SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒ Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, ~~2024~~2025 or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission
File Number

Registrant, State of Incorporation
Address, Zip Code and Telephone Number

IRS Employer
Identification No.

001-14431

American States Water Company

95-4676679

Incorporated in

California

630 E. Foothill Boulevard,

San Dimas

91773-1212

(909)

394-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Shares

AWR

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Commission

Registrant, State of Incorporation

IRS Employer

File Number

Address, Zip Code and Telephone Number

Identification No.

001-12008

Golden State Water Company

95-1243678

Incorporated in

California

630 E. Foothill Boulevard,

San Dimas

91773-1212

(909)

394-3600

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
None	None	None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

American States Water Company

Yes

☒

☐

Golden State Water Company

Yes

☐

☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

American States Water Company

Yes

☐

☒

Golden State Water Company

Yes

☐

☒

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

American States Water Company

Yes

☒

☐

Golden State Water Company

Yes

☒

☐

Indicate by check mark whether Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit such files).

American States Water Company

Yes

☒

☐

Golden State Water Company

Yes

☒

☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

American States Water Company

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Golden States Water Company

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

American States Water Company ¨

Golden State Water Company ¨

Indicate by check mark whether the Registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

American States Water Company ☒

Golden State Water Company ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filing reflect the correction of an error to previously issued financial statements.

American States Water Company ☐

Golden State Water Company ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the Registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

American States Water Company ☐

Golden State Water Company ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

American States Water Company

Yes

☐

☒

Golden State Water Company

Yes

☐

☒

The aggregate market value of all voting and non-voting common shares, no par value, of American States Water Company (“Common Shares”) held by non-affiliates of American States Water Company was approximately $2,~~694~~924,~~439~~564,~~281~~166 on June 2830, ~~2024~~2025, the last business day of the Registrant's most recently completed second fiscal quarter, based on the closing price per Common Share of American States Water Company as traded on the New York Stock Exchange. As of February 1817, ~~2025~~2026, the number of Common Shares of American States Water Company outstanding was 3839,~~156~~082,~~568~~470. As of that same date, American States Water Company owned all ~~173~~178.~~7586~~3836 outstanding Common Shares of Golden State Water Company. The aggregate market value of all voting stock held by non-affiliates of Golden State Water Company was zero on June 2830, ~~2024~~2025.

Golden State Water Company meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form, in part, with the reduced disclosure format for Golden State Water Company.

Documents Incorporated by Reference:

Portions of the Proxy Statement of American States Water Company will be subsequently filed with the Securities and Exchange Commission as to Part III, Item Nos. 10, 11, 13 and 14 and portions of Item 12, in each case as specifically referenced herein.

Table of Contents

AMERICAN STATES WATER COMPANY

and

GOLDEN STATE WATER COMPANY

FORM 10-K

INDEX

Glossary of Terms
Information Regarding Forward-Looking Statements
Part I
Item 1.	Business	7
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	2728
Item 1C.	Cybersecurity	2728
Item 2.	Properties	3031
Item 3.	Legal Proceedings	3132
Item 4.	Mine Safety Disclosure	3132
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	3233
Item 6.	Reserved	3435
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3536
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	6765
Item 8.	Financial Statements and Supplementary Data	6966
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~127~~123
Item 9A.	Controls and Procedures	~~127~~123
Item 9B.	Other Information	~~127~~123
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	~~127~~123
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	~~128~~124
Item 11.	Executive Compensation	~~128~~124
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~128~~124
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~129~~124
Item 14.	Principal Accounting Fees and Services	~~129~~124
Part IV
Item 15.	Exhibits, Financial Statement Schedules	~~130~~125
Item 16.	Form 10-K Summary	~~132~~127
	Schedule I — Condensed Financial Information of Parent and Notes	~~135~~130

GLOSSARY OF TERMS

The following terms and acronyms used in this Form 10-K are defined below:

Term or Acronym			Definition
50-year contract			ASUS’s initial 50-year, firm-fixed-price contracts
AFUDC			Allowance for Funds Used During Construction
Arrearage Program			California Water and Wastewater Arrearage Payment Program
ASC			Accounting Standards Codification
ASUS			American States Utility Services, Inc.
ATM			At-The-Market
AWR			American States Water Company
Board			Registrant’s Board of Directors
BRRAM			Base Revenue Requirement Adjustment Mechanism
BRRBA			Base Revenue Requirement Balancing Account
BSUS			Bay State Utility Services LLC
BVES			Bear Valley Electric Service, Inc.
Cal Advocates			Public Advocates Office of the California Public Utilities Commission
CCPA			California Consumer Privacy Act
CEMA			Catastrophic Emergency Memorandum Account
COC			Cost of Capital
CPUC			California Public Utilities Commission
DCAA			Defense Contract Auditing Agency
DCMA			Defense Contract Management Agency
DDW			Division of Drinking Water
DRP			Common Share Purchase and Dividend Reinvestment Plan
EBITDA			Earnings Before Income Taxes, Depreciation and Amortization
ECUS			Emerald Coast Utility Services, Inc.
EPA			Economic Price Adjustment
EPS			Earnings Per Share
ERISA			Employee Retirement Income Security Act of 1974, as amended
Exchange Act			Securities Exchange Act of 1934, as amended
Extended Arrearage Program			New Extended Water and Wastewater Arrearage Program
FBWS			Fort Bliss Water Services Company
FRUS			Fort Riley Utility Services, Inc.
FTB			California Franchise Tax Board
GAAP			Generally Accepted Accounting Principles in the United States of America
GHG			Greenhouse Gas
gpcd			Gallons Per Capita Per Day
GSWC			Golden State Water Company
ICBA			Incremental Cost Balancing Account
JBCC			Joint Base Cape Cod
kv			Kilovolt
M-WRAM			Monterey-style Water Revenue Adjustment Mechanism
MAF			Million Acre-Feet
MCBA			Modified Cost Balancing Account
MCL			Maximum Contamination Level
Moody’s			Moody’s Investors Service
MWD			Metropolitan Water District of Southern California
MWh			Megawatt-Hour
NYSE			New York Stock Exchange
ODUS			Old Dominion Utility Services, Inc.

ODUS Old Dominion Utility Services, Inc. OEIS Office of Energy Infrastructure Safety ONUS Old North Utility Services, Inc. PCAOB Public Company Accounting Oversight Board PFAS Perfluoroalkyl Substances PFBS Perfluorobutane Sulfonic Acid PFHxS Perfluorohexane Sulfonic Acid PFOA Perfluorooctanoic Acid PFOS Perfluorooctane Sulfonic Acid ppb Parts Per Billion ppt Parts Per Trillion PRUS Patuxent River Utility Services LLC PSUS Palmetto State Utility Services, Inc. REA Request for Equitable Adjustment REC Renewable Energy Credit Registrant American States Water Company and Golden State Water Company ROU Right-of-Use RPS Renewables Portfolio Standard RSU Restricted Stock Unit S&P Standard and Poor's Global Ratings SB Senate Bill SEC Securities and Exchange Commission SERP Supplemental Executive Retirement Plan SOFR Secured Overnight Financing Rate SWP State Water Project SWRCB State Water Resources Control Board TSR Total Shareholder Return TUS Terrapin Utility Services, Inc. U.S. United States WCCM Water Cost of Capital Mechanism WMP Wildfire Mitigation Plan WRAM Water Revenue Adjustment Mechanism

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K and the information incorporated by reference into this Form 10-K contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect the current views of our senior management with respect to future events and our financial performance. These statements include forward-looking statements with respect to our business and industry in general. Statements that include the words “expect,” “intend,” “believe,” “estimate,” “may,” “can,” “will,” “likely,” “should,” “could,” “anticipate,” “plan” and similar statements of a future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the following:

•the impact of laws, regulations and policies of regulatory agencies or the U.S. government ~~applicable to water, wastewater and electric utility operations~~;

•the ability of GSWC and BVES to recover their respective costs through regulated rates, including increased costs ~~associated~~related ~~with~~to ~~addressing~~aging infrastructure, climate change risks, ~~such as drought and wildfires in California, costs incurred in connection with complying with~~ water quality ~~regulations~~compliance, ~~and~~renewable ~~increased~~energy ~~costs of operation~~ and ~~maintenance~~greenhouse ~~due~~gas toregulations, inflation, tariffs, supply chain disruptions and ~~increases in~~ interest ~~rates~~rate increases, while facing ~~an increase in~~ customer ~~rate~~affordability ~~increase opposition and possible reluctance from the CPUC to pass through all such costs to the customers~~concerns;

•~~customer~~our ~~dissatisfaction~~contracts ~~due~~for toproviding ~~rising~~services ~~rates~~on ~~needed~~military tobases ~~recover~~are ~~the~~provided ~~costs~~under oflong-term, ~~replacing~~fixed-price ~~aging~~contracts ~~infrastructure,~~subject ~~address~~to ~~climate~~annual ~~change~~economic ~~risks,~~price ~~comply~~adjustments ~~with~~and ~~water~~may ~~quality,~~be ~~renewable~~suspended ~~energy~~or ~~and~~terminated ~~greenhouse~~by ~~gas~~the ~~regulation~~U.S. government at any time;

•~~all~~risks ofassociated with our ~~contracts~~military ~~for~~base ~~providing~~contracts ~~services~~including onpotential ~~military~~disputes ~~bases~~with ~~are provided to~~ the U.S. government ~~under~~over ~~long-term~~contract performance, ~~fixed-price~~increases ~~contracts~~in ~~subject~~costs related to ~~annual~~the ~~economic~~expansion ~~price~~of ~~adjustments~~our military base contract activities, and the performance of subcontractors supporting these operations;

•all contracts for providing services on military bases may be terminated or suspended at any time by the government;

•ASUS is subject to potential government audits or investigations of its business practices and compliance with government procurement statutes and regulations that could result in fines and penalties;

•GSWC and BVES are subject to potential audit and investigations by the CPUC for failure to comply with regulations applicable to public utilities, including failure to comply with state and federal water quality requirements, wildfire mitigation plans, renewable energy legislation, greenhouse gas regulations and other climate related regulations that could result in fines and penalties;

•wecompetition ~~compete~~ with other companies in bidding on providing utility services on military bases which involves estimating costs and potential profits that may not be realized;

•the impact of water quality and wastewater quality regulations, onincluding ~~military~~the ~~bases~~impact of groundwater contamination and rising costs associated with treatment and mitigation of groundwater due to contamination and compliance with regulation;

•asset or business acquisitions may not yield the anticipated benefits;

•the impact of climate change and extreme weather events, including droughts, storms, high wind events, wildfires, flash flooding and other natural disasters, and the effects they could have on our water and electric operations and their ability to continue providing safe and uninterrupted services during these extreme events;

•our assets at our regulated utilities are subject to condemnation by municipalities and other governmental subdivisions;

•increases in the costs of obtaining and complying with the terms of franchise agreements;

•~~damage~~the tocosts ~~our~~and ~~reputation~~impacts orof adverse publicity, legal and administrative proceedings, settlements, investigations or claims, any of which may lead to increased regulatory oversight, sanctions or ~~sanctions~~reputational harm;

•costs and effects of legal and administrative proceedings, settlements, investigations and claims;

•our ability to control operation and maintenance costs within the amounts that have been approved in rates or estimated in our military base contracts;

•the outbreak of pandemics, ~~such~~and asother ~~COVID-19~~events, ~~and~~such ~~other~~as ~~events~~terrorist activities, that may cause ~~region wide~~regionwide, statewide, nationwide or even global disruption, which could impact our businesses, operations, cash flows or financial results;

•the inherent risk of ~~damage to private~~ property damage and injury to employees ~~and~~or the ~~general~~ public ~~involved~~arising infrom ~~the~~electricity generation, transmission and distribution ~~of electricity~~, the handling of hazardous materials and equipment, and ~~being in close~~ proximity to public utility construction and maintenance operations, for which liability may arise regardless of any finding of negligence or fault;

•~~the~~risks ~~impact~~ of ~~groundwater~~losses ~~contamination~~not ~~and~~covered ~~the~~by ~~increasing~~insurance ~~costs~~or ~~associated~~recoverable ~~with~~in ~~treatment~~rates, including the risk of ~~groundwater~~inadequate insurance coverage to cover significant losses due to ~~contamination~~a ~~and~~wildfire ~~increasing~~as ~~water~~insurance ~~quality~~coverage ~~regulations~~becomes ~~and~~more ~~mitigation~~expensive ofor ~~contaminants;~~unavailable on reasonable terms;

•the adequacy and cost of water supplies due to fluctuations of weather, climate change, and other uncontrollable factors;

•~~risks~~the ofimpact ~~incurring~~that ~~losses~~water ~~not~~conservation ~~covered~~efforts bymay ~~insurance~~have oron ~~recoverable~~GSWC’s inoperations ~~rates~~and costs incurred;

•risks ofrelated ~~inadequate~~to ~~insurance~~inaccurate ~~coverages~~financing toor ~~cover~~accounting ~~significant~~estimates ~~losses~~and ~~due~~changes toin aaccounting, ~~wildfire~~public asutility, ~~insurance~~environmental ~~coverages~~and ~~become~~tax ~~more~~laws ~~expensive~~and orregulations ~~unavailable~~affecting onour ~~reasonable terms~~business;

•the adequacy of water supplies due to fluctuations of weather, climate change, and other uncontrollable factors;

•the impact that water conservation efforts may have on GSWC's operations and costs incurred;

•changes in electricity and natural gas prices in California;

•failure to make accurate estimates about financing and accounting matters;

•changes in accounting, public utility, environmental and tax laws and regulations affecting our businesses;

•changes in fair value of investments and other assets;

•the performance of subcontractors engaged to assist us in the performance of contracted services on military bases;

•incomplete or delayed reimbursement from the U.S. government and delays in obtaining decisions from the CPUC on regulated public utility rates that can adversely impact our financial condition and liquidity;

•physical security of our critical assets, personnel and data critical to our business, employees, customers and vendors, and the financial losses or other liabilities associated with failing to maintain safe work sites, equipment, or facilities;

•~~cybersecurity~~our ~~incidents~~ability orto ~~information~~successfully ~~and~~maintain ~~operational technology outages, including cybersecurity incidents~~ and ~~outages caused by third party solutions that support operational~~ /or ~~business~~upgrade ~~processes,~~our ~~could~~information ~~disrupt operations and critical~~ technology systems, ~~resulting~~as inwe anare ~~inability~~increasingly todependent ~~deliver~~on ~~services~~the tocontinuous ~~customers, loss of financial~~ and ~~other~~reliable ~~information~~operation ~~critical to operations or the breach~~ of ~~confidential~~these ~~information of our customers, employees and vendors~~systems;

•cybersecurity incidents or information and operational technology outages, including those caused by third-party systems supporting our operations, could disrupt operations and critical technology systems, impair our ability to deliver services, and/or result in the loss or breach of critical and confidential information;

•our ability to attract, retain, train, motivate, develop, and transition key employees;

•~~the~~ failure of our employees to maintain required certifications and licenses or to complete required compliance training;

•changes in interest rates and our ability to borrow funds and access bank and capital markets on reasonable terms, including our ability to finance significant capital expenditures required by our operations, which are increasing;

•the impact of inflation, tariffs imposed and supply chain disruptions on our operational costs and costs of capital that may not be recovered in rates for our regulated utilities and through economic price adjustments for our military bases;

•delays in receiving payment or delays in price adjustments due to canceled or delayed appropriations specific to our projects, reductions in government spending for the military generally or military-base operations specifically or other delays in Congress approving appropriations;

•appropriations and the timing of payment may be influenced by, among other things, the state of the economy, competing political priorities, budget constraints, the timing and amount of tax receipts, government shutdowns and the overall level of government expenditures;

•results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions, delays in receiving general rate case decisions from the CPUC, and general market and economic conditions;

•actions by credit rating agencies to downgrade AWR or GSWC’s credit ratings or to place those ratings on negative outlook;

•our ability to finance the significant capital expenditures required by our operations, which are increasing;

•volatility in the price of our Common Shares;

•declines in the market prices of equity and fixed-income securities and resulting cash funding requirements for defined benefit pension plans and other post-retirement benefit plans;

•~~our~~ reliance on cash flow from our subsidiaries to meet ~~our~~ financial obligations and to pay dividends on our Common Shares;

•the geographic concentration of our operations in California and changes in electricity and natural gas prices in the state; and

•other risks and uncertainties described under the heading “Item 1A. Risk Factors” in this Form 10-K.

Although we believe that the expectations reflected in the forward-looking statements are reasonable based on our current knowledge of our business and operations, we cannot guarantee future results, levels of activity, performance or achievements. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statements you read in this Form 10-K and the information incorporated herein by reference reflect our views as of their respective dates and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements and you should carefully consider all of the factors identified in this Form 10-K and the information incorporated herein by reference that could cause actual results to differ. Forward-looking statements speak only as of the date they are made and except as required by law, AWR expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Table of Contents

PART I

Item 1. Business

This annual report on Form 10-K is a combined report being filed by two separate Registrants, American States Water Company (“AWR”) and Golden State Water Company (“GSWC”). References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. GSWC makes no representations as to the information contained in this report relating to AWR and its subsidiaries, other than GSWC.

AWR makes its ~~periodic~~annual reports, on Form 10-QK, ~~and~~quarterly reports on Form 10-K,Q and current reports, on Form 8-K, and amendments to those reports, available free of charge through its website, www.aswater.com, as soon as those reports are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). Such reports are also available on the SEC’s website at www.sec.gov. AWR also makes available free of charge its code of ~~business~~ conduct ~~and ethics~~, its ~~corporate~~guidelines on significant governance ~~guidelines~~issues, its ~~policy for the~~ recoupment ~~of performance-based compensation~~policy, its insider trading policy and the charters of its Nominating and Governance Committee, Compensation Committee and Audit and Finance Committee through its website or by calling (877) 463-6297.

Overview

AWR is the parent company of GSWC, Bear Valley Electric Service, Inc. (“BVES”) and American States Utility Services, Inc. (“ASUS”) (and its wholly-owned subsidiaries: Fort Bliss Water Services Company (“FBWS”), Old Dominion Utility Services, Inc. (“ODUS”), Terrapin Utility Services, Inc. (“TUS”), Palmetto State Utility Services, Inc. (“PSUS”), Old North Utility Services, Inc. (“ONUS”), Emerald Coast Utility Services, Inc. (“ECUS”), Fort Riley Utility Services, Inc. (“FRUS”), Bay State Utility Services LLC (“BSUS”), and Patuxent River Utility Services LLC (“PRUS”)).

AWR has three reportable segments: water, electric and contracted services. Within the segments, AWR has three principal business units, water and electric service utility operations conducted through its regulated utilities GSWC and BVES, respectively, and contracted services conducted through ASUS and its subsidiaries.

GSWC is a public water and wastewater utility engaged in the purchase, production, distribution and sale of water in 1011 counties in the state of California and provides wastewater collection and treatment services in some areas. GSWC is regulated by the California Public Utilities Commission (“CPUC”). BVES is a public electric utility that distributes electricity in several San Bernardino County mountain communities in California and is also regulated by the CPUC. Additional information regarding public utility regulation is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “Regulatory Matters.”

AWR’s regulated utilities served ~~264~~265,~~557~~142 water customers and 24,~~857~~915 electric customers at December 31, ~~2024~~2025, or a total of ~~289~~290,~~414~~057 customers, compared with 264,~~093~~557 water customers and 24,~~777~~857 electric customers at December 31, ~~2023~~2024, or a total of ~~288~~289,~~870~~414 customers. Both GSWC’s and BVES’s operations exhibit seasonal trends. Although both have diversified customer bases, residential and commercial customers account for the majority of water and electric sales and revenues. Revenues derived from commercial and residential customers accounted for approximately 90% of total water and electric revenues for the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023.

ASUS, through its wholly owned subsidiaries, has contracted with the U.S. government to provide water and/or wastewater services at various military installations. ASUS 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 an initial 50-year, firm-fixed-price contract and additional firm-fixed-price contracts, task order agreements and contracts with third party prime contractors. ASUS has one subsidiary that has entered into a task order agreement with the U.S. government that has a term of 15 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 term for convenience of the U.S. government or as a result of default or nonperformance by the ASUS subsidiary performing the contract. The price for each of these contracts is subject to annual economic price adjustments or task order adjustments. The contracts are also subject to 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. AWR generally guarantees performance of all of the contracts of ASUS’s subsidiaries.

Table of Contents

Pursuant to the terms of the 50-year contracts with the U.S. government, the subsidiaries of ASUS operate the following water and wastewater systems:

Subsidiary

Military Base (1)

Type of System

Location

FBWS

Fort Bliss

Water and Wastewater

Texas and New Mexico

ODUS

Fort Gregg-Adams

Wastewater

Virginia

ODUS

Joint-Base Langley Eustis and Joint Expeditionary Base Little Creek-Fort Story

Water and Wastewater

Virginia

TUS

Joint Base Andrews

Water and Wastewater

Maryland

PSUS

Fort Jackson

Water and Wastewater

South Carolina

ONUS

Fort Liberty, Pope Army Airfield and Camp Mackall

Water and Wastewater

North Carolina

ECUS

Eglin Air Force Base

Water and Wastewater

Florida

FRUS

Fort Riley

Water and Wastewater Collection and Treatment

Kansas

PRUS

Naval Air Station Patuxent River

Water and Wastewater

Maryland

BSUS

Joint Base Cape Cod*

Water and Wastewater Collection and Treatment

Massachusetts

Subsidiary

Military Base

Type of System

Location

FBWS

Fort Bliss

Water and Wastewater

Texas and New Mexico

ODUS

Fort Lee

Wastewater

Virginia

ODUS

Joint-Base Langley Eustis and Joint Expeditionary Base Little Creek-Fort Story

Water and Wastewater

Virginia

TUS

Joint Base Andrews

Water and Wastewater

Maryland

PSUS

Fort Jackson

Water and Wastewater

South Carolina

ONUS

Fort Bragg, Pope Army Airfield and Camp Mackall

Water and Wastewater

North Carolina

ECUS

Eglin Air Force Base

Water and Wastewater

Florida

FRUS

Fort Riley

Water and Wastewater Collection and Treatment

Kansas

PRUS

Naval Air Station Patuxent River

Water and Wastewater

Maryland

BSUS

Joint Base Cape Cod*

Water and Wastewater Collection and Treatment

Massachusetts

(1) Names of military bases are as of December 31, 2024.

*BSUS is the only subsidiary that has entered into a task order agreement serving Joint Base Cape Cod that has a term of 15 years.

Certain financial information for each of AWR’s business segments - water distribution, electric distribution, and contracted services - is set forth in Note 17 to the Notes to Consolidated Financial Statements of American States Water Company and its subsidiaries. While AWR’s water and electric utility segments are not dependent upon a single or only a few customers, the U.S. government is the primary customer for ASUS’s contracted services. ASUS, from time to time, performs work at military bases for other prime contractors of the U.S. government.

Seasonality

The demand for water and electricity varies by season. For instance, there can be a higher level of water consumption during the third quarter of each year when weather in California has been hot and dry. During unusually wet weather, our customers generally use less water. The CPUC had adopted regulatory mechanisms that GSWC had implemented since 2008, and which helped mitigate fluctuations in revenues due to changes in water consumption by our customers in California. The Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”) ~~remained~~were in effect through December 31, 2024. As a result of receiving a final decision in GSWC’s ~~recent~~latest general rate case application that ~~will~~ set new rates for the years 2025 - 2027, GSWC was denied both regulatory mechanisms and instead received authorization to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”) and an incremental cost balancing account for supply costs effective January 1, 2025. The final CPUC decision ~~also~~did ~~approved~~approve GSWC’s request for the continuation of a sales reconciliation mechanism, which would allow GSWC to adjust its sales forecast throughout the general rate case cycle to address significant fluctuations in consumption. However, without the continuation of a full revenue decoupling mechanism and a full cost balancing account for water supply, Registrant may be subject to future volatility in revenues and earnings as a result of fluctuations in water consumption by our customers and changes in water supply cost mix. Additional information related to the CPUC’s adopted final decision in connection with GSWC’s general rate case proceeding is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under the section titled “Overview.”

The demand for electricity in our electric customer service area is greatly affected by winter snow levels. An increase in winter snow levels reduces the use of snow-making machines at ski resorts in the Big Bear area and, as a result, reduces our electric revenues. Likewise, unseasonably warm weather during a skiing season may result in temperatures too high for snow making conditions, which also reduces our electric revenues. The CPUC has adopted regulatory mechanisms for our electric business, which ~~helps~~help mitigate fluctuations in the revenues of our electric business due to changes in the amount of electricity used by BVES’s customers.

Environmental Regulations

AWR’s subsidiaries are subject to extensive environmental regulations. GSWC is required to comply with safe drinking water requirements, including testing to determine constituents in its water supply and customer notification requirements if certain contaminants exceed maximum levels or advisory levels, and requirements to address issues relating to known contamination. The subsidiaries of ASUS are subject to similar requirements in connection with their water and wastewater operations on military bases. GSWC is also responsible for clean-up and remediation at a plant site that contained

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~~wastewater operations on military bases. GSWC is also responsible for clean-up and remediation at a plant site that contained~~ an underground storage tank. AsAlso, as mandated by legislation enacted in California, BVES is required to submit wildfire mitigation plans to the CPUC and the Office of Energy Infrastructure Safety (“OEIS”) for approvals. California requires electric utilities to prepare plans on constructing, maintaining, and operating their electrical lines and equipment to minimize the risk of catastrophic wildfire.

ASUS’s subsidiaries are responsible for ensuring compliance with the reduction and/or removal of all constituents required under its wastewater treatment plant operating permits. ASUS works with state regulators and industry associations for the purpose of staying current with emergent issues and proactively addressing any change in wastewater treatment regulation.

The regulated utilities spent approximately $2719.43 million in ~~2024~~2025 and expect to spend approximately $1520.96 million in ~~2025~~2026 for capital expenditures on environmental control facilities. During ~~2024~~2025, ASUS performed $1213.15 million of construction activities (for the benefit of the U.S. government) related to environmental control facilities. ASUS expects to perform $918.08 million construction activities related to environmental control facilities in ~~2025~~2026. In addition, various other capital expenditures at the regulated utilities and construction projects at ASUS are incurred for purposes other than environmental control facilities but may also have some environmental benefits. An environmental control facility is any facility that is reasonably expected to abate, reduce or aid in the prevention, measurement, control of monitoring of noise, air or water pollutants, solid waste, thermal pollution, radiation or other pollutants.

Environmental matters and compliance with such laws and regulations are discussed further in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “Environmental Matters.”

Climate Change Planning, Risks and Opportunities

Climate change is one area that we focus on as we develop and execute our business strategy and financial planning, both in the short- and long-term and is subject to the oversight of the Board of Directors and senior management. First and foremost, designing and implementing efficient and resilient infrastructure and operational processes not only addresses climate change, but also reduces costs. Our capital investment programs are critical to ensure we can continue delivering reliable, high-quality water, wastewater and electric services without interruption. As a utility company, our operating strategy is dependent on having a reliable infrastructure in place.

The risks posed by climate variability increase the need for us to plan for and address supply resiliency. We address these risks by planning, assessing, mitigating, and investing in our infrastructure for the long-term benefit of our communities. As a provider of an essential product and service, our primary goal is to ensure service is uninterrupted.

GSWC considers the potential impacts of climate change in its water supply portfolio planning and its overall infrastructure replacement plans. We evaluate how water supplies, water quality and water demands may change, and consider mitigation strategies to assist us in being able to deliver water to our customers.

We seek to minimize our greenhouse gas (“GHG”) emissions to assist in reducing the effects of climate change. We have studied our GHG emissions levels, set a 2020 baseline, and developed a GHG emissions reduction target of 60% by 2035 from the 2020 baseline. To accomplish this, GSWC and BVES have developed a phased approach, which includes short-, medium- and long-term actions. Our priorities include reductions in energy use and increasing purchases of green energy for our water operations, increasing purchases of green energy for distribution to our electric customers, and reviewing our vehicle fleet needs and electrification. Achievement of this reduction target is contingent on certain external factors, which include the ongoing development of technology.

Water Utility

There are risks to maintaining adequate water quality and/or supply, either from climate variability or other events. They include droughts, changes in weather patterns, natural disasters, wildfires, decisions or actions restricting the use of water from our sources, and/or pumping of groundwater, and contamination or acts of terrorism or vandalism. We consider these potential events in our strategic planning process as we aim to avoid service interruptions and compromised water quality.

Our goal is to maintain adequate and high-quality water supplies. We strive to reach this goal in a number of ways, including monitoring water levels, short- and long-term water supply planning, having a diverse water supply portfolio, developing contingency plans, water efficiency and conservation efforts, and maintaining a strong infrastructure. Additional information on GSWC’s water supplies is discussed further in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under the section titled “Water Supplies.”

Electric Utility

Climate change has also impacted electric utilities in California due to an increase in wildfires. In addition, power supplies may also become more constrained and more expensive due to regulation of power plants using fossil fuels. BVES’s compliance with its wildfire mitigation plans have resulted in an increase in capital expenditures for wildfire mitigation projects. In January 2025, the CPUC adopted a final decision in connection with BVES’s general rate case proceeding that set

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~~projects. On January 16, 2025, the CPUC adopted a final decision in connection with BVES’s general rate case proceeding that sets~~ new electric rates for the years 2023-2026 and among other things, approves for recovery BVES's requested capital expenditures and other incremental operating costs already incurred in connection with BVES’s wildfire mitigation plans, which were not previously included in customer rates. The decision allows BVES to continue investing in the utility infrastructure, all of which is dedicated to improving the system safety, and is consistent with BVES’s wildfire mitigation plans.

California has established a cap-and-trade program applicable to greenhouse gas emissions. While BVES’s power-plant emissions are below the reporting threshold, as a “Covered Entity,” BVES has an obligation to file a report with the California Air Resources Board in June of each year under the Greenhouse Gas Mandatory Reporting Regulation. The report will become available publicly in the third quarter of ~~2025~~2026.

The State of California and the CPUC have established renewable energy procurement targets. BVES has entered into a CPUC-approved eleven-year contract for renewable energy credits. With this contract, BVES anticipates meeting most of California’s renewable energy statutes addressing this compliance requirement through 2036. BVES is actively seeking both short- and long-term renewable energy contracts and is developing a utility-owned solar facility to fulfill its resource portfolio requirements for the compliance period from 2025 to 2027.

In ~~2024~~2025, BVES’s renewable power represented 4447% of total retail sales. Renewable energy procurement requirements continue to escalate, reaching 50% by 2026 and 100% carbon free by 2045. BVES has entered into a contract to construct a solar energy project in Big Bear City, subject to obtaining necessary permits. On December 18, 2025, the CPUC ~~approval~~adopted a final decision in connection with BVES’s application for the Solar and ~~necessary~~Battery ~~permits.~~projects Ifthat ~~approved~~will allow BVES to construct solar generation and ~~constructed,~~energy ~~the~~storage ~~project~~facilities that will provide a source of clean, local energy for BVES’s customers.

BVES also offers a distributed generation program, which benefits customers who install a solar or wind-generating facility that produces renewable energy. Those customers can receive a bill credit if their monthly renewable energy production exceeds their on-site use. BVES also has a number of customers on its Net Energy Metering Program (NEM), which was the previous renewable energy program. NEM customers can receive a bill credit if their annual renewable energy production exceeds their on-site use. Approximately 57% of the energy consumed by BVES customers is now generated by customer-owned renewable sources (solar).

BVES is required to comply with the CPUC’s greenhouse gas emission performance standards. Under these standards, BVES must file an annual attestation with the CPUC stating that BVES has no new ownership investment in generation facilities exceeding the emission performance standards and no long-term commitments for generation exceeding the standards. In February ~~2025~~2026, BVES filed an attestation that BVES complied with the standards for ~~2024~~2025. At this time, management cannot estimate the impact, if any, that these regulations may have on future costs over BVES’s power plant operations or the cost of BVES’s purchased power from third party providers.

Competition

The businesses of GSWC and BVES are substantially free from direct and indirect competition with other public utilities, municipalities and other public agencies within their existing service territories. However, GSWC and BVES may be subject to eminent domain proceedings in which governmental agencies, under state law, may acquire GSWC’s water systems or BVES’s electric system if doing so is necessary and in the public’s interest. GSWC competes with governmental agencies and other investor-owned utilities in connection with offering service to new real estate developments on the basis of financial terms, availability of water and ability to commence providing service on a timely basis. ASUS actively competes for business with other investor-owned utilities, other third-party providers of water and/or wastewater services, and governmental entities primarily on the basis of quality of service and price.

AWR Workforce

AWR and its subsidiaries had a total of ~~846~~900 employees as of December 31, ~~2024~~2025. GSWC had ~~517~~537 employees as of December 31, ~~2024~~2025. BVES had 4648 employees, of which 1718 employees are covered by a collective bargaining agreement with the International Brotherhood of Electrical Workers, which expires in December ~~2025~~2026. At times, GSWC and BVES use temporary and contract workers for a finite period of time and in a limited capacity to continue a project or workflow until they can hire a regular employee. It is also common for those temporary workers to be hired as a regular, full-time employee.

ASUS and its subsidiaries had a total of ~~283~~315 employees as of December 31, ~~2024~~2025. FBWS, a subsidiary of ASUS, has 1315 employees that are covered by a collective bargaining agreement with the International Union of Operating Engineers. The agreement ~~expired~~expires in September 2024 and was extended on a mutual basis by both the Company and the union; the two parties are currently working to establish an updated agreement with an expected resolution in the first quarter of 20252028.

Our businesses require a combination of complex infrastructure, regulatory expertise and customer service. Ongoing development of our talent across the organization to meet critical business needs is a continual focus, and includes (i) building a culture such that high-potential talent is identified and further developed, (ii) creating career paths that not only move up a specialized ladder, but across the organization, and (iii) offering opportunities for employees to accept new challenges through stretch assignments.

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Attracting ~~Diverse~~ Qualified Candidates

We ~~understand that strength comes from having a diverse employee population. We~~ strive to hire from our local communities and to have a workforce that is representative, at all job levels, of the communities we serve and from which we recruit. This begins with the recruitment process. We strive to have all aspects of employment, including the decision to hire, promote, discipline, or discharge, be based on merit, competence, performance, and business needs. It is our policy not to discriminate on the basis of race, color, religion, marital status, age, national origin, ancestry, physical or mental disability, medical condition, pregnancy, genetic information, gender, sexual orientation, gender identity or expression, veteran status, or any other status protected under federal, state, or local laws.

Compensation and Benefits

We believe that we pay employees a competitive and fair wage, as benchmarked with other leading companies and the market. Consistent with our principle of valuing personal mastery, we reward employees for improving their skills and capabilities. Our benefits include a defined benefit pension plan for employees hired prior to January 1, 2011, a defined contribution plan for hires or rehires after December 31, 2010, a 401(k) plan, healthcare and insurance benefits, health savings and flexible spending accounts.

Safety and Training

Strong occupational health and safety practices reduce injuries, keep our workforce healthy, and reduce operating costs. A safe workforce translates into better performance company-wide. We work to create a safety-focused culture in which each individual feels personally responsible for their own safety, the safety of their co-workers, as well as the safety of the communities they serve. Safety performance is included as a metric in the officer and manager compensation programs. Employees attend training in various mandated safety programs that are applicable to their area of operations, including training to meet regulatory safety training requirements and requirements of the Department of Transportation. We also provide training to assist in compliance with local, state, and federal environmental laws.

To reinforce our safety efforts and protocols, company-wide safety inspections at GSWC and BVES are conducted with supervisors. The inspection reports are forwarded to management for review, allocation of resources are made (if needed), and corrective actions are taken. ASUS has a dedicated Safety Coordinator to support each military base installation served. The Safety Coordinator is responsible for regulatory compliance, as well as beneficial health and safety monitoring functions.

Learning and Development

Compliance training is required each year, for each employee. Other types of training are offered on an optional basis. Examples of optional programs include ongoing water operations competencies and education, supervisor development, knowledge capture and management, feedback and measurements to show the value of learning solutions, and administrative oversight for various business competencies relative to mandated training and compliance requirements. We pay for approved external business-related seminars and workshops. Certain positions require employees to maintain all of their job-specific certifications, licenses and continuing education credits.

On a regular and ongoing basis, we require all employees to certify that they have reviewed and understand our Code of Conduct as well as our Employee Handbook. We provide harassment and prevention awareness training for all employees.

Succession Planning

On an annual basis, our senior management team completes a roadmap for improving human capital management by developing succession plans with the goal of achieving the most efficient alignment of resources and talent to meet business needs. This includes identifying key succession positions and potential successors for top-level positions, such as Vice Presidents, for the next ten years.

Recruiting, developing and retaining the right talent is key to our long-term success. With approximately 38% of our employees eligible for retirement in the next five years, we are focused on transferring institutional knowledge, continuing succession planning and pursuing recruitment and development strategies to attract qualified talent.

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Item 1A. Risk Factors

You should carefully read the risks described below and other information in this Form 10-K in order to understand certain risks of our business.

Overview of Risk Factors

We have three business segments, water utility, electric utility and contracted services, each of which are subject to different risks as further discussed below. We are also subject to risks frequently encountered by businesses of our size.

Regulated Water and Electric Utility Operations

GSWC’s and BVES’s revenues depend substantially on the rates and charges we are permitted to recover from our customers and the timing of that recovery as authorized by the CPUC. Decisions of the CPUC could result in impairment charges and customer refunds, and delays in recovering costs in rates. Some of the factors impacting our ability to obtain rate recovery on a timely basis include opposition to rate increases arising out of increased costs for replacing aging infrastructure and increased costs associated with addressing climate change and weather event risks, such as drought, storms and wildfires in California, costs incurred in connection with complying with water quality regulations, costs incurred in connection with obtaining and complying with franchise agreements with local governmental agencies and costs of obtaining permits from local, state and federal governmental agencies. There may also be increased customer opposition to rate increases due to customer dissatisfaction with conservation rate structures and public safety power shutdowns.

Our water and electric utility services are provided in California. As a result, our financial results are largely subject to political, water supply, labor, utility cost and regulatory risks, economic conditions, natural disasters (which may increase as a result of climate change), and other risks affecting California businesses. Our assets are also subject to condemnation in California.

Contract Services Operations

All of our utility privatization contract services are provided to the U.S. government pursuant to the terms of firm-fixed-price contracts subject to annual economic price adjustments. ASUS may also, from time to time, perform construction services on military bases as a subcontractor or pursuant to task order agreements. These contracts may be terminated or services suspended at any time for convenience of the U.S. government. We are subject to penalties for failure to conform or comply with U.S. government regulations and the terms of our contracts, and may be suspended or debarred for such failure to comply. The fees that we may charge are adjusted annually and in response to our requests for equitable adjustments. We have experienced delays in obtaining price and equitable adjustments, as well as delays in being paid by the U.S. government.

We are also responsible for complying with water quality and wastewater quality regulations on military bases, which are expected to increase costs as a result of increased water quality regulations.

We compete with other companies in bidding on providing utility services on military bases. We submit bids on new U.S. government contracts for military bases based on estimates of cost and potential profit. Our estimates and judgment are important, for in the event we overpay to obtain a contract, we could incur losses on it.

Other Business Risks

We may be subject to financial losses, penalties and other liabilities if we fail to operate and maintain safe work sites, equipment and facilities, ~~including~~or experience losses, damages, penalties and other liabilities arising from natural disasters such as wildfires, other natural disasters and cybersecurity ~~and~~incidents or terrorist activities. We may not be able to recover all these losses from insurance or from ratepayers or may experience delays in obtaining recovery for these losses.

