, 2011, increased by $3.4 million primarily due to improved earnings. In addition, as discussed earlier, we received $29 million of cash proceeds from the sale of Shopro City Water Company and $62 million from the issuance of notes at Golden State Water Company.
The proceeds from the issuance were used to redeem $22 million of notes with higher interest rates and to pay down its short-term borrowing. Short-term borrowings as of June 30, 2011, were at $12 million. We continue to focus on our core strategies of prudently investing in our infrastructure and controlling our costs. Golden State Water Company's capital expenditure was approximately $36.7 million for the six months ended June 30, 2011. We are on target to invest $75 million to $80 million on capital projects for 2011. With that, I'd now like to turn the call over to Bob.
Speaker 0
Thank you, Eva. Good afternoon, ladies and gentlemen. I'm very pleased with our financial performance for the quarter. As Eva mentioned, each of our three continuing business segments achieved significant improvement over last year. Earnings per share from our regulated water and electric divisions of Golden State Water Company and our contracted services business under American States Utility Services increased by 45% compared to the second quarter of 2010. Also, as Eva mentioned, we closed on the sale of our Arizona utility in the second quarter, resulting in a gain of $0.12 per share included in discontinued operations. EBITDA from continuing operations increased to $38.5 million for the second quarter of 2011, an increase of $8.9 million when compared to the second quarter of 2010.
The water division of Golden State Water Company had a gross margin of $57.2 million for the second quarter, where gross margin is defined as revenues less supply costs. This represents a $6.4 million increase over the water margin from the second quarter of 2010, or 12.6%. I'm also pleased to announce that on July 26, 2011, the Board of Directors of American States Water Company approved a quarterly cash dividend of $0.28 per share on the common shares of the company. The $0.28 per share dividend is consistent with the dividend we approved in April, which at the time represented a $0.02 per share increase in the quarterly dividend or 7.7%. For more than 57 consecutive years, American States Water Company shareholders have received an increase in their aggregate annual dividend.
We are among only a handful of companies on the New York Stock Exchange that can boast of such a long period of dividend increases. Now I'll discuss the status of key regulatory filings and other matters for the company. On July 21, 2011, Golden State Water Company filed a general rate case for all of its water regions and the General Office. This is our first consolidated water rate case. We expect these rates to become effective on January 1, 2013. If rates are approved as filed, the rate increases are expected to generate approximately $31.3 million in annual revenues based on normalized sales starting in 2013 as compared to 2011 adopted revenues. The proposed rate increases for 2014 over 2013 are $9.1 million, and the 2015 proposed increases over 2014 amount to about $11.5 million.
On May 2, 2011, we completed our cost of capital filing with the PUC, requesting an 11.5% return on equity and a capital structure that included 55.6% equity and 44.4% debt. When finalized, the rate of return authorized by the commission will be implemented into rates on a company-wide basis. We believe a decision on the cost of capital filing will occur in the first quarter of 2012. In December 2010, the PUC issued the final decision in the rate case related to the seven customer service areas in Golden State Water Company's Region 1, approving rate increases for 2011 and 2012. In addition to rate increases of $1.9 million over 2010 adopted revenues, the CPUC also authorized approximately $18.5 million of capital projects to be filed for revenue recovery with advice letters when those projects are completed.
The majority of these projects are expected to be completed over a two-year period. This decision also allows us to recover the cost of debt and equity used to finance these capital projects prior to their inclusion in rates. In March of 2011, Golden State Water Company filed for recovery of its 2010 Water Revenue Adjustment Mechanism, or WRAM, net of the modified cost balancing account for a total of $19.6 million. Surcharges are currently in place to recover the 2009 and 2010 balances. For the three and six months ended June 30, 2011, surcharges of approximately $4.0 million and $5.6 million, respectively, were billed to customers for collection of the WRAM balance net of the modified cost balancing account. The implementation of the surcharges increases the company's cash flow and does not impact earnings. Water consumption decreased 5% compared to the second quarter of 2010.