We are also subject to other business risks typical of our business, including:

•Cybersecurity incidents or information and operational technology outages, including incidents and outages caused by third party solutions that support operational and business processes, could disrupt and adversely impact our operations and critical technology systems, resulting in an increase of costs, liabilities to third parties and damage to our reputation;

•Physical security risks of our infrastructure, critical assets, and data critical to our business, employees, customers and vendors could also disrupt our operations and critical systems, resulting in reputational damage and adversely impact our financial performance;

•Failure to attract, train, develop and transition key employees with the necessary skills to replace employees who are retiring or otherwise terminate employment or to fill new positions needed to respond to the increase in public utility and environmental regulations and overall needs of our operations and continued capital investments;

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•Failure to make accurate estimates about financing and accounting matters, and in filing requests for rate increases with the CPUC or requests for price adjustments with the U.S. government or in bids on military base contracts or obtain new task orders from the U.S. government;

•Our ability to finance significant capital expenditures required by our businesses, which could be adversely impacted by general economic and market conditions, delays in receiving decisions from the CPUC on our general rate cases or delays in receiving payment from the U.S. government;

•Volatility in economic conditions such as changes to inflation, short-term interest rate volatility, tariffs, and other market conditions may adversely impact our financial performance;

•Changes in accounting, public utility, environmental and tax laws and regulations impacting our business;

•Our inability to comply with debt covenants in our debt agreements; and

•Final determination of our income tax liability by the federal and applicable state governments.

As a holding company, AWR is dependent upon dividends from its subsidiaries to pay dividends to its shareholders. The ability of its subsidiaries to pay dividends is dependent upon compliance with state laws governing the payment of dividends and the terms of the debt agreements with the applicable subsidiary.

Climate Change

Climate change has resulted in increased frequency and duration of droughts, volatility in rainfall, potential degradation of water quality, and changes in demand for services. More frequent and extended California drought conditions may cause increased stress on surface water supplies and groundwater basins, as well as allocations of water from the State Water Project and the Colorado River. Wholesale water suppliers may not have adequate supply during extended periods of drought, which may result in increases in prices for water delivered to us. In addition, GSWC could experience an increased use of reclaimed or recycled water by GSWC customers, in lieu of GSWC supplying potable water to these customers. Reclaimed water generally has lower tariff rates than potable water and may be provided by other companies or government entities in GSWC’s service territory. Prolonged droughts may also result in state-ordered mandatory or voluntary conservation efforts by customers, changes in customer conservation patterns and imposition of new regulations impacting such things as landscaping and irrigation patterns.

California has established long-term indoor and outdoor water use standards to address the impact of climate change on California water resources. These standards, which were adopted by the California State Water Resources Board and effective January 1, 2025, require all urban water retailers to meet certain water use standards on a system-by-system basis. The extended drought in the Colorado River watershed has resulted in a short-term agreement between Arizona, California and Nevada and the Bureau of Reclamation to reduce the amount of water taken from the Colorado River by 10% through the end of 2026. The impact to GSWC as a result of the short-term agreement is not known at this time.

Drought conditions have contributed to increases in wildfires, which has resulted in new California legislation requiring electric utilities to adopt and implement wildfire mitigation plans and water utilities to enhance plans to ensure water infrastructure remains functional during wildfire events. GSWC and BVES isare incurring increased capital expenditures and, when applicable, other operating costs related to the creation, implementation and tomaintenance ~~maintain~~of ongoing requirements of these plans. We anticipate that the costs of capital improvements necessary to sustain this program will continue to increase. BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. Shut-offs can reduce BVES’s liquidity and decrease customer satisfaction. Abnormal weather patterns created by climate change can also impact electricity demand at BVES. The demand for electricity at our electric segment is greatly affected by winter snow levels. An increase in winter snow levels reduces the use of snow-making machines at ski resorts in the Big Bear area and, as a result, also reduces BVES’s liquidity. Likewise, unseasonably warm weather during a skiing season may result in temperatures too high for snow making conditions, which also reduces our liquidity.

More extreme weather events which may result in significant rainfall, flash flooding, mudslides, high winds and wildfires could damage our infrastructure and our customers’ and/or suppliers’ property. The wildfires of recent ~~wildfires~~years that devastated communities in southern California may result in legislative and regulatory actions that may impose additional reporting requirements, and capital investment requirements for our regulated utilities and water system operation requirements for GSWC. For instance, recent California legislation has required electric utilities to adopt and implement wildfire mitigation plans, and certain local counties in California have required water utilities to enhance plans to ensure water infrastructure remains functional during wildfire events. As a result of such events, it may increase our cost of maintaining our infrastructure and adversely impact our ability to provide water or electric service to our customers. The cost of damage to our infrastructure may be somewhat mitigated if the CPUC permits us to establish a catastrophic emergency memorandum account that enables us to recover the costs incurred. Furthermore, potential future legislative efforts to ban gas powered power plants as a response to climate change may require usBVES to replace ~~our~~its ~~current~~ 8.4 MW natural gas-powered generator before its useful life is completed.

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Lastly, with extreme weather events and conditions comes volatility in water demand and usage of our customers. Without the continuation of a full revenue decoupling mechanism such as the WRAM and a full supply cost decoupling balancing account such as the MCBA as discussed further later, Registrant may be subject to future volatility in revenues and earnings as a result of fluctuations in water consumption by our customers and changes in water supply cost mix.

Risks Associated with Regulated Public Utility and Contracted 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

GSWC’s and BVES’s revenues depend substantially on the rates and fees they charge their customers and their ability to recover costs on a timely basis as authorized by the CPUC, including the ability to recover the costs of purchased water, groundwater assessments, electricity, natural gas, chemicals, water treatment, security at water facilities and preventative maintenance and emergency repairs. Any delays by the CPUC in granting rate relief to cover increased operating and capital costs at our public utilities or delays in obtaining approval of our requests at ASUS for economic price or equitable adjustments for contracted services from the U.S. government may adversely affect our year-over-year financial performance, liquidity and cash flows. We may file for interim rates in California in situations where there may be delays in granting final rate relief during a general rate case proceeding. If the CPUC approves lower rates than the interim rates we were permitted to adopt, the CPUC will require us to refund to customers the difference between the interim rates and the rates approved by the CPUC. Similarly, if the CPUC approves rates that are higher than the interim rates, the CPUC may authorize us to recover the difference between the interim rates and the final rates.

Regulatory decisions affecting GSWC and/or BVES may also impact prospective revenues and earnings, affect the timing of the recognition of revenues and expenses, may overturn past decisions used in determining our revenues and expenses, and could result in impairment charges and customer refunds. Negative decisions made by the CPUC may have an adverse effect on GSWC’s or BVES’s results of operations, financial position or cash flows and affect the ability of the regulated utilities to recover costs and an appropriate return on the capital investments being made.

OnIn August ~~27,~~ 2020, the CPUC issued a final decision in the first phase of the CPUC’s Order Instituting Rulemaking evaluating the low income ratepayer assistance and affordability objectives contained in the CPUC’s 2010 Water Action Plan, addressing the continued use of the WRAM and the MCBA by California water utilities. As a result of this decision, these mechanisms implemented by GSWC in 2008 would be discontinued for years after 2024. In response to the CPUC’s order, GSWC, three other investor-owned water utilities and the California Water Association each separately filed a petition in 2021 with the California Supreme Court (the “Court”) to review the CPUC’s decision-making processes that resulted in discontinuing the use of the WRAM and MCBA. On July 8, 2024, the Court issued a ruling that set aside the previously issued order by the CPUC and vacated the portions of the CPUC’s August 2020 decision related to the discontinued use of the WRAM and MCBA used by water utilities and its accompanying findings and conclusions. Furthermore, in September 2022, the governor of California signed Senate Bill (“SB”) 1469, which allowed Class A water utilities, including GSWC, to continue requesting the use of a revenue decoupling mechanism in their next general rate case.

Accordingly, GSWC requested the continued use of the WRAM and MCBA in its general rate case application filed in August 2023 that establishes new rates for the years 2025 – 2027. In January 2025, GSWC received a final decision that rejected GSWC’s request for continuation of the WRAM and MCBA and instead ordered GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”) and an incremental cost balancing account for supply costs. The final CPUC decision ~~also~~did ~~approved~~approve GSWC’s request for the continuation of a sales reconciliation mechanism, which would allow GSWC to adjust its sales forecast throughout the general rate case cycle to address significant fluctuations in consumption. However, without the continuation of a full revenue decoupling mechanism such as the WRAM and a full supply cost decoupling balancing account ~~for water supply~~ such as the MCBA, Registrant may be subject to future volatility in revenues and earnings as a result of fluctuations in water consumption by our customers and changes in water supply cost mix.

Our regulated utilities'’ ongoing financial results depend on their ability to recover costs from ~~its~~their customers, including costs such as water or electricity purchased for its customers, through rates charged and billed to its customers as approved by the CPUC. Both GSWC’s and BVES’s financial results depend on its ability to earn a reasonable return on capital, from its credit facilities, long-term debt and equity as well as the recovery of costs such as operations and maintenance expense that are incurred. Our ability to recover costs and earn a reasonable rate of return can be affected by time lags or delays in receiving approvals on general rate case decisions from the CPUC to authorize recovery of customers’ rates and differences between authorized rates and the actual costs incurred, due to increased levels of inflation, which each could adversely impact our financial condition and cash flows. In addition, our regulated utilities may be prevented from cost-recovery by the CPUC as a result of customer affordability concerns and desires to avoid rate increases.

Management continually evaluates the anticipated recovery of regulatory assets, settlement of liabilities and revenues subject to refund and provides for allowances and reserves as deemed necessary. In the event that our assessment of the probability of recovery or settlement through the ratemaking process is incorrect, we will adjust the associated regulatory asset or liability to reflect the change in our assessment or any regulatory disallowances. A change in our evaluation of the probability over the recovery of regulatory assets including a future disallowance of previously granted regulatory mechanisms, or a regulatory disallowance of all or a portion of our costs could have a material adverse effect on our financial results.

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We are also, in some cases, required to estimate future expenses and, in others, we are required to incur the expense before receiving approval to recover the costs. As a result, our revenues and earnings may fluctuate depending on the accuracy of our estimates, the timing of our investments or expenses or other factors. If expenses increase significantly over a short period, we may experience delays in recovery of these expenses and the inability to recover the carrying costs for the expenses, which increases risks of regulatory disallowances or write-offs.

Additional information related to the CPUC’s adopted final decision in connection with GSWC’s general rate case proceeding is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under the section titled “Overview.”

Delays in obtaining approval of general rate cases could adversely impact our liquidity

We have ~~been~~experienced ~~experiencing increasing~~ delays in obtaining CPUC approval of our general rate cases. As a result, we have previously needed, and may need in the future, to undertake capital improvements described in our rate case filings before we receive CPUC approval to recover these costs in rates. BVES is required to file wildfire mitigation plans with OEIS for regulatory approval by the OEIS and the CPUC and, once approved, for BVES to make the capital improvements described in the wildfire mitigation plan. However, the CPUC does not approve recovery of any of the costs of implementing approved wildfire mitigation plans until it approves the next general rate case filed by BVES after the approval of the wildfire mitigation plans. As a result, there may be a delay in recovering costs associated with capital improvements required to be made by wildfire mitigation plans, and the CPUC may not approve all costs incurred in connection with the implementation of these plans that are incurred prior to obtaining CPUC approval of these costs in a general rate case.

Changes in laws, regulations and policies of regulatory agencies can significantly affect our business

Regulatory agencies may also change their rules and policies, which may adversely affect our profitability and cash flows. We are subject to regulations under U.S. federal and state regulations and policies including from the CPUC, Federal Energy Regulatory Commission and other regulatory agencies. Regulations and laws affect almost all aspects of our businesses and changes to such regulations are continuous and ongoing. There can be no assurance that laws, regulations and policies of regulatory agencies will not be changed in ways that will ~~not~~ materially impact our results of operations, financial position or cash flows.

Changes in policies of the U.S. government may adversely affect one or more of ASUS’s subsidiaries. In certain circumstances, the U.S. government may be unwilling or unable to appropriate funds to pay costs mandated by changes in rules and policies of federal or state regulatory agencies. The U.S. government may disagree with the increases that we request and may delay approval of requests for equitable adjustment or economic price adjustments, which could adversely affect our anticipated rates of return at our contracted services business.

We may also be subject to fines or penalties if a regulatory agency or the U.S. government determine that we have failed to comply with laws, regulations or orders applicable to our businesses, unless we successfully appeal such an adverse determination. Regulatory agencies may disallow recovery of certain costs if they determine they may no longer be recovered in rates, or if audit findings determine that we have failed to comply with our policies and procedures for procurement or other practices. Additional information regarding water quality regulations is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “Environmental Matters.”

Additional information regarding water quality regulations is discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the section titled “Environmental Matters.”

Our assets at our regulated utilities are subject to condemnation

Municipalities and other governmental subdivisions may, in certain circumstances, seek to acquire certain of our assets through eminent domain proceedings. It is generally our practice to contest these proceedings, which may be costly and may temporarily divert the attention of management from the operation of our business. If a municipality or other governmental subdivision succeeds in acquiring our assets, there is a risk that we will not receive adequate compensation for the assets taken or be able to recover all charges associated with the condemnation of such assets. In addition, we would no longer be entitled to any portion of the revenues generated from the use of such assets.

Our costs of obtaining and complying with the terms of franchise agreements are increasing

Cities and counties in which GSWC and BVES operate have granted them franchises to construct, maintain and use pipes, wires and appurtenances in or along public streets and rights of way. The costs of obtaining, renewing and complying with the terms of these franchise agreements have been increasing as cities and counties attempt to regulate our operations within the boundaries of the city or unincorporated areas of the counties in which we operate. Our regulated utilities may also be required from time to time to relocate existing infrastructure in order to accommodate local infrastructure improvement projects. Cities and counties have also been imposing new fees on our operations, including pipeline abandonment fees and road-cut or other types of capital improvement fees. At the same time, there is increasing opposition from consumer groups to rate increases that may be necessary to compensate GSWC and BVES for the increased costs of regulation by local governments. These trends may adversely affect our ability to recover in rates the costs of providing water and electric services and to efficiently manage capital expenditures and operating and maintenance expenses within CPUC-authorized levels.

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governments. These trends may adversely affect our ability to recover in rates the costs of providing water and electric services and to efficiently manage capital expenditures and operating and maintenance expenses within CPUC-authorized levels.

We have also experienced instances of increased costs and delays in obtaining permits that we need in order to install, maintain, repair, and replace some of our aging water and electric utility infrastructure and upgrades needed to comply with changes in laws and regulations or otherwise necessary to harden our infrastructure as a result of drought, wildfires and increases in the frequency and duration of more extreme weather events due to climate change.

Our liquidity and earnings may be adversely affected by maintenance costs at our regulated utilities

Some of our infrastructure in California is aging. We have experienced leaks and mechanical problems in some of these older systems. In addition, infrastructure maintenance expenses are affected by labor and material costs, inflationary or tariff changes impacting such costs, supply chain disruptions and more stringent environmental regulations. Our electrical systems have also required upgrades due to aging and new wildfire safety and other compliance requirements. While we spend significant amounts on maintenance each year, these costs can increase substantially and unexpectedly. There could be an increase in infrastructure damage if California experiences more extreme weather events resulting in damage to our property.

We include estimated increases in maintenance costs for future years in each water and electric general rate case filed by GSWC and BVES, respectively, for possible recovery. To the extent that these estimates understate our actual costs, we may be unable to recover all maintenance costs in rates.

Adverse publicity and reputational risks can lead to increased regulatory oversight or sanctions

As a utility company, we have a large customer base and are therefore, subject to public criticism regarding, among other things, the quality and reliability of our water and electricity services, and the accuracy, timeliness and format of bills that are provided to our customers for such services. Adverse publicity and negative customer sentiment may cause regulatory authorities, including the CPUC, and other governing bodies to view us unfavorably and cause us to be susceptible to increased oversight and more stringent regulations and economic requirements.

Risks Associated with Health, Safety and Liability Matters

Our liquidity and earnings may be adversely affected by wildfires

It is possible that wildfires may occur more frequently, be of longer duration or impact larger areas as a result of drought-damaged plants and trees, lower humidity or higher winds that may occur as result of changing weather patterns. Our liquidity, earnings and operations may be materially and adversely affected by wildfires. We may be required to (i) incur greater costs to relocate lines or increase our trimming of trees and other plants near our electric or water facilities to avoid wildfires, (ii) make significant additional capital expenditures to fund the projects in BVES’s wildfire and safety mitigation plans, and (iii) bear the costs of damages to property or injuries to the public if it is determined that our power lines or other electrical or water equipment was a cause of such damages or injuries. In addition, wildfires may result in reduced demand if structures are destroyed or unusable following a wildfire and may adversely affect our ability to provide water or electric service in our service areas due to public safety power shutdowns or if any of our water or electric utility infrastructure is damaged by a wildfire.

Losses by insurance companies resulting from wildfires in California have caused insurance coverage for wildfire risks to become more expensive and the number of insurance companies willing to issue policies without an exclusion for losses due to wildfires to decrease. As a result, coverage could become unavailable on reasonable terms or without exclusions for losses due to wildfires, and our insurance may be inadequate to recover all our losses incurred in a wildfire. We might not be allowed to recover in our rates any increased costs of wildfire insurance or the costs of any uninsured wildfire losses.

Electric utilities in California are authorized to shut off power for public safety reasons, such as during periods of extreme fire hazard, if the utility reasonably believes that there is an imminent and significant risk that strong winds may topple power lines or cause vegetation to come into contact with power lines leading to increased risk of fire. Shut-offs can reduce BVES’s liquidity and decrease customer satisfaction.

These shut-offs can also adversely affect GSWC’s water utility operations if the electric utilities that provide electric service to GSWC’s water operations shut off power lines that deliver electricity to GSWC’s water plant and equipment, thereby adversely affecting its ability to provide water service to its customers.

We may, in certain circumstances, be held strictly liable for damages to property caused by our equipment even if we are not negligent

Utilities in California may be held strictly liable, in certain circumstances, for damages caused by their property, such as mains, fire hydrants, power lines and other equipment, even though they were not negligent in the operation and maintenance of that property, under a doctrine known as inverse condemnation. ~~Our liquidity~~Furthermore, ~~earnings~~the ~~and~~wildfires ~~operations~~of ~~may~~recent beyears ~~adversely~~have ~~affected~~increased ~~if we are unable to recover~~ the ~~costs~~focus ofon ~~paying~~water ~~claims~~utilities ~~for~~and ~~damages~~their ~~caused~~ability byto ~~the~~provide ~~non-negligent~~adequate ~~operation~~services ~~and~~during ~~maintenance~~such ofan ~~our~~event. Water ~~property~~utilities ~~from~~may ~~customers~~be orheld ~~through insurance.~~

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strictly liable under inverse condemnation claims for fire damage in the event the water system did not operate as designed, including being damaged by the fire itself, even if the fire is no fault of the water utility. Our liquidity, earnings and operations may be adversely affected if we are unable to recover the costs of paying claims for damages caused by the non-negligent operation and maintenance of our property from customers or through insurance.

We may be subject to financial losses, penalties and other liabilities if we fail to maintain safe work sites, equipment or facilities

Our safety record is critical to our reputation. We maintain health and safety standards to protect our employees, customers, vendors and the public. Although we aim to comply with such health and safety standards, it is unlikely that we will be able to avoid all accidents or other events resulting in damage to property or the public.

Our business sites, including construction and maintenance sites, often put our employees and others in close proximity with large pieces of equipment, moving vehicles, pressurized water, chemicals and other regulated materials. On many sites, we are responsible for safety and, accordingly, must implement safety procedures. If we fail in any respect to implement such procedures or if the procedures we implement are ineffective or are not followed by our employees or others, our employees and others may be injured or die. Unsafe work sites also have the potential to increase our operating costs. Any of the foregoing could result in financial losses, which could have a material adverse impact on our business, financial condition, and results of operations.

Our operations involve the handling and storage of hazardous chemicals that, if improperly handled, stored or disposed of, could subject us to penalties or other liabilities. We are also subject to regulations dealing with occupational health and safety. Although we maintain functional employee groups whose primary purpose is to ensure that we implement effective health, safety, and environmental work procedures throughout our organization, including construction sites and maintenance sites, a failure to comply with such regulations in any respect could subject us to liability.

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

Electricity is dangerous for employees and the general public should they come in contact with electrical current or equipment, including through downed power lines, sparking during high-wind events or equipment malfunctions. Injuries and property damage caused by such events may subject BVES to significant liabilities that may not be covered or fully covered by insurance. Additionally, the CPUC has delegated to its staff the authority to issue citations, which carry a fine of $50,000 per-violation per day, to electric utilities subject to its jurisdiction for violations of safety rules found in statutes, regulations, and the General Orders, rules and regulations, of the CPUC.

We may sustain losses that exceed or are excluded from our insurance coverage or for which we are not insured

We are, from time to time, parties to legal or regulatory proceedings. These proceedings may pertain to regulatory investigations, employment matters or other disputes. Management periodically reviews its assessment of the probable outcome of these proceedings, the costs and expenses reasonably expected to be incurred, and the availability and extent of insurance coverage. On the basis of this review, management establishes reserves for such matters. We may, however, from time to time be required to pay fines, penalties or damages that exceed our insurance coverage and/or reserves if our estimate of the probable outcome of such proceedings proves to be inaccurate.

We maintain insurance coverage as part of our overall legal and risk management strategy to minimize our potential liabilities. Generally, our insurance policies cover property, workers’ compensation, general liability, automobile liability, and other risks. Insurance coverage may not cover certain claims involving punitive damages. Each policy includes deductibles or self-insured retentions and policy limits for covered claims. Our insurance policies also contain exclusions and other limitations that may not cover our potential liabilities. Furthermore, due to insurance market conditions, including the prevalence of wildfires in recent years, resulting in tighter underwriting and increased premiums along with reductions in capacity, we have experienced increased costs and difficulties in obtaining certain insurance coverages, particularly along the general liability, umbrella and cyber insurance lines. We may experience further increased insurance costs and/or coverage reductions in future years. As a result, we may sustain losses that exceed or that are excluded from our insurance coverage or for which we are not insured.

Uninsured losses and increases in the cost of insurance may not be recoverable or fully recoverable in customer rates. A loss which is not insured or not fully insured or cannot be recovered in customer rates could materially affect our financial condition and results of operations.

We operate in areas subject to natural disasters

We operate in areas that are prone to earthquakes, wildfires, mudslides, hurricanes, tornadoes, high winds, storms, flooding or other natural disasters. While we maintain insurance policies to help reduce our financial exposure, a significant seismic event in southern California, where our regulated water and electric operations are concentrated, wildfires or other natural disasters in any of the areas that we serve could adversely impact our ability to deliver water and electricity or provide wastewater service, and adversely affect our costs of operations. Any losses not covered by insurance could have an adverse effect on the results of operations, financial position, cash flows and reputation of our regulated utilities. In addition, such events may cause increases to the cost of the applicable insurance. With respect to GSWC and BVES, the CPUC has historically allowed utilities to establish a catastrophic emergency memorandum account (“CEMA”) to potentially recover

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natural disasters in any of the areas that we serve could adversely impact our ability to deliver water and electricity or provide wastewater service, and adversely affect our costs of operations. Any losses not covered by insurance could have an adverse effect on the results of operations, financial position, cash flows and reputation of our regulated utilities. In addition, such events may cause increases to the cost of the applicable insurance. With respect to GSWC and BVES, the CPUC has historically allowed utilities to establish a catastrophic emergency memorandum account (“CEMA”) to potentially recover incremental costs not covered in rates caused by catastrophic emergency events. With respect to ASUS’s subsidiaries, costs associated with responding to natural disasters have been recoverable through requests for equitable adjustment.

Our operations may be the target of terrorist activities

As our operations support a Critical Infrastructure Sector of the United States, one that is vital to the United States where disruption in any of the sectors could have a debilitating effect on security, national economic security, or national public health or safety, terrorists could seek to disrupt service to our customers by targeting our assets through physical or cybersecurity events. We also may be prevented from providing water and/or wastewater services at the military bases we serve in times of military crisis affecting these bases. WeIf ~~have invested in additional security for facilities throughout~~ our ~~regulated~~operations ~~service~~were ~~areas to mitigate~~ the ~~risks~~subject of a terrorist ~~activities. In~~or ~~addition~~cybersecurity attack, weit ~~continue~~could tohave ~~increase~~a ~~our~~material ~~investment~~adverse ineffect ~~information~~on ~~technology~~our tobusiness, ~~monitor~~results ~~and~~of ~~address~~operations ~~cyber threats~~ and ~~attempted~~financial ~~cyber-attacks, and to improve our posture in addressing security vulnerabilities~~condition.

Water Quality Regulatory Risks

Our costs involved in maintaining water quality and complying with environmental regulation have increased and are expected to continue to increase

Capital and operating costs at GSWC are expected to increase substantially as a result of increases in environmental regulation arising from increases in the cost of upgrading and building new water treatment plants, disposing of residuals from our water treatment plants, handling and storing hazardous chemicals, compliance-monitoring and testing activities and securing alternative supplies when necessary. GSWC may be able to recover these costs from customers through the ratemaking process. We may also be able to recover a portion of these costs from certain third parties under settlement and contractual arrangements. ~~GSWC~~ ~~expects~~During to2025, ~~incur~~GSWC ~~additional~~received ~~capital~~class ~~costs~~settlement ~~and~~payments ~~operating~~associated ~~costs~~with toclass ~~maintain~~action ~~and~~claims ~~improve~~related ~~the quality of water delivered~~ to ~~its~~PFAS ~~customers in light of anticipated stress on water resources associated with watershed and aquifer pollution~~contamination, ~~drought impacts,~~ as ~~well~~discussed asfurther toin ~~meet~~Item ~~future~~7, ~~water~~“Environmental ~~quality standards and consumer expectations~~Matters. ~~The~~” ~~CPUC~~These ~~ratemaking~~funds ~~process~~may ~~provides~~be ~~GSWC~~used ~~with~~for ~~the~~future ~~opportunity~~capital toinvestments ~~recover~~or ~~prudently~~operations ~~incurred capital~~ and ~~operating~~maintenance ~~costs~~expenses inrelated ~~future~~to ~~filings~~PFAS ~~associated~~water ~~with~~contamination ~~achieving~~to its water ~~quality standards~~systems.

~~During 2024~~However, ~~the~~GSWC ~~U.S.~~expects ~~EPA~~to ~~announced~~incur ~~several~~additional ~~final~~capital ~~regulations~~costs ~~that~~and ~~include~~operating ~~established~~costs ~~maximum~~to ~~contaminant~~maintain ~~levels~~and ~~(“MCLs”)~~improve ~~for~~the ~~six~~quality ~~perfluoroalkyl~~of ~~substances~~water ~~(“PFAS”)~~delivered ~~compounds~~to inits ~~drinking~~customers ~~water,~~in ~~designation~~light of ~~PFOA~~anticipated ~~and~~stress ~~PFOS~~on aswater ~~CERCLA~~resources ~~hazardous~~associated ~~substances,~~with ~~and~~watershed ~~Lead~~ and ~~Copper~~aquifer ~~Rule~~pollution, ~~Improvements~~drought impacts, as ~~further~~well ~~described~~as into ~~Item~~meet 7,future ~~“Environmental~~water ~~Matters~~quality standards and consumer expectations.” ~~Such~~The ~~regulations~~CPUC ~~are~~ratemaking ~~expected~~process toprovides ~~increase~~ GSWC’s ~~capital~~with ~~investments~~the ~~and~~opportunity ~~operations~~to recover prudently incurred capital and ~~maintenance~~operating ~~expenses~~costs ~~over~~in ~~the~~future ~~next~~filings ~~decade.~~associated Inwith ~~addition,~~achieving ~~due~~water toquality ~~the~~standards. ~~volatility~~If ofwe ~~the~~are ~~supply~~unable ~~chain~~to ~~and~~recover ~~demand~~these ~~for~~costs ~~PFAS~~at all or ~~other~~in ~~treatment~~a ~~components~~timely manner, ~~both~~it ~~the~~could ~~capital~~have ~~investments~~a ~~and~~material ~~operations~~adverse ~~and~~effect ~~maintenance~~on ~~expenses~~our ~~are~~business, ~~likely~~results toof ~~further~~operations ~~increase~~and financial condition.

~~Additional~~During 2024, the U.S. EPA announced several final regulations that include established maximum contaminant levels (“MCLs”) for six perfluoroalkyl substances (“PFAS”) compounds in drinking water, designation of PFOA and PFOS as CERCLA hazardous substances, Lead and Copper Rule Improvements and California State Division of Drinking Water adopted a MCL of 10 parts per billion for Hexavalent Chromium, as further described, along with additional information regarding other changes to water quality regulations, ~~is provided~~ in Item 7., “~~Management~~Environmental Matters.” Such regulations are expected to increase GSWC’s ~~Discussion~~capital investments and ~~Analysis~~operations and maintenance expenses over the next decade. In addition, due to the volatility of ~~Financial~~the ~~Condition~~supply chain and ~~Results~~demand for PFAS or other treatment components, both the capital investments and operations and maintenance expenses are likely to further increase. In May 2025, U.S. EPA announced its intention to extend the deadline for drinking water systems to comply with the new PFAS maximum contaminant levels by two years to 2031, but it has not yet issued regulations to put this extension into effect. Separately, in September 2025, U.S. EPA requested the D.C. Circuit vacate the maximum contaminant levels that were established for four PFAS compounds, which the D.C. Circuit Court has unanimously rejected in January 2026. Each of ~~Operations”~~these ~~under~~potential changes to the ~~heading~~regulations, ~~“Environmental~~if ~~Matters~~enacted, could affect the cost or timing of GSWC’s associated capital investments and operations and maintenance expenses.”

Our operating costs may increase as a result of groundwater contamination

Our operations can be impacted by groundwater contamination in ~~certain~~our service territories. Historically, we have taken a number of steps to address contamination, including the removal of wells from service, decreasing the amount of groundwater pumped from wells in order to facilitate remediation of plumes of contaminated water, constructing water treatment facilities and securing alternative sources of supply from other areas not affected by the contamination. In emergency situations, we have supplied our customers with bottled water until the emergency situation has been resolved.

Our ability to recover these types of costs depends upon a variety of factors, including approval of rate increases, the willingness of potentially responsible parties to settle litigation and otherwise address the contamination, and the extent and magnitude of the contamination. We may recover costs from certain third parties that may be responsible, or potentially responsible, for groundwater contamination. However, we often experience delays in obtaining recovery of these costs and incur additional costs associated with seeking recovery from responsible or potentially responsible parties, which may adversely impact our liquidity. In some events, we may be unable to recover all of these costs from third parties due to the inability to identify the potentially responsible parties, the lack of financial resources of responsible parties or the high litigation costs associated with obtaining recovery from responsible or potentially responsible parties.

We can give no assurance regarding the adequacy of any such recovery to offset the costs associated with contamination or the cost of recovery of any legal costs. To date, the CPUC has permitted us to establish memorandum accounts for potential recovery of these types of costs when they have arisen.

Management believes that rate recovery, proper insurance coverage and reserves are in place to appropriately manage these types of contamination issues. However, such issues, if ultimately resolved unfavorably to us, could, in the aggregate, have a material adverse effect on our results of operations and financial condition.

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incur additional costs associated with seeking recovery from responsible or potentially responsible parties, which may adversely impact our liquidity. In some events, we may be unable to recover all of these costs from third parties due to the inability to identify the potentially responsible parties, the lack of financial resources of responsible parties or the high litigation costs associated with obtaining recovery from responsible or potentially responsible parties.

Water Supply Risks

The adequacy of our water supplies depends upon weather and a variety of other uncontrollable factors

The adequacy of our water supplies varies from year to year depending upon a variety of factors, including:

•rainfall, groundwater basin replenishment, flood control, snowpack levels in California and the West, reservoir levels and availability of reservoir storage;

•availability of Colorado River water and imported water from the State Water Project;

•the amount of usable water stored in reservoirs and groundwater basins;

•the amount of water used by our customers and others;

•water quality and changes to water quality regulations;

•legal limitations on production, diversion, storage, conveyance and use; and

•climate change.

Although there have been improvements in drought conditions over this past year, California drought conditions in recent years and ~~historically and~~ changes in weather patterns have caused an increased stress on surface water supplies and groundwater basins. In addition, low or no allocations of water from the State Water Project and court-ordered pumping restrictions on water obtained from the Sacramento-San Joaquin Delta decrease or eliminate the amount of water that the Metropolitan Water District of Southern California (“MWD”) and other state water contractors are able to import from northern California.

We have implemented tiered rates and other practices, as appropriate, in order to encourage water conservation. We have also implemented programs to assist customers in complying with water usage reductions. Over the long term, we are acting to secure additional supplies, which may include supplies from desalination, ~~and~~ increased use of reclaimed water, and direct potable re-use where appropriate and feasible. We cannot predict the extent to which these efforts to reduce stress on our water supplies will be successful or sustainable, or the extent to which these efforts will enable us to continue to satisfy all of the water needs of our customers. Water shortages at GSWC may:

•adversely affect our supply mix, for instance, by causing increased reliance upon more expensive water sources;

•adversely affect our operating costs, for instance, by increasing the cost of producing water from more highly contaminated aquifers or requiring us to transport water over longer distances, truck water to water systems or adopt other emergency measures to enable us to continue to provide water service to our customers;

•result in an increase in our capital expenditures over the long term, for example, by requiring future construction of pipelines to connect to alternative sources of supply, new wells to replace those that are no longer in service or are otherwise inadequate to meet the needs of our customers, and other facilities to conserve or reclaim water;

•adversely affect the volume of water sold as a result of such factors as mandatory or voluntary conservation efforts by customers, changes in customer conservation patterns, recycling of water by customers and imposition of new regulations impacting such things as landscaping and irrigation patterns;

•adversely affect aesthetic water quality if we are unable to flush our water systems as frequently due to water shortages or drought restrictions; and

•result in customer dissatisfaction and harm to our reputation if water service is reduced, interrupted or otherwise adversely affected as a result of drought, water contamination or other causes.

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Our liquidity may be adversely affected by changes in water supply costs

We obtain our water supplies for GSWC from a variety of sources, which vary among our water systems. Certain systems obtain all of their supply from water that is pumped from aquifers within our service areas; some systems purchase all of their supply from wholesale suppliers; some systems obtain their supply from treating surface water sources; and other systems obtain their supply from a combination of wells, surface water sources and/or wholesale suppliers. The cost of obtaining these supplies varies, and overall costs can be impacted as use within a system varies from time to time. As a result, our cost of providing, distributing and treating water for our customers’ use can vary significantly.

Furthermore, imported water wholesalers, such as MWD, may not always have an adequate supply of water to sell to us. Wholesale water suppliers may increase their prices for water delivered to us based on factors that affect their operating costs. Purchased water rate increases are beyond our control.

Since 2008, GSWC implemented a modified supply cost balancing account, the MCBA, to track the difference between actual supply cost and ~~recover~~the ~~costs~~supply ~~from~~cost adopted in water rates. The MCBA is a full decoupling balancing account for supply ~~mix~~cost. ~~changes~~It tracks the difference between actual and ~~rate~~adopted ~~changes~~supply bycost due to change in supply mix, wholesale suppliers’ rates, and production volume. However, cash flows from operations can be significantly affected since much of the balance we recognize in the MCBA was collected from or refunded to customers primarily through surcharges or surcredits, respectively, generally over twelve- to twenty-four-months. Beginning in 2025, the MCBA was discontinued. The final decision issued on January 30, 2025 in GSWC’s latest general rate case application rejected GSWC’s request to continue the use of WRAM and MCBA. Instead of a MCBA, the Commission directed GSWC to implement an incremental cost balancing account, as ~~authorized~~further bydescribed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the ~~CPUC~~heading “Overview.” ~~However~~Without a full decoupling supply cost balancing account, Registrant’s earnings may be subject to future volatility as a result of changes in water supply cost mix. In addition, cash flows from operations can be affected since much of the balance we recognize in the ICBA may be collected from or refunded to customers through surcharges or surcredits in future periods based on CPUC approval.

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operations can be significantly affected since much of the balance we recognize in the MCBA is collected from or refunded to customers primarily through surcharges or surcredits, respectively, generally over twelve- to twenty-four-months. Beginning in 2025, the MCBA will be discontinued and GSWC will no longer be able to recover costs from supply mix changes in the MCBA as a result of the final decision issued on January 30, 2025 in GSWC's recent general rate case application. The final decision rejected GSWC’s request to continue the use of a full supply cost balancing account such as the MCBA, and instead directs GSWC to implement an incremental cost balancing account, as further described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Overview.” However, without a full supply cost balancing account, Registrant’s earnings may be subject to future volatility as a result of changes in water supply cost mix.

Our liquidity and earnings may be adversely affected by our conservation efforts

Our water utility business is heavily dependent upon revenue generated from rates charged to our customers based on the volume of water used. The rates we charge for water are regulated by the CPUC and may not be adequately adjusted to reflect changes in demand. Declining usage also negatively impacts our long-term operating revenues if we are unable to secure rate increases or if growth in the customer base does not occur to the extent necessary to offset per-customer usage decline.

Conservation by all customer classes at GSWC is a top priority. However, customer conservation will result in lower volumes of water sold. We may experience a decline in per-customer water usage due to factors such as:

•conservation efforts to reduce costs;

•drought conditions resulting in additional water conservation;

•the use of more efficient household fixtures and appliances by customers to save water;

•voluntary or mandatory changes in landscaping and irrigation patterns;

•recycling of water by our customers; ~~and~~

•mandated water-use restrictions.; and

~~These~~•excessive ~~types~~rainfall ~~of changes may result in permanent decreases in demand even if our water supplies are sufficient to meet higher levels of demand after a drought ends~~events. In addition, governmental restrictions on water usage during drought conditions may result in a decreased demand for water, even if our sources of supply are sufficient to serve our customers during such drought conditions. California has established long-term indoor and outdoor water use standards to address the impact of climate change on California water resources and mandate water conservation requirements on all Californians. These standards will require all urban water retailers to meet certain water use standards on a system-by-system basis.

~~Since~~These ~~2008,~~types ~~we have implemented the CPUC-approved WRAM at GSWC, which has the effect~~ of ~~stabilizing~~changes ~~revenues~~may atresult ~~the~~in ~~adopted~~short ~~level~~term ~~thereby~~as ~~reducing~~well ~~the~~as ~~potential~~permanent ~~adverse~~decreases ~~earnings~~in ~~impact~~demand ofeven if our ~~customers’~~water ~~conservation~~supplies ~~efforts. Cash~~are ~~flows~~sufficient ~~from~~to ~~operations~~meet ~~can~~higher belevels ~~significantly affected since much~~ of ~~the~~demand ~~balance~~after wea ~~recognize~~drought inends. In ~~the WRAM account is collected from or refunded to customers generally over twelve-~~addition, ~~eighteen-~~governmental orrestrictions ~~twenty-four-month~~on ~~periods. The final decision in the recent~~ water ~~general~~usage ~~rate~~during ~~case~~drought ~~rejected~~conditions ~~GSWC’s~~may ~~request~~result ~~for~~in ~~the continued use of~~ a ~~full~~decreased ~~sales~~demand ~~and~~for ~~revenue~~water, ~~decoupling~~even ~~mechanism~~if ~~such~~our assources ~~the~~of ~~WRAM~~supply ~~and~~are ~~orders~~sufficient ~~GSWC~~ to ~~transition~~serve toour acustomers ~~modified~~during ~~rate~~such ~~adjustment~~drought ~~mechanism,~~conditions. California ~~M-WRAM,~~has ~~which~~established ~~tracks~~long-term ~~the~~indoor ~~difference between the revenue based on actual metered sales through a tiered volumetric rate~~ and ~~the~~outdoor ~~revenue~~water ~~that~~use ~~would~~standards ~~have~~to ~~been~~address ~~received with~~ the ~~same~~impact ~~actual metered sales if a blended tier standard quantity rate had been in effect. The final decision also approved GSWC’s request for the continuation~~ of aclimate ~~sales~~change ~~reconciliation~~on ~~mechanism,~~California ~~which~~water ~~would~~resources ~~allow~~and ~~GSWC~~mandate towater ~~adjust~~conservation ~~its~~requirements ~~sales~~on ~~forecast~~all ~~throughout the general rate case cycle to address significant fluctuations in customer water consumption~~Californians. ~~However,~~These ~~without~~standards ~~the~~will ~~continuation~~require ofall aurban ~~full~~water ~~revenue~~retailers ~~decoupling mechanism such as the WRAM, Registrant may be subject~~ to ~~future~~meet ~~volatility~~certain inwater ~~revenues~~use ~~and~~standards ~~earnings~~on as a ~~result of fluctuations in water consumption~~ system-by-system ~~our customers~~basis.