As we've discussed in prior calls, the WRAM mechanism helps mitigate fluctuations in the company's revenues and earnings due to changes in water consumption from our conservation efforts. As of June 30, 2011, the company has a net aggregated regulatory asset of $37.2 million on the balance sheet related to the WRAM and the modified cost balancing accounts. As you recall, in November 2010, the PUC issued its final decision on the Region 2, Region 3, and General Office rate case. This decision was retroactive to January 1, 2010. Accordingly, during the fourth quarter of 2010, we recorded a $19.5 million regulatory asset, which represents the difference between interim rates in place as of January 1, 2010, and final rates approved in the PUC decision. A 24-month surcharge is in place to recover this regulatory asset.
During the three and six months ended June 30, 2011, approximately $2 million and $3 million in surcharges were billed to customers, respectively. Similar to the WRAM, these surcharges do not impact earnings but do increase the company's cash flow. For Bear Valley Electric Service, we intend to file a rate case in December 2011 for rates expected to be effective January 1, 2013. In the meantime, we also continue our efforts to procure renewable resources each year to help achieve interim target purchase levels of renewable energy resources established by the PUC. We entered into two contracts that have been approved by the PUC in June 2011. In connection with advancing the PUC's renewable portfolio standard program goals, including procuring the two contracts, Golden State Water Company was authorized by the PUC to track related legal and outside service costs in a memorandum account.
In June 2011, we filed for recovery of these costs, totaling $1.2 million incurred during the period September 1, 2007, through March 31, 2011. We have expensed these costs as incurred. If approved by the PUC, Golden State Water Company will reverse these expenses and report income and a regulatory asset for future recovery from customers. Let's turn our discussion to the company's subsidiaries that provide water and wastewater contracted services at military bases throughout the country under American States Utility Services, or ASUS. Again, we're pleased that ASUS continues to improve its earnings. However, we believe successful price redeterminations and requests for equitable adjustment, or REA filings, will provide added revenues, respectively, to help offset increased costs and provide ASUS the opportunity to consistently generate positive operating income at its subsidiaries that serve military bases.
We are still working to finalize prospective price redeterminations and requests for equitable adjustment at various bases, which includes adjustments to reflect inflation in costs and changes in operating conditions and infrastructure levels from that assumed at the time of the execution of the contracts. The timing of the conclusion of such filings is somewhat unpredictable. To summarize, I'll quickly talk about the status of each of our price redeterminations. First, we continue to negotiate permanent price redeterminations for the Virginia military bases, which are served under two contracts. We received a contract modification in February 2011 resolving the operation and maintenance, or O&M, portion of the first price redetermination for the Fort Lee contract, which reduced an interim rate adjustment to 14.6%. A proposed settlement of the renewal and replacement, or R&R, components of the price redetermination is expected to be resolved in the second half of 2011.
Proposed settlements for the O&M and R&R components of the first price redetermination for the other three Virginia bases have also been submitted to the government, with resolution anticipated during the second half of 2011. Under the U.S. government's Base Realignment and Closure Act, Fort Monroe will be closing as a military installation effective September 3, 2011. This closure has been anticipated as part of the original privatization contract. As such, the contract with the U.S. government will be modified to terminate operations and maintenance services at Fort Monroe as of September 3, 2011. Accordingly, future price redeterminations for the military bases will not include Fort Monroe. Second, we are currently in negotiations with the U.S. government on the first price redeterminations for Andrews Air Force Base. In August 2010, the government approved an 18.9% interim increase to contract rates.
We anticipate the price redetermination at Andrews to be resolved during the second half of 2011. The first price redetermination with the Fort Bragg military base is expected to be filed in the third quarter of 2011. An interim increase of 3.6% is currently in effect. Regarding Fort Jackson, the first price redetermination will be filed in the third quarter of 2011. An interim increase of 3.4% is currently in effect. Lastly, in connection with an inventory settlement reached in January 2010, Fort Bliss, our subsidiary that serves Fort Bliss and the government, agreed to waive the first and second price redeterminations under the original 50-year contract. The third redetermination is expected to be filed in 2012. Before I turn the conference over to the operator to entertain questions, I would like to thank you again for your continued support and interest in the company.
With that, I'll turn this back to Jamie.
Speaker 2
At this time, we will now begin the question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. If you're using a speakerphone, we do ask that you please pick up your handset before pressing the keys to ensure good sound quality. To withdraw your question, you may press star and then two. Once again, in order to ask a question, please press star and then one using a touch-tone telephone. We'll now pause momentarily to assemble our roster. Our first question comes from Michael Roomberg from Flettenberg Thalmon. Please go ahead with your question.
Speaker 5
Hi. Good morning, Bob. How are you?
Speaker 2
Hi, Michael.
Speaker 5
Eva.
Speaker 2
Hi.
Speaker 5
I just have a question regarding your commentary regarding the rate case, the consolidated general rate case, and the $31 million in incremental annual revenue. I guess based on reading your application, it seems like there's $58 million in incremental annual revenue in 2013. Can you help me just reconcile those two numbers?
Speaker 2
Sure. I think the difference really represents, the $31.3 million that we referenced was the difference between our increase and the 2011 adopted revenues. The 2011 adopted revenues recognize the Water Revenue Adjustment Mechanism in that amount. The $58 million represents really an increase in the kind of the base rate component. What we're seeing is some of the dollars will be moving because we are forecasting lower sales in 2013 than what we had in 2011. The adopted sales level is dropping, and dollars basically will be moving from the WRAM component into the base rate revenue component.
Speaker 5
Okay. It's just essentially they're using a different base of revenue than you are.
Speaker 4
That's right. Michael, under the PUC rule, the rate increases on our application represent the difference between revenue using our current tariff rates and the forecasted consumption of 2013 and our revenue requesting the application. That's how the rules are about using your forecasted consumption but using your current tariff rates. That's why you see a bigger increase in our application. In terms of revenue requirement dollar in total, the $31 million is really the year-to-year comparison there.
Speaker 5
Okay. All right. That's very helpful. Just one more with respect to ASUS. I guess, you know, this unexpected benefit from the timing of the Fort Bragg contract and the reevaluation of the estimated costs of the project, can this be considered somewhat of a one-time thing now that these two, you know, the revenue and the costs are more in alignment? Is it something that you'll continue to benefit from as the project continues?
Speaker 2
Yeah. I guess the way I look at it is we're going to continue to benefit based upon this because what's happened is under a percentage of completion accounting, you have to estimate your costs. Of course, you know what your revenues are. To the degree the costs are coming in lower than what you anticipated earlier on, you get to sort of book the pro rata share of the profit based upon how much work you've done. What we're seeing is when we subcontracted the work out, we're seeing the costs coming in lower. As a result, we're going to be able to kind of recognize profit as we go through and do the work on the project.
Speaker 5
Okay. There's no possibility that the contract price can be renegotiated or redetermined?
Speaker 4
The cost estimates still may be changing as time goes along because this is a long-term project. It won't be done until probably early 2014. We think we got most of the costs nailed down at this point, but there are still a few items under this contract that we are still looking into.
Speaker 2
It is a fixed price contract with the government. In terms of the revenue level going down, you know, we don't think that's going to happen.
Speaker 5
The government can't come back and say, "Okay. The prices seem to be far below what we had originally estimated under the contract, and therefore we want to renegotiate terms"? That's not something that can take place. Is that correct?
Speaker 2
My understanding is they can't.
Speaker 4
Can't. Okay.
Speaker 2
Now, to the degree we do things differently than what we had intended in the original contract, we may go back and talk to the government a little bit about that. If there's a sort of a change in scope or a change in the way we're going to be replacing the pipe, let's say we can save a bunch of money by using a different method for changing out the pipe, we would go back to the government and talk about whether that's an acceptable method and talk about what impact that then has on the contract price between us and them.
Speaker 5
Okay. That's helpful. Thanks again, guys, and congratulations on a nice quarter. It's a shame it's getting a little bit lost in the other news going on today, but congrats.
Speaker 2
Yeah, timing's everything, as they say.
Speaker 4
Hopefully, it wasn't too long. Thank you, Michael.
Speaker 5
Yes.
Speaker 2
Our next question comes from Christopher Patil from Janney Montgomery Scott. Please go ahead with your question.
Speaker 1
Yes. Good afternoon, Bob. Good afternoon, Eva.
Speaker 4
Hi.
Speaker 5
Hi.
Speaker 4
It's okay. How are you?