~~Electric~~From ~~Segment~~2008 ~~Operations~~until ~~Risks~~2024, we implemented the CPUC-approved WRAM at GSWC, which had the effect of stabilizing revenues at the adopted level thereby reducing the potential adverse earnings impact of our customers’ conservation efforts. Cash flows from operations can be significantly affected since much of the balance we recognize in the WRAM account is collected from or refunded to customers generally over twelve-, eighteen- or twenty-four-month periods. The final decision, issued January 30, 2025, in the water general rate case rejected GSWC’s request for the continued use of a full sales and revenue decoupling mechanism such as the WRAM and orders GSWC to transition to a modified rate adjustment

Our electric segment operates in a high wildfire risk area

Drought conditions in recent years and historically as well as shifting weather patterns in California as a result of climate change have created dry vegetation and higher risks of wildfire in California. Severe wildfires can pose a material risk for BVES in the event of the occurrence of a wildfire. There is no assurance that losses incurred through a wildfire event will not exceed the coverage limits of BVES’s insurance coverage. Any losses not fully insured by BVES’s insurance coverage may not be approved by the CPUC for future cost recovery.

BVES is required to adopt and implement a wildfire mitigation plan that is submitted periodically to, and subject to the approval of, the CPUC. In January 2025, the CPUC ratified BVES’s 2025 wildfire mitigation plan update which was also approved by the Office of Energy Infrastructure Safety in the fourth quarter of 2024. The recovery of costs incurred to implement the plan and its update are not approved by the CPUC at the time of its approval of the plan but will only be

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~~approved~~mechanism, byM-WRAM, which tracks the ~~CPUC~~difference between the revenue based on actual metered sales through a tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a blended tier standard single quantity rate had been in effect. The final decision also approved GSWC’s request for the continuation of a ~~subsequent~~sales reconciliation mechanism, which would allow GSWC to adjust its sales forecast throughout the general rate case cycle to address significant fluctuations in customer water consumption. WeHowever, ~~anticipate~~without ~~that~~ the ~~costs~~continuation of ~~capital~~a ~~improvements~~full ~~necessary~~revenue decoupling mechanism such as the WRAM, Registrant may be subject to ~~implement~~future ~~this~~volatility ~~program~~in ~~will~~revenues ~~increase~~and ~~substantially~~earnings as a result of fluctuations in water consumption by our customers.

~~BVES~~Electric isSegment ~~also~~Operations required to implement a public safety power shut-off program during high wildfire threat conditions. The CPUC may assess penalties if BVES shuts-down power to its customers and the CPUC determines that the shutdown was not reasonably necessary in the circumstances. As a result of shutting-down power to its customers, BVES's cash flows may be negatively affected due to a reduction in electricity sold. However, BVES has implemented a CPUC-approved revenue decoupling mechanism that mitigates the impact of customer usage fluctuations to earnings.Risks

Our electric segment operates in a high wildfire risk area

BVES is required to adopt and implement a wildfire mitigation plan (“WMP”) that is submitted periodically to, and subject to the approval of, the CPUC. In November 2025, the Office of Energy Infrastructure Safety approved BVES’s 2026-2028 Base WMP. The CPUC is expected to ratify this WMP in the first quarter of 2026. The recovery of costs incurred to implement the plan are not approved by the CPUC at the time of its approval of the plan but will only be approved by the CPUC in a subsequent general rate case. We anticipate that the costs of capital improvements necessary to implement this program will increase substantially.

BVES is also required to implement a public safety power shut-off program during high wildfire threat conditions. The CPUC may assess penalties if BVES shuts-down power to its customers and the CPUC determines that the shutdown was not reasonably necessary in the circumstances. As a result of shutting-down power to its customers, BVES’s cash flows may be negatively affected due to a reduction in electricity sold. However, BVES has implemented a CPUC-approved revenue decoupling mechanism that mitigates the impact of customer usage fluctuations to earnings.

BVES has also obtained a safety certificate, which must be renewed annually by the CPUC. Even with an approved safety certificate, BVES could be found liable for deaths, injuries and property damage if BVES’s electric equipment is found to have caused a catastrophic wildfire and it is determined by the CPUC that BVES did not act reasonably in operating and maintaining its equipment. BVES may not be able to recover the costs of all liabilities from such a wildfire from insurance or from ratepayers.

Our liquidity may be adversely affected by increases in electricity and natural gas prices in California

We purchase most of the electric energy sold to customers in our electric customer service area from others under purchased power contracts. In addition to purchased power contracts, we purchase additional energy from the spot market to meet peak demand and following the expiration of purchased power contracts if there are delays in obtaining CPUC authorization of new ~~purchase~~purchased power contracts. We may sell surplus power to the spot market during times of reduced energy demand. As a result, our cash flow may be affected by increases in spot market prices of electricity purchased and decreases in spot market prices for electricity sold. However, BVES has implemented a CPUC-approved supply-cost balancing account to mitigate the impact to earnings from fluctuations in supply costs.

Unexpected generator downtime at our 8.4 megawatt natural-gas-fueled generator or a failure to perform by any of the counterparties to our electric and natural gas purchase contracts could further increase our exposure to fluctuating natural gas and electricity prices.

Changes in electricity prices also affect the unrealized gains and losses on our block forward purchased power contracts that qualify as derivative instruments since we adjust the asset or liability on these contracts to reflect the fair market value of the contracts at the end of each month. The CPUC has authorized us to establish a memorandum account to track the changes in the fair market value of our purchased power contracts. As a result, unrealized gains and losses on these types of purchased power contracts do not impact earnings.

We may not be able to procure sufficient renewable energy resources to comply with CPUC rules

We are required to procure a portion of our electricity for BVES from renewable energy resources to meet the CPUC’s renewable procurement requirements. We have agreements with third parties to purchase renewable energy credits, which has enabled us to meet these requirements through 2024. The next RPS compliance period is years 2025-2027. In the event that the third parties fail to perform in accordance with the terms of the agreement, we may not be able to obtain sufficient resources to ~~meet the renewable procurement requirements. We may be subject to fines and penalties by the CPUC if it determines that we are not in compliance with the renewable resource procurement rules.~~

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meet the renewable procurement requirements. We may be subject to fines and penalties by the CPUC if it determines that we are not in compliance with the renewable resource procurement rules.

Utility Privatization Contract Risks

Our contracts for servicing military bases create certain risks that are different from our public utility operations

We have entered into contracts to provide water and/or wastewater services at military bases primarily pursuant to initial 50-year, firm fixed-priced contracts, one 15-year contract, additional firm fixed-price contracts and task order contracts, subject to termination, in whole or in part, for the convenience of the U.S. government. We also from time to time enter into contracts with third party prime contractors on military bases. The U.S. government may stop work under the terms of one or more of these contracts, not provide additional task orders, delay performance of our obligations under the contracts, or modify the contracts at its convenience.

Our contract pricing is based on a number of assumptions, including assumptions about the condition and amount of infrastructure at the military bases, prices and availability of labor, equipment and materials. We may be unable to recover all costs if any of these assumptions are inaccurate or if all costs incurred in connection with performing the work were not considered. Our contracts are also subject to annual economic price adjustments, adjustments as task orders are issued or other changes permitted by the terms of the contracts. Prices are also subject to equitable adjustment based upon changes in circumstances, laws or regulations and service-requirement changes to the extent provided in each of the contracts.

We are required to record all costs under our military base contracts as they are incurred. As a result, we may record losses associated with unanticipated conditions that result in higher than estimated costs, higher than anticipated infrastructure levels, and required emergency work at the time such expenses occur. We recognize additional revenue for such work as, and to the extent that, our economic price adjustments and/or requests for equitable adjustments are approved. Delays in obtaining approval of economic price adjustments and/or equitable adjustments can negatively impact our results of operations and cash flows.

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to the extent that, our economic price adjustments and/or requests for equitable adjustments are approved. Delays in obtaining approval of economic price adjustments and/or equitable adjustments can negatively impact our results of operations and cash flows.

Certain payments under these contracts are subject to appropriations by Congress. We may experience delays in receiving payment or delays in price adjustments due to canceled or delayed appropriations specific to our projects, reductions in government spending for the military generally or military-base operations specifically or other delays in Congress approving appropriations. Appropriations and the timing of payment may be influenced by, among other things, the state of the economy, competing political priorities, budget constraints, the timing and amount of tax receipts, government shutdowns and the overall level of government expenditures.

We may experience delays in receiving payments for services rendered in military bases due to delays in Congressional appropriation bills, extended government shutdowns, or other factors affecting the available funds to pay contractors. During 2025, the U.S. government experienced the longest government shutdown in its history. In the event the U.S. government shuts down for a longer period, our liquidity and earnings could be impacted.

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 have entered into contract modifications with the U.S. government and agreements with third parties for the construction of new water and/or wastewater infrastructure at the military bases on which we operate. Most of these contracts are firm fixed-price contracts. Under firm fixed-price contracts, we will benefit from cost savings, but are generally unable (except for changes in scope or circumstances approved by the U.S. government or third party) to recover any cost overruns to the approved contract price. Under most circumstances, the U.S. government or third party has approved increased-cost change orders due to changes in scope of work performed.

We generally recognize contract revenues from these types of contracts over time using input methods to measure progress towards satisfying a performance obligation. The measurement of performance over time is based on cost incurred relative to total estimated costs, or the physical completion of the construction projects. The earnings or losses recognized on individual contracts are based on periodic estimates of contract revenues, costs and profitability as these construction projects progress.

We establish prices for these types of firm fixed-price contracts and the overall contract taken as a whole, based, in part, on cost estimates that are subject to a number of assumptions, including assumptions regarding future economic conditions. If these estimates prove inaccurate or circumstances change, cost overruns could have a material adverse effect on our contracted business operations and results of operations.

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We may be adversely affected by disputes with the U.S. government regarding our performance of contracted services on military bases

Entering into contracts with the U.S. government subjects us to a number of operational and compliance risks over our performance of contracted services on military bases. We are periodically audited or reviewed by the Defense Contract Auditing Agency (“DCAA”), the Defense Contract Management Agency (“DCMA”), the Department of Labor, the Defense Logistics Agency Energy, and/or the Department of Justice for compliance with federal acquisition regulations, cost-accounting standards and other laws, regulations and standards that are not applicable to the operations of GSWC or BVES. During the course of these audits/reviews, the U.S. government may question our incurred project costs or the manner in which we have accounted for such costs and recommend to our U.S. government administrative contracting officer that such costs be disallowed. If there is a dispute with the U.S. government regarding performance under these contracts or the amounts owed to us, the U.S. government may delay, reject or withhold payment, delay price adjustments or assert its right to offset damages against amounts owed to us. If we are unable to collect amounts owed to us on a timely basis or the U.S. government asserts its offset rights, profits and cash flows could be adversely affected.

Moreover, we are subject to potential government investigations of our business practices and compliance with government procurement statutes and security regulations. If we are charged with wrongdoing as a result of an investigation, or if we fail to comply with the terms of one or more of our U.S. government contracts, other agreements with the U.S. government or U.S. government statutes and regulations, our existing contracts could be terminated or we could be suspended or barred from future U.S. government contracts for a period of time, and be subject to possible damages, fines and penalties as well as damage to our reputation in the water and wastewater industry, which could have a material adverse effect on our results of operations and cash flows.

We depend, to some extent, upon subcontractors to assist us in the performance of contracted services on military bases

We rely, to some extent, on subcontractors to assist us in the operation and maintenance of the water and wastewater systems at military bases. The failure of any of these subcontractors to perform services for us in accordance with the terms of our contracts with the U.S. government could result in the termination of our contract to provide water and/or wastewater services at the affected base(s), and/or a loss of revenues, or increases in costs, to correct a subcontractor’s performance failures.

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services at the affected base(s), and/or a loss of revenues, or increases in costs, to correct a subcontractor’s performance failures.

We are also required to make a good faith effort to achieve our small business subcontracting plan goals pursuant to U.S. government regulations. If we fail to use good faith efforts to meet these goals, the U.S. government may assess damages against us at the end of the contract. The U.S. government has the right to offset claimed damages against any amounts owed to us.

We also rely on third-party manufacturers, as well as third-party subcontractors, to complete our construction projects. To the extent that we cannot engage subcontractors or acquire equipment or materials, our ability to complete a project in a timely fashion or at a profit may be impaired. If the amount of costs we incur for these projects exceeds the amount we have estimated in our bids, we could experience reduced profits or losses in the performance of these contracts. In addition, if a subcontractor or manufacturer is unable to deliver its services, equipment or materials according to the negotiated terms for any reason, including the deterioration of its financial condition, we may be required to purchase the services, equipment or materials from another source at a higher price. This may reduce the profit to be realized or result in a loss on a project for which the services, equipment or materials were needed.

If subcontractors fail to perform services to be provided to us or fail to provide us with the proper equipment or materials, we may be penalized for their failure to perform; however, our contracts with subcontractors include certain protective provisions, which may include the assessment of liquidated damages. We also mitigate these risks by requiring our subcontractors, as appropriate, to obtain performance bonds and to compensate us for any penalties we may be required to pay as a result of their failure to perform.

We may not be fully reimbursed for all of our construction costs or may only receive payment on a delayed basis

Unlike GSWC and BVES, who recover their capital investments from customers over the life of the assets through annual depreciation and earn a return on such investments through the ratemaking process, ASUS is reimbursed for the cost of ongoing renewal and replacement construction projects plus a profit through the collection of a monthly cash stream under each of the 50-year and 15-year contracts with the U.S. government. ASUS also receives funding from the U.S. government for initial and other new construction projects at the military bases it serves that, in many cases, are outside the scope of contracts with the U.S. government and are granted through firm-fixed contract modifications. ASUS’s subsidiaries expect to continue incurring significant construction costs. Reimbursement by the U.S government for these construction costs may not be fully reimbursable if the costs incurred are greater than the amounts estimated and approved by the U.S. government, or payments may be delayed awaiting government funding and processing, which could significantly affect our cash flows from operations.

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Other Contracted Services Segment Risks

Risks associated with wastewater systems are different from those of our water distribution operations

The wastewater-collection-system operations of our ASUS subsidiaries providing wastewater services on military bases are subject to substantial regulation and involve significant environmental risks. If collection, treatment or disposal systems fail, overflow or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to aquatic life and economic damages. The cost of addressing such damages may not be recoverable. This risk is most acute during periods of substantial rainfall or flooding, which are common causes of sewer overflows and system failures. These risks may be increased as a result of an increase in the duration and frequency of storms due to climate change. Liabilities resulting from such damage could adversely and materially affect our business, results of operations and financial condition. In the event that we are deemed liable for any damage caused by overflows, our losses may not be recoverable under our contracts with the U.S. government or covered by insurance policies. We may also find it difficult to secure insurance for this business in the future at acceptable rates.

We may have responsibility for water quality at the military bases we serve

While it is the responsibility of the U.S. government to provide the source of water supply to meet ASUS’s subsidiaries water distribution system requirements under their contracts with the U.S. government, ASUS’s subsidiaries, as the water system permit holders for most of the bases they serve, are responsible for ensuring the continued compliance of the provided source of supply with all federal, state and local regulations, including water quality regulations. We believe, however, that the terms of the contracts between ASUS’s subsidiaries and the U.S. government provide the opportunity for us to recover costs incurred in the treatment or remediation of any quality issue that arises from the source of water supply. We may also be subject to fines and penalties if found negligent and non-compliant to federal, state, and local regulations.

Our earnings may be affected, to some extent, by weather during different seasons

Seasonal weather conditions, such as hurricanes, heavy rainfall or significant winter storms, occasionally cause temporary office closures and/or result in temporary halts to construction activity at military bases. To the extent that our construction activities are impeded by these events, we will experience a delay in recognizing revenues from these construction projects.

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construction activities are impeded by these events, we will experience a delay in recognizing revenues from these construction projects.

We continue to incur costs associated with the expansion of our military base contract activities

We continue to incur additional costs in connection with the expansion of our contract operations associated with the preparation of bids for new contract operations on prospective and existing military bases. Our ability to recover these costs and to earn a profit on our contract operations will depend upon the extent to which we are successful in obtaining new contracts and recovering these costs and other costs from new contract revenues.

We face intense competition for new military base contracts

An important part of our growth strategy is the expansion of our contracted services business through new contract awards to serve additional military bases for the U.S. government. ASUS competes with other investor-owned utilities, municipalities, and other entities for these contracts.

Additionally, the U.S. government periodically reviews the cost and overall effectiveness of the military privatization program. Should these reviews prompt a decision to curtail or eliminate the issuance of solicitations for future military base contract awards, the potential for growth in this segment could be negatively impacted.

Information Technology Risk Factors

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

We rely on various information and operational technology systems to manage our operations, including those provided by third party solutions that support our operational and business processes. Such systems require periodic modifications, upgrades and/or replacement, which subject us to inherent costs and risks, including potential disruption of our internal control structure, substantial capital expenditures, additional administrative and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. In addition, the difficulties with implementing new technology systems may cause disruptions in our business operations and have an adverse effect on our business and operations, if not anticipated and appropriately mitigated.

We rely on our information and operational technology systems in connection with the operation of our business, especially with respect to customer service and billing, accounting and the monitoring and operation of our treatment, storage and pumping facilities. Our information and operational technology systems and operations could be damaged or interrupted by weather, natural disasters, telecommunications failures, cyberattacks or acts of war or terrorism or similar events or disruptions. Outages caused by third party information and operational technology solutions are often beyond our ability to control. Any of these or other events could cause system interruption, delays and loss of critical data, delay or prevent operations or delay in notification of system failures or emergencies and adversely affect our financial results and could result in liabilities not covered by insurance or recoverable in rates for misappropriation of assets or sensitive information, corruption of data and the impact of operational disruptions on our customers.

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disruptions. Outages caused by third party information and operational technology solutions are often beyond our ability to control. Any of these or other events could cause system interruption, delays and loss of critical data, delay or prevent operations or delay in notification of system failures or emergencies and adversely affect our financial results and could result in liabilities not covered by insurance or recoverable in rates for misappropriation of assets or sensitive information, corruption of data and the impact of operational disruptions on our customers.

Use of Artificial Intelligence (“AI”) by our employees, subcontractors and third parties engaged by us could have an adverse impact on our business and operations.

As of the date of this filing, we have developed a policy regarding the use of AI and predictive analytics tools. These tools presently include, without limitation, generative text models (such as ChatGPT, Claude, and Co-Pilot). There is a risk that such AI tools (or AI tools used without Company approval) will be used in a manner that does not adhere to our AI policy and/or may be misused by our employees, subcontractors, or other third parties engaged by us. This, in turn, could result in the loss of confidential or proprietary information and subject us to competitive or reputational harm, as well as potential regulatory investigations/actions and/or legal liability. Additionally, we may not be able to control, and may lack visibility into, how third-party AI tools, or AI features incorporated into third-party products, are developed or maintained, or how such tools use, disclose and/or protect the data we input, even where we have sought contractual protections with respect to these matters. Further, AI algorithms may be flawed, and the data used to train AI tools may be inaccurate, incomplete, or biased. As a result, the content, analysis or recommendations that these tools produce may be inaccurate, incomplete, or biased, and the use of this information by our employees, subcontractors, or other third parties engaged by us may have a material adverse effect on our business, results of operations and financial condition.

Cybersecurity incidents could disrupt our internal operations, and any such disruption could increase our expenses, damage our reputation and adversely affect our stock price

There continues to be an increasing number of cyberattacks on companies around the world, which have caused operational failures or compromised sensitive corporate or customer data. These attacks have occurred over the internet, through malware, viruses or attachments to e-mails, or through persons inside the organization or with access to systems inside the organization and may be heightened with the increased use and prevalence of artificial intelligence. Although we do not believe that our systems are at a materially greater risk of cybersecurity attacks when compared to other similar organizations, our information technology systems remain at risk to damage or interruption from the following among other types of cybersecurity risks:

•Supply Chain Attacks;

•Malicious Software;

•Credential Loss or Theft;

•Supervisory Control and Data Acquisition System Takeover;

•Equipment Theft;

•Ransomware;

•Actions of Employees (Intentional or Accidental);

•Phishing Attacks;

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•Identity-Based Attacks; and

•Denial-of-Service Attacks.

•Artificial Intelligence enabled Attacks

We believe a breach of customer personally identifiable information is one of the most significant financial risks to us as the costs incurred could exceed the amount of our cybersecurity insurance coverage and these costs may increase if we fail to comply with federal and state privacy regulations such as the California Consumer Privacy Act (“CCPA”), a state statute that became effective January 1, 2020, which enhances the privacy rights and consumer protections for California residents. Among other things, the CCPA establishes statutory damages for victims of data security breaches, and provides additional rights for consumers to obtain their data from any business that has their personally identifying information. Any actual or perceived failure to comply with the CCPA could lead to investigations, claims, and proceedings by governmental entities and private parties, damages for breach, and other significant costs, penalties, and other liabilities, as well as harm to our reputation.

We have implemented security measures and will continue to devote significant resources to improve our security posture to address any security vulnerabilities in an effort to prevent cyberattacks. Despite our efforts, due to the evolving nature of cyberattacks and vulnerabilities, we cannot be assured that a cyberattack will not cause water, wastewater or electric system problems, disrupt service to our customers, compromise important data or systems or result in unintended release of customer or employee information. Moreover, if a security breach affects our systems or results in the unauthorized release of sensitive data, our reputation could be materially damaged. We may not discover any security breach and loss of information for a significant period of time after the security breach. We could also be exposed to a risk of loss or litigation and possible liability. Pursuant to U.S. government regulations regarding cybersecurity of government contractors, we might be subject to fines, penalties or other actions, including debarment, with respect to current contracts or with respect to future contract opportunities.

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sensitive data, our reputation could be materially damaged. We may not discover any security breach and loss of information for a significant period of time after the security breach. We could also be exposed to a risk of loss or litigation and possible liability. Pursuant to U.S. government regulations regarding cybersecurity of government contractors, we might be subject to fines, penalties or other actions, including debarment, with respect to current contracts or with respect to future contract opportunities.

We maintain cybersecurity insurance to provide coverage for a portion of the losses and damages that may result from a security breach, but such insurance is subject to a number of exclusions and may not cover the total loss caused by a breach. Other costs associated with cyber incidents may not be covered by insurance or recoverable in rates. The market for cybersecurity insurance continues to evolve and may affect the future availability of cyber insurance at reasonable rates.

Additional information regarding cybersecurity and risk management associated with cybersecurity is provided in Item 1C. “Cybersecurity.”

Human Capital Management Risks

Failure to attract, retain, train, motivate, develop and transition key employees could adversely affect our business

In order to be successful, we must attract, retain, train, motivate, and develop key employees, including those in managerial, operational, financial, regulatory, business development and information technology support positions. Our regulated businesses and contracted services operations are complex. Attracting and retaining high quality staff allows us to minimize the cost of providing quality service. In order to attract and retain key employees in a competitive marketplace, we must provide a competitive compensation package and be able to effectively recruit qualified candidates. This is especially challenging for us since approximately 38% of our employees will be eligible to retire in the next five years. The failure to successfully hire key employees or the loss of a material number of key employees could have a significant impact on the quality of our operations in the short term. Further, changes in our management team may be disruptive to our business, and any failure to successfully transition key new hires or promoted employees could adversely affect our business and results of operations.

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

Many of our employees must have specialized certifications and licenses in order to perform their duties and periodically complete required compliance training. Our business could be adversely affected if our employees do not maintain their certifications and licenses or we are unable to attract employees with the necessary certifications and licenses.

Other Business Risk Factors

The accuracy of our judgments and estimates about financial and accounting matters will impact our operating results and financial condition

The quality and accuracy of estimates and judgments used have an impact on our operating results and financial condition. If our estimates are not accurate, we will be required to make an adjustment in a future period. We make certain estimates and judgments in preparing our financial statements regarding, among others:

•timing of recovering M-WRAM, WRAM, ICBA, MCBA and BRRAM regulatory assets;

•regulatory recovery of deferred items;

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•amounts to set aside for uncollectible accounts receivable, inventory obsolescence and uninsured losses;

•our legal exposure and the appropriate accrual for claims, including general liability and workers’ compensation claims;

•future costs and assumptions for pensions and other post-retirement benefits; and

•possible tax uncertainties.

Market conditions and demographic changes may adversely impact the value of our benefit plan assets and liabilities

Market factors can affect assumptions we use in determining funding requirements with respect to our pension and other post-retirement benefit plans. For example, a relatively modest change in our assumptions regarding discount rates can materially affect our calculation of funding requirements. To the extent that market data compels us to reduce the discount rate used in our assumptions, our benefit obligations could materially increase, which could adversely affect our financial position and cash flows. Further, changes in demographics, such as increases in life expectancy assumptions may also increase the funding requirements of our obligations related to our pension and other post-retirement benefit plans.

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Market conditions also affect the values of the assets that are held in trusts to satisfy significant future obligations under our pension and other post-retirement benefit plans. These assets are subject to market fluctuations, which may cause investment returns to fall below our projected rates of return. A decline in the market value of our pension and other post-retirement benefit plan assets will increase the funding requirements under these plans if future returns on these assets are insufficient to offset the decline in value. Future increases in pension and other post-retirement costs as a result of the reduced value of plan assets may not be fully recoverable in rates, and our results of operations and financial position could be negatively affected. These risks are mitigated to some extent by the two-way pension balancing accounts authorized by the CPUC, which permits us to track differences between forecasted annual pension expense adopted in water and electric rates and actual pension expenses for future recovery or refund to customers.

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

The utility business is capital intensive. We spend significant sums of money for additions to, or replacement of, our property, plant and equipment at our water and electric regulated utilities. We obtain funds for these capital projects from operations, contributions by developers and others, and refundable advances from developers (which are repaid over a period of time). We periodically borrow money or issue equity or debt securities for these purposes. In addition, we have revolving credit facilities that are used for capital expenditure programs with our utilities and operations. We cannot provide assurance that these sources will continue to be adequate or that the cost of funds will remain at levels permitting us to earn a reasonable rate of return.

As our capital investment program continues to increase, coupled with the elimination of bonus depreciation for regulated utilities due to tax reform, we will need access to external financing more often, which increases our exposure to market conditions. In addition to cash flow from operations, we rely primarily on our credit facilities and long-term debt to satisfy our liquidity needs. We also may from time to time issue Common Shares, including pursuant to our at-the-market offering program, to support our capital investment program. Changes in market conditions, including events beyond our control such as increases to interest rates, could limit our ability to access capital on terms favorable to us or at all, including obtaining credit facilities with the borrowing capacities needed as well as issuing equity or debt securities. As a result, the amount of capital available may not be sufficient to meet all our liquidity needs at a reasonable cost at all of our subsidiaries.

Payment of our debt may be accelerated if we fail to comply with restrictive covenants in our debt agreements

Our failure to comply with restrictive covenants in our debt agreements could result in an event of default. If the default is not cured or waived, we may be required to repay or refinance the debt before it becomes due. Even if we are able to obtain waivers from our creditors, we may only be able to do so on unfavorable terms. Our ability to comply with the financial covenants in our debt agreements may be adversely affected by delays in obtaining CPUC approval of our general rate case filings.

The price of our Common Shares may be volatile and may be affected by market conditions beyond our control

The trading price of our Common Shares may fluctuate in the future because of the volatility of the stock market and a variety of other factors, many of which are beyond our control. Factors that could cause fluctuations in the trading price of our Common Shares include: changes in interest rates; regulatory developments, decisions and delays of decisions; general economic conditions and trends; price and volume fluctuations in the overall stock market; actual or anticipated changes or fluctuations in our results of operations; actual or anticipated changes in the expectations of investors or securities analysts; actual or anticipated developments in other utilities’ businesses or the general competitive landscape; litigation involving us or our industry; major catastrophic events; sales of large blocks of our stock and the other risks described herein.

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actual or anticipated developments in other utilities’ businesses or the general competitive landscape; litigation involving us or our industry; major catastrophic events, or sales of large blocks of our stock.

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

As a holding company, our subsidiaries conduct substantially all operations and our only significant assets are investments in our subsidiaries. This means that we are dependent on distributions of funds from our subsidiaries to meet our debt service obligations and to pay dividends on our Common Shares.

Our subsidiaries are separate and distinct legal entities and generally have no obligation to pay any amounts due on AWR’s credit facility. Our subsidiaries only pay dividends if and when declared by the respective subsidiary board. Moreover, GSWC and BVES are obligated to give first priority to their own capital requirements and to maintain capital structures consistent with those determined to be reasonable by the CPUC in its most recent decisions on capital structure for both GSWC and BVES in order for customers to not be adversely affected by the holding company structure. Furthermore, our right to receive cash or other assets in the unlikely event of liquidation or reorganization of any of our subsidiaries is generally subject to the prior claims of creditors of that subsidiary. If we are unable to obtain funds from a subsidiary in a timely manner, we may be unable to meet our financial obligations, make additional investments or pay dividends.

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The final determination of our income tax liability may be materially different from our income tax provision

Significant judgment is required in determining our provision for income taxes. Our calculation of the provision for income taxes is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service and other taxing authorities.

Although we believe our income tax estimates are appropriate, there is no assurance that the final determination of our current taxes payable will not be materially different, either higher or lower, from the amounts reflected in our financial statements. In the event we are assessed additional income taxes, our financial condition and cash flows could be adversely affected.

Our operations are geographically concentrated in California

Although we operate water and wastewater facilities in a number of states under our contracted services business, our regulated water and electric operations are concentrated in California, particularly Southern California. As a result, our financial results are largely subject to political, water supply, labor, utility cost and regulatory risks, economic conditions, natural disasters (which may increase as a result of climate change) and other risks affecting California. Our financial results may also be impacted by population growth or decline in our service areas.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Cyberattacks represent a threat to water, wastewater and electric utility systems. There have also been increasing threats to the information that companies maintain that have resulted in unauthorized disclosure of private customer, employee, director and corporate financial information.

Threats can come from many sources, including, but not limited to, ransomware, malicious software, credential loss or theft, supervisory control and data acquisition system takeover, equipment theft, supply chain attacks, phishing attacks, identity-based attacks, denial-of-service attacks, or the actions of employees either intentional or accidental or artificial intelligence enabled attacks. Ransomware whereby hackers take control of a company’s systems and/or data has been identified as the most significant threat to Registrant’s critical infrastructure systems and is getting harder to detect ~~and~~while encrypted files are becoming harder to recover. Threat actors using ransomware have also increased their use of data, not only for direct ransom and data destruction, but also to release the data to the public. Registrant believes a breach of customer personally identifiable information is one of the most significant financial risks to it as the costs incurred could exceed the amount of its cybersecurity insurance coverage. ~~Nevertheless~~ In addition, in order to continue meeting Registrant’s technological business needs and as more vendors build solutions in the cloud, Registrant expects to further expand its use of cloud-computing environments. As such, Registrant expects risks from cyberattacks and data breaches to increase due to the growth of its technological footprint in the cloud environments.

As cyberattacks have become more frequent and sophisticated, including against third-party technology providers, Registrant expects to continue to increase its investment in information and operational technology to monitor and address cyber threats and attempted cyberattacks, and to improve its posture in addressing security vulnerabilities. Registrant has implemented robust cybersecurity systems and controls to prevent any unauthorized access to information. Its platform was designed to be consistent with industry best practices such as the U.S. National Institute of Standards and Technology (“NIST”) cybersecurity frameworks. In addition, Registrant has dedicated employees with cybersecurity technical expertise and also leverages outside cybersecurity firms. Registrant has adopted multi-layered safeguards and educational measures to protect its operations, assets and digital information. Registrant conducts mandatory quarterly cybersecurity training for all employees. Registrant also conducts specialized training for ASUS employees annually on protecting certain types of information relating to the work ASUS and its subsidiaries do with the U.S. government to comply with U.S. government contracting requirements. In addition, Registrant conducts periodic and unannounced phishing tests with all employees and vulnerability assessment and penetration tests.

27Registrant has adopted a cybersecurity incident response policy, plan and set of specific instructions, which are annually reviewed by the IT cybersecurity team members. Registrant is also taking actions intended to strengthen its cybersecurity posture and to improve its cybersecurity incident response plans and operating procedures. Despite the actions Registrant has taken and is taking and the fact that, to its knowledge, it has yet to experience a cybersecurity incident; however, there can be no assurance that Registrant will not experience a cybersecurity incident.

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cybersecurity frameworks. In addition, Registrant has dedicated employees with cybersecurity technical expertise and also leverages outside cybersecurity firms. Registrant has adopted multi-layered safeguards and educational measures to protect its operations, assets and digital information. Registrant conducts mandatory quarterly cybersecurity training for all employees. Registrant also conducts specialized training for ASUS employees annually on protecting certain types of information relating to the work ASUS and its subsidiaries do with the U.S. government to comply with U.S. government contracting requirements. In addition, Registrant conducts periodic and unannounced phishing tests with all employees and vulnerability assessment and penetration tests.

Registrant has adopted a cybersecurity incident response policy, plan and set of specific instructions, which are annually reviewed by the IT cybersecurity team members. Registrant is also taking actions intended to strengthen its cybersecurity posture and to improve its cybersecurity incident response plans and operating procedures. Despite the actions Registrant has taken and is taking and the fact that, to its knowledge, it has yet to experience a cybersecurity incident, there can be no assurance that Registrant will not experience a cybersecurity incident.

Risk management, oversight and response

Cyber risk management is an ongoing iterative process that requires continuous identification, assessment and management of possible cyber threats and has become a vital part of Registrant’s overall risk management efforts. Registrant’s ~~cybersecurity team assesses ongoing cybersecurity threats and vulnerabilities to prioritize and implement mitigation factors and defense to help contain and combat identified risks.~~

To keep threat and vulnerability information up-to-date, the cybersecurity team subscribes to multiple national and state-level threat and vulnerability information disclosure services, both general-purpose and industry-specific in nature. Updates from these sources include general information delivered on a daily basis and more threat-specific information delivered as required. Tools are in place within Registrant’s environment to monitor for anomalous behavior and provide rapid alerting for emerging threats and, in some cases, automated responses to threats. Registrant’s cybersecurity team meets regularly with product vendors for these tools to ensure optimal configurations are in place to protect its environment.

To determine the risk to Registrant’s systems, it engages in a continuous vulnerability management lifecycle process to identify and remediate vulnerable systems and system configurations. In this regard, Registrant leverages the NIST cybersecurity frameworks. To supplement Registrant’s internal process, the cybersecurity team regularly contracts consultants to assess system configurations, both passively through exercises such as configuration review and actively through penetration testing, and response procedures, such as tabletop exercises, to identify areas for improvement. In addition, Registrant supplements its day-to-day operations with around the clock identification, assessment and mitigation of cyber risks with third-party security services as well. Registrant is working on implementing across AWR and its subsidiaries a comprehensive, risk-based approach to identify and oversee cybersecurity risks presented by third parties, including vendors, service providers and other external users of its systems and data, as well as the systems of third parties that could adversely impact Registrant’s business in the event of a cybersecurity incident affecting those third-party systems.

Cybersecurity updates are provided periodically to Registrant’s senior management, including its CEO, CFO and senior vice presidents of Registrant’s operations, and to the senior management of Registrant’s subsidiaries. Cybersecurity risk management extends beyond Registrant’s and its subsidiaries’ senior management teams. Registrant’s Board of Directors (the “Board”) oversees enterprise risk management, or ERM, performed under the direction of Registrant’s senior management team. Cybersecurity updates, including recent findings, changes to processes or personnel changes, are provided to the ERM liaison to the Board, who is a member of the Board, and to the full Board on a quarterly basis or more frequently if needed. Cybersecurity is one component of an overall ERM framework that involves Registrant’s Board. The Board satisfies its oversight responsibility by obtaining information from the ERM liaison and senior management of Registrant, with input from the senior management of Registrant’s subsidiaries as necessary. On a quarterly basis, Registrant’s senior management will discuss plans to mitigate cybersecurity risks with the ERM liaison. The ERM liaison and Registrant’s senior management will then provide a report to the full Board regarding the critical cybersecurity risks discussed, mitigation plans and implementation of the ERM program that addresses cybersecurity risks.

In addition, Registrant’s plans require members of its senior management, such as its CEO and CFO, as well as members of management from its, and its subsidiaries’, Operations, Information Technology, Human Capital Management, Accounting and Legal teams to participate in Registrant’s Cybersecurity Incident Response Team (“CIRT”) and to be kept current on all aspects related to a cyberattack, if a cybersecurity incident were to occur.

Responses to cyberattacks are fast-moving and dynamic and would require an assessment of actual or potential damage performed by Registrant’s cybersecurity team. If a cyberattack were to occur, continuous engagement, communication and collaboration between Registrant’s cybersecurity team and members of its CIRT as well as third parties would likely be necessary in order to gather accurate and complete information, perform a comprehensive evaluation and assessment of the cyberattack, manage and contain the cybersecurity threat, and develop and execute a remediation and recovery plan. Members

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ofcybersecurity ~~its CIRT~~ team ~~would~~assesses ~~work~~ongoing ~~together to determine whether a~~ cybersecurity ~~breach~~threats ~~is material~~ and ~~required~~vulnerabilities to beprioritize ~~reported~~and toimplement ~~the~~mitigation ~~Board~~factors and ~~publicly~~defense ~~under~~to ~~applicable~~help ~~law~~contain and ~~regulation~~combat identified risks.

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~~Risks~~To ~~from~~determine ~~cybersecurity~~the ~~threats,~~risk ~~including~~to asRegistrant’s asystems, ~~result~~it ofengages ~~any~~in ~~previous~~a ~~cybersecurity~~continuous ~~incidents,~~vulnerability ~~have~~management ~~not~~lifecycle ~~materially~~process ~~affected~~to identify and ~~are~~remediate ~~not~~vulnerable ~~reasonably~~systems ~~likely~~and tosystem ~~materially~~configurations. ~~affect~~In ~~Registrant~~this regard, ~~including~~Registrant ~~its~~leverages ~~business~~the ~~strategy,~~NIST ~~results~~cybersecurity offrameworks. ~~operations~~To orsupplement ~~financial~~Registrant’s ~~condition.~~internal ~~However~~process, the ~~risk of~~ cybersecurity ~~threats~~team ~~could~~regularly becontracts ~~significant~~consultants ifto aassess ~~cyberattack~~system ~~disrupts Registrant’s critical operations~~configurations, ~~service~~both orpassively ~~financial~~through ~~systems.~~exercises ~~See~~such ~~“Information~~as ~~Technology~~configuration ~~Risk~~review ~~Factors”~~and ~~under~~actively ~~Item~~through ~~1A. In~~penetration ~~addition~~testing, ~~any~~and ~~unauthorized~~response ~~access~~procedures, tosuch ~~sensitive~~as ~~information~~tabletop orexercises, ~~data~~to ~~breaches~~identify ~~could~~areas befor ~~detrimental~~improvement. toIn ~~Registrant’s operations~~addition, ~~critical~~Registrant ~~corporate~~supplements ~~information~~its ~~and~~day-to-day ~~reputation~~operations ~~and relationships~~ with ~~its~~around ~~customers,~~the ~~vendors,~~clock ~~employees~~identification, ~~directors~~assessment and ~~could~~mitigation ~~negatively~~of ~~affect~~cyber ~~the~~risks ~~future~~with ofthird-party ~~contract~~security ~~awards~~services atas ~~ASUS~~well. ~~and~~Registrant ~~could~~is ~~result~~ in athe ~~termination~~process of ~~one~~implementing oracross ~~more~~AWR ofand its ~~existing~~subsidiaries ~~contracts~~a orcomprehensive, ~~the~~risk-based ~~assessment~~approach ~~of penalties. The cost of responding~~ to aidentify ~~cyberattack~~and ~~could~~oversee becybersecurity ~~significant~~risks ~~depending~~presented onby ~~the~~third ~~severity~~parties, ofincluding ~~the~~vendors, ~~cyberattack~~service providers and ~~could~~other goexternal ~~beyond~~users ~~financial~~of ~~costs~~its assystems ~~operations~~ and ~~services~~data, ~~provided~~as bywell ~~Registrant~~as ~~could~~the besystems ~~delayed~~of ~~and~~third ~~coordinated~~parties ~~resources~~that ~~in response~~ could beadversely ~~significant.~~ impact Registrant’s ~~could~~business ~~also~~in bethe ~~assessed~~event ~~penalties~~of ifa itcybersecurity isincident ~~determined~~affecting ~~that~~those ~~applicable~~third-party ~~data privacy laws have been violated~~systems.

Registrant’s plans require members of its senior management, such as its CEO and CFO, as well as members of management from its, and its subsidiaries’, Operations, Information Technology, Human Capital Management, Accounting and Legal teams to participate in Registrant’s Cybersecurity Incident Response Team (“CIRT”) and to be kept current on all aspects related to a cyberattack, if a cybersecurity incident were to occur.

To ensure that members of Registrant’s Board are informed of material cyberattacks, Registrant’s CFO and IT Director have been designated as key members of management that will provide current updates to Registrant’s ERM liaison and the Board. The communication will include, but not be limited to, the nature and status of the cyberattack and Registrant’s plan to contain and mitigate the cyber threat and ultimately the remediation and recovery plan to return to “business as usual” state. Registrant’s CFO has over 15 years overseeing the Company’s risk management area. Registrant’s IT Director has over 25 years in Information Technology designing, implementing and supporting various cybersecurity and technical solutions, along with ensuring compliance with multiple cybersecurity regulations.

Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected and are not reasonably likely to materially affect Registrant, including its business strategy, results of operations or financial condition. However, the risk of cybersecurity threats could be significant if a cyberattack disrupts Registrant’s critical operations, service or financial systems. See “Information Technology Risk Factors” under Item 1A. In addition, any unauthorized access to sensitive information or data breaches could be detrimental to Registrant’s operations, critical corporate information and reputation and relationships with its customers, vendors, employees, directors and could negatively affect the future of contract awards at ASUS and could result in a termination of one or more of its existing contracts or the assessment of

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penalties. The cost of responding to a cyberattack could be significant depending on the severity of the cyberattack and could go beyond financial costs as operations and services provided by Registrant could be delayed and coordinated resources in response could be significant. Registrant could also be assessed penalties if it is determined that applicable data privacy laws have been violated.

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Item 2. Properties

Water Properties

As of December 31, ~~2024~~2025, GSWC’s physical properties consisted of water transmission and distribution systems, which included 2,~~882~~890 miles of pipeline together with services, meters and fire hydrants, and approximately 450 parcels of land generally less than 1 acre each, on which are located wells, pumping plants, reservoirs and other water utility facilities, including five surface water treatment plants. GSWC also has franchises, easements and other rights of way for the purpose of accessing wells and tanks and constructing and using pipes and appurtenances for transmitting and distributing water. All of GSWC’s properties are located in California.

As of December 31, ~~2024~~2025, GSWC owned ~~238~~234 wells, of which ~~176~~181 are active with an aggregate production capacity of approximately ~~180~~188 million gallons per day. GSWC has 5961 connections to the water distribution facilities of the MWD, and other municipal water agencies. GSWC’s storage reservoirs and tanks have an aggregate capacity of approximately 119 million gallons. GSWC owns no dams. The following table provides, in greater detail, information regarding the water utility plant of GSWC:

Pumps		Distribution Facilities			Reservoirs
Well	Booster	Mains*	Services	Hydrants	Tanks	Capacity*
238	378	2,882	264,696	27,087	144	119	(1)
234	392	2,890	265,100	27,282	145	119	(1)

* Reservoir capacity is measured in millions of gallons. Mains are in miles.

(1) GSWC has additional capacity in its Bay Point system, through an exclusive capacity right to use 4.4 million gallons per day from a treatment plant owned by Contra Costa Water District. GSWC also has additional reservoir capacity through an exclusive right-to-use all of one 8 million gallon reservoir, one-half of another 8 million gallon reservoir, and one-half of a treatment plant’s capacity, all owned by Three Valleys Municipal Water District.

Electric Properties

BVES’s properties are located in the Big Bear area of San Bernardino County, California. As of December 31, ~~2024~~2025, BVES owned and operated approximately 87.8 miles of overhead 34.5 kilovolt (kv) sub-transmission lines (2128.9438 circuit miles are insulated), 6.4957 miles of underground 34.5 kv sub-transmission lines, ~~494~~495.3689 miles of overhead 4.16 kv or 2.4 kv distribution lines (4546.0132 circuit miles are insulated), 114.5298 miles of underground cable, 1314 sub-stations and a natural gas-fueled 8.4 MW peaking generation facility. BVES also has franchises, easements and other rights of way for the purpose of constructing and using poles, wires and other appurtenances for transmitting electricity.

Adjudicated and Other Water Rights

GSWC owns groundwater and surface water rights in California. Groundwater rights are further subject to classification as either adjudicated or unadjudicated rights. Adjudicated rights have been established through comprehensive litigation in the courts, and the annual extraction quantities and use of the adjudicated rights are often subject to the provisions of the judgment for that particular groundwater basin. Additionally, as a result of the adjudication, many of these groundwater basins are managed by a watermaster that is charged with enforcing the provisions of the judgment, which may include determining operating safe yields based on the water supply conditions of the groundwater basin.

GSWC actively manages its adjudicated groundwater rights portfolio with the goal of optimizing and making this source of supply sustainable. Unadjudicated rights are subject to further regulation by the State Water Resources Control Board (“SWRCB”) and the California Department of Water Resources. Surface water rights are quantified and managed by the SWRCB, unless the surface water rights originated prior to 1914. As of December 31, ~~2024~~2025, GSWC had adjudicated groundwater rights and surface water rights of 70,~~794~~362 and 11,335 acre-feet per year, respectively. GSWC also has a number of unadjudicated groundwater rights, which have not been quantified, but are typically measured by historical usage.

Office Buildings

GSWC owns its general headquarters facility in San Dimas, California. GSWC also owns and leases customer service offices and office space throughout California. BVES owns office space in California. ASUS leases office facilities in Virginia, North Carolina, Maryland and ~~Maryland~~Massachusetts, and owns service centers in Florida, Maryland, South Carolina, Virginia, Texas, North Carolina and Kansas.

Mortgage and Other Liens

As of December 31, ~~2024~~2025, neither AWR, GSWC, BVES, ASUS, nor any of its subsidiaries, had any mortgage debt or liens securing indebtedness outstanding. Under the terms of certain debt instruments, AWR, GSWC and BVES are prohibited from issuing any secured debt, without providing equal and ratable security to the holders of this existing debt.

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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 constitutes a more necessary use. In addition, these laws provide that the owner of utility property (i) may contest whether the condemnation is actually necessary, and (ii) is entitled to receive the fair market value of its property if the property is ultimately taken.

Item 3. Legal Proceedings

During the fourth quarter of 2025, GSWC and one of ASUS’s subsidiaries received class settlement payments of $2.2 million and $0.3 million, net of legal and other costs, respectively, from Dupont de Nemours, Inc. and related entities (“Dupont”) pursuant to respective class settlement agreements. A multidistrict litigation was created by a court order on December 7, 2018 that included Dupont, Tyco Fire Products LP, BASF Corp. and other defendants. A class settlement agreement among Dupont and the class of eligible public water systems was then entered into on June 30, 2023 and resolved any claims for PFAS contamination with Dupont. The class settlement agreement between the parties was approved by an order issued by the Federal District Court of South Carolina on February 28, 2024.

GSWC and one of ASUS’s subsidiaries are plaintiffs in lawsuits seeking monetary damages related to PFAS contamination affecting public water systems with Tyco Fire Products LP and BASF Corp. Both defendants have reached class settlement agreements with the classes of eligible public water systems on April 26, 2024 and May 20, 2024, respectively, and both class settlement agreements have been approved by orders issued by the Federal District Court of South Carolina on November 22, 2024. Although class settlement agreements have been reached by the parties and approved by the Court, settlement amounts expected to be awarded to GSWC and ASUS’s subsidiary are not known at this time.

Registrant is subject to 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.

Item 4. Mine Safety Disclosure

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Stock Performance Graph

The graph below compares the cumulative 5-Year total return of American States Water Company’s Common Shares with the cumulative total returns of the S&P 500 index and a customized peer group of seven water utilities that includes: American Water Works Company Inc., Essential Utilities Inc., Artesian Resources Corporation, California Water Service Group, Middlesex Water Co., York Water Co. and H2O America (formerly SJW Group). In accordance with SEC guidance, the returns of the seven utilities included in the peer group are weighted according to their respective market capitalization.

An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Common Shares, and in the common stock in the index and in the peer group on December 31, ~~2019~~2020. Relative performance is tracked through December 31, ~~2024~~2025.

	12/2019		12/2020		12/2021		12/2022		12/2023		12/2024
	12/2020		12/2021		12/2022		12/2023		12/2024		12/2025
American States Water Company	$	100.00	$	93132.2426	$	~~123~~120.3243	$	~~112~~106.2963	$	99105.4236	$	98100.2479
S&P 500	$	100.00	$	~~118~~128.4071	$	~~152~~105.3940	$	~~124~~133.7910	$	~~157~~166.5940	$	~~197~~196.0216
Peer Group	$	100.00	$	~~117~~123.0247	$	~~144~~105.4968	$	~~123~~90.6752	$	~~105~~86.9431	$	~~101~~92.0017

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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Market Information Relating to Common Shares

Common Shares of American States Water Company are traded on the New York Stock Exchange (“NYSE”) under the symbol “AWR.”

GSWC is a wholly-owned subsidiary of AWR. As a result, there is no public trading market in its common shares.

Approximate Number of Holders of Common Shares

As of February 1817, ~~2025~~2026, there were 1,~~739~~648 holders of record of the 3839,~~156~~082,~~568~~470 outstanding Common Shares of American States Water Company. AWR owns all of the outstanding common shares of GSWC, BVES and ASUS. ASUS owns all of the outstanding stock of its subsidiaries.

Frequency and Amount of Any Dividends Declared and Dividend Restrictions

For the last two years, AWR has paid dividends on its Common Shares on or about March 1, June 1, September 1 and December 1. The following table lists the amounts of dividends paid on Common Shares of American States Water Company:

	2024		2023
	2025		2024
First Quarter	$	0.~~4300~~4655	$	0.~~3975~~4300
Second Quarter	$	0.~~4300~~4655	$	0.~~3975~~4300
Third Quarter	$	0.~~4655~~5040	$	0.~~4300~~4655
Fourth Quarter	$	0.~~4655~~5040	$	0.~~4300~~4655
Total	$	1.~~7910~~9390	$	1.~~6550~~7910

AWR’s ability to pay dividends is subject to the requirement in its revolving credit facility to maintain compliance with all covenants described in Note 9 Bank Debt included in Part II, Item 8, in the Notes to Consolidated Financial Statements. GSWC is prohibited under the terms of its senior notes from paying dividends if, after giving effect to the dividend, its total indebtedness to capitalization ratio (as defined) would be more than 0.6667-to-1. GSWC would have to issue additional debt of $~~881.7~~1,148 million to invoke this covenant as of December 31, ~~2024~~2025.

Under California law, AWR, GSWC, BVES and ASUS are each permitted to distribute dividends to its shareholders and repurchase its shares so long as the Board of Directors determines, in good faith, that either: (i) the value of the corporation’s assets equals or exceeds the sum of its total liabilities immediately after the dividend, or (ii) its retained earnings equals or exceeds the amount of the distribution.

Under the least restrictive of the California tests, approximately $~~920.~~1,045.6 million was available to pay dividends to AWR’s common shareholders and repurchase shares from AWR’s common shareholders at December 31, ~~2024~~2025. Approximately $~~805~~933.87 million was available for GSWC to pay dividends to AWR at December 31, ~~2024~~2025, and approximately $~~102~~117.17 million was available for BVES to pay dividends to AWR at December 31, ~~2024~~2025. BVES has a separate revolving credit facility, and its ability to pay dividends is subject to the requirement in the credit agreement to maintain compliance with all covenants described in Note 9 Bank Debt.

ASUS’s ability to pay dividends to AWR is dependent upon the ability of each of its subsidiaries to pay dividends to ASUS under applicable state law as well as ASUS’s ability to pay dividends under California law.

AWR paid $6774.07 million in dividends to shareholders for the year ended December 31, ~~2024~~2025, as compared to $6167.20 million for the year ended December 31, ~~2023~~2024. GSWC paid dividends of $3537.15 million and $5535.41 million to AWR in ~~2024~~2025 and ~~2023~~2024, respectively. BVES did not pay dividends to AWR in ~~2024~~2025 and ~~2023~~2024. ASUS paid dividends of $20.0 million and $16.0 million to AWR in ~~2024~~2025 and ~~2023~~2024, respectively.

Unregistered Sales of Equity Securities

On December 3026, ~~2024~~2025, GSWC issued 20.~~7586~~975 common shares to AWR in exchange for a contribution of $~~39,999,700~~12.0 million. These shares were issued in a private placement, and the proceeds were used to pay outstanding borrowings under GSWC’s credit agreement and to fund GSWC’s operations and capital expenditures. GSWC issued the common shares upon the exemption from registration provided under Section 4(a)(2) of the Securities Act of 1933, as amended. AWR did not issue any unregistered equity securities during ~~2024~~2025.

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Other Information

The shareholders of AWR have approved the material features of all equity-compensation plans under which AWR directly issues equity securities.

33The following table provides information about AWR repurchases of its Common Shares during the fourth quarter of 2025:

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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 (1)(3)
October 1 - 31, 2025	277		$	74.08	—	—
November 1 - 30, 2025	5,949		$	70.72	—	—
December 1 - 31, 2025	3,828		$	73.39	—	—
Total	10,054	(2)	$	71.83	—

The following table provides information about AWR repurchases of its Common Shares during the fourth quarter of 2024:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number ofShares Purchased asPart of PubliclyAnnounced Plans or Programs (1)	Maximum Numberof Shares That MayYet Be Purchasedunder the Plans or Programs (1)(3)
October 1 - 31, 2024	11,425		$	83.37	—	—
November 1 - 30, 2024	302		$	83.86	—	—
December 1 - 31, 2024	3,143		$	84.87	—	—
Total	14,870	(2)	$	83.70	—

(1) None of the Common Shares were repurchased pursuant to any publicly announced stock repurchase program.

(2) Of these amounts, 115,~~016~~445 Common Shares were acquired on the open market for employees pursuant to the 401(k) plan. The remainder of the shares were acquired on the open market for participants in the DRP.

(3) Neither the 401(k) plan nor the Common Share Purchase and DRP contains a maximum number of Common Shares that may be purchased in the open market.

Item 6. (Reserved)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information on AWR’s consolidated operations and assets, and includes specific references to (i) GSWC, AWR’s regulated water utility segment, (ii) BVES, AWR’s regulated electric utility segment, (iii) ASUS and its subsidiaries, collectively, AWR’s contracted services segment, and (iv) AWR (parent) where applicable.

Included in the following analysis is a discussion of Registrant’s operations in terms of earnings per share by business segment and AWR (parent), which equals each business segment’s recorded earnings and adjusted earnings (if applicable) divided by AWR’s weighted average number of diluted Common Shares. The impact of retroactive rates related to the full year of 2022 recorded during the year ended December 31, 2023 resulting from the final decision in the water general rate case approved in June 2023 and the impact from the reversal of revenues subject to refund recorded in 2022 due to a ~~change~~one-time intax ~~estimates~~benefit recorded in ~~2023~~2024 ~~following~~at the ~~receipt~~water ofsegment ahas ~~final cost of capital decision in June 2023 have~~ been excluded in ~~this~~the analysis when communicating AWR’s consolidated and water segment results for the years ended December 31, ~~2024~~2025 and ~~2023~~2024. This adjustment has been excluded from the analysis to help facilitate comparisons of ~~Registrant~~AWR’s performance from period to period.

All of the measures discussed above are derived from consolidated financial information of Registrant, but are not presented in our financial statements that are prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). These items constitute “non-GAAP financial measures” under Securities and Exchange Commission rules, which supplement our GAAP disclosures but should not be considered as an alternative to the respective GAAP measures. Furthermore, the non-GAAP financial measures may not be comparable to similarly titled non-GAAP financial measures of other registrants.

AWR uses earnings per share by business segment and AWR (parent), a non-GAAP financial measure, as an important measure in evaluating its operating results and believes it provides investors with clarity surrounding the performance of its segments. AWR reviews this measurement regularly and compares it to historical periods and to its operating budget. AReconciliations ~~reconciliation~~of this measure and of diluted earnings per share as adjusted to AWR’s consolidated diluted earnings per share prepared in accordance with GAAP isare included in the discussion under the section titled “Summary Results by Segment.”

Overview

Factors affecting our financial performance are summarized under the Overview section in Item 1. Business and Item 1A. Risk Factors.

The U.S. government announced a comprehensive set of tariffs in the second quarter. Following the pause of certain of these tariffs, the majority of the previously announced tariffs have been implemented. The U.S. government has continued to indicate that they could impose additional tariffs on particular countries and to impose global tariffs on certain goods. Such tariffs could impact our results of operations by increasing the costs of various goods, including construction materials. Management is actively engaged with vendors and business partners to reduce financial risks of tariffs; however, the impact of such tariffs is subject to uncertainties regarding whether the U.S. government ultimately imposes additional tariffs, the timing of their implementation, the magnitude of such tariffs and possible exemption for certain goods, among other unknowns.

Water and Electric Segments:

GSWC’s revenues, operating income and cash flows are earned primarily through delivering potable water to homes and businesses in California. BVES’s revenues, operating income and cash flows are primarily earned through delivering electricity in the Big Bear area of San Bernardino County, California. Rates charged to GSWC and BVES customers are authorized by the CPUC. These rates are intended to allow recovery of operating costs and a reasonable rate of return on invested capital. GSWC and BVES plan to continue seeking additional rate increases in future years from the CPUC to recover operating and supply costs, and receive reasonable returns on invested capital. Capital expenditures in future years at GSWC and BVES are expected to remain at substantially higher levels than depreciation expense. When necessary, GSWC and BVES may obtain funds from external sources in the capital markets and through bank borrowings.

General Rate Case Filings and Other Matters:

Water General Rate Case for the years 2025–2027

On ~~August~~January 1430, ~~2023~~2025, ~~GSWC~~the ~~filed~~CPUC issued a final decision in GSWC’s general rate case application for all its water regions and the general office., ~~This~~which ~~general~~determines ~~rate case will determine~~ new water rates for the years 2025 –- 2027. On ~~July~~Among ~~12,~~other ~~2024~~things, ~~GSWC and~~ the ~~Public~~final ~~Advocates~~decision ~~Office~~adopted ~~(“Cal Advocates”) of the CPUC filed~~ a ~~joint motion to adopt a~~ settlement agreement between GSWC and ~~Cal Advocates in connection with~~ the ~~water~~Public ~~utility~~Advocates ~~general~~Office ~~rate~~at ~~case. A proposed decision in~~ the ~~water general rate case was issued on November 15~~CPUC, ~~2024~~which ~~and~~authorized anGSWC ~~alternate~~to ~~proposed~~invest ~~decision~~approximately ~~was~~$573.1 ~~subsequently~~million ~~issued~~in oncapital ~~December~~infrastructure ~~27,~~over ~~2024. The proposed decision adopted~~ the ~~settlement~~three-year ~~agreement~~capital ~~and~~cycle. ~~also~~The ~~addressed~~$573.1 ~~various~~million ~~unresolved~~of ~~issues~~infrastructure ~~related~~investment toincludes ~~GSWC’s requests for certain regulatory mechanisms~~$17.7 ~~Among~~million ~~other things, the proposed decision rejected GSWC’s request for the continuation~~ of aadvice ~~sales~~letter ~~reconciliation~~capital ~~mechanism,~~investments ~~which would allow GSWC~~ to ~~adjust~~be ~~its~~filed ~~sales~~for ~~forecast~~revenue ~~throughout~~recovery during the ~~general~~second- ~~rate~~and ~~case~~third-year ~~cycle~~attrition toincreases ~~address~~when ~~significant~~those ~~fluctuations~~projects inare ~~consumption~~completed. An ~~alternate~~In ~~decision~~addition, ~~issued by~~ the ~~assigned Commissioner on December 27, 2024,~~ approved ~~GSWC’s~~settlement ~~request~~agreement toincludes ~~continue this mechanism~~$58. No2 ~~other~~million ~~material~~of ~~changes~~advice ~~were~~letter ~~made~~capital toinvestments ~~the~~that ~~proposed~~began ~~decision. On~~construction ~~January 30, 2025, the CPUC issued a final decision~~ in ~~this~~2023 ~~proceeding~~to ~~that~~be ~~approved~~filed ~~the~~for ~~alternate~~revenue ~~proposed~~recovery ~~decision,~~during ~~which adopted~~ the ~~settlement~~second- ~~agreement. GSWC~~and ~~continued~~third-year toattrition ~~bill~~increases ~~its~~when ~~customers~~those ~~based~~projects onare ~~the~~completed. ~~existing~~Under ~~adopted 2024 rates until~~ the ~~new 2025 rates were~~ approved ~~and~~settlement ~~implemented~~agreement, ~~effective~~beginning ~~February~~in 12025, ~~2025.~~all ~~GSWC~~of ~~had filed with~~ the ~~CPUC~~advice toletter ~~establish~~projects ~~memorandum~~were ~~accounts~~allowed to ~~track~~accrue ~~interim~~in ~~rates,~~a ~~which~~memorandum ~~made~~account ~~the~~(i) ~~new~~interest ~~2025 rates retroactive to January 1, 2025.~~

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The settlement agreement approved in the final decision resolved most of the issues related to the calculation of the 2025 annual revenue requirement in the general rate case application leaving only two unresolved issues. Among other things, the approved settlement authorizes GSWC to invest approximately $573.1 million in capital infrastructure over the three-year capital cycle. The $573.1 million of infrastructure investment includes $17.7 million of advice letter capital investments to be filed for revenue recovery during the second and third year attrition increases when those projects are completed. In addition, the approved settlement agreement includes $58.2 million of advice letter capital investments that began construction in 2023 that we expect to file for revenue recovery during the second and third year attrition increases when those projects are completed. For all of the advice letter projects, GSWC will be allowed to accrue interest during construction at the adopted cost of debt and recover the full rate of return, including all applicable components of the revenue requirement after the assets are placed in service up until the assets are placed in customer rates.

Excluding revenues for all of the advice letter capital projects discussed above, under the terms of the approved settlement agreement (i) GSWC’s adopted operating revenues less water supply costs for 2025 will increase by approximately $23 million as compared to the 2024 adopted operating revenues less water supply costs, and (ii) there are potential additional revenue increases of approximately $20 million for each of the years 2026 and 2027 based on inflation factors used at the time of the application filing in August 2023. The increases in 2026 and 2027 are subject to the results of an earnings test and changes to the forecasted inflationary index values. Actual increases for 2026 and 2027 will be determined when the CPUC approves the filings to implement the new rate increases, using inflationary index values applicable at that time.

The two remaining 2025 revenue requirement issues that were not resolved in the approved settlement agreement were related to the sales forecast and supply mix. The final decision adopts GSWC’s recommended sales forecast and adopts a supply mix that splits the difference between GSWC’s and Cal Advocates’ forecasts. In addition, certain items related to GSWC’s request for various regulatory mechanisms were litigated that were also addressed in the final decision. With regards to these requests, the final decision (i) rejects GSWC’s request for the continuation of a full sales and revenue decoupling mechanism such as the WRAM and a full cost balancing account for water supply such as the MCBA, and instead orders GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”) and an incremental cost balancing account (“ICBA”) for supply costs, (ii) accepts GSWC’s sales reconciliation mechanism, (iii) rejects GSWC’s supply mix adjustment mechanism, and (iv) rejects GSWC’s request to modify the existing per- and polyfluoroalkyl substances (“PFAS”) memorandum account to track carrying costs on capital investments needed to comply with the new PFAS maximum contaminant levels established by the U.S. EPA (with monitoring and reporting required effective 2027), and instead orders GSWC to file for recovery of PFAS-related capital projects through a separate application or future general rate case. The final decision also adopted GSWC’s M-WRAM rate design proposal, authorizing GSWC to increase the revenue requirement in its fixed service charges to between 45-48% depending on the ratemaking area representing approximately 65% of GSWC’s fixed costs in aggregate. The M-WRAM tracks the difference between the revenue based on actual metered sales through a tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a blended tier standard quantity rate had been in effect. The ICBA for supply costs tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. The M-WRAM and ICBA are effective January 1, 2025.

As noted above, GSWC litigated its request for the continued use of the WRAM and MCBA. In August 2020, the CPUC had issued a decision that mandated the discontinuation of the existing WRAM used by investor-owned water utilities since 2008 that, in conjunction with tiered rates, incentivizes water conservation, and also ordered the discontinued use of the MCBA. In response to the CPUC’s order, GSWC, three other investor-owned water utilities and the California Water Association each separately filed a petition in 2021 with the California Supreme Court (the “Court”) to review the CPUC’s decision-making processes that resulted in discontinuing the use of the WRAM and MCBA. On July 8, 2024, the Court issued a ruling that set aside the previously issued order by the CPUC and vacated the portions of the CPUC’s August 2020 decision related to the discontinued use of the WRAM and MCBA used by water utilities and its accompanying findings and conclusions. Furthermore, in September 2022, the governor of California signed Senate Bill (“SB”) 1469, which allowed Class A water utilities, including GSWC, to continue requesting the use of a revenue decoupling mechanism in their next general rate case. However, despite the Court’s ruling and SB 1469, GSWC’s request to continue using the WRAM and MCBA was rejected by the CPUC and as a result, GSWC will not be able to recognize under-collections of revenue caused by fluctuations in consumption or changes in water supply cost mix beginning in 2025. However, the final decision did approve GSWC’s request for the continuation of a sales reconciliation mechanism, which would allow GSWC to adjust its sales forecast throughout the general rate case cycle to address significant fluctuations in consumption.

Finally, included in the consolidated results for 2024 is a tax benefit of $5 million, or $0.13 per share, resulting from the final decision that adopted a settlement agreement, which excluded from customer rates certain excess deferred income tax balances generated by activities outside of ratemaking that were previously recorded as regulatory liabilities as a result of the 2017 Tax Cuts and Jobs Act that reduced the corporate income tax rate from 35% to 21%. Because of the final CPUC decision, and the alternate proposed decision received in December 2024, both of which approved the settlement agreement in its entirety, GSWC recorded the tax benefit in 2024 to reflect a change in estimate that decreased its regulatory liabilities associated with excess deferred income tax balances as of December 31, 2024.

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~~Water~~during ~~General~~the ~~Rate~~construction ~~Case~~period at GSWC’s adopted cost of debt until the assets are in service, and (ii) the full rate of return that includes a debt and equity component and all applicable components of the revenue requirement for ~~years~~the ~~2022~~projects -from ~~2024~~the period the assets are in service until the date of the attrition filings.

InExcluding ~~June~~revenues ~~2023,~~for all of the ~~CPUC~~advice ~~adopted~~letter acapital ~~final~~projects ~~decision~~discussed inabove, under the terms of the settlement agreement, GSWC’s ~~general~~adopted ~~rate~~operating ~~case~~revenues ~~application~~less water supply costs for ~~all~~2025 ~~its~~increased ~~water~~by ~~regions~~approximately ~~and~~$23 ~~its~~million ~~general~~as ~~office~~compared ~~that~~to ~~determined~~the ~~new~~2024 adopted operating revenues less water ~~rates~~supply ~~for~~costs. ~~the~~In ~~years~~December, ~~2022–2024~~2025, ~~retroactive~~GSWC received approval from the CPUC to implement its full second-year rate increases, effective January 1, ~~2022. The~~2026, ~~impact~~that ofwill ~~retroactive~~result ~~rates~~in higher adopted operating revenues less water supply cost for 2026 of approximately $32.0 million compared to 2025’s adopted operating revenues less water supply cost. Included in the ~~full~~2026 ~~year~~increase ofis ~~2022~~nearly as$11 ~~well~~million asrelated to the ~~2023~~advice ~~estimated~~letter ~~second-year~~capital ~~rate~~projects ~~increases~~previously ~~have~~discussed. The ~~been~~assets ~~reflected~~from the advice letter projects and the related amounts in the ~~results~~memorandum ofaccount ~~operations~~were added to the adopted rate base for inclusion in the ~~year~~revenue ~~ended~~requirement ~~December~~effective 31January 1, ~~2023~~2026.

The ~~third-year~~final ~~rate~~decision ~~increases~~also ~~for~~addressed ~~2024,~~GSWC’s ~~which~~request ~~were~~for ~~effective~~various ~~January~~regulatory 1,mechanisms ~~2024,~~that ~~have~~were ~~been~~litigated ~~reflected~~during in the ~~year~~proceeding. ~~ended~~Among ~~December~~other 31things, ~~2024~~the ~~results.~~final ~~There~~decision ~~was~~rejected anGSWC’s ~~increase~~request infor ~~recorded~~the ~~water~~continuation ~~operating revenues~~ of ~~$22.3~~a ~~million~~full ~~when~~sales ~~compared~~and torevenue ~~2023,~~decoupling ~~largely~~mechanism such as ~~a result of~~ the ~~third-year~~WRAM ~~rate~~and ~~increases for 2024 that reflects, among other things,~~ a ~~higher~~full ~~revenue~~cost ~~requirement~~balancing account for ~~increases~~water ~~in recorded~~ supply ~~costs~~such ofas ~~$3.6~~the ~~million~~MCBA, ~~which~~and ~~combined~~instead isordered anGSWC ~~increase~~to oftransition ~~$0.36~~to ~~per~~a ~~share,~~modified ~~when~~rate ~~compared~~adjustment tomechanism ~~2023,~~(a ~~and~~Monterey-style ~~excludes~~WRAM ~~the~~or ~~impact of (i~~“M-WRAM”) ~~retroactive~~and ~~rates~~an ~~for~~incremental ~~the~~cost ~~full~~balancing ~~year~~account of(“ICBA”) ~~2022~~for ~~resulting~~supply ~~from~~costs. ~~the~~The final ~~general~~decision ~~rate~~also ~~case~~adopted ~~decision,~~GSWC’s ~~and~~M-WRAM ~~(ii)~~rate ~~reversing~~design ~~the~~proposal ~~revenues~~authorizing ~~subject~~GSWC to ~~refund~~increase ~~liability previously recorded in 2022 resulting from~~ the ~~final~~revenue ~~cost~~requirement ofrecovery ~~capital decision, with both decisions received and recorded~~ in ~~2023.~~its ~~Actual~~fixed ~~water~~service ~~supply~~charges ~~costs~~to ~~are~~between ~~tracked~~45-48% ~~against~~of ~~adopted costs in~~ the revenue requirement, ~~and~~depending ~~passed through to customers~~ on ~~a dollar-for-dollar basis by way of~~ the ~~CPUC-approved~~ratemaking ~~water~~area ~~supply~~representing ~~cost~~approximately ~~balancing~~65% ~~accounts.~~of ~~The~~GSWC’s ~~increase~~fixed ~~in water supply~~ costs ~~results~~ in aaggregate, ~~corresponding~~and ~~increase~~approved inGSWC’s ~~water~~request ~~operating~~for ~~revenues~~the ~~and~~continuation ~~has~~of noa ~~net~~sales ~~impact~~reconciliation onmechanism ~~the~~that ~~water~~would ~~segment’s~~allow ~~profitability.~~GSWC ~~Due~~ to ~~the~~adjust ~~delay~~its insales ~~finalizing~~forecast throughout the ~~previous water~~ general rate case, ~~water~~cycle ~~revenues billed~~ to ~~customers~~address ~~for~~significant ~~the~~fluctuations ~~year~~in ~~ended~~consumption. ~~December~~The ~~31,~~M-WRAM ~~2022~~tracks ~~and for~~ the ~~period~~difference ~~from~~between ~~January~~the 1,revenue ~~2023 to July 30, 2023 were~~ based on ~~2021~~actual ~~adopted~~metered ~~rates~~sales ~~and~~through ~~new~~a ~~2023~~tiered volumetric rate ~~increases~~and ~~went~~the ~~into~~revenue ~~effect~~that onwould ~~July~~have ~~31,~~been ~~2023.~~received Inwith ~~October~~the ~~2023,~~same ~~surcharges~~actual ~~were~~metered ~~implemented~~sales toif ~~recover~~a ~~all~~standard ~~retroactive~~single quantity rate ~~differences~~had ~~accumulated~~been in ~~memorandum~~effect. ~~accounts~~The ICBA for ~~the~~supply ~~full~~costs ~~year~~tracks ofdifferences ~~2022~~between ~~and~~the ~~for~~authorized ~~2023~~per-unit ~~through~~prices ~~July~~and ~~30,~~actual ~~2023~~per-unit ~~over~~prices 36for ~~months.~~each Assupply ofcost ~~December 31,~~(purchased ~~2024~~water, ~~there~~pump istax, anand ~~aggregate~~purchased ~~cumulative balance of $37~~power).7 ~~million~~The ~~in CPUC~~M-~~approved~~WRAM ~~general~~and ~~rate~~ICBA ~~case~~were ~~memorandum~~effective ~~accounts~~January ~~that~~1, ~~have been recognized as regulatory assets with a corresponding increase in water revenues~~2025.

~~Cost~~Without the WRAM and MCBA, GSWC’s earnings in 2025 were favorably impacted from an actual water supply source mix that included less purchased water than what was authorized in the general rate case and included in the revenue requirement, which was partially offset by the negative impact from a nearly 4% decrease in water consumption compared to amounts adopted in the final general rate case. As a result, the combined impact from changes in water supply source mix compared to adopted levels and fluctuations in consumption did not have a material impact on GSWC’s 2025 earnings. The new 2025 rates and the implementation of ~~Capital~~the ~~(“COC”)~~new ~~Proceedings~~M-WRAM and ICBA regulatory mechanisms approved in the final decision have been reflected in GSWC’s earnings for the year ended December 31, 2025 that resulted in an increase in recorded revenues of $46.7 million largely from the new rates and an increase in recorded water supply costs of $21.9 million, which combined is an increase of $24.8 million, compared to 2024. GSWC’s future earnings will continue to be subject to volatility as a result of fluctuations in consumption and/or changes in water supply source mix compared to adopted levels.

Water Cost of Capital (“COC”) Proceeding

2026 COC Application

Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. ~~After~~ ~~receiving~~In anNovember ~~extension in February 2024, GSWC’s next cost of capital application was scheduled to be filed on May 1,~~ 2025 ~~effective for the years 2026 - 2028. On January 14~~, ~~2025, the CPUC approved a request to defer the cost of capital application by another year. In December 2024,~~ GSWC, along with three other investor-owned California water utilities, requested a further extension of the date by which each of them must file their cost of capital applications. In November 2025, the CPUC approved the request to defer the cost of capital application by another year. The CPUC’s approval postponed ~~this~~the filing date by one year until May 1, ~~2026~~2027, with a corresponding effective date of January 1, ~~2027~~2028. The CPUC also approved the joint parties’ request to leave the current Water Cost of Capital Mechanism (“WCCM”) in place through the one-year deferral period. GSWC’s current authorized rate of return on rate base is 7.93%, based on its weighted cost of capital, which will continue in effect through December 31, ~~2026~~2027. The 7.93% return on rate base includes a return on equity of 10.06%, an embedded cost of debt of 5.1%, and a capital structure with 57% equity and 43% debt.

~~2021~~Electric ~~COC~~General ~~Application~~Rate Cases:

OnGeneral ~~June~~Rate ~~29,~~Case ~~2023, the CPUC adopted a final decision in the cost of capital proceeding effective July 31, 2023 that, among other things, allowed~~ for ~~the~~Years continuation of the WCCM. The WCCM adjusts the return on equity and rate of return on rate base between the three-year cost of capital proceedings 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 there is a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. Based on the final decision, all adjustments to rates were effective July 31, 2023. Accordingly, GSWC billed its water customers and recognized revenues for the period from January 1 through July 30, 2023 based on the previously authorized return on equity of 8.9%. After receiving the final cost of capital decision, GSWC filed an advice letter to establish the WCCM and related adjustment for 2023, which increased GSWC’s 8.85% adopted return on equity in the decision to 9.36% effective July 31, 2023. For the period from October 1, 2022 through September 30, 2023, the Moody’s Aa utility bond rate increased by 139.7 basis points from the benchmark, which again triggered a WCCM adjustment and increased GSWC’s 9.36% adopted return on equity to 10.06% effective January 1, 2024.–2026

~~Based~~On onJanuary 16, 2025, the CPUC adopted a final decision in ~~the~~BVES’s ~~cost~~general ofrate ~~capital~~case proceeding ~~issued~~that inset ~~June~~new ~~2023,~~electric ~~all~~rates ~~adjustments~~retroactive to ~~rates~~January ~~were~~1, ~~prospective~~2023 and ~~not~~approved ~~retroactive~~the settlement agreement reached between BVES, Cal Advocates and another intervenor in its entirety. ~~Following~~Among other things, the ~~receipt~~settlement ofagreement, (i) settled and adopted the ~~final~~revenue ~~decision~~requirements ~~that~~for ~~became~~each ~~effective~~of ~~July~~the ~~31,~~four years 2023 through 2026, ~~management~~and ~~updated~~the ~~its~~rate ~~analysis~~increases ~~and~~for ~~reassessed~~2024 ~~the~~through ~~accounting~~2026 ~~estimates~~are ~~recorded~~not subject to ~~date~~an ~~related~~earnings totest, ~~GSWC’s~~(ii) ~~lower~~authorized ~~cost~~BVES ofto ~~debt~~invest approximately $52.5 ~~Accordingly,~~million ~~during~~in ~~the~~capital ~~second~~infrastructure ~~quarter~~included ofin ~~2023,~~base ~~GSWC~~rates ~~recorded~~over athe ~~change~~four-year inrate ~~estimate~~cycle ~~that~~and ~~resulted~~at inleast an ~~increase~~additional $23.1 million (plus an allowance for funds used during construction, or “AFUDC”) to ~~water~~be ~~revenues~~filed infor revenue recovery through advice letters when the ~~amount~~projects are completed; (iii) adopted a cost of $6capital that increased BVES’s adopted return on equity from 9.46% ~~million~~to 10.0%, orlowered ~~approximately~~the $0cost of debt from 6.136% ~~per~~to ~~share~~5.51%, asand amaintained ~~result~~the capital structure of ~~reversing~~57% ~~its~~equity ~~regulatory~~and ~~liability~~43% ~~for~~debt, ~~revenues~~and ~~subject~~(iv) toapproved ~~refund~~for ~~that~~recovery itthe ~~had~~requested ~~recorded~~capital ~~during~~expenditures ~~2022.~~and other incremental

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~~Electric~~operating ~~General~~costs ~~Rate~~already ~~Case~~incurred ~~for~~prior ~~the~~to ~~years~~ 2023~~–2026~~ in connection with BVES’s wildfire mitigation plans that were previously not included in customer rates.