Speaker 1
All right. Thanks for taking my question. I just wanted to get your kind of preliminary take on cost of capital. Given what's happened with, you know, Treasury yields this year, can you just talk a little bit about your strategy in the case and how you're kind of positioning yourself and your risk profile relative to the other, I guess, California water utilities and also the broader utility group in general?
Speaker 2
Sure. Obviously, we're focused on going in and supporting our 11.5% that we have asked for. It's a serious business in California to be in the water business given the difficulty from a supply perspective. The commission's been very helpful in terms of dealing with supply issues by allowing us to decouple and to implement increasing block rates. It's going to be quite interesting, I think, in the cost of capital hearing as to where things are really headed here because of the market. It's quite surprising to me that the last time we had a cost of capital hearing was back in 2008 where it seemed like the same kinds of things were going on in terms of the market.
I think there will be some pressure because of the WRAM to say that the company, I think the commission's going to probably try to make the argument that the company is less risky because of the WRAM. There have been some studies put out by rate of return folks that suggest that the company or companies with the WRAM are not less risky. I know your question was surrounding the Treasury rate. It'd be interesting to see what happens to that Treasury rate here over the next several months.
Speaker 1
Right.
Speaker 2
I don't know. Eva, you have anything to add?
Speaker 4
I think we've already covered everything. The hearing is in October.
Speaker 2
October, yeah.
Speaker 4
We still have a couple of months to observe what will be happening with the Treasury rates and everything going on.
Speaker 1
Thank you for that call. I appreciate it. Just a housekeeping question. Is there any way that you can just break out the water supply costs for us in the quarter? I know it'll come out in the Q, but any way you can break out those four line items there?
Speaker 4
I think we can.
Speaker 2
Sure.
Speaker 4
We have that. You want to for the quarter, right, Michael?
Speaker 1
Correct.
Speaker 2
CJ?
Speaker 4
I'm sorry. Water supply costs for the quarter. Purchased water is $12.9 million.
Speaker 2
Okay.
Speaker 4
Power purchase for pumping is $2.2 million. Groundwater production assessment, which is pump tax, that's $3.9 million. We also have supply cost balancing account for water. Are you only talking about the power, electric, and the water?
Speaker 1
I guess I can back into the supply costs given the numbers that you gave us in the press release and those three you just gave me now.
Speaker 4
Okay. The supply cost balancing account, we also have it there. It's $4 million.
Speaker 2
Yeah, 4.08.
Speaker 4
You got that $12.9 million purchased water, $2.2 million pump tax, $3.9 million groundwater—I'm sorry, $2.2 million power purchase for pumping, $3.9 million for groundwater production assessment, and $4.0 million for water supply cost balancing account.
Speaker 1
Got it. Perfect. Is there any way you can give us at least just revenue in the ASUS segment for the quarter?
Speaker 4
ASUS revenue for the quarter is $22 million.
Speaker 2
Yeah, 22.0.
Speaker 1
Perfect. Thanks so much.
Speaker 4
You're welcome.
Speaker 2
Thank you, CJ. Our next question comes from Jonathan Reeder from Wells Fargo.
Speaker 5
Hey, how's it going today?
Speaker 4
It's good, Jonathan.
Speaker 5
Oh, a little better than probably on our end just looking at the stock prices right now. Had a huge drop just a few moments ago. Anyway, most of my questions have been asked. I just wanted a little more clarity on the Fort Bragg pipeline project. Can you give us, I guess, what the overall revenue values are of this project? I mean, it seems like it's a pretty significant one that can, you know, move the needle or at least impact ASUS, you know, going forward for the next few years.
Speaker 2
Sure. Recognizing that it's a project that'll go through 2014, the projected revenue is $58 million.
Speaker 5
Would it be reasonable to assume, you know, kind of a ratable kind of impact from now? When did the project start, maybe? I know it's supposed to conclude in 2014.
Speaker 2
Yeah.
Speaker 4
We started the project in 2010.
Speaker 2
Yeah, it's just, I mean, it's moving along. Probably ratably would be the best way to do it at this point.
Speaker 5
Okay, thanks. That's all I have for now.
Speaker 2
Okay.
Speaker 4
Okay, Jonathan.
Speaker 2
Jonathan, once again, if you would like to ask a question, please press star and then one using a touch-tone telephone. Our next question comes from Michael Roomberg from Flettenberg Thalmon. Please go ahead with your question.