OnThe ~~August~~new ~~30,~~electric ~~2022~~rates were implemented on March 1, 2025. BVES ~~filed~~was also authorized by the CPUC to establish a general rate case ~~application~~memorandum account that ~~determines~~made the new ~~electric~~ rates ~~for~~retroactive ~~the~~to ~~years~~January ~~2023 –~~1, ~~2026~~2023. On ~~November~~The 1,general ~~2024,~~rate ~~BVES,~~case ~~Cal~~memorandum ~~Advocates,~~account ~~and~~tracked the ~~other~~revenue ~~intervenor~~differences inbetween the ~~proceeding~~2022 ~~filed~~adopted arates ~~joint~~and ~~motion~~the to2023 ~~adopt~~and a2024 ~~settlement~~new ~~agreement~~rates ~~between~~authorized by the ~~parties~~CPUC ~~resolving~~for ~~all~~future ~~issues~~recovery. As of December 31, 2025, the aggregate cumulative under-collection in ~~connection~~retroactive ~~with~~revenues related to the ~~pending~~full ~~general~~year ~~rate~~of ~~case~~2023 and 2024 amounted to $8.2 million. On ~~January~~April 161, 2025, BVES implemented surcharges to recover the ~~CPUC~~retroactive ~~adopted~~amounts aaccumulated ~~final~~related ~~decision~~to inthe ~~BVES’s~~new ~~general~~rates, ~~rate~~as ~~case~~well ~~proceeding~~as ~~that~~recovery ~~set~~of ~~the~~incremental ~~new~~operating ~~electric~~costs ~~rates~~incurred ~~retroactive~~prior to ~~January~~2023 1,in ~~2023~~connection ~~and~~with ~~approves~~BVES’s ~~the~~wildfire ~~settlement~~mitigation ~~agreement~~plans that were being tracked in ~~its~~memorandum ~~entirety~~accounts prior to the new rate cycle.

~~Among~~The ~~other~~final ~~things,~~decision ~~the~~provided ~~settlement~~for ~~agreement,~~an ~~(i)~~increase ~~settles~~in ~~and~~adopted ~~adopts~~operating ~~the~~revenues ~~revenue~~of ~~requirements~~$2.2 million for ~~each~~2025. ofFurthermore, the ~~four~~previously ~~years~~mentioned ~~2023~~advice ~~through~~letter ~~2026,~~projects ~~(ii)~~of ~~authorizes~~at ~~BVES~~least ~~to invest approximately~~ $5223.51 million inare ~~capital~~expected ~~infrastructure~~to ~~included~~generate inadditional ~~base~~annual ~~rates~~operating ~~over~~revenues ~~the~~of ~~four-year~~approximately ~~rate cycle and at least an additional~~ $~~23.1~~3 million ~~(plus~~when anthe ~~allowance~~respective ~~for~~projects ~~funds~~are ~~used during construction~~completed, orplaced ~~“AFUDC”)~~in toservice, beand filed for ~~revenue~~ recovery ~~through~~in ~~advice~~customer ~~letters~~rates. ~~when~~These ~~the~~ projects ~~are~~also ~~completed;~~accrue ~~(iii)~~AFUDC ~~adopts~~during aconstruction ~~cost~~that ofwill ~~capital~~further ~~that~~increase ~~increases~~the ~~BVES’s~~revenue ~~adopted~~requirement. ~~return~~On onApril ~~equity~~1, ~~from~~2025, ~~9.6%~~BVES toimplemented ~~10.0%,~~new ~~lowers~~base rates to recover the ~~cost~~revenue ofrequirement ~~debt~~associated ~~from~~with 6$11.6% tomillion ~~5.51%,~~(including ~~and~~AFUDC) ~~maintains~~of ~~the~~ capital ~~structure~~projects ofapproved ~~57%~~for ~~equity~~recovery ~~and~~through ~~43%~~advice ~~debt~~letters. In addition, ~~and~~effective ~~(iv)~~October ~~approves~~1, ~~for~~2025, ~~recovery~~BVES began to recover the ~~requested~~revenue ~~capital~~requirement ~~expenditures~~as ~~and~~a ~~other~~result ~~incremental~~of ~~operating~~an ~~costs~~additional ~~already~~advice ~~incurred~~letter incapital ~~connection~~project ~~with~~totaling ~~BVES’s~~approximately ~~wildfire~~$12.2 ~~mitigation~~million ~~plans~~(including AFUDC) that ~~were~~was ~~previously~~completed ~~not~~and ~~included~~placed in ~~customer rates~~service.

~~Because~~General ofRate ~~receiving~~Case ~~a proposed decision in December 2024 followed by a final decision in January 2025, both of which approved the settlement agreement in its entirety, the impact of retroactive rates~~ for ~~the~~Years full year of 2023 and the 2024 second-year rate increases have been reflected in the 2024 fourth quarter results as it became probable that the approved retroactive rates for 2023 and 2024 would be permitted to be billed to customers in the future. The new rates are expected to go into effect on March 1, 2025. BVES was also authorized by the CPUC to establish a general rate case memorandum account that made the new rates retroactive to January 1, 2023. Due to the delay in finalizing the electric general rate case, billed electric revenues for the years of 2023 and 2024, were based on 2022 adopted rates. The general rate case memorandum account tracks the revenue differences between the 2022 adopted rates and the 2023 and 2024 new rates authorized by the CPUC for future recovery. Accordingly, as of December 31, 2024, an aggregate cumulative under-collection amount of $9.8 million in retroactive revenues related to the full year of 2023 and 2024 was recorded during the fourth quarter of 2024 along with a corresponding increase to BVES’s regulatory assets for future recovery from customers. Within 90 days from the effective date of the final decision, BVES will file for recovery of retroactive amounts accumulated related to the new rates, as well as recovery of incremental operating costs incurred prior to 2023 in connection with BVES’s wildfire mitigation plans that were being tracked in memorandum accounts prior to the new rate cycle. 2027–2030

AsOn ~~a result of reflecting the new rates in 2024 retroactive to~~ January 130, ~~2023~~2026, ~~there~~BVES ~~was~~filed ana ~~increase~~new ingeneral ~~2024~~rate ~~recorded~~case ~~electric~~application ~~revenues~~that ofwill ~~$9.8~~determine ~~million when compared to 2023 largely reflecting the~~ new ~~customer~~electric rates for ~~2023 and 2024 that, for this approved rate cycle cover, among other things,~~ the ~~growth~~years in2027 ~~rate~~through base and the higher operating costs as settled in the revenue requirement including those related to BVES’s wildfire mitigation plans that prior to 2023 were previously not included in customer rates and not expensed because they were being tracked in memorandum accounts2030. ~~The~~ ~~increase~~Among ~~in recorded revenues was largely offset by higher operating expenses and interest costs to support, among~~ other things, BVES’s ~~wildfire~~requested ~~mitigation~~(i) ~~plans including investing in~~ capital ~~all~~budgets of ~~which~~approximately is$133 ~~dedicated~~million ~~to improving the system safety and reliability~~ for the ~~community~~four-year itrate ~~serves. The~~cycle, ~~final~~and ~~decision~~another ~~will~~approximately ~~also provide for an increase in adopted operating revenues of~~ $~~2.2~~17 million, ~~for~~plus ~~2025~~AFUDC, ~~and $3.3 million in 2026. The rate increases~~ for ~~2024~~capital -projects ~~2026 are not subject~~ to anbe ~~earnings~~filed ~~test. Furthermore,~~for ~~the~~revenue ~~previously~~recovery ~~mentioned~~through advice ~~letter~~letters ~~projects of at least $23.1 million are expected to generate additional annual operating revenues of approximately $3 million~~ when the ~~respective~~ projects are completed, ~~placed~~and in(ii) ~~service,~~a ~~and~~capital ~~filed~~structure for ~~recovery~~BVES inof ~~customer~~60% ~~rates.~~equity ~~These~~and ~~projects~~40% ~~also~~debt, ~~accrue~~a ~~AFUDC~~return ~~during~~on ~~construction~~equity ~~that~~of ~~will further increase the revenue requirement~~11. ~~In the settlement agreement~~30%, ~~the~~an ~~parties~~embedded ~~agreed~~cost ~~to remove portions~~ of ~~the~~debt ~~requested capital budgets from rates until they were completed and placed in service. For all~~ of ~~the advice letter projects~~5.92%, ~~BVES~~and ~~will~~a bereturn ~~allowed~~on ~~to accrue AFUDC during the construction period at the adopted~~ rate ofbase ~~return, which will be added to the cost~~ of ~~the assets and recovered in customer rates when the assets are placed in service~~9. 15%.

Contracted Services Segment:

ASUS’s revenues, operating income and cash flows are earned by providing water and/or wastewater services, including operation and maintenance services and construction of facilities for the water and/or wastewater systems at various military installations, pursuant to an initial 50-year, firm -fixed-price contract, additional firm -fixed-price contracts, task order agreements and subcontracts with third party prime contractors on military bases. Currently, ASUS has one subsidiary that has entered into a task order agreement with the U.S. government that has a term of 15 years. The contract ~~price~~prices for each of the contracts and recurring task order agreements isare subject to annual economic price adjustments. Additional revenues generated by contract operations are primarily dependent on annual economic price adjustments, and new construction activities under contract modifications with the U.S. government or agreements with other third-party prime contractors. ASUS’s subsidiaries continue to enter into U.S. government-awarded contract modifications and agreements with third-party prime contractors for new construction projects at the military bases served.

During 2025, ASUS was awarded approximately $29.4 million in new construction projects, some of which were completed in 2025 and the remainder of which are expected to be completed through 2028. ASUS’s subsidiaries expect to continue to enter into U.S. government-awarded contract modifications and agreements with third-party prime contractors for new construction projects at the military bases served.

Effective October 1, 2025, the U.S. government announced its shutdown, which officially ended on November 12, 2025. Amid the U.S. government shutdown, the subsidiaries of ASUS did not experience any earnings impact to their existing operations and maintenance and renewal and replacement services, as utility privatization contracts are an “excepted service.” In the event of a future shutdown, management expects that an impact on ASUS and its operations through its subsidiaries would likely be limited to (a) the timing of funding to pay for services rendered, (b) delays in the processing of EPAs and/or REAs, (c) the timing of the issuance of contract modifications for new construction work not already funded by the U.S. government, (d) the timing of construction work associated with delays in receiving construction permits from furloughs at government agencies, and/or (e) delays in solicitation for and/or awarding of new contracts under the Department of Defense contracting programs. However, in the event a future U.S. government shutdown extends for an unprecedented and much longer period, ASUS’s liquidity and earnings could be impacted.

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During 2024, ASUS has been awarded approximately $56.5 million in new construction projects for completion beginning in 2024 through 2027. Earnings and cash flows from modifications to the initial 50-year contracts, additional contracts thereafter with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue in future periods.

In August and September of 2023, ASUS was awarded new contracts with the U.S. government to serve two military bases for which operations began in April 2024. After completion of the transition periods, ASUS began operating the water and wastewater utility systems at Naval Air Station Patuxent River in Maryland under a 50-year privatization contract with the U.S. government and at Joint Base Cape Cod in Massachusetts under a 15-year contract with the U.S. government. The initial value of its contract at Naval Air Station Patuxent River was estimated at approximately $349 million over a 50-year period and is subject to annual economic price adjustments. In July 2024, the estimated contract value was increased to $378 million after an inventory adjustment. Under its contract at Joint Base Cape Cod, ASUS performs work through the annual issuance of task orders by the U.S. government over a 15-year period up to a maximum value to ASUS of $75.0 million, subject to adjustments as task orders are issued. In April 2024, the U.S. government awarded a task order to ASUS valued at $4.1 million for the first year of operation, maintenance, and renewal and replacement services of the water and wastewater systems at Joint Base Cape Cod.

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Summary Results by Segment

The table below sets forth a comparison of the diluted earnings per share by business segment and for the parent company:

	Diluted Earnings per Share
	Year Ended
	12/31/2024		12/31/2023		CHANGE
	12/31/2025		12/31/2024		CHANGE
Water	$	2.5161	$	2.7751	$	(0.~~26)~~10
Electric	0.2125		0.2021		0.0104
Contracted services	0.5561		0.5055		0.0506
AWR (parent)	(0.1009)		(0.10)		—0.01
Consolidated diluted earnings per share, as recorded (GAAP)	3.1737		3.3617		(0.~~19)~~20
Adjustments to GAAP measure:
Adjustment to GAAP measure:
Impact of retroactive rates related to the full year of 2022 from the decision in the water general rate case*	—		(0.38)		0.38
Impact of a tax benefit recorded in the fourth quarter of 2024 resulting from a final decision in the water general rate case*	—		(0.13)		0.13
Impact related to the final cost of capital decision*	—		(0.13)		0.13
Consolidated diluted earnings per share, as adjusted (Non-GAAP)	$	3.37	$	3.04	$	0.33
Consolidated diluted earnings per share, as adjusted (Non-GAAP)*	$	3.17	$	2.85	$	0.32
Water diluted earnings per share, as adjusted (Non-GAAP)*	$	2.61	$	2.38	$	0.23
Water diluted earnings per share, as adjusted (Non-GAAP)*	$	2.51	$	2.26	$	0.25

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

* ~~All adjustments to 2023’s recorded diluted earnings per share relate to the water segment.~~ The water segment’s adjusted earnings for ~~2023~~2024 exclude ~~both~~ the impact of ~~the~~a ~~final~~one-time ~~decision~~tax inbenefit ~~the~~of ~~water~~$0.13 ~~general~~per ~~rate~~share ~~case~~recorded ~~that~~during ~~included retroactive rates related to~~ the ~~full~~fourth ~~year~~quarter of ~~2022~~2024 ~~and the impact of reversing previously recorded estimated 2022 revenues subject to refund~~ as a result of ~~the~~receiving a final ~~cost~~decision offrom ~~capital~~the ~~decision~~CPUC ~~issued~~ in ~~June~~the ~~2023~~water ~~that~~general ~~made~~rate ~~all adjustments to rates prospective~~case. ~~Both adjustments are shown separately in the table above.~~

For the year ended December 31, ~~2024~~2025, AWR’s recorded consolidated diluted earnings were $3.1737 per share, as compared to $3.3617 per share for ~~2023~~2024, aan ~~decrease~~increase of $0.1920 per share,. ~~which~~Excluding ~~includes: (i)~~ the impact ~~from~~of ~~the~~a ~~final~~one-time ~~decision~~tax benefit shown separately in the ~~water~~table ~~general~~above ~~rate~~and ~~case~~discussed ~~recorded~~below, inadjusted ~~2023~~consolidated ~~that~~diluted ~~included~~earnings ~~retroactive~~for ~~new~~2024 ~~rates~~were ~~related~~$3.04 toper ~~the~~share ~~full~~as ~~2022~~compared ~~year~~to recorded diluted earnings of $03.3837 per share, ~~and~~for ~~(ii)~~2025, ~~the~~an ~~impact~~adjusted increase of ~~the~~$0.33 ~~final~~per ~~cost~~share oflargely ~~capital~~from ~~decision~~the ~~that~~implementation ~~resulted~~of innew ~~the~~customer ~~reversal~~rates ~~during~~at the ~~year~~regulated ~~ended~~utilities, ~~December~~and ~~31,~~higher ~~2023~~earnings ofat ~~estimated~~the ~~revenues~~contracted ~~subject~~services tosegment ~~refund~~largely ~~recorded~~from inan ~~2022~~increase ofin ~~$6.4~~management ~~million,~~fee orrevenues ~~$0.13~~and ~~per~~construction ~~share~~activities. ~~Excluding~~AWR’s ~~these~~consolidated ~~two~~diluted ~~items~~earnings ~~from~~in ~~2023,~~2025 ~~adjusted~~were ~~consolidated~~negatively ~~diluted~~impacted ~~earnings~~by ~~would~~approximately be $20.8510 per share ~~for~~from ~~2023~~the ashigher ~~compared~~number toof ~~adjusted~~dilutive ~~and~~shares ~~recorded~~in ~~diluted~~2025 ~~earnings~~compared ofto ~~$3.17~~2024 ~~per~~due ~~share~~to ~~for~~the ~~2024,~~continued anissuance ~~adjusted~~of ~~increase~~equity ofunder ~~$0.32~~AWR’s ~~per~~ATM ~~share.~~offering program.

~~Furthermore,~~Included ~~included~~ in the consolidated results for 2024 was a tax benefit of $5.0 million, or $0.13 per share, resulting from the final decision issued by the CPUC on January 30, 2025 in connection with GSWC’s ~~recent~~latest general rate case proceeding. The final decision adopted a settlement agreement between GSWC and Cal Advocates, which excluded from customer rates certain excess deferred income tax balances generated by activities outside of ratemaking that were previously recorded as regulatory liabilities as a result of the 2017 Tax Cuts and Jobs Act that reduced the corporate income tax rate from 35% to 21%. ~~Because~~ ~~of the final CPUC decision, and the alternate proposed decision received in December 2024, both of which approved the settlement agreement in its entirety,~~ GSWC recorded the tax benefit to reflect a change in estimate that decreased its regulatory liabilities associated with excess deferred income tax balances as of December 31, 2024. In addition, AWR’s consolidated diluted earnings in 2024 were negatively impacted by approximately $0.04 per share due to the dilutive effects from the issuance of equity under AWR’s ATM offering program.

The following is a computation and reconciliation of diluted earnings per share from the measure of net income (loss) by business segment as disclosed in Note 17 to the Consolidated Financial Statements, to AWR’s consolidated fully diluted earnings per common share for the year ended December 31, ~~2024~~2025 and ~~2023~~2024:

	Water				Electric				Contracted Services				AWR (Parent)				Consolidated (GAAP)
In 000's except per share amounts	~~2024~~2025		~~2023~~2024		~~2024~~2025		~~2023~~2024		~~2024~~2025		~~2023~~2024		~~2024~~2025		~~2023~~2024		~~2024~~2025		~~2023~~2024
Net income (loss) (Note 17)	$	94100,~~463~~946	$	~~102~~94,~~708~~463	$	79,~~754~~615	$	7,~~479~~754	$	2023,~~642~~457	$	1820,~~596~~642	$	(3,~~591~~576)	$	(3,~~862~~591)	$	~~119~~130,~~268~~442	$	~~124~~119,~~921~~268
Weighted Average Number of Diluted Shares	3738,~~583~~673		37,~~077~~583		3738,~~583~~673		37,~~077~~583		3738,~~583~~673		37,~~077~~583		3738,~~583~~673		37,~~077~~583		3738,~~583~~673		37,~~077~~583
Diluted earnings per share	$	2.5161	$	2.7751	$	0.2125	$	0.2021	$	0.5561	$	0.5055	$	(0.1009)	$	(0.10)	$	3.1737	$	3.3617

Note: Certain amounts in the table above may not foot or crossfoot due to rounding.

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Water Segment:

For the year ended December 31, ~~2024~~2025, recorded diluted earnings from the water utility segment were $2.5161 per share, as compared to $2.7751 per share for ~~2023~~2024, aan ~~decrease~~increase of $0.2610 per share, which ~~includes:~~included ~~(i)~~ the impact ~~from~~of ~~the~~a ~~final~~one-time ~~decision~~tax inbenefit ~~the water general rate case recorded in 2023 that included retroactive new rates related to the full 2022 year~~ of $0.3813 per share, ~~and~~as ~~(ii) the impact of the final cost of capital decision that resulted in the reversal of estimated water revenues subject to refund~~ previously ~~recorded~~discussed ~~in 2022 of $6~~above.~~4 million, or $0.13 per share.~~ Excluding the impact of ~~these~~this ~~two~~item ~~items~~ from ~~2023~~2024, adjusted diluted earnings at the water segment would be $2.2638 per share for ~~2023~~2024 as compared to ~~adjusted and~~ recorded diluted earnings of $2.5161 per share for ~~2024~~2025, an adjusted ~~net~~ increase at the water segment of $0.2523 per share. The ~~due~~discussion ~~primarily~~below topresents the ~~following~~major ~~items:~~variances in earnings for the two periods:

•~~Excluding~~An the revenue impact related to 2022 resulting from the decisions in both the general rate case and cost of capital proceedings recorded for the year ended December 31, 2023 as previously discussed, there was an increase in water operating revenues of approximately $2246.37 million ~~mainly~~largely as a result of the ~~third~~CPUC-~~year~~authorized new rate increases ~~that~~effective ~~went into effect on~~ January 1, ~~2024,~~2025 asin ~~well~~connection aswith anthe ~~increase~~approved ingeneral rate case. GSWC’s ~~return~~transitioned onfrom ~~rate~~a ~~base~~full inrevenue ~~2024~~decoupling ~~compared~~mechanism to ~~2023~~the ~~resulting~~M-WRAM ~~from~~effective ~~the~~January ~~final~~1, ~~cost~~2025. ofAs ~~capital~~a ~~proceeding~~result, ~~received~~GSWC’s inrevenues ~~June~~and ~~2023~~earnings ~~that~~may ~~allowed~~be ~~for~~subject ~~the~~to ~~continuation~~future ofvolatility ~~the~~from ~~WCCM~~significant asfluctuations ~~previously~~in ~~discussed~~customer consumption compared to adopted levels.

•An increase in water supply costs of $321.69 million, ~~which~~primarily ~~consist~~related ofto higher overall per-unit purchased water, ~~purchased~~costs ~~power~~covered ~~for~~in ~~pumping, groundwater~~rates. ~~production~~As ~~assessments~~a ~~and~~result ~~changes~~of intransitioning ~~the~~from ~~water~~a ~~supply~~full cost balancing ~~accounts.~~account ~~The~~for ~~increase in~~ water supply ~~costs~~to isthe ~~primarily~~ICBA, ~~related~~GSWC’s toearnings anfor ~~increase~~the inyear ~~customer~~ended ~~water usage~~December 31, ~~wholesale~~2025 ~~water~~were ~~prices~~favorably ~~and~~impacted by an actual water ~~production~~supply ~~costs.~~source ~~During~~mix ~~2024~~that ~~and~~included ~~2023,~~less ~~actual~~purchased water ~~supply~~than ~~costs~~what ~~were~~was ~~tracked~~authorized ~~against~~in ~~adopted~~the ~~costs~~general rate case and included in the revenue requirement. For the year ended December 31, ~~and~~2025, ~~passed~~GSWC’s ~~through~~pumped towater ~~customers~~sources, onwhich acost ~~dollar-for-dollar~~less ~~basis~~than bypurchased ~~way~~water, were capable of ~~the~~meeting ~~CPUC-approved~~a ~~water~~greater ~~supply~~portion ~~cost~~of ~~balancing~~customer ~~accounts.~~demand ~~The~~when ~~increase~~compared into a higher purchased water ~~supply~~mix ~~costs~~being ~~results~~recovered in the new adopted rates. GSWC’s earnings will be subject to future volatility as a ~~corresponding~~result ~~increase~~of favorable and unfavorable changes in the water ~~operating~~supply ~~revenues~~source ~~and~~mix ~~has~~compared noto ~~material~~the ~~impact~~adopted onmix ~~the~~incorporated ~~water~~in ~~segment’s~~the ~~profitability~~revenue requirement.

•An overall increase in operating expenses of $810.90 million (excluding supply costs) mainly due to increases in (i) overall labor costs, ~~and~~(ii) ~~other~~maintenance ~~employee~~expense, (iii) insurance-related ~~benefits~~costs, (iiiv) ~~administrative~~depreciation and ~~general~~amortization expenses, ~~resulting~~which ~~largely~~are ~~from~~impacted ~~higher~~by ~~outside-services~~increasing ~~costs~~capital ~~related~~additions toplaced ~~the~~in ~~general~~service ~~rate~~and ~~case~~are ~~application~~reflected and ~~other~~recovered ~~regulatory~~in ~~filings~~customer rates, and an(v) ~~increase~~non-income taxes; partially offset by a decrease in ~~insurance~~other operation-related costs including lower chemicals and water treatment costs, administrative and general expenses (~~iii~~excluding labor) ~~depreciation~~primarily ~~and~~due ~~amortization~~to ~~expenses~~lower asoutside ~~well~~services costs including those related to regulatory filings as compared to 2024, and property taxes resulting from favorable true-ups in assessed property values. Lastly, ~~both~~as a result of ~~which~~receiving ~~are~~a ~~impacted~~final bydecision ~~the~~on ~~increasing~~its ~~capital~~general ~~expenditures~~rate ~~and~~case, ~~are~~GSWC ~~reflected~~was ~~and~~authorized ~~recovered~~to inrecover ~~customer~~certain ~~rates.~~costs ~~These~~through ~~increases~~various ~~were~~memorandum ~~partially~~accounts ~~offset~~that bywere ~~decreases~~recorded in ~~other~~2024 ~~operation-related~~ and ~~maintenance~~did ~~expenses~~not recur in 2025.

•An overall increase in ~~interest~~other ~~expense~~income (net of ~~interest~~other ~~income~~expense) of $60.53 million ~~resulting~~due primarily ~~from~~to angains ~~increase~~of in$5.5 ~~interest~~million ~~rates,~~generated ason ~~well~~investments asheld anto ~~overall~~fund ~~increase~~one inof ~~total~~the ~~borrowing~~Company’s ~~levels~~retirement toplans ~~support,~~as ~~among~~compared ~~other~~to ~~things,~~gains ~~the~~of ~~capital~~$5.3 ~~expenditure~~million ~~programs~~recorded atduring ~~GSWC~~2024.

•AnExcluding ~~overall~~the ~~increase~~one-time tax benefit of $5.0 million recorded in ~~other~~2024, ~~income~~an ~~(net~~overall ofdecrease ~~other~~in ~~expense)~~the ofeffective ~~$1.4~~income ~~million~~tax rate due ~~primarily~~ to achanges ~~change~~ in ~~the~~certain ~~non~~flowed-~~service~~through ~~cost~~income ~~components~~taxes ~~related~~and topermanent items included in GSWC’s ~~benefit~~income ~~plans~~tax ~~resulting~~expense ~~from~~for ~~changes~~the inyear ~~actuarial~~ended ~~assumptions~~December ~~including~~31, ~~expected~~2025 ~~returns~~as oncompared ~~plan~~to ~~assets.~~2024 ~~However,~~favorably asimpacted the water segment’s earnings. As a ~~result~~regulated ofutility, GSWC’s ~~two~~treats certain temporary differences as being flowed-~~way~~through ~~pension~~in ~~balancing~~computing ~~accounts~~its ~~authorized~~income bytax expense consistent with the ~~CPUC,~~income ~~changes~~tax inmethod ~~total~~used ~~net~~in ~~periodic~~its ~~benefits~~CPUC-jurisdiction ~~costs~~rate ~~related~~making. toChanges in the ~~pension~~magnitude ~~plan~~of ~~have~~flowed-through noitems ~~material~~either ~~impact~~increase toor decrease tax expense, thereby affecting diluted earnings per share.

•AnA ~~overall~~ decrease in ~~the~~earnings ~~effective income tax rate due to (i) a tax benefit~~ of $5approximately ~~million, or~~ $0.1307 per share, ~~resulting~~due ~~from~~to the ~~final~~dilutive ~~decision~~effects infrom ~~GSWC’s~~the ~~latest~~issuance ~~general~~of ~~rate~~equity ~~case~~under ~~proceeding as previously discussed, and (ii) changes in certain flowed-through income taxes and permanent items included in GSWC~~AWR’s ~~income~~ATM ~~tax~~offering ~~expense~~program. ~~for~~Under the ~~year ended December 31~~program, ~~2024~~AWR asmay ~~compared~~offer toand ~~2023~~sell ~~that~~its ~~favorably~~Common ~~impacted~~Shares, ~~the~~with ~~water~~an ~~segment's~~aggregate ~~earnings.~~gross Asoffering aprice ~~regulated~~of ~~utility,~~up ~~GSWC~~to ~~treats~~$200 ~~certain~~million, ~~temporary~~from ~~differences~~time asto ~~being~~time ~~flowed-through~~at ~~in computing~~ its ~~income~~sole ~~tax~~discretion, ~~expense consistent~~ with ~~the~~$40.7 ~~income~~million ~~tax~~currently ~~method~~remaining ~~used~~available infor ~~its CPUC-jurisdiction rate making~~sale. ~~Changes~~Through inDecember 31, ~~the~~2025, ~~magnitude~~AWR ofhas ~~flowed-through~~sold ~~items either increase or decrease tax expense~~2,048,988 ~~thereby~~Common ~~affecting~~Shares ~~diluted~~through ~~earnings~~this ~~per~~ATM ~~share~~offering program.

•A decrease in earnings of approximately $0.03 per share due to the dilutive effects from the issuance of equity under AWR’s ATM offering program. Under the program, AWR may offer and sell its Common Shares, with an aggregate gross offering price of up to $200 million, from time to time at its sole discretion. Through December 31, 2024, AWR has sold 1,145,219 Common Shares through this ATM offering program.

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Electric Segment:

Diluted earnings from the electric utility segment increased $0.0104 per share for the year ended December 31, ~~2024~~2025 as compared to ~~2023. On~~2024, ~~January~~largely ~~16,~~resulting ~~2025,~~from an increase in revenues from the ~~CPUC~~third-year ~~adopted~~rate increases in 2025 as a result of receiving a final decision approved by the CPUC in connection with BVES’s general rate case proceeding that set new rates for 2023 –- 2026, ~~with new electric rates~~ (retroactive to January 1, 2023~~. As~~), aas ~~result~~well ofas receiving ~~the~~approval ~~final~~in ~~decision,~~2025 ~~the~~of ~~impact~~certain ~~from~~advice ~~retroactive~~letter ~~rates~~projects ~~for~~that ~~the~~increased ~~full~~base ~~year~~rates ofto ~~2023~~recover ~~and from~~ the ~~second-year~~revenue ~~rate~~requirement ~~increases~~associated ~~through~~with ~~the~~these ~~year~~capital ~~ended~~projects. In ~~December 31~~addition, ~~2024~~there ~~have~~was ~~been~~an ~~reflected~~overall decrease in the ~~2024~~effective ~~fourth~~income ~~quarter~~tax ~~results. The~~rate ~~new~~due ~~rates~~to ~~resulted~~changes in ancertain ~~increase~~flowed-through inincome ~~electric~~taxes ~~revenues~~as ~~that~~compared ~~supports,~~to ~~among~~2024 ~~other~~that ~~things,~~favorably impacted the ~~growth~~electric ~~in rate base and higher operating costs related to BVES~~segment’s ~~wildfire~~earnings. These ~~mitigation~~increases ~~plans that were previously not included~~ in ~~customer~~the ~~rates~~electric ~~and~~segment’s ~~not~~earnings ~~expensed because they~~ were ~~being~~partially ~~tracked~~offset inby ~~memorandum~~an ~~accounts. The~~overall increase in ~~electric revenues in 2024 compared to 2023 was largely offset by higher~~ operating expenses. ~~and~~There ~~interest~~was ~~costs~~also toa ~~support,~~decrease ~~among~~in ~~other~~earnings ~~things,~~of ~~BVES’s~~approximately ~~wildfire~~$0.01 ~~mitigation~~per ~~plans~~share ~~including~~due ~~investing~~to inthe ~~capital~~dilutive ~~all~~effects offrom ~~which is dedicated to improving~~ the ~~system~~issuance ~~safety~~of ~~and~~equity ~~reliability~~under ~~for~~AWR’s ~~the~~ATM ~~community~~offering ~~it serves~~program.

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Contracted Services Segment:

Diluted earnings from the contracted services segment increased $0.0506 per share for the year ended December 31, ~~2024~~2025 as compared to ~~2023~~2024, largely due to (i) an increase in management fee revenues resulting from the commencement of ~~operation~~operations in April 2024 at the new bases (Naval Air Station Patuxent River and Joint Base Cape Cod) and the resolution of various economic price adjustments, (ii) an increase in construction activities, and (iii) lower interest expense resulting from lower borrowing levels and interest rates; partially offset by higher overall operating expenses (excluding construction expenses) ~~from the new bases as compared to 2023~~, and a decrease in earnings of approximately $0.0102 per share due to the dilutive effects ~~on ASUS~~ from the issuance of equity under AWR’s ATM offering program.

AWR (Parent):

For the year ended December 31, ~~2024~~2025, the diluted loss from AWR (parent) isdecreased ~~consistent~~$0.01 per share compared to ~~2023~~2024 due to higher income from the lease of AWR’s water rights; partially offset by higher interest expense resulting from higher average borrowing levels under AWR’s credit facility.

The following discussion and analysis for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 provide information on AWR’s consolidated operations and assets and, where necessary, includes specific references to AWR’s individual segments and subsidiaries: GSWC, BVES and ASUS and its subsidiaries.

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Consolidated Results of Operations — Years Ended December 31, 2025 and 2024 (amounts in thousands, except per share amounts):


	Year Ended		Year Ended		$		%
	12/31/2025		12/31/2024		CHANGE		CHANGE
OPERATING REVENUES
Water	$	464,114	$	417,410	$	46,704	11.2	%
Electric	57,217		51,645		5,572		10.8	%
Contracted services	136,742		126,404		10,338		8.2	%
Total operating revenues	658,073		595,459		62,614		10.5	%

OPERATING EXPENSES
Water purchased	98,224		74,274		23,950		32.2	%
Power purchased for pumping	14,076		15,025		(949)		-6.3	%
Groundwater production assessment	21,489		24,145		(2,656)		-11.0	%
Power purchased for resale	18,110		11,630		6,480		55.7	%
Supply cost balancing accounts	(5,014)		(1,894)		(3,120)		164.7	%
Other operation	47,041		41,318		5,723		13.9	%
Administrative and general	102,811		100,941		1,870		1.9	%
Depreciation and amortization	47,784		43,647		4,137		9.5	%
Maintenance	21,663		20,255		1,408		7.0	%
Property and other taxes	28,008		27,091		917		3.4	%
ASUS construction	60,606		54,544		6,062		11.1	%
Total operating expenses	454,798		410,976		43,822		10.7	%

OPERATING INCOME	203,275		184,483		18,792		10.2	%

OTHER INCOME AND EXPENSES
Interest expense	(46,776)		(50,382)		3,606		-7.2	%
Interest income	5,650		7,874		(2,224)		-28.2	%
Other, net	7,649		7,466		183		2.5	%
	(33,477)		(35,042)		1,565		-4.5	%

INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE	169,798		149,441		20,357		13.6	%

Income tax expense	39,356		30,173		9,183		30.4	%

NET INCOME	$	130,442	$	119,268	$	11,174	9.4	%

Basic earnings per Common Share	$	3.37	$	3.17	$	0.20	6.3	%

Fully diluted earnings per Common Share	$	3.37	$	3.17	$	0.20	6.3	%

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Consolidated Results of Operations — Years Ended December 31, 2024 and 2023 (amounts in thousands, except per share amounts):

	Year Ended		Year Ended		$		%
	12/31/2024		12/31/2023		CHANGE		CHANGE
OPERATING REVENUES
Water	$	417,410	$	433,473	$	(16,063)	-3.7	%
Electric	51,645		41,832		9,813		23.5	%
Contracted services	126,404		120,394		6,010		5.0	%
Total operating revenues	595,459		595,699		(240)		—	%
OPERATING EXPENSES
Water purchased	74,274		72,864		1,410		1.9	%
Power purchased for pumping	15,025		12,829		2,196		17.1	%
Groundwater production assessment	24,145		20,850		3,295		15.8	%
Power purchased for resale	11,630		13,275		(1,645)		-12.4	%
Supply cost balancing accounts	(1,894)		12,118		(14,012)		-115.6	%
Other operation	41,318		40,271		1,047		2.6	%
Administrative and general	100,941		88,273		12,668		14.4	%
Depreciation and amortization	43,647		42,403		1,244		2.9	%
Maintenance	20,255		14,218		6,037		42.5	%
Property and other taxes	27,091		24,046		3,045		12.7	%
ASUS construction	54,544		57,912		(3,368)		-5.8	%
Gain on sale of assets	—		(100)		100		-100.0	%
Total operating expenses	410,976		398,959		12,017		3.0	%
OPERATING INCOME	184,483		196,740		(12,257)		-6.2	%
OTHER INCOME AND EXPENSES
Interest expense	(50,382)		(42,762)		(7,620)		17.8	%
Interest income	7,874		7,416		458		6.2	%
Other, net	7,466		5,126		2,340		45.6	%
	(35,042)		(30,220)		(4,822)		16.0	%
INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE	149,441		166,520		(17,079)		-10.3	%
Income tax expense	30,173		41,599		(11,426)		-27.5	%
NET INCOME	$	119,268	$	124,921	$	(5,653)	-4.5	%
Basic earnings per Common Share	$	3.17	$	3.37	$	(0.20)	-5.9	%
Fully diluted earnings per Common Share	$	3.17	$	3.36	$	(0.19)	-5.7	%

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Operating Revenues

General

GSWC and BVES rely upon approvals by the CPUC of rate increases to recover operating expenses and to provide for a return on invested and borrowed capital used to fund utility plants. ASUS relies on economic price and equitable adjustments by the U.S. government in order to recover operating expenses and provide a profit margin for ASUS. Current operating revenues and earnings may be negatively impacted if ASUS’s subsidiaries do not receive adequate price adjustments in a timely manner. ASUS’s earnings are also impacted by the level of construction projects at its subsidiaries, which may or may not continue at current levels in future periods.

Water

For the year ended December 31, ~~2024~~2025, revenues from water operations ~~decreased~~increased to by $16464.1 million, toan increase of $~~417~~46.47 million, compared to ~~2023~~2024. The ~~decrease~~increase in water revenues ~~was~~during ~~largely~~2025 ~~due~~is toprimarily ~~the~~a ~~impact~~result of ~~retroactive rates related to~~ the ~~full~~CPUC-approved ~~2022~~new ~~year~~2025 ~~resulting from the general~~ rate ~~case~~increases ~~decision~~effective ofJanuary ~~approximately~~1, ~~$32~~2025 ~~million~~in ~~and~~connection ~~the~~with ~~impact of~~ the ~~final~~recently ~~cost~~approved ofgeneral ~~capital~~rate ~~decision that resulted in the reversal of $6.4 million of revenues subject to refund previously recorded in 2022~~case, ~~with~~as ~~both~~well ~~decisions~~as ~~received~~an ~~and~~increase ~~recorded~~ in ~~2023.~~water ~~The~~consumption ~~increase~~compared to ~~revenues from both of these items recorded in 2023 did not recur in~~ 2024. ~~and~~There was ~~partially~~also ~~offset by~~ an increase in ~~water revenues resulting from the third~~CPUC-~~year~~approved ~~rate~~surcharges ~~increases~~billed ~~that~~in ~~went~~2025 ~~into~~compared ~~effect~~to ~~on January 1,~~ 2024, ~~and~~to anrecover ~~increase~~previously inincurred ~~water~~costs. ~~revenues~~These assurcharges aare ~~result~~largely ofoffset aby ~~higher~~corresponding ~~return~~increases ~~on rate base~~ in ~~2024~~operating ~~compared~~expenses, ~~to 2023~~ resulting ~~from the final cost of capital proceeding received~~ in ~~June~~no ~~2023~~impact ~~that~~to ~~allowed for the continuation of the WCCM as previously discussed~~earnings.

~~Billed~~While billed water consumption for the year ended December 31, ~~2024~~2025 was higher by 41.59% compared to ~~2023~~2024 due primarily to lower amounts of seasonal precipitation ~~and~~for ~~higher~~2025 ~~temperatures~~compared into ~~the~~2024, ~~summer~~2025 ~~months~~consumption ~~for~~was ~~2024~~nearly 4% lower as compared to ~~2023~~consumption amounts adopted in the final general rate case. Prior ~~Changes~~to 2025, changes in consumption ~~have~~had not had a significant impact on recorded revenues due to the CPUC-approved ~~WRAM~~full ~~that~~revenue ~~has~~decoupling ~~been~~mechanism, inknown ~~place~~as inthe ~~all~~WRAM, ~~but~~which ~~one~~adjusted ~~small~~volumetric ~~rate-making~~revenues ~~area.~~to ~~During~~adopted ~~2024~~levels ~~and~~authorized ~~2023~~by the CPUC. As previously discussed, ~~GSWC~~the ~~recorded~~final decision in the ~~difference~~latest ~~between~~general ~~what~~rate itcase ~~bills~~rejected ~~its~~GSWC’s ~~water~~request ~~customers~~for the continuation of the WRAM, and ~~what~~instead isordered ~~authorized~~GSWC byto ~~the~~transition ~~CPUC~~to ina ~~the~~modified rate adjustment mechanism (a Monterey-style WRAM ~~accounts~~or “M-WRAM”). Without having a full revenue decoupling mechanism, GSWC’s revenues and earnings will be subject to future volatility as ~~regulatory~~a ~~assets~~result orof ~~liabilities~~significant fluctuations in customer consumption compared to adopted levels.

Electric

Electric revenues for the year ended December 31, ~~2024~~2025 increased by $95.86 million to $5157.62 million ~~due,~~largely inresulting ~~large~~from ~~part,~~an toincrease ~~the final decision~~ in ~~the electric general rate case proceeding that set rates for 2023 - 2026, and was retroactive to January 1, 2023. The retroactive~~ revenues ~~for~~from ~~the full~~ third-year ofelectric ~~2023~~rate ~~and the second-year~~ increases ~~for~~implemented ~~2024 have been reflected~~ in ~~2024 as previously discussed~~2025.

Electric usage for the year ended December 31, ~~2024~~2025 was ~~consistent~~1.1% ~~with~~lower ~~2023~~than 2024. Due to the CPUC-approved ~~Base Revenue Requirement Adjustment Mechanism~~BRRBA, which adjusts certain revenues to adopted levels authorized by the CPUC, changes in usage do not have a significant impact on earnings.

Contracted Services

Revenues from contracted services are composed of construction revenues (including renewal and replacements) and management fees for operating and maintaining the water and/or wastewater systems at various military bases. For the year ended December 31, ~~2024~~2025, revenues from contracted services increased $610.03 million to $~~126~~136.47 million as compared to $~~120~~126.4 million for ~~2023~~2024. The increase was ~~largely~~primarily due to an increase in management fee revenue from ~~the commencement of operations at the new bases and the resolution of~~ annual economic price adjustments, ~~partially~~and ~~offset~~the bynew ~~lower~~operations ~~overall~~at ~~construction~~Joint ~~activity~~Base ~~resulting~~Cape ~~from~~Cod ~~timing~~and ~~differences~~Naval ofAir ~~when~~Station ~~construction~~Patuxent ~~work~~River ~~was~~and ~~performed~~an inincrease ~~2024 as compared to the same period~~ in ~~2023~~construction activities.

ASUS’s subsidiaries continue to enter into U.S. government-awarded contract modifications and agreements with third-party prime contractors for new construction projects at the military bases served. ~~During~~ ~~2024, ASUS was awarded approximately $56.5 million in new construction projects for completion in 2024 through 2027.~~ Earnings and cash flows from modifications to the initial 50-~~year~~ ~~contracts~~ and ~~additional~~15-year contracts with the U.S. government and agreements with third-party prime contractors for additional construction projects may or may not continue at current levels in future periods.

Operating Expenses:

Supply Costs

Total supply costs at the regulated utilities comprise the largest ~~segment~~portion of total consolidated operating expenses. Supply costs accounted for 30approximately 32.03% and 3330.10% of total operating expenses for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

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Water segment supply costs

Two of the principal factors affecting water supply costs are the amount of water produced and the source of the water. Generally, the variable cost of producing water from wells is less than the cost of water purchased from wholesale suppliers. The overall actual percentages for purchased water for the years ended December 31, 2024 and 2023 were 41% and 43%. The decrease in the actual percentage of purchased water resulted primarily from wells coming back on-line that had previously been out of service.

Under the CPUC-approved MCBA, GSWC tracks adopted and actual expense levels for purchased water, power purchased for pumping and pump taxes. GSWC records the variances (which include the effects of changes in both rate and volume) between adopted and actual purchased water, purchased power and pump tax expenses as a regulatory asset or liability. GSWC recovers from, or refunds to, customers the amount of such variances. GSWC tracks these variances individually for each water ratemaking area. Without the MCBA mechanism in place beginning in 2025, there may be volatility to Registrant’s earnings as a result of changes in water supply cost mix. However, the MCBA will be replaced with an incremental supply cost balancing account that will not include changes in water supply cost mix, but will allow GSWC to track differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. 43

~~Supply~~Table ~~costs for the water segment consist~~ of purchased water, purchased power for pumping, groundwater production assessments and changes in the water supply cost balancing accounts. For the years ended December 31, 2024 and 2023, water supply costs consisted of the following amounts (in thousands):Contents

	YearEnded		YearEnded		$		%
	12/31/2024		12/31/2023		CHANGE		CHANGE
Water purchased	$	74,274	$	72,864	$	1,410	1.9	%
Power purchased for pumping	15,025		12,829		2,196		17.1	%
Groundwater production assessment	24,145		20,850		3,295		15.8	%
Water supply cost balancing accounts *	(1,621)		13,839		(15,460)		-111.7	%
Total water supply costs	$	111,823	$	120,382	$	(8,559)	-7.1	%

Since the implementation in 2008 of the previously CPUC-approved MCBA, GSWC was able to track adopted and actual expense levels for purchased water, power purchased for pumping and pump taxes. GSWC recorded the variances (which include the effects of changes in both rate and volume) between adopted and actual purchased water, purchased power and pump tax expenses as a regulatory asset or liability. GSWC recovered from, or refunded to, customers the amount of such variances. Without the MCBA mechanism in place, beginning in 2025, there may be volatility to Registrant’s earnings as a result of changes in water supply source mix. The MCBA has been replaced with an incremental supply cost balancing account that will not include the impact from changes in water supply source mix compared to the adopted mix incorporated in the revenue requirement, but allows GSWC to track differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs.

*Supply ~~The~~costs ~~sum~~for the water segment consist of purchased water, purchased power for pumping, groundwater production assessments and ~~electric~~changes in the water supply- cost balancing accounts. For ~~are~~the ~~shown~~years onended ~~AWR’s~~December 31, ~~Consolidated~~2025 ~~Statements of Income~~ and ~~totaled~~2024, ~~$(1.9)~~water ~~million~~supply ~~and~~costs ~~$12.1~~consisted ~~million~~of ~~for~~the ~~2024~~following ~~and~~amounts ~~2023,~~(in ~~respectively.~~thousands):

Purchased water costs for the year ended December 31, 2024 increased to $74.3 million as compared to $72.9 million for 2023 primarily due to increases in wholesale water costs, partially offset by a reduction in purchased water resulting from wells coming back on-line. There was an overall increase in well production costs compared to 2023 due to an increase in customer water usage, which increases power purchased for pumping and groundwater production assessments. The increases to water production costs were also a result of increases in electricity provider rates and increases in pump tax rates.


	Year Ended		Year Ended		$		%
	12/31/2025		12/31/2024		CHANGE		CHANGE
Water purchased	$	98,224	$	74,274	$	23,950	32.2	%
Power purchased for pumping	14,076		15,025		(949)		-6.3	%
Groundwater production assessment	21,489		24,145		(2,656)		-11.0	%
Water supply cost balancing accounts *	(96)		(1,621)		1,525		-94.1	%
Total water supply costs	$	133,693	$	111,823	$	21,870	19.6	%

~~For~~* ~~the~~The ~~year~~sum ~~ended~~of ~~December 31,~~water ~~2024,~~and ~~the~~electric ~~water~~ supply -cost balancing ~~account~~accounts ~~had~~are ashown ~~$1.6~~on ~~million~~AWR’s ~~under-collection~~Consolidated asStatements ~~compared~~of toIncome aand totaled $13(5.80) million ~~over-collection~~and ~~in 2023~~$(1. ~~The~~9) ~~change~~million infor ~~water~~2025 ~~supply~~and cost balancing accounts was primarily due to updated adopted supply costs from the final decision in the previous water general rate case proceeding recorded in 2023. The over-collection recorded in 2023 included the full year impact of 2022 that reflected the new adopted supply costs retroactive to January 12024, ~~2022~~respectively.

Purchased water costs for the year ended December 31, 2025 increased to $98.2 million as compared to $74.3 million for 2024. The overall actual percentages for purchased water for the years ended December 31, 2025 and 2024 were 48% and 41%, respectively, resulting in higher purchased water volume and costs in 2025. The increase in purchased water costs was also due to increases in wholesale water prices. Power purchased for pumping and groundwater production assessment both decreased due, in part, to the shift in actual supply source mix resulting in lower production volume in 2025 as compared to 2024. These decreases were partially offset by increases in pump tax rates and electricity provider rates.

For the year ended December 31, 2025, the water supply cost balancing account had a $0.1 million under-collection as compared to a $1.6 million under-collection in 2024. The change in water supply cost balancing accounts was primarily due to a change in the supply cost recovery mechanisms, as previously described. Unlike the MCBA, the incremental supply cost balancing account only tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs.

Electric segment supply costs

Supply costs for the electric segment consist primarily of purchased power for resale, the cost of natural gas used by BVES’s generating unit, the cost of renewable energy credits and changes in the electric supply cost balancing account. For the years ended December 31, 2025 and 2024, electric supply costs consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Power purchased for resale

1118,~~630~~110

1311,~~275~~630

(16,~~645)~~480

~~-12~~55.47

Electric supply cost balancing account *

(~~273~~4,918)

(~~1,721~~273)

1(4,~~448~~645)

~~-84.1~~**

Total electric supply costs

1113,~~357~~192

11,~~554~~357

~~(197)~~1,835

-116.72

* The sum of water and electric supply-cost balancing accounts are shown on AWR’s Consolidated Statements of Income and totaled $(15.90) million and $~~12.~~(1.9) million for ~~2024~~2025 and ~~2023~~2024, respectively.

~~For~~** ~~the~~not year ended December 31, 2024, the cost of power purchased for resale to BVES’s customers decreased to $11.6 million as compared to $13.3 million for 2023 primarily due to lower overall average prices per megawatt-hour. The change in the electric supply balancing account in 2024 when compared to 2023 is also due to decreases in energy prices.meaningful

45For the year ended December 31, 2025, the cost of power purchased for resale to BVES’s customers increased to $18.1 million as compared to $11.6 million for 2024 primarily due to higher overall average prices per megawatt-hour. The change in the electric supply balancing account in 2025 when compared to 2024 was due primarily to increases in energy prices.

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Other Operation

The primary components of other operation expenses include payroll costs, materials and supplies, chemicals and water treatment costs, and outside service costs of operating the regulated water and electric systems, including the costs associated with transmission and distribution, pumping, water quality, meter reading, billing, and operations of district offices and the electric system. Registrant’s contracted services operations incur many of the same types of expenses. For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, other operation expenses by business segment consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

2832,~~349~~181

2928,~~064~~349

~~(715)~~3,832

-213.5

Electric Services

34,~~424~~674

43,~~057~~424

~~(633)~~1,250

~~-15~~36.65

Contracted Services

910,~~545~~186

79,~~150~~545

~~2,395~~641

336.57

Total other operation

4147,~~318~~041

4041,~~271~~318

15,~~047~~723

213.69

For the year ended December 31, ~~2024~~2025, the ~~decrease~~increase in other operation expenses at the water segment was due, ~~primarily~~in part, from an increase of $1.6 million in billed surcharges to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts. Increases in revenues from billed surcharges have a corresponding and offsetting increase in other operation expenses, resulting in no impact to earnings. Furthermore, for the year ended December 31, 2024, there was a reduction of $2.0 million as a result of receiving the final decision in the recent water general rate case that authorized the recovery of previously incurred operation-related costs that were being tracked in CPUC-authorized memorandum accounts and which became probable of future recovery;. There ~~partially~~was ~~offset~~no bysimilar ~~higher~~item ~~operation-related~~in ~~labor,~~2025. There aswas ~~well~~also asan ~~bad~~increase ~~debt~~in ~~expense~~operation-related ~~due~~labor tocost, ~~COVID~~partially ~~relief~~offset ~~funds~~by ~~for~~a ~~past~~decrease ~~due bills recorded~~ in ~~2023~~chemicals ~~that~~and ~~did~~water ~~not~~treatment ~~recur in 2024~~costs.

The ~~decrease~~increase at the electric segment was due primarily to anhigher ~~overall~~operation-related ~~decrease~~labor ~~in surcharges billed to customers for the recovery of previously incurred~~ costs, ~~which~~transportation ~~had a corresponding decrease in other operation expenses~~costs, ~~resulting~~and inbad nodebt ~~impact to earnings~~expense. The decrease was largely due to the expiration of a surcharge as a result of fully recovering incremental costs previously tracked in a memorandum account that arose from the impact of a winter storm in 2018.

The increase at the contracted services segment was due primarily to the new operations at ~~the~~Joint ~~new~~Base ~~bases,~~Cape ~~higher~~Cod ~~operation-related~~and ~~labor~~Naval ~~costs,~~Air ~~and~~Station ~~water~~Patuxent ~~treatment~~ and ~~other~~higher operation-related labor costs.

Administrative and General

Administrative and general expenses include payroll related to administrative and general functions, all employee-related benefits, insurance expenses, outside legal and consulting fees, regulatory utility commission expenses, expenses associated with being a public company and general corporate expenses charged to expense accounts. For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, administrative and general expenses by business segment, including AWR (parent), consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

6466,~~510~~637

5964,~~313~~510

52,~~197~~127

83.83

Electric Services

1312,~~241~~601

813,~~745~~241

~~4,496~~(640)

~~51.~~-4.8

Contracted Services

23,~~183~~567

2023,~~431~~183

~~2,752~~384

131.57

AWR (parent)

~~(216)~~7

~~223~~(1)

*-14.3

Total administrative and general

~~100~~102,~~941~~811

88100,~~273~~941

121,~~668~~870

141.49

*Administrative ~~not~~and ~~meaningful~~general expenses increased at the water segment due, in large part, to an increase of $1.0 million in billed surcharges to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts. Increases in revenues from billed surcharges have a corresponding and offsetting increase in administrative and general expenses, resulting in no impact to earnings. There was also an increase in labor and insurance-related costs, partially offset by a decrease in outside services costs including those related to regulatory filings as compared to 2024.

Administrative and general expenses ~~increased~~decreased at the ~~water~~electric segment primarily due, into ~~large~~the ~~part,~~approval toof ~~higher~~the ~~outside-services~~final ~~costs~~decision ~~incurred~~ in ~~connection with~~ the ~~water~~electric general rate case ~~application~~proceeding ~~and~~with ~~other~~rates ~~regulatory~~retroactive ~~filings,~~to ~~labor~~2023 ~~and~~but ~~employee-related~~recorded ~~expenses,~~in ~~and~~2024. ~~insurance-related~~Higher costs incurred to support BVES’s wildfire mitigation plans of $1.3 Inmillion ~~addition,~~related ~~during~~to the full year ~~ended~~2023 ~~December~~were ~~31,~~expensed ~~2023,~~during ~~there~~the ~~was~~fourth aquarter ~~reduction~~ of ~~approximately~~2024 ~~$0.4~~as ~~million~~the ~~recorded~~costs prior to ~~reflect~~2023 ~~the~~were ~~final~~being ~~decision~~tracked ~~issued~~ in ~~June~~memorandum ~~2023~~accounts onprior ~~the~~to ~~prior~~receiving ~~water~~the approved general rate case ~~proceeding~~decision ~~that~~at ~~authorized~~the time. Higher expenses related to the ~~recovery~~wildfire ofmitigation ~~previously~~activities ~~incurred~~are ~~administrative~~reflected and ~~general~~recovered ~~expenses~~in ~~that~~the new customer rates implemented. There was also a decrease in outside services costs. These decreases were ~~being~~partially offset by an increase of $1.6 million in billed surcharges in 2025 to recover previously incurred costs that had been tracked in CPUC-~~authorized memorandum accounts.~~

Administrative and general expenses increased at the electric segment primarily due to the approval of the final decision in the electric general rate case proceeding with rates retroactive to January 1, 2023. The new electric rates for 2023 and 2024 included the recovery of higher (i) costs incurred in 2023 and 2024 related to wildfire mitigation activities that were temporarily deferred and recorded as regulatory assets through the third quarter of 2023 while awaiting the general rate case decision and which have now been expensed during the fourth quarter as they are included in the new rates, and (ii) the amortization of regulatory commission costs incurred in this proceeding; with both items retroactively included in the new electric customer rates that resulted in a combined increase in 2024 expenses of $4.3 million compared to 2023 expenses. The higher expenses are reflected and recovered in the new customer rates. The electric segment recorded an increase in revenues 45

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~~retroactive~~authorized tomemorandum ~~January~~accounts. 1,Increases ~~2023~~ in ~~2024~~revenues ~~that~~from ~~offset~~billed ~~the~~surcharges ~~effects~~have ofa ~~the~~corresponding ~~increased administrative~~ and ~~general~~offsetting ~~expenses related to the decision. There was also an~~ increase in ~~labor~~administrative ~~costs,~~ and ~~legal~~general ~~and~~expenses, ~~other~~resulting ~~outside~~in ~~services~~no ~~costs~~impact to earnings.

Administrative and general expenses increased at the contracted services segment due to ~~the~~higher ~~operations~~labor ofcosts, employee-related benefits, and from the new ~~bases,~~operations anat ~~increase~~Joint inBase ~~labor~~Cape Cod and ~~employee-related~~Naval ~~costs,~~Air ~~and~~Station ~~insurance-related~~Patuxent ~~costs~~River, partially offset by lower ~~outside~~overall legal costs.

Administrative and general expenses at AWR (parent) during the year ended December 31, 2023 reflected the reversal of a previous accrual for a matter that was favorably resolved and did not recur in 2024.

Depreciation and Amortization

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, depreciation and amortization expense by segment consisted of the following amounts (in thousands):

	YearEnded		YearEnded		$		%
	12/31/2024		12/31/2023		CHANGE		CHANGE
	12/31/2025		12/31/2024		CHANGE		CHANGE
Water Services	$	3740,~~187~~336	$	3537,~~886~~187	$	13,~~301~~149	38.65	%
Electric Services	3,~~160~~856		3,~~256~~160		~~(96)~~696		-222.90	%
Contracted Services	3,~~300~~592		3,~~261~~300		39292		18.28	%
Total depreciation and amortization	$	4347,~~647~~784	$	4243,~~403~~647	$	14,~~244~~137	2.9.5	%

Depreciation and amortization expense increased at the water segment due largely to additions to utility plant recorded in 2024, partially offset by the retroactive impact for the full year of 2022 of $0.6 million recorded in 2023 as a result of receiving a final decision in the water general rate case in 2023. The overall ~~decrease~~increase in depreciation and amortization ~~expenses~~expense atresulted ~~the electric segment is~~ primarily ~~due~~from tocapital ~~the~~additions retroactive impact of an overall lower composite depreciation rate supported by the latest depreciation study adopted in the final decision in the electric general rate case that was recorded in 2024 related to ~~the~~utility ~~full~~plant ~~year of 2023~~ and ~~2024.~~other ~~The~~fixed ~~lower~~assets ~~adopted~~placed ~~depreciation expense levels from the updated study is also reflected~~ in ~~the new revenue requirements, resulting in no significant impact to earnings~~service. ~~This decrease was partially offset by additions to utility plant.~~

Maintenance

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, maintenance expense by segment consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

910,~~788~~286

9,~~906~~788

~~(118)~~498

-15.21

Electric Services

5,~~901~~773

~~924~~5,901

~~4,977~~(128)

*-2.2

Contracted Services

45,~~566~~604

34,~~388~~566

1,~~178~~038

3422.87

Total maintenance

2021,~~255~~663

1420,~~218~~255

61,~~037~~408

427.50

*Overall ~~not~~maintenance ~~meaningful~~expense increased at the water segment due to an increase in maintenance activities when compared to 2024.

Maintenance expense decreased at the ~~water~~electric segment primarily due to ~~lower~~the ~~unplanned~~approval of the final decision in the electric general rate case proceeding with rates retroactive to 2023 but recorded in 2024. Higher maintenance costs ~~experienced~~incurred into support BVES’s vegetation management activities of $2.4 million related to the full year 2023 were expensed during the fourth quarter of 2024 as ~~compared~~the costs prior to 2023 were being tracked in memorandum accounts prior to receiving the approved general rate case decision at the time. Higher expenses related to vegetation management activities are reflected and recovered in the new customer rates implemented. This decrease was largely offset by an increase of $2.3 million in billed surcharges to recover previously incurred costs that had been tracked in CPUC-authorized memorandum accounts. Increases in revenues from billed surcharges have a corresponding and offsetting increase in maintenance expenses, resulting in no impact to earnings.

~~Maintenance~~Overall maintenance expense ~~was~~increased ~~higher~~ at the ~~electric~~contracted services segment ~~as compared to 2023~~ due ~~largely~~ to ~~the~~higher ~~approval~~planned ofand ~~the~~unplanned ~~final~~maintenance-related ~~decision~~activities incompared ~~the electric general rate case proceeding with rates retroactive~~ to ~~January~~2024. 1Furthermore, ~~2023. Maintenance costs of approximately $4.7 million recorded in 2024 reflect~~ the ~~impact~~new ofoperations ~~the~~at ~~higher~~Joint ~~levels~~Base ofCape ~~vegetation~~Cod ~~management costs approved in the final decision related to the full year of 2023~~ and ~~2024~~Naval ~~that~~Air ~~have~~Station ~~been~~Patuxent ~~included~~River ~~in the new retroactive customer rates. The electric segment~~ also ~~recorded~~contributed ~~revenues retroactive~~ to ~~January 1, 2023 in 2024 that offset~~ the ~~effects~~higher ~~of the incremental increases in~~ maintenance ~~costs adopted in the final decision~~expense. ~~There was also an increase in other maintenance-related activities.~~

Maintenance expense was higher at the contracted services segment as compared to the same period in 2023 due to higher planned and unplanned maintenances, and maintenance activity at the new bases that was not incurred in the same period in 2023.

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Property and Other Taxes

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, property and other taxes by segment, consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

22,~~233~~617

1922,~~845~~233

~~2,388~~384

121.07

Electric Services

2,~~399~~804

2,~~100~~399

~~299~~405

1416.29

Contracted Services

2,~~459~~587

2,~~101~~459

~~358~~128

175.02

Total property and other taxes

2728,~~091~~008

2427,~~046~~091

~~3,045~~917

123.74

Property and other taxes increased at the water segment due, in part, to a favorable property tax adjustment recorded in 2023 resulting from changes to property tax assessments of certain counties at that time, with no such adjustment occurring in 2024, as well as an increase in capital additions and related higher assessed values. 46

~~Property~~Table ~~and~~of ~~other taxes increased at the electric segment due to higher property taxes resulting from capital additions and related higher assessed values.~~Contents

Property and other taxes increased at the ~~contracted~~water ~~services~~ segment due largely asto ~~a result of~~ an increase in ~~gross~~franchise ~~receipts~~fees ~~taxes resulting~~ from higher revenues, ~~and~~partially offset by an ~~increase~~overall decrease in ~~payroll~~property taxes ~~due,~~resulting ~~in part,~~ from ~~the~~favorable ~~operations~~true-ups atin ~~the~~assessed ~~new~~property ~~bases~~values.

Property and other taxes increased at the electric segment due largely to higher property taxes from capital additions and an increase in franchise fees from higher revenues.

Property and other taxes increased at the contracted services segment largely as a result of an increase in payroll taxes due, in part, from the operations at the new bases.

ASUS Construction

For the year ended December 31, ~~2024~~2025, construction expenses for contracted services were $5460.56 million, ~~decreasing~~increasing by $36.41 million compared to ~~2023~~2024 primarily due to an ~~overall~~increase ~~decrease~~ in construction activity ~~resulting from timing differences of when such work was performed in 2024~~ as compared to ~~2023~~2024.

Interest Expense

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, interest expense by segment, including AWR (parent), consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

3835,~~532~~747

3138,~~283~~532

7(2,~~249~~785)

23-7.2

Electric Services

34,~~812~~288

3,~~298~~812

~~514~~476

1512.65

Contracted Services

~~2,166~~620

2,~~127~~166

39(1,546)

1-71.84

AWR (parent)

56,~~872~~121

65,~~054~~872

~~(182)~~249

-34.02

Total interest expense

5046,~~382~~776

4250,~~762~~382

7(3,~~620~~606)

17-7.82

AWR’s borrowings consist of bank notes under revolving credit facilities, while GSWC and BVES borrowings consist of revolving credit facilities and long-term debt issuances. Consolidated interest expense ~~increased~~decreased as compared to ~~2023~~2024 resulting primarily from anoverall ~~increase~~lower inaverage ~~total~~interest ~~borrowing~~rates. ~~levels~~The tooverall ~~support~~combined average interest rates were 5.07% and 5.36% for the year ended December 31, ~~among~~2025 ~~other~~and ~~things~~2024, respectively. In addition, the ~~capital~~decrease ~~expenditures~~in ~~programs~~the atwater segment’s interest expense was also attributed to the ~~regulated~~impact ~~utilities,~~of ascapitalizing ~~well~~debt ascosts anrelated ~~overall~~to ~~increase~~certain advice letter projects approved by the CPUC in ~~average~~the ~~interest~~latest ~~rates.~~general rate case effective January 1, 2025. The ~~overall~~increase ~~combined~~at the electric segment was due to higher average ~~interest~~borrowings, ~~rates~~partially ~~were~~offset ~~5.36%~~by ~~and~~lower 5average interest rates.~~22%~~ ~~for~~The decrease at the ~~year~~contracted ~~ended~~services ~~December 31,~~segment ~~2024~~was largely attributed to lower borrowings and ~~2023,~~lower ~~respectively~~average interest rates.

The combination of debt and equity financing is used to support, among other things, the capital expenditures program at the regulated utilities. Total average borrowing levels in 2025 increased slightly as compared to 2024. That is because during 2025 and 2024, AWR raised proceeds (net of commissions) of $67.3 million and $89.5 million, respectively, under its ATM offering program, and used the proceeds to pay down borrowings under its credit facility and make equity contributions to its regulated subsidiaries in support of their operations and capital expenditures.

Interest Income

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, interest income by business segment, including AWR (parent), consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

63,~~018~~245

56,~~557~~018

~~461~~(2,773)

8-46.31

Electric Services

~~976~~1,542

~~1,060~~976

~~(84)~~566

-758.90

Contracted Services

~~782~~809

~~806~~782

~~(24)~~27

-3.05

AWR (parent)

9854

~~(7)~~98

~~105~~(44)

*-44.9

Total interest income

75,~~874~~650

7,~~416~~874

~~458~~(2,224)

6-28.2

*The ~~not~~decrease ~~meaningful~~in interest income at the water segment was due primarily to a decrease in interest income earned on regulatory assets. Regulatory asset balances will decrease as surcharges are approved and implemented. The increase at the electric segment was due to higher levels of regulatory asset balances earning interest income.

The increase in interest income at the water segment was due primarily to higher interest income earned on regulatory assets bearing interest at the current 90-day commercial paper rates, which have increased compared to rates in 2023, as well as an overall higher average net regulatory assets balance recorded during 2024 compared to 2023. 47

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Other Income and (Expense), net

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, other income and (expense) by business segment, including AWR (parent), consisted of the following amounts (in thousands):

	YearEnded		YearEnded		$		%
	12/31/2024		12/31/2023		CHANGE		CHANGE
	12/31/2025		12/31/2024		CHANGE		CHANGE
Water Services	$	6,~~326~~634	$	46,~~946~~326	$	~~1,380~~308	274.9	%
Electric Services	~~968~~519		36968		~~932~~(449)		*-46.4	%
Contracted Services	(8218)		(~~125~~82)		4364		-3478.40	%
AWR (parent)	~~254~~514		~~269~~254		~~(15)~~260		-5102.64	%
Total interest income	$	7,466	$	5,126	$	2,340	45.6	%
Total other income and (expenses), net	$	7,649	$	7,466	$	183	2.5	%

*For ~~not~~the ~~meaningful~~year ended December 31, 2025, other income (net of other expense) increased due primarily to gains of $5.5 million generated on investments held to fund one of the Company’s retirement plans as compared to gains of $5.3 million recorded in 2024, due to financial market conditions. The decrease in other income (net of other expense) in the electric segment is due primarily to lower AFUDC (equity) earned on certain CPUC-approved advice letter projects while under construction compared to 2024. The increase in other income for AWR (parent) is due primarily to an increase in non-regulated-related activities.

For the year ended December 31, 2024, other income (net of other expense) increased primarily due to a change in the non-service cost components related to the Company’s defined-benefit pension plan and other retirement benefits resulting from changes in actuarial assumptions including expected returns on plan assets. However, as a result of GSWC’s and BVES’s two-way pension balancing accounts authorized by the CPUC, changes in total net periodic benefit costs related to the pension plan have no material impact to earnings. The increase in other income (net of other expense) in the electric segment also includes CPUC-authorized recovery of AFUDC on certain capital projects recorded in 2024 of $0.9 million as a result of receiving the final decision on the electric general rate case.

Income Tax Expense

For the years ended December 31, ~~2024~~2025 and ~~2023~~2024, income tax expense by segment, including AWR (parent), consisted of the following amounts (in thousands):

YearEnded

12/31/2024

12/31/2023

CHANGE

12/31/2025

12/31/2024

CHANGE

Water Services

2231,~~869~~550

3522,~~689~~869

~~(12~~8,~~820)~~681

~~-35~~38.90

Electric Services

2,~~541~~475

12,~~515~~541

~~1,026~~(66)

67-2.76

Contracted Services

67,~~699~~314

6,~~109~~699

~~590~~615

9.72

AWR (parent)

(1,~~936~~983)

(1,~~714~~936)

(~~222~~47)

132.04

Total income tax expense

3039,~~173~~356

4130,~~599~~173

~~(11~~9,~~426)~~183

~~-27~~30.54

Consolidated income tax expense for the year ended December 31, ~~2024~~2025 ~~decreased~~increased by $119.42 million primarily due to athe ~~decrease~~increase in consolidated pretax income ~~and a tax benefit of $5 million recorded at GSWC in 2024~~ as acompared ~~result~~to ~~of receiving a final decision in the latest water general rate proceeding as previously discussed~~2024. AWR’s ETRs were 2023.2% and 2520.02% for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. GSWC’s ETR was 1923.58% for the year ended December 31, ~~2024~~2025 as compared to 2519.85% for ~~2023,~~2024. ~~which~~The ~~fluctuated~~increase in GSWC’s ETR was due largely due to ~~the~~a one-time tax benefit of $5.0 million recorded in 2024 as a result of receiving the final decision in the water general rate case as previously discussed. ~~above~~There ~~and~~was no similar item recorded in 2025. This was partially offset by changes in certain flowed-through income taxes and permanent items.

Information comparing the consolidated results of operations for fiscal years ~~2023~~2024 and ~~2022~~2023 can be found under Item 7, Management’s Discussion and Analysis under the headings “Summary Results by Segment” and “Consolidated Results of Operations-Years Ended December 31, ~~2023~~2024 and ~~2022~~2023” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023~~2024 filed with the SEC.

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Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those that are important to the portrayal of AWR’s financial condition, results of operations and cash flows, and require the most difficult, subjective or complex judgments of AWR’s management. The need to make estimates about the effect of items that are uncertain is what makes these judgments difficult, subjective and/or complex. Management makes subjective judgments about the accounting and regulatory treatment of many items. The following are accounting policies and estimates that are critical to the financial statements of AWR. For more information regarding the significant accounting policies of Registrant, see Note 1 of “Notes to Financial Statements” included in Part II, Item 8, in Financial Statements and Supplementary Data.

Accounting for Rate Regulation — Because GSWC and BVES operate extensively in regulated businesses, they are subject to the authoritative guidance for accounting for the effects of certain types of regulation. Application of this guidance requires accounting for certain transactions in accordance with regulations adopted by the regulatory commissions of the states in which rate-regulated operations are conducted. Utility companies defer costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that those costs and credits will be recognized in the ratemaking process in a period different from the period in which they would have been reflected in income by an unregulated company. These deferred regulatory assets and liabilities are then reflected in the income statement in the period in which the same amounts are reflected in the rates charged for service.

Regulation and the effects of regulatory accounting have the most significant impact on the financial statements of GSWC and BVES. When either files for adjustments to rates, the capital assets, operating costs and other matters are subject to review, and disallowances may occur. In the event that a portion of either GSWC’s or BVES’s operations are no longer subject to the accounting guidance for the effects of certain types of regulation, they are required to write-off related regulatory assets that are not specifically recoverable and determine if other assets might be impaired. If the CPUC determines that a portion of either GSWC’s or BVES’s assets are not recoverable in customer rates, management is required to determine if it has suffered an asset impairment that would require a write-down in the asset valuation. Management continually evaluates the anticipated recovery, settlement or refund of regulatory assets, liabilities, and revenues subject to refund and provides for allowances and/or reserves that it believes to be necessary. In the event that management’s assessment as to the probability of the inclusion in the ratemaking process is incorrect, the associated regulatory asset or liability will be adjusted to reflect the change in assessment or the impact of regulatory approval of rates. Reviews by the CPUC may also result in additional regulatory liabilities to refund previously collected revenues to customers if the CPUC disallows costs included in the ratemaking process.

Registrant also reviews its utility plant in-service for possible impairment in accordance with accounting guidance for regulated entities for abandonments and disallowances of plant costs.

Revenue Recognition — GSWC and BVES record water and electric utility operating revenues when the service is provided to customers. Operating revenues include unbilled revenues that are earned (i.e., the service has been provided) but not billed by the end of each accounting period. Unbilled revenues are calculated based on the number of days and total usage from each customer’s most recent billing record that was billed prior to the end of the accounting period and is used to estimate unbilled consumption as of the year-end reporting period. Unbilled revenues are recorded for both monthly and bi-monthly customers.

In 2008, the CPUC granted GSWC the authority to implement revenue decoupling mechanisms through the adoption of the WRAM. With the adoption of this alternative revenue program, GSWC adjusts revenues in the WRAM for the difference between what is billed to its water customers and that which is authorized by the CPUC. GSWC’s request, in its most recent general rate case, to continue using a revenue decoupling mechanism, similar to the WRAM, has been denied by the CPUC. The CPUC has ordered GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM ~~or “M-WRAM”~~) effective January 1, 2025. The M-WRAM tracks the difference between the revenue based on actual metered sales through a tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a ~~blended tier~~ standard single quantity rate had been in effect. The CPUC also granted BVES a revenue decoupling mechanism through the ~~BRRAM~~BRRBA. BVES adjusts revenues in the ~~BRRAM~~BRRBA for the difference between what is billed to its electric customers and that which is authorized by the CPUC.

As required by the accounting guidance for alternative revenue programs, GSWC and BVES are required to collect their M-WRAM/WRAM and ~~BRRAM~~BRRBA balances, respectively, within 24 months following the year in which they are recorded. The CPUC has set the recovery period for under-collected balances that are up to 15% of adopted annual revenues at 18 months or less. For net WRAM under-collected balances greater than 15%, the recovery period is 19 to 36 months. As a result of the accounting guidance and CPUC-adopted recovery periods, Registrant must estimate if any WRAM and ~~BRRAM~~BRRBA revenues will be collected beyond the 24-month period. This can affect the timing of when such revenues are recognized.

ASUS’s firm-fixed-price contracts with the U.S. government are considered service concession arrangements under ASC 853 Service Concession Arrangements. Accordingly, the services under these contracts are accounted for under Topic 606 Revenue from Contracts with Customers and the water and/or wastewater systems are not recorded as Property, Plant and

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Equipment on AWR’s consolidated balance sheet. Revenues for ASUS’s operations and maintenance contracts are recognized when services have been rendered to the U.S. government pursuant to the initial 50-year contract and additional contracts thereafter. Revenues from construction activities are recognized as performance obligations are satisfied. Performance obligations related to firm-fixed-price contracts are satisfied over time as ASUS’s performance typically creates or enhances an asset that the U.S. government controls. ASUS recognizes revenue on its firm-fixed-price contracts as performance obligations are satisfied and control of the promised good and/or service is transferred to the U.S. government by measuring the progress toward complete satisfaction of the performance obligation(s) using an input method. 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, ASUS 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 conditions, change orders and estimated profitability, including those arising from any contract penalty provisions, and final contract settlements may result in revisions to costs and income, and are recognized in the period in which the revisions are determined. Unbilled receivables from the U.S. government represent amounts to be billed for construction work completed and/or for services rendered pursuant to the initial 50-year contract and additional contracts with the U.S government, which are not presently billable but which will be billed under the terms of the contracts.

Income Taxes — Registrant’s income tax calculations require estimates due principally to the regulated nature of the operations of GSWC and BVES, the multiple states in which Registrant operates, and potential future tax rate changes. Registrant uses the asset and liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. Changes in regulatory treatment, or significant changes in tax-related estimates, assumptions or law, could have a material impact on the financial position and results of operations of Registrant.

As regulated utilities, GSWC and BVES treat certain temporary differences as flowed-through adjustments in computing their income tax expense consistent with the income tax approach approved by the CPUC for ratemaking purposes. Flowed-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase occurring in another period. Giving effect to these temporary differences as flowed-through adjustments typically results in a greater variance between the effective tax rate and the statutory federal income tax rate in any given period than would otherwise exist if GSWC or BVES were not required to account for their income taxes as regulated enterprises. As of December 31, ~~2024~~2025, Registrant’s total amount of unrecognized tax benefits was zero.

Pension Benefits — Registrant’s pension benefit obligations and related costs are calculated using actuarial concepts within the framework of accounting guidance for employers’ accounting for pensions and post-retirement benefits other than pensions. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement. We evaluate these critical assumptions annually. Other assumptions include employee demographic factors such as retirement patterns, mortality, turnover and rate of compensation increase. The discount rate enables Registrant to state expected future cash payments for benefits as a present value on the measurement date. The guideline for setting this rate is a high-quality, long-term corporate bond rate. Registrant’s discount rates were determined by considering the average of pension yield curves constructed using a large population of high-quality corporate bonds. The resulting discount rates reflect the matching of plan liability cash flows to the yield curves. A lower discount rate increases the present value of benefit obligations and increases periodic pension expense. Conversely, a higher discount rate decreases the present value of benefit obligations and decreases periodic pension expense. To determine the expected long-term rate of return on the plan assets, Registrant considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on plan assets will increase pension expense. The long-term expected return on the pension plan’s assets was 6.00% ~~and 5.75%~~ for ~~2024~~2025 and ~~2023, respectively~~2024.

For the pension plan obligation, Registrant ~~increased~~decreased the discount rate to 5.7057% as of December 31, ~~2024~~2025 from 5.1670% as of December 31, ~~2023~~2024 to reflect market interest-rate conditions at December 31, ~~2024~~2025. A hypothetical 25-basis point decrease in the assumed discount rate would have decreased total net periodic pension expense for ~~2024~~2025 by approximately $0.1 million, which includes an increase in service cost that was more than offset by the decrease in interest cost, and would have increased the projected benefit obligation and accumulated benefit obligation at December 31, ~~2024~~2025 by a total of $5.56 million. A 25-basis point decrease in the long-term return on pension-plan-asset assumption would have increased ~~2024~~2025 pension cost by approximately $0.5 million.