Speaker 5
Hi. I just had a follow-up. Bob, on the previous conference call on the first quarter's results, you had indicated that you'd like over time, at least, to get to the 60% payout ratio on the dividend. I know that you grew the dividend. You currently are growing the dividend around 8%. Now, I'm wondering, just given where you expect earnings to be over the next couple of years, if you could elaborate a little bit on that target and how you intend to get there.
Speaker 2
Sure. We are taking another look at whether that's an appropriate payout ratio for us. I don't think the ratio will go any lower. We try not to have choppy dividend increases. We try to have smooth increases. We'll look at a sort of a forecast over the next three or four years and see what a sustainable dividend is. We know our shareholders like to see dividend increases, and we like to give them to them. I don't know what more specifics you'd like to hear, Michael, but that's sort of how we look at it.
Speaker 5
Okay, no, that's helpful. Thanks for the additional color.
Speaker 1
Our next question comes from Heike Dauer from Robert W. Baird.
Speaker 3
Thank you. Congratulations on a solid quarter.
Speaker 4
Thank you, Heike.
Speaker 3
I wonder if we could drill down a little bit more on ASUS and maybe if we could start with, I believe you said, Bob, that there was a reduction in the interim increase at Fort Lee. I don't think that we've heard that before, that the interim rate was actually decreased once it was finalized. Can we have some more details on that?
Speaker 2
Yeah. It was a small increase. I mean, it was, I think, something we probably had in the, I believe it was in the first quarter 10-Q. I think it was a reduction in the increase from, Eva, wasn't the interim?
Speaker 4
From the interim rate.
Speaker 2
About 18%.
Speaker 4
Right. Right.
Speaker 2
We're talking about 15%. It's just a slight reduction there.
Speaker 3
Okay. If we think directionally about this segment in 2011 full-year results compared to 2010 full-year results, we have the positive upside of Fort Bragg. We saw a drag in the first quarter because I think you had lower revenues, and it was also partly related to the increased proportion of headquarter costs that the segment was incurring. Can you give us some insight on how we should be thinking about the second half of the year?
Speaker 2
One of the issues in the first quarter, year over year, was in the first quarter of 2010, we had a $0.19 per share benefit from approved requests for equitable adjustments at both Fort Bragg and Fort Bliss. That is what made it difficult to do a kind of a year-over-year comparison in the first quarter.
Speaker 3
Right. Excluding that, I think it was still a year-over-year drag once you take that one-time benefit out of the first quarter of last year.
Speaker 2
You're right. We are incurring a little more corporate overhead costs being assigned to ASUS as part of the General Office case that was resolved in late 2010. That's a hotly contested item in rate cases, and the allocation actually went up a little bit because of the rate case decision there. In terms of ASUS's performance going forward, it will be a function of these price redeterminations and how successful we are there. That business has been very solid the last two and a half years and continues on that path despite getting permanent price redeterminations. We do have a number of price redeterminations, as I went through with the government, and we also have some REAs that have been requested. We're working through that process with the government. We think we're getting better at this, but it's been slow going, and we appreciate that.
We appreciate how difficult it is to forecast ASUS going forward without these price redeterminations.
Speaker 3
Okay, thanks for the additional insights.
Speaker 2
Thanks. Once again, if you would like to ask a question, please press star and then one using a touch-tone telephone. If you decide to withdraw your question, you may press star and then two to remove yourself from the question queue. Again, it is star and then one to ask a question. Seeing no additional questions, I would now like to turn the conference call back over to Bob Sprowls for any closing remarks.
Speaker 0
Thank you, Jamie. I just want to wrap up today by thanking you all for your participation in today's call and for your continued coverage of us and continued interest in investment in American States Water Company. Thank you, everybody, and have a good day.
Speaker 2
This concludes today's American States Water Company conference call. As a reminder, the call will be archived on our website and can be replayed beginning Monday, August 8, 2011, at 2:00 P.M. Pacific Time. It will run through Monday, August 15, 2011. After logging on to the website, click the Investors button at the top of the page. The archive is located just above the Stock Quote section. Thank you for your participation. You may now disconnect your telephone lines.