In addition, changes in the fair value of plan assets will impact future pension cost and the Plan’s funded status. Changes in market conditions can affect the value of plan assets held to fund future long-term pension benefits. Any reductions in the value of plan assets will result in increased future expense, a decrease in the overfunded position, and increase the required future contributions.

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The CPUC has authorized GSWC and BVES to each maintain a two-way balancing account to track differences between their forecasted annual pension expenses adopted in rates and the actual annual expense to be recorded in accordance with the accounting guidance for pension costs. As of December 31, ~~2024~~2025, GSWC has a $12.71 million over-collection in its two-way pension balancing account for the general office and water regions. As of December 31, ~~2024~~2025, BVES has an insignificant balance in its two-way pension balancing account.

Funding requirements for qualified defined benefit pension plans are determined by government regulations. In establishing the contribution amount, Registrant has considered the potential impact of funding-rule changes under the Pension Protection Act of 2006. Registrant contributes the minimum required contribution as determined by government regulations or the forecasted annual pension cost authorized by the CPUC and included in customer rates, whichever is higher. In accordance with this funding policy, for ~~2025~~2026, the pension contribution is not expected to be ~~approximately~~significant ~~$3.4~~given ~~million~~its current funded status. Any differences between the forecasted annual pension costs in rates and the actual pension costs are included in the two-way pension balancing accounts. Additionally, market factors can affect assumptions we use in determining funding requirements with respect to our pension plan. For example, a relatively modest change in our assumptions regarding discount rates can materially affect our calculation of funding requirements. To the extent that market data compels us to reduce the discount rate used in our assumptions, our benefit obligations could materially increase.

Changes in demographics, including increased numbers of retirees or increases in life expectancy assumptions may also increase the funding requirements of our obligations related to the pension plan. Mortality assumptions are a critical component of benefit obligation amounts and a key factor in determining the expected length of time for annuity payments. Assuming no changes in actuarial assumptions or plan amendments, the costs over the long term are expected to decrease due to the closure of Registrant’s defined benefit pension plan to new employees as of January 1, 2011. Employees hired or rehired after December 31, 2010 are eligible to participate in a defined contribution plan instead of the pension plan.

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Liquidity and Capital Resources

AWR

AWR’s regulated business is capital intensive and requires considerable capital resources. A portion of these capital resources is provided by internally generated cash flows from operations. AWR anticipates that interest expense will increase in future periods due to the need for additional external capital to fund construction programs at its regulated utilities and if market interest rates increase. In addition, as the capital investment program continues to increase, AWR and its subsidiaries anticipate they will need to access external financing more often. External financing may also be needed to cover costs incurred in connection with capital investments that are not covered in rates due to delays in obtaining approval of general rate cases by the CPUC.

AWR funds its operating expenses and pays dividends on its outstanding Common Shares primarily through dividends from its wholly owned subsidiaries. The ability of GSWC and BVES to pay dividends to AWR is restricted by California law. Under these restrictions, approximately $~~805~~933.87 million was available for GSWC to pay dividends to AWR on December 31, ~~2024~~2025. Approximately $~~102~~117.17 million was available for BVES to pay dividends to AWR as of December 31, ~~2024~~2025. ASUS’s ability to pay dividends to AWR is dependent upon state laws in which each ASUS subsidiary operates, as well as ASUS’s ability to pay dividends under California law.

When necessary, AWR obtains funds from external sources through the capital markets and from bank borrowings. Access to external financing on reasonable terms depends on the credit ratings of AWR and GSWC and current business conditions, including that of the water utility industry in general as well as conditions in the debt or equity capital markets.

On February 27, 2024, AWR entered into an Equity Distribution Agreement with third-party sales agents, under which AWR may offer and sell Common Shares, from time to time at its sole discretion, through an ATM offering program having an aggregate gross offering price of up to $200 million over a three-year period and pursuant to AWR’s effective shelf registration statement on Form S-3. In 2024, AWR ~~intends~~began toraising ~~use~~proceeds under its ATM offering program and has used the net proceeds from these sales, after deducting commissions on such sales and offering expenses, for general corporate purposes, including, but not limited to, repayment of debt and making equity contributions to its subsidiaries. ~~During~~Through ~~2024, AWR sold 1,145,219 Common Shares through~~ this ATM offering program, during 2025 and 2024, AWR raised proceeds of $8967.53 million, net of approximately $1.40 million in commissions paid ~~under~~and ~~the~~$89.5 ~~terms~~million, net of ~~the~~$1.4 ~~Equity~~million ~~Distribution~~in ~~Agreement.~~commissions paid, respectively. As of December 31, ~~2024~~2025, approximately $~~109~~40.17 million remained available for sale under the ATM offering program which are expected to be fully used by the end of 2026.

In June 2023, AWR and GSWC each entered into credit agreements with aan original term of five years provided by a syndicate of banks and financial institutions. Both credit agreements, ~~will~~as amended, are now scheduled to mature in June ~~2028~~2029. The credit agreements provide AWR and GSWC unsecured revolving credit facilities with current borrowing capacities of $~~165~~195.0 million and $200.0 million, respectively. Under the terms of the credit agreements, the borrowing capacities for AWR and GSWC may be expanded up to an additional $6030.0 million and $75.0 million, respectively, subject to the lenders’ approval. AWR’s credit facility primarily provides support to AWR (parent) and ASUS, while GSWC’s credit agreement provides support to its water operations and capital expenditures. As of December 31, 2025, AWR’s and GSWC’s outstanding borrowings under the ~~new~~ credit facilities were $~~120~~124.0 million and $~~124~~13.0 million, respectively,. asAs of December 31, ~~2024~~2025, AWR’s borrowings under its credit facility have been classified as non-current liabilities on AWR’s Consolidated Balance Sheet. The CPUC requires GSWC to completely pay off all borrowings under its revolving credit facility within a 24-month period after which GSWC may again borrow under its facility. GSWC’s pay-off period for its credit facility ends in ~~June~~December ~~2025~~2027. Accordingly, GSWC’s outstanding borrowings under its credit facility as of December 31, ~~2024~~2025 have been classified as non-current liabilities in both AWR’s Consolidated Balance Sheet and GSWC’s Balance Sheet.

In March 2025, the CPUC issued a final decision in GSWC’s ~~expects~~financing application, which among other things, approved GSWC’s request to issue up to $750.0 million of additional long-term debt and~~/or~~ equity insecurities. Subsequently, on May 29, 2025, toGSWC ~~facilitate~~executed a note purchase agreement for the ~~pay-off~~issuance of ~~its~~unsecured ~~credit~~private ~~facility. Under~~placement ~~the~~notes ~~current~~totaling ~~financing~~$100.0 ~~application~~million. ~~authorized~~In byconnection with the ~~CPUC~~transaction, GSWC ~~does~~issued ~~not~~(i) ~~have~~$75.0 ~~any~~million ~~remaining~~at ~~funds~~a ~~available~~coupon ~~for~~rate ~~the issuance~~ of ~~long-term financing~~5.30% Ondue ~~January~~May 2229, ~~2024~~2032, ~~GSWC~~and ~~filed~~(ii) $25.0 million at a ~~new~~coupon ~~financing~~rate ~~application~~of ~~with~~5.65% ~~the~~due ~~CPUC~~May 29, ~~pending~~2037. ~~approval~~In addition, ~~that~~on ~~requests~~May ~~authorization~~30, ~~for~~2025, ~~the~~GSWC ~~issuance~~issued ~~and~~3.6500 ~~sale~~common ofshares ~~additional~~to ~~long-term~~its ~~debt~~parent ~~and~~in ~~equity~~exchange ~~securities~~for ofa upcontribution toof $~~750~~50.0 million. GSWC Aused ~~proposed~~the ~~decision~~proceeds ~~has~~from ~~yet~~both tothe beissuance ~~issued~~of by the ~~CPUC~~notes inand ~~GSWC’s~~equity ~~new~~to ~~financing~~fully ~~application~~pay asdown ofall ~~the~~outstanding ~~date~~borrowings as of ~~this~~May ~~filing. If~~31, an2025 ~~approval~~under isGSWC’s ~~not~~credit ~~received~~agreement. In ~~soon~~December 2025, GSWC ~~will~~issued ~~file~~an aadditional ~~request~~0.9750 ~~with~~of ~~the~~common ~~CPUC~~shares to ~~extend~~AWR ~~its~~for ~~24-month~~total ~~pay-off~~proceeds ~~period~~of ~~past~~approximately ~~the~~$12.0 ~~June~~million. ~~2025~~GSWC ~~deadline~~again ~~while~~used itthe ~~awaits~~proceeds ~~a final decision~~ from the ~~CPUC~~stock onissuance ~~its~~to ~~financing~~pay ~~application~~down ~~that~~outstanding ~~will~~borrowings ~~enable~~under ~~GSWC~~its torevolving ~~issue~~credit ~~the~~facility ~~necessary~~and ~~long-term financing~~ to ~~pay-off~~fund its ~~borrowings~~operations ~~under~~and ~~the~~capital ~~credit facility~~expenditures.

OnIn ~~June~~August 5, 2024, ~~GSWC completed~~ the ~~issuance~~CPUC ofissued ~~$65.0~~a ~~million~~final decision in ~~unsecured~~BVES’s ~~private~~financing ~~placement notes with a coupon rate of 5.50%~~application, ~~maturing~~which onamong ~~June~~other 5things, ~~2027.~~approved ~~GSWC~~BVES’s ~~used~~request ~~the~~to ~~proceeds~~issue ~~from~~up ~~the private placement notes~~ to ~~pay~~$120 ~~down~~million ~~outstanding~~of ~~borrowings~~new ~~under~~long-term ~~its~~debt ~~revolving credit facility~~ and toequity ~~fund its operations and capital expenditures~~securities. ~~Interest~~On ~~payments~~February ~~are~~12, ~~due~~2025, ~~semiannually~~BVES oncompleted ~~June~~the 5issuance ~~and~~of ~~December~~$50.0 5million ~~each~~in ~~year,~~unsecured ~~commencing December 5, 2024. The~~ private -placement notes ~~rank equally~~ with ~~GSWC’s~~a ~~other~~coupon ~~unsecured~~rate ~~and~~of ~~unsubordinated debt~~6.12% ~~GSWC~~maturing ~~may,~~on atFebruary ~~its option~~12, ~~redeem~~2030. ~~all~~BVES orused ~~portions~~the ofproceeds from the notes ~~at any time upon written notice, subject~~ to ~~payment~~pay ofdown aall ~~make-whole~~amounts ~~premium. The covenant requirements~~ under ~~these~~its ~~private~~revolving ~~placement~~credit ~~notes~~facility ~~are~~outstanding ~~similar~~satisfying to the ~~terms~~CPUC’s ofrequirement ~~other~~at ~~private~~that ~~placement notes issued by GSWC~~time.

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OnBVES ~~December~~has 30a separate revolving credit facility without a parent guaranty that supports its electric operations and capital expenditures, ~~2024~~which provides a borrowing capacity, ~~GSWC~~as ~~issued~~amended, 2of $65.~~7586~~0 million ~~Common~~and ~~Shares~~expires on December 19, 2028. Under BVES’s amended credit agreement, executed on December 19, 2025, BVES extended the term of its credit facility to ~~AWR~~2028 ~~for~~and ~~total~~also ~~proceeds~~expanded the borrowing capacity of ~~approximately~~up to an additional $4025.0 million, subject to lender’s approval. ~~GSWC~~BVES’s ~~used~~revolving credit facility is considered a short-term debt arrangement by the ~~proceeds~~CPUC. ~~from~~Therefore, pursuant to the ~~stock~~CPUC’s ~~issuance~~requirements, borrowings under this credit facility are required to be fully paid off within a 24 month period, after which, BVES may borrow under the credit facility again. BVES’s next pay-off ~~down~~period ends in June 2027. As of December 31, 2025, the outstanding ~~borrowings~~balance under ~~its~~BVES’s ~~revolving~~ credit facility ~~and~~of to$4.0 million ~~fund~~has ~~its~~been ~~operations~~classified ~~and~~as ~~capital~~a ~~expenditures~~non-current liability in AWR’s Consolidated Balance Sheet.

BVES has a separate revolving credit facility without a parent guaranty that supports its electric operations and capital expenditures with a current borrowing capacity of $65.0 million that matures on July 1Furthermore, 2026. Currently, the credit agreement provides BVES an option to increase the borrowing capacity of the facility by an additional $10.0 million. BVES’s revolving credit facility is considered a short-term debt arrangement by the CPUC. Therefore, pursuant to the CPUC’s requirements, borrowings under this credit facility are required to be fully paid off within a 24-month period, after which, BVES may borrow under the credit facility again. BVES’s extended pay-off period as approved by the CPUC was set to end on May 1, 2025. On August 1, 2024, the CPUC issued a final decision in ~~BVES’s~~December financing application, which among other things, approved BVES’s request to issue up to $120 million of new long-term debt and equity securities. As a result of receiving approval of the new financing application, on February 12, 2025, BVES ~~completed~~issued ~~the issuance of $50~~3.033 ~~million~~common inshares ~~unsecured private-placement notes with a coupon rate of 6.12% maturing on February 12, 2030. BVES used the proceeds from the notes~~ to pay down all amounts under its revolving credit facility outstanding at the time of issuing the notes. As a result of refinancing the outstanding borrowings under the revolving credit facility with 5-year term notes, as of December 31, 2024 the outstanding balance under BVES’s credit facility of $45.0 million has been classified as a non-current liability in AWR’s ~~Consolidated Balance Sheet. Furthermore, in September 2024, BVES issued eleven Common Shares to AWR~~ for total proceeds of $226.0 million. BVES used the proceeds from the stock issuance to pay down outstanding borrowings under its revolving credit facility and to fund its operations and capital expenditures.

Our primary sources of liquidity to fund operations continue to be from the recovery of costs charged to customers at our regulated utilities and the collection of payments from the U.S government. We believe that capital investment costs associated with our capital programs at our regulated utilities will continue to be recovered through water and electric rates charged to customers, as well as funds from credit facilities from our regulated utilities. In addition, AWR’s credit facility will continue to be used to support ASUS’s operations and AWR (parent). The long-term capital-intensive nature of our regulated utilities have required us to continually seek future financing opportunities beyond the short-term. Future long-term financing at GSWC and BVES will consist of both long-term debt and equity issuances in order to manage to the CPUC-authorized capital structure. Under the current financing applications authorized by the CPUC, GSWC and BVES ~~has~~have $88588.0 million and $82.0 million, respectively, remaining and available ~~that~~under ~~provides~~each ~~for~~utility’s ~~the~~authorized ~~issuance~~applications ~~and~~that ~~sale~~provide offor ~~additional~~ long-term ~~debt~~financing and ~~equity securities,~~ which are expected to be used over the next 2-56 years to pay down outstanding borrowings under ~~the~~their respective credit facilities and support ~~its~~ operations. As previously discussed, GSWC awaits a final decision from the CPUC on its new financing application that would provide authorization for the issuance and sale of additional long-term debt and equity securities of up to $750.0 million expected to be used over the next 1-5 years.

Management believes that AWR’s and GSWC’s sound capital structures and strong credit ratings, combined with its financial discipline, will enable AWR to access the debt and equity markets. However, unpredictable financial market conditions in the future may limit its access or impact the timing of when to access the market, in which case AWR may choose to temporarily reduce its capital spending.

AWR’s ability to pay cash dividends on its Common Shares outstanding depends primarily upon cash flows from its subsidiaries. AWR intends to continue paying quarterly cash dividends on or about March 1, June 1, September 1 and December 1, subject to earnings and financial conditions, regulatory requirements and such other factors as the Board of Directors may deem relevant. On February 410, ~~2025~~2026, AWR’s Board of Directors approved a first quarter dividend of $0.~~4655~~5040 per share on AWR’s Common Shares. Dividends on the Common Shares will be paid on March 35, ~~2025~~2026 to shareholders of record at the close of business on February 1823, ~~2025~~2026. AWR has paid common dividends every year since 1931, and has increased the dividends received by shareholders each calendar year for 7071 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result. AWR’s quarterly dividend rate has grown at a compound annual growth rate (“CAGR”) of 8.85% over the last five years ~~through~~since ~~2024~~the first quarter of 2021, and has achieved a 10-year CAGR of 8.03% in its calendar year dividend payments through ~~2024~~2025. AWR’s current policy is to achieve a CAGR in the dividend of more than 7% over the long-term.

Cash Flows from Operating Activities:

Cash flows from operating activities have generally provided sufficient cash to fund operating requirements, including a portion of construction expenditures at GSWC and BVES, and construction expenses at ASUS, and to pay dividends. AWR’s future cash flows from operating activities are expected to be affected by a number of factors, including utility regulation; delays in receiving approvals of general rate cases, changes in tax law; maintenance expenses; inflation; newly imposed tariffs; compliance with water quality regulations and environmental, health and safety standards; production costs; customer growth; per-customer usage of water and electricity; weather and seasonality; conservation efforts; compliance with local governmental requirements, including mandatory restrictions on water use; ~~the lingering effects of the COVID-19 pandemic on~~ its customers’ ability to pay utility bills; and required cash contributions to pension and post-retirement plans. Future cash flows from contracted services subsidiaries will depend on new business activities, existing operations, the construction of new and/or replacement infrastructure at military bases, timely economic price and equitable adjustment of prices, and timely collection of payments from the U.S. government and other prime contractors operating at the military bases, and any adjustments arising out of an audit or investigation by federal governmental agencies.

54ASUS funds its operating expenses primarily through internal operating sources, which include U.S. government funding under 15- and 50-year contracts for operations and maintenance costs and construction activities, as well as investments by, or loans from, AWR. ASUS, in turn, provides funding to its subsidiaries. ASUS’s subsidiaries may also from time to time provide funding to ASUS or other subsidiaries of ASUS.

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~~construction~~Cash flows from operating activities are primarily generated by net income, adjusted for non-cash expenses such as depreciation and amortization, and deferred income taxes. Cash generated by operations varies during the year. Net cash provided by operating activities of ~~new~~AWR was $229.7 million for 2025 as compared to $198.7 million for 2024. The increase in operating cash flow was largely due to the timing of cash receipts and~~/or~~ ~~replacement~~disbursements ~~infrastructure~~related atto ~~military~~working ~~bases~~capital items. In particular, ~~timely~~the ~~economic~~implementation ~~price~~of new rates and ~~equitable~~surcharges ~~adjustment~~at ofour ~~prices~~regulated utilities added to cash flows from operations. In addition, in 2025, GSWC and ~~timely~~one ~~collection~~of ASUS’s subsidiaries received combined approximately $17 million in PFAS contamination litigation proceeds as plaintiffs in class action lawsuits. The increase in cash flows from operating activities is partially offset by the differences at ASUS in the timing of vendor payments ~~from~~and the receipt of cash for construction work at military bases. The billings (and cash receipts) for this construction work generally occur at completion of the work or in accordance with a billing schedule contractually agreed to with the U.S. government and/or other prime contractors. ~~operating~~Thus, atcash flow from construction-related activities may fluctuate from period to period with such fluctuations representing timing differences of when the ~~military~~work ~~bases,~~is being performed and ~~any~~when ~~adjustments~~the ~~arising~~cash ~~out~~is received for payment of anthe ~~audit~~work. orFurthermore, ~~investigation~~in byMarch ~~federal~~2024, ~~governmental~~as ~~agencies~~a result of the Extended Arrearage Program, GSWC received $3.5 million in COVID-19 relief funds from the State of California to provide assistance to customers for delinquent water customer bills incurred during the pandemic. There were no similar relief funds received during 2025.

ASUS funds its operating expenses primarily through internal operating sources, which include U.S. government funding under long-term contracts with the U.S. government for operations and maintenance costs and construction activities, as well as investments by, or loans from, AWR. ASUS, in turn, provides funding to its subsidiaries. ASUS’s subsidiaries may also from time to time provide funding to ASUS or other subsidiaries of ASUS.

Cash flows from operating activities are primarily generated by net income, adjusted for non-cash expenses such as depreciation and amortization, and deferred income taxes. Cash generated by operations varies during the year. Net cash provided by operating activities of AWR was $198.7 million for 2024 as compared to $67.7 million for 2023. The increase in operating cash flow was largely due to the implementation of new CPUC-approved billed water rates and surcharges at GSWC during the second-half of 2023 as a result of receiving the final CPUC decision in June 2023 on in the previous water general rate case proceeding. With the delay in receiving the water general rate case decision at the time, billed water revenues in 2023 through July 30, 2023 were based on 2021 adopted rates pending a final CPUC decision, while operating expenses continued to rise primarily due to inflation and increasing costs in complying with water quality regulations. GSWC filed for the implementation of the CPUC-approved rate increases that went into effect in July 2023. GSWC also filed for the recovery of retroactive rate amounts accumulated through July 30, 2023 related to the CPUC approved rate increases for 2022 and 2023. Surcharges were implemented in October 2023 to recover the cumulative retroactive rate differences over 36-months. Furthermore, in March 2024, as a result of the Extended Arrearage Program, GSWC received $3.5 million in COVID-19 relief funds from the State of California to provide assistance to customers for delinquent water customer bills incurred during the pandemic. There were no similar relief funds received during 2023. Finally, a 4.5% increase in billed water consumption also contributed to the increase in operating cash flows.

In addition, the increase in cash flows from operating activities resulted from differences at ASUS in the timing of vendor payments and the receipt of cash for construction work at military bases. The billings (and cash receipts) for this construction work generally occur at completion of the work or in accordance with a billing schedule contractually agreed to with the U.S. government and/or other prime contractors. Thus, cash flow from construction-related activities may fluctuate from period to period with such fluctuations representing timing differences of when the work is being performed and when the cash is received for payment of the work.

These increases in operating cash flows discussed above were partially offset by differences in the timing of income tax payments between the two periods. The timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.

Cash Flows from Investing Activities:

Net cash used in investing activities was $~~232~~237.85 million for the year ended December 31, ~~2024~~2025 as compared to $~~188~~232.8 million in ~~2023~~2024, which is mostly related to capital expenditures at the regulated utilities. ~~that~~GSWC ~~are~~and ~~consistent~~BVES ~~with~~invest capital ~~budgets approved in the general rate case proceedings. AWR invests capital~~ to provide essential services to ~~its~~their regulated customer ~~base~~bases, while working with the CPUC to have the opportunity to earn a fair rate of return on investment. AWR’s infrastructure investment plan consists of both infrastructure renewal programs (to replace infrastructure, including those to mitigate wildfire risk) and major capital investment projects (to construct new water treatment, supply and delivery facilities). The regulated utilities may also be required from time to time to relocate existing infrastructure in order to accommodate local infrastructure improvement projects. Projected capital expenditures and other investments are subject to periodic review and revision.

During ~~2025~~2026, the regulated utilities’ company-funded capital expenditures are estimated to be approximately $~~170~~185 – $~~210~~225 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues.

Cash Flows from Financing Activities:

AWR’s financing activities include primarily: (i) the proceeds from the issuance of Common Shares, (ii) the issuance and repayment of long-term debt and notes payable to financial institutions, ~~(iii) the proceeds from unsecured new or existing revolving credit facilities for AWR, GSWC~~ and ~~BVES, and~~ (iviii) the payment of dividends on Common Shares. In order to finance new infrastructure, GSWC also receives customer advances (net of refunds) for, and contributions in aid of, construction. Borrowings on AWR’s ~~new~~ credit facility isare used to support AWR (parent) and its contracted services subsidiary, and borrowings on GSWC’s and BVES’s credit facilities are used to fund GSWC and BVES capital programs, respectively, until long-term financing is arranged. AWR may also from time to time make equity contributions to GSWC and BVES. Overall debt levels are expected to increase to fund the costs of the capital expenditures that will be made by the regulated utilities.

55Net cash used by financing activities was $26,000 for the year ended December 31, 2025 as compared to cash provided of $46.6 million for 2024. The change in cash from financing activities in 2025 was due primarily to a decrease in total net borrowings required in 2025 as compared to 2024 due, in large part, to an increase in cash flows from operating activities. Financing activities in 2025 included the issuance of long-term debt of $50.0 million by BVES and $100.0 million by GSWC, and the proceeds were used to pay down outstanding borrowings under their respective credit facilities. Credit facilities have been used to support their operations and ongoing capital expenditure programs. In June 2024, GSWC completed the issuance of $65.0 million in unsecured private placement notes. The proceeds from the private placement notes were used by GSWC for general corporate purposes including the repayment of outstanding borrowings under its credit facility and the support of its operations and capital expenditures. During 2025, AWR had net payments on its credit facilities of $148.0 million, while during 2024, AWR had net payments on its credit facilities of $44.5 million. In addition, during 2025, AWR sold 903,769 Common Shares through its ATM offering program and raised net of issuance cost of $67.0 million, while during 2024, AWR sold 1,145,219 Common Shares through its ATM offering program and raised proceeds net of issuance cost of $88.7 million.

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Net cash provided by financing activities was $46.6 million for the year ended December 31, 2024 as compared to cash provided of $129.2 million for 2023. The decrease in cash provided by financing activities in 2024 was due primarily to a decrease in total new borrowings required in 2024 as compared to 2023 due, in large part, to an increase in cash flows from operating activities. In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and used the proceeds to pay down the majority of its outstanding intercompany borrowings from AWR at that time, which in turn used the proceeds to pay down outstanding borrowings under its credit facility. In June 2024, GSWC completed the issuance of $65.0 million in unsecured private placement notes. The proceeds from the private placement notes were used by GSWC for general corporate purposes including the repayment of outstanding borrowings under its credit facility and the support of its operations and capital expenditures. During the year ended December 31, 2024, AWR had net payments on its credit facilities of $44.5 million, while during the year ended December 31, 2023, AWR had net borrowings on its credit facilities of $54.6 million. Credit facilities have been used to support operations and capital expenditures. In addition, during 2024, AWR sold 1,145,219 Common Shares through its ATM offering program and raised proceeds of $89.5 million, net of $1.4 million in commissions paid under the terms of the Equity Distribution Agreement.

GSWC

GSWC funds its operating expenses, payments on its debt, dividends to AWR on its outstanding common shares, and a portion of its construction expenditures through internal sources. Internal sources of cash flow are provided primarily by retention of a portion of earnings from operating activities. Internal cash generation is influenced by factors such as weather patterns, conservation efforts, environmental ~~regulation~~and water quality regulations, litigation, changes in tax law and deferred taxes, changes in supply costs and regulatory decisions affecting GSWC’s ability to recover these supply costs, timing of rate relief, increases in maintenance expenses and capital expenditures, surcharges authorized by the CPUC to enable GSWC to recover expenses previously incurred from customers, and CPUC requirements to refund amounts previously charged to customers. Internal cash flows have also been impacted by delays in receiving payments from GSWC customers due to the lingering effects of the COVID-19 pandemic.

GSWC may, at times, utilize external sources for long-term financing, as well as obtain funds from equity investments from its parent, AWR, to help fund a portion of its operations and construction expenditures. On June 28, 2023, GSWC executed its own separate credit agreement that provides for a $200.0 million unsecured revolving credit facility to support GSWC’s operations and capital expenditures. GSWC’s borrowing capacity under this credit agreement may be expanded up to an additional $75.0 million, subject to the lenders’ approval. 54

The CPUC requires GSWC to pay-off all intercompany borrowings it has from AWR within a 24-month period. GSWC’s borrowings under its credit facility will be required to be paid-off in full within a 24-month period after which GSWC may continue to borrow under its facility. GSWC’s next pay-off period ends in June 2025. On December 30, 2024, GSWC issued 2.7586 Common Shares to AWR for total proceeds of approximately $40.0 million. After this issuance, under the current financing application authorized by the CPUC, GSWC has no remaining authorized funds that provides for long-term financing. On January 22, 2024, GSWC filed a new financing application with the CPUC, pending approval, that requests the authorization for the issuance and sale of additional long-term debt and equity securities of up to $750.0 million. A proposed decision has yet to be issued by the CPUC in GSWC’s new financing application as of the date of this filing. If an approval is not received soon, GSWC will file a request with the CPUC to extend its 24-month pay-off period past the June 2025 deadline while it awaits a final decision from the CPUC on its new financing application that will enable GSWC to issue the necessary long-term financing to pay-off its borrowings under the credit facility.

GSWC also receives advances and contributions from customers, home builders and real estate developers to fund construction necessary to extend service to new areas. Advances for construction are generally refundable at a rate of 2.5% in equal annual installments over 40 years. Utility plant funded by advances and contributions is excluded from rate base. GSWC amortizes contributions in aid of construction at the same composite rate of depreciation for the related property.

Cash Flows from Operating Activities:

Net cash provided by operating activities was $158.6 million for the year ended December 31, 2024 as compared to $54.3 million for 2023. The increase in operating cash flow was largely due to the implementation of new CPUC-approved billed water rates and surcharges during the second-half of 2023 as a result of receiving the final water general rate case decision in June 2023. Also, in March 2024, as a result of the Extended Arrearage Program, GSWC received $3.5 million in COVID-19 relief funds from the State of California to provide assistance to customers for delinquent water customer bills incurred during the pandemic, with no similar relief funds received during 2023. The increase in cash flow was also due to a 4.5% increase in billed water consumption and the timing of vendor payments. These increases in operating cash flows were partially offset by differences in the timing of income tax payments between two periods. The timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.

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changes in supply costs and regulatory decisions affecting GSWC’s ability to recover these supply costs, timing of rate relief, increases in maintenance expenses and capital expenditures, surcharges authorized by the CPUC to enable GSWC to recover expenses previously incurred from customers, and CPUC requirements to refund amounts previously charged to customers. Internal cash flows have also been impacted by delays in receiving payments from GSWC customers.

GSWC may, at times, utilize external sources for long-term financing, as well as obtain funds from equity investments from its parent, AWR, to help fund a portion of its operations and construction expenditures. GSWC has its own separate credit agreement that provides for a $200.0 million unsecured revolving credit facility to support GSWC’s operations and capital expenditures. GSWC’s borrowing capacity under this credit agreement may be expanded up to an additional $75.0 million, subject to the lenders’ approval.

In March 2025, the CPUC issued a final decision in GSWC’s financing application, which among other things, approved GSWC's request to issue up to $750.0 million of additional long-term debt and equity securities. Subsequently, on May 29, 2025, GSWC executed a note purchase agreement for the issuance of unsecured private placement notes totaling $100.0 million. In connection with the transaction, GSWC issued (i) $75.0 million at a coupon rate of 5.30% due May 29, 2032, and (ii) $25.0 million at a coupon rate of 5.65% due May 29, 2037. In addition, during 2025, GSWC issued a total of 4.6250 common shares to AWR for total proceeds of approximately $62.0 million. Under the current financing application authorized by the CPUC, GSWC has $588.0 million remaining and available that provides for long-term financing and which are expected to be used over the next 2 to 6 years to pay down portions of the outstanding borrowings under GSWC’s credit facility and support its operations and capital program.

In addition, GSWC also receives advances and contributions from customers, home builders and real estate developers to fund construction necessary to extend service to new areas. Advances for construction are generally refundable at a rate of 2.5% in equal annual installments over 40 years. Utility plant funded by advances and contributions is excluded from rate base. GSWC amortizes contributions in aid of construction at the same composite rate of depreciation for the related property.

Cash Flows from Operating Activities:

Net cash provided by operating activities was $183.3 million for the year ended December 31, 2025 as compared to $158.6 million for 2024. The increase in operating cash flow was due primarily to (i) new water rates implemented effective January 1, 2025 that were approved in the latest general rate case proceeding, (ii) the implementation, in May 2025, of the WRAM/MCBA surcharges related to the recovery of all pre-2025 revenue and supply cost activity with the majority to be recovered over 18 months, (iii) the implementation of other surcharges during the year, and (iv) receipt of approximately $14.7 million in PFAS contamination litigation proceeds as plaintiffs in class action lawsuits. In March 2024, GSWC received $3.5 million in COVID-19 relief funds from the State of California to provide assistance to customers for delinquent water customer bills incurred during the pandemic, which did not recur in 2025. The timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.

Cash Flows from Investing Activities:

Net cash used in investing activities was $~~198~~204.81 million for the year ended December 31, ~~2024~~2025 as compared to $~~162~~198.28 million for ~~2023~~2024, which is mostly related to spending under GSWC’s infrastructure investment plans that are consistent with capital budgets authorized in its general rate cases.

Cash Flows from Financing Activities:

Net cash provided by financing activities was $4819.34 million for the year ended December 31, ~~2024~~2025 as compared to $~~110~~48.63 million for ~~2023~~2024. The decrease in net cash provided by financing activities ~~in 2024~~ was due primarily to a decrease in total ~~new~~capital (debt and equity) raised in 2025 as compared to 2024 due, in large part, to an increase in cash flows from operating activities. During 2025, GSWC issued long-term debt of $100.0 million and issued common shares to AWR (parent) in exchange for contribution of $62.0 million used. GSWC used the proceeds from both issuances to pay down outstanding borrowings ~~required~~under its credit facility that is used to support its water operations and capital expenditures program. atIn 2024, GSWC ascompleted athe ~~result~~issuance of an$65.0 ~~increase~~million in ~~cash~~unsecured ~~flows~~private ~~from~~placement ~~operating~~notes ~~activities~~and issued common shares to AWR (parent) in exchange for contribution of approximately $40.0 million. Finally, GSWC paid $37.5 million in dividends to AWR during 2025 as compared to $35.1 million during 2024.

In January 2023, GSWC issued $130.0 million of unsecured notes in a private placement and $10.0 million of equity to AWR. GSWC used the proceeds from both issuances to pay-off all of its outstanding intercompany borrowings from AWR at that time. In June 2023, GSWC executed its own separate credit agreement that it began using to support its water operations and capital expenditures program. On June 5, 2024, GSWC completed the issuance of $65.0 million in unsecured private placement notes and used the proceeds for general corporate purposes including the repayment of a portion of the outstanding borrowings under its credit facility and support of its operations and capital expenditures. In addition, in December 2024, GSWC issued approximately $40.0 million of equity to AWR. Finally, GSWC paid $35.1 million in dividends to AWR during 2024 as compared to $55~~.4 million during 2023.~~

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Contractual Obligations and Commitments

Registrant has various contractual obligations, which are recorded as liabilities in the consolidated financial statements. Other items, such as certain purchase commitments, are not recognized as liabilities in the consolidated financial statements but are required to be disclosed. In addition to contractual maturities, Registrant has certain debt instruments that contain annual sinking funds or other principal payments. Registrant believes that it will be able to refinance debt instruments at their maturity through public issuance or private placement of debt or equity. Annual payments to service debt are generally made from cash flows from operations.

	Payments/Commitments Due (1)
($ in thousands)	Total		Less than 1Year
Notes/Debentures (2)	$	187,000	$	—
Private Placement Notes (3)	445,000		—
Tax-Exempt Obligations (4)	9,537		143
Other Debt Instruments (5)	2,356		242
Total AWR Long-Term Debt	$	643,893	$	385
Credit Facilities (6)	$	289,000	$	124,000
Interest on Long-Term Debt (7)	255,609		32,153
Advances for Construction (8)	73,525		3,714
Renewable Energy Credit Agreements (9)	8,948		335
Purchased Power Contracts (10)	41,116		3,736
Capital Expenditures (11)	96,623		90,240
Water Purchase Agreements (12)	2,294		459
Operating Leases (13)	9,285		2,422
Employer Contributions (14)	3,400		3,400
SUB-TOTAL	779,800		260,459
Other Commitments (15)	11,655		—
TOTAL	$	1,435,348	$	260,844

The following table reflects Registrant’s contractual obligations and commitments to make future payments pursuant to contracts as of December 31, 2025. The table reflects only financial obligations and commitments. Therefore, performance obligations associated with our initial 50-year, firm-fixed-price contract and additional firm-fixed-price contracts with the U.S. government at our contracted services segment are not included in the amounts below.


	Payments/Commitments Due (1)
($ in thousands)	Total		Less than 1 Year
Notes/Debentures (2)	$	187,000	$	—
Private Placement Notes (3)	595,000		—
Tax-Exempt Obligations (4)	10,196		7,957
Other Debt Instruments (5)	2,114		252
Total AWR Long-Term Debt	$	794,310	$	8,209

Credit Facilities (6)	$	141,000	$	—
Interest on Long-Term Debt (7)	277,889		40,504
Advances for Construction (8)	81,806		3,875
Renewable Energy Credit Agreements (9)	8,817		986
Purchased Power Contracts (10)	53,289		8,977
Capital Expenditures (11)	106,102		97,526
Water Purchase Agreements (12)	1,984		467
Operating Leases (13)	6,946		2,315
SUB-TOTAL	677,833		154,650

Other Commitments (14)	12,396		—

TOTAL	$	1,484,539	$	162,859

(1) Excludes dividends and facility fees.

(2) The notes and debentures have been issued by GSWC under an Indenture dated September 1, 1993, as amended in December 2008. The notes and debentures do not contain any financial covenants that Registrant believes to be material or any cross-default provisions.

(3) Consists of GSWC senior private placement notes of $~~410~~510.0 million and BVES unsecured private placement notes of $3585.0 million, totaling $~~445~~595.0 million issued to various banks and financial institutions. GSWC'’s most recent private placement notes include $~~130~~65.0 million issued in ~~January~~June ~~2023~~2024 and $65100.0 million issued in ~~June~~May ~~2024~~2025. Under the terms of each of the senior notes, GSWC may not incur any additional debt or pay any distributions to its shareholders if, after giving effect thereto, it would have a debt to capitalization ratio in excess of 0.6667-to-1 or a debt to earnings before interest, taxes, depreciation and amortization ratio of more than 8-to-1. ~~BVES~~Under ~~amended~~the terms of its ~~term~~amended ~~loan~~credit agreement ~~related~~and ~~to the~~ unsecured private placement notes, ~~where effective December 19, 2024 and through the end of 2025,~~ BVES must maintain a minimum interest coverage ratio of 3.0 times its interest expense~~, and 4~~.~~5 times its interest expense thereafter.~~ BVES is also required to maintain a maximum consolidated total debt to consolidated total capitalization ratio of 0.65 to 1.00. GSWC and BVES were in compliance with all of its covenant provisions as of December 31, ~~2024~~2025. GSWC and BVES do not currently have any outstanding mortgages or other liens on indebtedness on ~~its~~their properties.

(4) Consists of obligations at GSWC related to (i) a loan agreement supporting $7.7 million in outstanding debt issued by the California Pollution Control Financing Authority, and (ii) $12.85 million of obligations with respect to GSWC’s 500 acre-foot entitlement to water from the State Water Project (“SWP”). These obligations do not contain any financial covenants believed to be material to Registrant or any cross-default provisions. In regard to its SWP entitlement, GSWC has entered into agreements with various developers for a portion of its 500 acre-foot entitlement to water from the SWP.

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entitlement to water from the State Water Project (“SWP”). These obligations do not contain any financial covenants believed to be material to Registrant or any cross-default provisions. In regard to its SWP entitlement, GSWC has entered into agreements with various developers for a portion of its 500 acre-foot entitlement to water from the SWP.

(5) Consists of the outstanding debt portion of funds received under the American Recovery and Reinvestment Act for reimbursements of capital costs related to the installation of meters for conversion of non-metered service to metered service in GSWC’s Arden-Cordova District.

(6) Credit facilities consists of (i) a $~~165~~195.0 million revolving credit facility under AWR, of which $~~120~~124.0 million was outstanding as of December 31, ~~2024~~2025; (ii) a $200.0 million revolving credit facility under GSWC, of which $~~124~~13.0 million was outstanding as of December 31, ~~2024~~2025; and (iii) a $65.0 million revolving credit facility under BVES, of which $454.0 million was outstanding as of December 31, ~~2024, and which was refinanced on February 12,~~ 2025 ~~with the issuance of long-term financing consisting of unsecured private-placement notes due on February 12, 2030~~.

(7) Consists of expected interest expense payments based on the assumption that GSWC’s long-term debt remains outstanding until maturity.

(8) Advances for construction represent contract refunds mostly from GSWC to developers for the cost of water systems paid for by the developers. The advances are generally refundable in equal annual installments over 40-year periods.

(9) Consists of agreements executed by BVES to purchase renewable energy credits through 2035. These renewable energy credits are used to meet California’s renewables portfolio standard.

(10) Consists of BVES fixed-cost purchased power ~~contract~~contracts executed in July 2023 and in May 2025 with Shell Energy North America (US), L.P and Morgan Stanley Capital Group Inc., respectively.

(11) Consists primarily of capital expenditures estimated to be required under signed contracts at GSWC and BVES as of December 31, ~~2024~~2025.

(12) Water purchase agreements consist of (i) a remaining amount of $10.19 million under an agreement expiring in 2028 to use water rights from a third party, and (ii) an aggregate amount of $1.21 million of ~~other~~ water purchase commitments with other third parties, which expire between ~~2025~~2026 through 2038.

(13) Reflects future minimum payments under noncancelable operating leases for both GSWC and ASUS.

(14) ~~Consists~~Other ofcommitments ~~expected~~consist ~~contributions~~primarily toof ~~Registrant’s~~(i) ~~defined~~$11.4 ~~benefit~~million ~~pension~~in ~~plan~~asset ~~for~~retirement ~~the~~obligations ~~year~~of ~~2024. Contributions~~GSWC tothat reflect the ~~pension~~retirement ~~plan~~of ~~are~~wells ~~expected~~by toGSWC, bewhich ~~the~~by ~~higher~~law ofneed ~~the~~to ~~minimum~~be ~~required~~properly ~~contributions~~capped ~~under~~at the ~~Employee~~time ~~Retirement~~of ~~Income~~removal; ~~Security Act~~ (~~“ERISA”~~ii) irrevocable orletters ~~the~~of ~~amounts~~credit ~~that are recovered~~ in ~~customer~~the ~~rates~~amount ~~and~~of ~~approved~~$1.0 bymillion for the ~~CPUC. These~~deductible ~~amounts~~in ~~are~~Registrant’s ~~estimates~~business ~~and~~automobile ~~are~~insurance ~~subject~~policies; toand ~~change~~(iii) ~~based~~a on$15,000 ~~among~~irrevocable ~~other~~letter ~~things,~~of ~~the~~credit ~~limits~~issued ~~established~~on ~~for~~behalf ~~federal~~of ~~tax~~GSWC ~~deductibility~~pursuant ~~(pension~~to ~~plan)~~a ~~and~~franchise agreement with the ~~significant~~City ~~impact~~of ~~that~~Rancho ~~returns~~Cordova. All onof ~~plan~~the ~~assets~~letters ~~and~~of ~~changes~~credit inare ~~discount~~issued ~~rates~~pursuant ~~have~~to onAWR’s ~~such~~revolving ~~amounts~~credit facility.

~~(15)~~Information ~~Other~~comparing ~~commitments~~the ~~consist~~liquidity ~~primarily~~and ofcapital ~~(i)~~resources ~~$10.8~~for ~~million~~fiscal inyears ~~asset~~2024 ~~retirement~~and ~~obligations~~2023 ofcan ~~GSWC~~be ~~that~~found ~~reflect~~under ~~the~~Item ~~retirement of wells by GSWC~~7, ~~which~~Management’s byDiscussion ~~law~~and ~~need~~Analysis tounder ~~be properly capped at~~ the ~~time~~heading of“Liquidity ~~removal;~~and ~~(ii) irrevocable~~Capital ~~letters~~Resources” ~~of credit~~ in ~~the~~AWR’s ~~amount~~Annual ofReport ~~$0.9~~on ~~million~~Form 10-K for the ~~deductible~~fiscal inyear ~~Registrant’s~~ended ~~business~~December ~~automobile insurance policies; and (iii) a $15~~31,~~000~~ ~~irrevocable~~2024 ~~letter~~filed ~~of credit issued on behalf of GSWC pursuant to a franchise agreement~~ with the ~~City of Rancho Cordova~~SEC. ~~All of the letters of credit are issued pursuant to AWR’s revolving credit facility.~~

Information comparing the liquidity and capital resources for fiscal years 2023 and 2022 can be found under Item 7, Management’s Discussion and Analysis under the heading “Liquidity and Capital Resources” in AWR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC.

BVES Power-Supply Arrangements

BVES purchases power pursuant to purchase power contracts approved by the CPUC. ~~Prior~~ toIn ~~2023~~May 2025, ~~BVES~~the ~~had~~CPUC ~~entered~~approved ~~into~~a ~~purchase~~new power ~~contracts~~purchase ~~with~~contract ~~three-~~between BVES and ~~five-year~~a ~~terms~~third ~~depending~~party. onThe ~~the~~new ~~amount~~contract ofprovides ~~power~~for ~~and~~ the ~~period~~purchase ~~during~~of ~~which~~electricity ~~the~~during ~~power~~a isdelivery ~~purchased~~period ~~under~~from ~~the~~June ~~contracts. These~~1, ~~remaining~~2025 ~~contracts~~through ~~expired~~December in31, ~~2024.~~2028 Inand ~~July~~is ~~2023,~~subject to the ~~CPUC~~accounting ~~approved~~guidance afor ~~new~~derivatives ~~power~~and ~~purchase~~requires ~~agreement~~mark-to-market ~~between~~accounting. ~~BVES~~In ~~and~~addition, aBVES ~~third~~continues ~~party~~ to procure renewable portfolio standard eligible energy and renewable energy credits as a bundled product. ~~BVES~~through ~~began~~a ~~taking power under this long-term~~ contract ~~during~~that ~~the~~delivers ~~fourth quarter of 2024 to replace the expired contracts. The new contract provides for the purchase of electricity during a delivery period from November 1, 2024~~ through December 31, 2035. In addition to the purchased power contracts, BVES buys additional energy to meet peak demand as needed and sells surplus power when necessary. BVES is pursuing short- and long-term renewable energy contracts to replace any power purchase agreements that have expired in addition to satisfying its requirements related to its resource portfolio for the next compliance period (2025 - 2027) and beyond. The average price per MWh, including fixed costs, ~~decreased~~increased to $71125.8961 per MWh in ~~2024~~2025 from $7971.8089 per MWh in ~~2023~~2024. BVES has an electric-supply-cost balancing account, as approved by the CPUC, to alleviate any impacts to earnings.

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Construction Program

GSWC maintains an ongoing water distribution main replacement program throughout its customer service areas based on the age and type of distribution-system materials, priority of leaks detected, remaining productive life of the distribution system and an underlying replacement schedule. In addition, GSWC and BVES upgrade their facilities in accordance with industry standards, local and CPUC requirements and new legislation. California requires investor-owned electric utilities to submit an annual wildfire mitigation plan to the CPUC for approval, and requires all electric utilities to prepare plans on constructing, maintaining, and operating their electrical lines and equipment to minimize the risk of catastrophic wildfires.

As of December 31, ~~2024~~2025, GSWC and BVES have unconditional purchase obligations for capital projects of approximately $96106.61 million. During the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, GSWC and BVES had capital expenditures of $244.0 million, $182.7 million and $174.3 million, respectively. A portion of these capital expenditures was funded by developers through contributions in aid of construction, which are not required to be repaid, and refundable advances. During the years ended December 31, 2024, 2023 and 2022, capital expenditures funded by developers were $8.5 million, $7.0 million and $6.9 million, respectively. During 2025, the water and electric segments’ company-funded capital expenditures are estimated to be approximately $170 - 210 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues. These amounts include approximately $9.1 million estimated to be spent by BVES on wildfire mitigation projects.

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expenditures of $223.3 million, $244.0 million and $182.7 million, respectively. A portion of these capital expenditures was funded by developers through contributions in aid of construction, which are not required to be repaid, and refundable advances. During the years ended December 31, 2025, 2024 and 2023, capital expenditures funded by developers were $12.5 million, $8.5 million and $7.0 million, respectively. During 2026, the water and electric segments’ company-funded capital expenditures are estimated to be approximately $185 - 225 million, barring any delays resulting from changes in capital improvement schedules due to unfavorable weather conditions and supply chain issues. These amounts include approximately $13.2 million estimated to be spent by BVES on wildfire mitigation projects.

Contracted Services

Under the terms of the contracts with the U.S. government, each contract’s price is subject to an economic price adjustment (“EPA”) on an annual basis. In the event that ASUS (i) is managing more assets at specific military bases than were included in the U.S. government’s request for proposal, (ii) is managing assets that are in substandard condition as compared to what was disclosed in the request for proposal, (iii) prudently incurs costs not contemplated under the terms of the contract, and/or (iv) becomes subject to new regulatory requirements, such as more stringent water-quality standards, ASUS is permitted to file, and has filed, requests for equitable adjustment (“REAs”). The timely filing for and receipt of EPAs and/or REAs continues to be critical in order for ASUS’s subsidiaries to recover increasing costs of operating, maintaining, renewing and replacing the water and/or wastewater systems at the military bases it serves.

During sequestration or automatic spending cuts, and the U.S. government shutdown, the subsidiaries of ASUS did not experience any earnings impact to their existing operations and maintenance and renewal and replacement services, as utility privatization contracts are an “excepted service.” With the expiration of sequestration, similar issues including further sequestration pursuant to the Balanced Budget and Emergency Deficit Control Act may arise as part of the fiscal uncertainty and/or future debt-ceiling limits imposed by Congress. Any future impact on ASUS and its operations through its subsidiaries will likely be limited to (a) the timing of funding to pay for services rendered, (b) delays in the processing of EPAs and/or REAs, (c) the timing of the issuance of contract modifications for new construction work not already funded by the U.S. Government, (d) the timing of construction work associated with delays in receiving construction permits from furloughs at government agencies, and/or (de) delays in solicitation for and/or awarding of new contracts under the Department of Defense contracting programs. In the event a future U.S. government shutdown extends for an unprecedented and much longer period, ASUS’s liquidity and earnings could be impacted.

At times, the DCAA and/or the DCMA may, at the request of a contracting officer, perform audits/reviews of contractors for compliance with certain government guidance and regulations, such as the Federal Acquisition Regulations and Defense Federal Acquisition Regulation Supplements. Certain audit/review findings, such as system deficiencies for government-contract-business-system requirements, may result in delays in the resolution of filings submitted to and/or the ability to file new proposals with the U.S. government.

60Below is a summary of current and projected EPA filings for price adjustments to operations and maintenance fees and renewal and replacement fees for ASUS’s subsidiaries in fiscal 2026.

Military Base

EPA period

Filing Date

Fort Bliss (FBWS)

October 2026 - September 2027

Third Quarter 2026

Fort Lee (ODUS)

February 2026 - January 2027

Fourth Quarter 2025

Joint Base Langley Eustis and Joint Expeditionary Base Little Creek Fort Story (ODUS)

April 2026 - March 2027

First Quarter of 2026

Joint Base Andrews (TUS)

February 2026 - January 2027

Fourth Quarter 2025

Fort Jackson (PSUS)

February 2026 - January 2027

Fourth Quarter 2025

Fort Bragg (ONUS)

March 2026 - February 2027

First Quarter 2026

Eglin Air Force Base (ECUS)

June 2026 - May 2027

Second Quarter 2026

Fort Riley (FRUS)

July 2026 - June 2027

Second Quarter 2026

Joint Base Cape Cod (BSUS)

April 2026 - March 2027

First Quarter 2026

Naval Air Station Patuxent River (PRUS)

April 2026 - March 2027

First Quarter 2026

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Below is a summary of current and projected EPA filings for price adjustments to operations and maintenance fees and renewal and replacement fees for ASUS’s subsidiaries in fiscal 2025.

Military Base (1)

EPA period

Filing Date

Fort Bliss (FBWS)

October 2025 - September 2026

Third Quarter 2025

Fort Gregg-Adams (ODUS)

February 2025 - January 2026

Fourth Quarter 2024

Joint Base Langley Eustis and Joint Expeditionary Base Little Creek Fort Story (ODUS)

April 2025 - March 2026

First Quarter of 2025

Joint Base Andrews (TUS)

February 2025 - January 2026

Fourth Quarter 2024

Fort Jackson (PSUS)

February 2025 - January 2026

Fourth Quarter 2024

Fort Liberty (ONUS)

March 2025 - February 2026

First Quarter 2025

Eglin Air Force Base (ECUS)

June 2025 - May 2026

Second Quarter 2025

Fort Riley (FRUS)

July 2025 - June 2026

Second Quarter 2025

Joint Base Cape Cod (BSUS)

April 2025 - March 2026

First Quarter 2025

Naval Air Station Patuxent River (PRUS)

April 2025 - March 2026

First Quarter 2025

Regulatory Matters

A discussion on various regulatory matters is included in the section titled “Overview” in this Form 10-K’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The discussion below focuses on other regulatory matters and developments.

Certificates of Public Convenience and Necessity

GSWC and BVES hold Certificates of Public Convenience and Necessity (“CPCN”) granted by the CPUC in each of the ratemaking areas they serve. ASUS subsidiaries are regulated, if applicable, by the state in which it primarily conducts water and/or wastewater operations. FBWS holds a CPCN from the Public Utilities Commission of Texas. The Virginia State Corporation Commission exercises jurisdiction over ODUS as a public service company. The Maryland Public Service Commission approved the right of TUS to operate as a water and wastewater utility at Joint Base Andrews, Maryland, and may exercise its jurisdiction over the water and wastewater utility operation at Naval Air Station Patuxent River, Maryland. The South Carolina Public Service Commission exercises jurisdiction over PSUS as a public service company. ONUS is regulated by the North Carolina Public Service Commission. ECUS, FRUS and BSUS are not subject to regulation by their respective states’ utility commissions.

GSWC and BVES are subject to regulation by the CPUC which has broad authority over service and facilities, rates, classification of accounts, valuation of properties, the purchase, disposition and mortgaging of properties necessary or useful in rendering public utility service, the issuance of securities, the granting of certificates of public convenience and necessity as to the extension of services and facilities and various other matters.

Rates that GSWC and BVES are authorized to charge are determined by the CPUC in general rate cases and are derived using rate base, cost of service and cost of capital, as projected for a future test year. Rates charged to customers vary according to customer class and rate jurisdiction and are generally set at levels allowing for recovery of prudently incurred costs, including a fair return on rate base. Rate base generally consists of the original cost of utility plant in service, plus certain other assets, such as working capital and inventory, less accumulated depreciation on utility plant in service, deferred income tax liabilities and certain other deductions.

GSWC is required to file a water general rate case application every three years according to a schedule established by the CPUC. General rate cases typically include an increase in the test year with inflation-rate adjustments for expenses in the second and third years of the rate case cycle. For capital projects, there are two test years. Rates are based on a forecast of expenses and capital costs for each test year. GSWC’s cost of capital is determined in a separate proceeding. Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. BVES’s general rate cases are typically filed every four years, which also includes a determination of BVES'’s cost of capital. Rates may also be increased by offsets for certain expense increases, including, but not limited to, supply-cost offset and balancing-account amortization, advice letter filings related to certain plant additions and other operating cost increases.

Neither the operations of AWR nor the operations and rates of ASUS are directly regulated by the CPUC. The CPUC does, however, regulate certain transactions between GSWC, BVES and ASUS and between GSWC and BVES and AWR.

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General Rate Cases and Other Regulatory Matters

Water Segment

Recent Changes in Rates:

Rates that GSWC is authorized to charge are determined by the CPUC in general rate cases. ~~Water~~ ~~revenues~~In ~~billed~~January to2025, ~~customers for~~ the ~~year~~CPUC ~~ended~~issued ~~December 31, 2024 were based on 2024 adopted rates. However, due to~~ a ~~delay in receiving a~~ final decision onin GSWC’s ~~water~~latest general rate ~~application~~case proceeding that ~~determined~~will set new ~~water~~ rates for ~~2022 and 2023, retroactive to January 1, 2022 and January 1, 2023, GSWC recorded~~ the ~~cumulative~~years ~~retroactive~~2025 ~~rate differences to CPUC~~-~~authorized~~ ~~general rate case memorandum accounts recognized as regulatory assets, which through December 31, 2024 totaled $37~~2027.7 ~~million. In October 2023~~Accordingly, ~~GSWC~~new ~~also~~water ~~filed~~rates for ~~the~~2025 ~~recovery~~have ofbeen ~~all~~implemented ~~retroactive amounts for 2022~~ and ~~2023~~reflected ~~accumulated~~in upGSWC’s toresults ~~the~~for ~~effective date of~~ the ~~new~~year ~~2023~~ended ~~rates, July~~December 3031, ~~2023, with surcharges implemented in October 2023~~2025.

~~Water~~In ~~General~~December ~~Rate~~2025, ~~Case~~GSWC ~~for~~received approval from the ~~years~~CPUC to implement its full second-year rate increases, effective January 1, 2026, that will result in higher adopted operating revenues less water supply cost for 2026 of approximately $32.0 million compared to 2025~~–2027:~~’s adopted operating revenues less water supply cost. Included in the 2026 increase is nearly $11 million related to advice letter capital projects. The assets from the advice letter projects and the related amounts in the memorandum account were added to the adopted rate base for inclusion in the revenue requirement effective January 1, 2026.

OnExpansion August 14, 2023, GSWC filed a general rate case application for all its water regions and the general office. This general rate case will determine new water rates for the years 2025 – 2027. On July 12, 2024, GSWC and Cal Advocates of ~~the CPUC filed a joint motion to adopt a settlement agreement between~~ GSWC’s ~~and~~Water Cal Advocates in connection with the water utility general rate case. On January 30, 2025, the CPUC adopted a decision approving the settlement agreement and establishing new rates retroactive to January 1, 2025. GSWC filed an advice letter on January 31, 2025 to implement new rates effective February 1, 2025. GSWC had filed with the CPUC to establish memorandum accounts to track interim rates, which made the new 2025 rates retroactive to January 1, 2025.Operations:

~~Cost~~In of2014, ~~Capital~~the ~~Proceeding~~CPUC issued a final decision granting GSWC the authority to provide water utility service to a new area to be developed near Sacramento called Sutter Pointe, in Sutter County, California. Specific plans for the new development have been approved by Sutter County that will allow for the construction of 17,500 total dwelling units at full buildout, which is currently expected to occur over the next 20 or more years. ~~2022–~~Among other things, the final decision in 2014 ordered GSWC to file a separate application before the commencement of any construction in order to establish initial water service rates. The first phase of the new development has begun and is expected to occur over the next five years, and will serve up to 3,800 customer connections. Accordingly, in August 2024:, GSWC filed an application prior to the start of construction. In October

On June 29, 2023, a final decision was adopted by the CPUC in the cost of capital proceeding that, among other things, (i) adopts GSWC’s requested capital structure; (ii) adopts a cost of debt of 5.1% for GSWC as compared to 6.6% previously authorized; (iii) adopts a return on equity of 8.85% for GSWC as compared to 8.9% previously authorized; (iv) allows for the continuation of the WCCM through December 31, 2024; and (v) adopts the new cost of capital for the three-year period commencing January 1, 2022 through December 31, 2024. Based on the final decision issued in June, all adjustments to rates were prospective and not retroactive. GSWC filed an advice letter that implemented the new cost of capital effective July 31, 2023. 59

On June 30, 2023, GSWC filed an advice letter to establish the WCCM for 2023, which was approved by the CPUC and increased the 8.85% adopted return on equity in the decision to 9.36% effective July 31, 2023. Additionally, on October 12, 2023, GSWC filed an advice letter to establish the WCCM for 2024, which has been approved by the CPUC, and increased GSWC’s 9.36% adopted return on equity to 10.06% effective January 1, 2024.

2024-2025 COC Application:

Investor-owned water utilities serving California are required to file their cost of capital applications on a triennial basis. After receiving an extension in February 2024, GSWC’s next cost of capital application was scheduled to be filed on May 1, 2025 effective for the years 2026 - 2028. On January 14, 2025, the CPUC approved a request to defer the cost of capital application by another year. In December 2024, GSWC, along with three other investor-owned California water utilities, requested a further extension of the date by which each of them must file their cost of capital applications. The CPUC’s approval postponed this filing date by one year until May 1, 2026, with a corresponding effective date of January 1, 2027. The CPUC also approved the joint parties’ request to leave the current WCCM in place through the one-year deferral period. GSWC’s current authorized rate of return on rate base is 7.93%, based on its weighted cost of capital, which will continue in effect through December 31, 2026. The 7.93% return on rate base includes a return on equity of 10.06%, an embedded cost of debt of 5.1%, and a capital structure with 57% equity and 43% debt.

San Juan Oaks Mutual Acquisition:

In August 2023, GSWC entered into an agreement to purchase the water and wastewater system assets from San Juan Oaks Mutual Water Company in San Benito County, California. The new master-planned community, known as San Juan Oaks, will serve up to an estimated 1,300 customers once the community is built as planned. The transaction is subject to CPUC approval. In December 2023, GSWC filed an application to establish the new service area and to set water and sewer rates for the San Juan Oaks service area in San Benito County, California. On December 5, 2024, the CPUC approved a final decision granting GSWC’s CPCN and establishing rates for water and sewer service.

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2025, the CPUC issued a final decision authorizing initial water service rates covering the new development for the years 2026 through 2028.

On January 27, 2026, GSWC filed an application with the CPUC to acquire the water system assets from a city located within Los Angeles County. The application requested the expansion of GSWC’s CPCN to incorporate the new service area into one of GSWC’s existing ratemaking areas, and to include the $5.25 million purchase price in rate base. The acquisition is forecasted to increase revenues by approximately $1.0 million, if approved as filed. The city's service area serves almost 900 primarily residential customers.

Electric Segment

Recent Changes in Rates:

OnRates ~~August~~that ~~30, 2022,~~ BVES ~~filed~~is aauthorized ~~new~~to ~~general~~charge ~~rate~~are ~~case~~determined ~~application~~by ~~with~~ the CPUC ~~to determine new rates for the years 2023–2026. Electric revenues billed to customers for 2024 and 2023 were based on 2022 adopted rates and remained~~ in ~~effect until finalization of the pending~~ general rate ~~case application~~cases. On ~~December~~In ~~15,~~January ~~2022~~2025, the CPUC ~~approved~~issued a final decision ~~for~~in BVES’s ~~to establish a~~ general rate case ~~memorandum~~proceeding ~~account~~ that ~~makes~~set new rates for the ~~new~~years 2023 ~~rates~~- ~~effective~~2026, ~~and~~ retroactive to January 1, 2023. On ~~January 16~~Accordingly, ~~2025,~~new ~~the~~electric ~~CPUC~~rates ~~adopted~~for a2025, ~~final~~which ~~decision~~is ~~in connection with~~ the ~~pending~~third ~~general~~year ~~rate~~in ~~case proceeding that adopts~~ the ~~settlement~~rate ~~agreement~~cycle, inhave ~~its~~been ~~entirety~~implemented and ~~will~~reflected ~~determine~~in ~~new~~BVES ~~electric~~results ~~rates~~ for the ~~years~~year ~~2023~~ended ~~- 2026. The new rates will be effective and retroactive to January 1~~December 31, ~~2023 and are expected to go into effect on March 1,~~ 2025. As a result of receiving the final decision, the impact from retroactive rates for the full year of 2023 and from the second-year rate increases for the full year of 2024 ~~have~~were ~~been~~ reflected in ~~the~~BVES’s 2024 fourth quarter results.

~~Vegetation~~Among ~~Management~~other things, ~~Wildfire~~the ~~Mitigation~~final ~~Plans~~decision also approved for recovery the requested capital expenditures and ~~Legislation:~~other incremental operating costs already incurred prior to 2023 in connection with BVES’s wildfire mitigation plans (“WMP”s) that were not included in customer rates prior to receiving a CPUC final decision on its latest general rate case. The decision approved BVES’s recovery of incremental vegetation management costs and other wildfire mitigation and prevention costs incurred prior to 2023 that were being tracked in memorandum accounts for future recovery and were recorded as regulatory assets. As of December 31, 2025, BVES has a total of approximately $11.3 million in regulatory assets related to these memorandum accounts. During the first quarter of 2025, BVES filed an advice letter to recover all pre-2023 costs included in the vegetation management and other WMP memorandum accounts, which will be recovered over a period of 24 to 36 months through surcharges that were implemented on March 1, 2025 and April 1, 2025.

~~The~~General ~~CPUC~~Rate ~~adopted~~Case regulations intended to enhance the fire safety of overhead electric power lines. Those regulations included increased minimum clearances around electric power lines. BVES was authorized to track incremental costs incurred to implement the regulations in a fire hazard prevention memorandum account for ~~the~~Years purpose of obtaining cost recovery in a future general rate case. On January 16, 2025, the CPUC issued a final decision in the electric general rate case, which set new rates through the year 2026. Costs related to vegetation management, such as costs for increased minimum clearances around electric power lines, have been included in the revenue requirement for the years 2023 through 2026. Among other things, the decision authorizes BVES to record incremental costs related to vegetation management in a CPUC-approved balancing account for future recovery up to a capped amount. In addition, the decision approves BVES’s recovery of vegetation management costs incurred and recorded prior to 2023 through a surcharge. As of December 31, 2024, BVES has approximately $9.9 million in incremental vegetation management costs recorded as a regulatory asset. 2027–2030:

On ~~California~~January ~~legislation~~30, ~~enacted~~2026, inBVES ~~September~~filed ~~2018~~a ~~requires~~general ~~all~~rate ~~investor-owned~~case ~~electric~~application ~~utilities~~that towill ~~have~~determine anew ~~wildfire~~electric ~~mitigation~~rates ~~plan~~for ~~(“WMP”) approved by~~ the ~~Office~~years of2027 ~~Energy~~through ~~Infrastructure Safety (“OEIS”) and ratified by the CPUC~~2030. ~~The~~ ~~WMP~~Among ~~must~~other ~~include a utility’s plans on constructing~~things, ~~maintaining,~~BVES ~~and~~requested ~~operating~~(i) ~~its~~capital ~~electrical~~budgets ~~lines~~of ~~and~~approximately ~~equipment~~$133 tomillion ~~minimize~~for the ~~risk~~four-year ofrate ~~catastrophic~~cycle, ~~wildfire.~~and Inanother ~~the~~approximately ~~fourth~~$17 ~~quarter~~million, ofplus ~~2024~~AFUDC, ~~OEIS~~for ~~approved~~capital ~~BVES’s~~projects ~~2025 WMP Update~~ to ~~its~~be ~~2023-2025~~filed ~~WMP,~~for ~~which~~revenue ~~was~~recovery ~~ratified~~through byadvice ~~the~~letters ~~CPUC~~when ~~on January 16, 2025. The general rate case decision approved by~~ the ~~CPUC~~projects onare ~~January 16~~completed, ~~2025~~and ~~also~~(ii) ~~included~~a ~~costs~~capital ~~related~~structure tofor BVES’s ~~WMP~~of in60% ~~BVES’s~~equity ~~revenue~~and ~~requirement.~~40% ~~Furthermore~~debt, ~~the~~a ~~decision~~return ~~allows~~on ~~for~~equity ~~continued tracking~~ of ~~incremental~~11.30%, ~~costs~~an ~~related~~embedded tocost ~~wildfire~~of ~~mitigation~~debt ~~activities through WMP memorandum accounts. As~~ of ~~December 31~~5.92%, ~~2024,~~and ~~BVES~~a ~~recorded~~return ~~approximately~~on ~~$4.8~~rate ~~million~~base asof ~~regulatory assets related to expenses accumulated in its WMP memorandum accounts for future recovery~~9.15%.

~~Additionally,~~BVES ~~the~~Solar ~~governor~~Energy ofand ~~California~~Battery ~~approved~~Storage AB 1054 in July 2019 that, among other things, changed the burden of proof applicable in CPUC proceedings for an electric utility with a valid safety certification seeking to recover wildfire costs. Previously, an electric utility seeking to recover costs had the burden to prove that it acted reasonably. Under AB 1054, if an electric utility has a valid safety certification, it will be presumed to have acted reasonably unless a party to the relevant proceeding creates a “serious doubt” as to the reasonableness of the utility’s conduct. In December 2024, OEIS issued a renewal of the safety certification for BVES for 12 months. Projects:

In May 2024, BVES filed an application with the CPUC for approval to construct the solar energy and battery storage projects that will provide BVES with its first solar power generation facility and battery energy storage system. In July 2025, BVES and the Public Advocates Office filed a joint motion with the CPUC to adopt a settlement agreement resolving all issues in the proceeding. Among other things, the settlement agreement authorizes BVES to construct the solar energy and battery storage facility and system for a total combined cost of approximately $28.0 million, plus additional funds used during construction. In December 2025, BVES received a final decision approving the settlement agreement and authorizing construction of the solar and battery projects. The costs associated with the projects are recoverable in customer rates at the time the projects are completed and in service.

For more information regarding significant regulatory matters, see Note 3 of “Notes to Financial Statements” included in Part II, Item 8, in Financial Statements and Supplementary Data.

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Environmental Matters

AWR’s subsidiaries are subject to stringent environmental regulations. GSWC and ASUS are required to comply with the safe drinking water standards established by the U.S. EPA. GSWC is also required to comply with the safe drinking water standards by the Division of Drinking Water (“DDW”), under the SWRCB. The DDW, acting on behalf of the U.S. EPA, administers the U.S. EPA’s program in California. Similarly, ASUS is required to comply with the drinking water standards that are administered by the relevant state agencies in the states in which it operates. The U.S. EPA regulates contaminants that may have adverse health effects that are known or likely to occur at levels of public health concern, and the regulation of which will provide a meaningful opportunity for health risk reduction.

GSWC and ASUS currently test their water supplies and water systems according to, among other things, requirements listed in the Federal Safe Drinking Water Act. They work proactively with third parties and governmental agencies to address issues relating to known contamination threatening their water sources. They also incur operating costs for testing to determine the levels, if any, of the constituents in ~~its~~their sources of supply, and additional expenses to treat contaminants in order to meet the federal and state maximum contaminant level standards and consumer demands. GSWC expects to incur additional capital costs as well as increased operating costs to maintain or improve the quality of water delivered to its customers in light of anticipated stress on water resources associated with watershed and aquifer pollution, drought impacts, and consumer expectations. Both GSWC and ASUS will see increased operating costs to meet newly established and future water quality standards. The CPUC ratemaking process provides GSWC with the opportunity to recover prudently incurred capital and operating costs in future filings associated with achieving water quality standards. The request for equitable adjustment process and capital funding request mechanism provide ASUS with the opportunity to recover prudently incurred operating costs and capital investment requirement in future filings associated with achieving water quality standards. Management believes that such incurred and expected future costs should be authorized for recovery by the CPUC and the U.S. government.

63Perfluoroalkyl Substances (“PFAS”)

~~Table~~PFAS have negatively impacted water systems across the country including those of ~~Contents~~GSWC. PFAS were used in fire suppression agents, certain fabric and other materials and used in various industrial processes. In July 2018, DDW issued drinking water notification levels for certain fluorinated organic chemicals. Notification levels are health-based advisory levels established for contaminants in drinking water for which maximum contaminant levels have not been established. Notification to consumers and stakeholders is required when the advisory levels or notification levels are exceeded. Assembly Bill 756, signed into law in July 2019 and effective in January 2020, requires, among other things, additional notifications by water systems when they detect levels of PFAS above response levels.

~~expectations. Both~~PFAS ~~GSWC~~Drinking ~~and~~Water ~~ASUS~~Maximum ~~will~~Contaminant see increased operating costs to meet newly established and future water quality standards. The CPUC ratemaking process provides GSWC with the opportunity to recover prudently incurred capital and operating costs in future filings associated with achieving water quality standards. The request for equitable adjustment process and capital funding request mechanism provide ASUS with the opportunity to recover prudently incurred operating costs and capital investment requirement in future filings associated with achieving water quality standards. Management believes that such incurred and expected future costs should be authorized for recovery by the CPUC and the U.S. government.Levels

~~Drinking~~On ~~Water~~April ~~Notification~~10, ~~Levels~~2024, the U.S. EPA announced the final regulations that established maximum contaminant levels (“MCLs”) for six PFAS compounds in drinking water. The regulation established MCLs for perfluorooctanoic acid (“PFOA”), perfluorooctane sulfonic acid (“PFOS”), and several other contaminants with individual MCLs that range from 4 ppt to 10 ppt. In addition, the regulation established a MCL for PFAS mixtures containing at least two of the regulated PFAS compounds for the combined and co-occurring levels of these PFAS in drinking water. The final rule requires public water systems to implement PFAS monitoring and reporting within three years (2027), and where exceedances are identified, to implement solutions within five years (2029) to reduce PFAS levels to below the MCLs. In May 2025, U.S. EPA announced its intention to extend the deadline for drinking water systems to comply with the new PFAS maximum contaminant levels by two years to 2031, but it has not yet issued regulations to put this extension into effect.

~~In July 2018~~Currently, ~~DDW~~there ~~issued~~are ~~drinking~~more ~~water~~than ~~notification~~35 ~~levels~~sources ~~for~~at ~~certain~~GSWC ~~fluorinated organic chemicals used to make certain fabrics~~ and ~~other~~7 ~~materials,~~sources ~~and~~at ~~used~~ASUS inthat ~~various~~have ~~industrial~~exceeded ~~processes. These~~one ~~chemicals~~or ~~were~~more ~~also~~of ~~present~~the inPFAS ~~certain fire suppression agents~~MCLs. These ~~chemicals~~new ~~are~~MCLs ~~referred~~will toincrease ascapital ~~PFAS. Notification~~investment ~~levels~~expenditures ~~are~~over ~~health-based~~the ~~advisory~~next ~~levels~~five ~~established~~years ~~for~~and ~~contaminants~~increase inoperation ~~drinking~~and ~~water~~maintenance ~~for~~expenses ~~which~~over ~~maximum~~the ~~contaminant levels have not been established~~long-term. The ~~U.S.~~CPUC ~~EPA~~ has ~~also~~authorized ~~established~~GSWC ~~health~~to ~~advisory~~track ~~levels~~incremental ~~for~~expenses, ~~these~~including ~~compounds.~~laboratory ~~Notification~~testing ~~to consumers~~ and ~~stakeholders~~monitoring iscosts, ~~required~~customer ~~when~~and ~~the~~public ~~advisory levels or~~ notification ~~levels are exceeded. Assembly Bill 756~~costs, ~~signed~~and ~~into~~chemical ~~law in July 2019~~ and ~~effective~~operating intreatment ~~January 2020~~costs, ~~requires,~~incurred ~~among~~as ~~other~~a ~~things,~~result ~~additional~~of ~~notifications~~PFAS bycontamination ~~water~~in ~~systems~~a ~~when~~memorandum ~~they~~account ~~detect~~to ~~levels~~be offiled ~~PFAS~~with ~~above~~the ~~response~~CPUC ~~levels~~for future recovery.

~~GSWC~~Hexavalent isChromium in the process of collecting and analyzing samples for PFAS. GSWC has removed some wells from service and expects to incur additional costs to treat impacted wells. GSWC has provided customers with information regarding PFAS detection and provides updated information via its website. In February 2020, DDW established new response levels for two of the PFAS compounds: 10 parts per trillion (“ppt”) for perfluorooctanoic acid (“PFOA”) and 40 ppt for perfluorooctanesulfonic acid (“PFOS”). In March 2021, DDW issued drinking-water notification and response levels of 0.5 parts per billion (“ppb”) and 5 ppb, respectively, for perfluorobutane sulfonic acid (“PFBS”). In June 2022, the U.S. EPA issued interim updated drinking-water health advisories for PFOA and PFOS, and also issued final health advisories for PFBS and other compounds known as GenX chemicals. In October 2022, DDW issued drinking-water notification and response levels of 3 ppt and 20 ppt, respectively, for perfluorohexane sulfonic acid (“PFHxS”).

Drinking Water Maximum Contaminant Levels

On April 10, 2024, the U.S. EPA announced the final regulations that established maximum contaminant levels (“MCLs”) for six PFAS compounds in drinking water. The regulation established MCLs for PFOA, PFOS, and several other contaminants with individual MCLs that range from 4 ppt to 10 ppt. In addition, the regulation established MCL for PFAS mixtures containing at least two of certain of the regulated PFAS compounds for the combined and co-occurring levels of PFAS in drinking water. The final rule requires public water systems to implement PFAS monitoring and reporting within three years (2027), and where exceedances are identified, to implement solutions within five years (2029) to reduce PFAS levels to below the MCLs.

Currently, there are more than 45 sources at GSWC and 7 sources at ASUS that have exceeded one or more of the PFAS MCLs. These new MCLs will increase capital investments and operations and maintenance expenses over the next five years. In addition, due to the volatility of the supply chain and demand for PFAS treatment components, both the capital investments and operations and maintenance expenses are likely to further increase. The CPUC has authorized GSWC to track incremental expenses, including laboratory testing and monitoring costs, customer and public notification costs, and chemical and operating treatment costs, incurred as a result of PFAS contamination in a memorandum account to be filed with the CPUC for future recovery.

California State Division of Drinking Water adopted an MCL of 10 parts per billion for Hexavalent Chromium, which went into effect on October 1, 2024. Depending on the size of the water system, water systems will have two to four years from the effective date to come into compliance with the MCL. Currently, there are approximately eight sources at GSWC that exceed or are within eighty percent of the MCL. These MCLs are also expected to increase GSWC’s capital investments and operations and maintenance expenses.

The CPUC ratemaking process provides GSWC with the opportunity to recover prudently incurred capital and operating costs in future filings associated with achieving water quality standards. Management believes that such incurred and expected future costs should be authorized for recovery by the CPUC for both PFAS compounds and hexavalent chromium.

~~Designation of PFOA and PFOS as CERCLA Hazardous Substances~~61

On May 8, 2024, the U.S. EPA issued a final rule to designate PFOA and PFOS as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). This designation is expected to increase GSWC’s and ASUS’s water treatment and disposal costs. The CPUC has authorized GSWC to track incurred incremental expenses as a result of PFAS contamination in a memorandum account to be filed with the CPUC for future recovery.

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Per- and Polyfluoroalkyl Substances (“PFAS”) Contamination Litigation Proceeds Memorandum Account

GSWC has been a plaintiff in class action lawsuits (against 3M Company, DuPont, and others) related to PFAS contamination affecting public water systems. The class settlement agreement among 3M Company and the class of eligible public water systems was entered into on June 22, 2023 and resolved any claims for PFAS contamination with 3M Company. The class settlement agreement between the parties was approved by an order issued by the Federal District Court of South Carolina on March 29, 2024. As a result of the settlement, GSWC was notified in the second quarter of 2025 that it will receive from 3M Company approximately $19.0 million, net of legal fees. In June 2025, 3M Company paid a portion of this amount into a qualified settlement fund totaling approximately $12.5 million to be administered by a custodian for the benefit of GSWC. GSWC received the first payment of approximately $3.8 million into this settlement fund in August, and the remainder of the $12.5 million was received in October 2025. GSWC expects to be paid the remaining settlement payments totaling approximately $6.5 million during 2026 – 2033. One of ASUS’s subsidiaries is also a participant in this class settlement agreement with 3M Company and is expected to receive approximately $2 million of settlement payments during 2025 – 2033. During the fourth quarter, GSWC and one of ASUS’s subsidiaries received class settlement payments of $2.2 million and $0.3 million, net of legal and other costs, respectively, from DuPont pursuant to respective class settlement agreements.

Settlement proceeds received by GSWC may be used for future capital investments or operations and maintenance expenses related to PFAS water contamination to its water systems or any PFAS related litigation against its water systems, which benefit GSWC’s customers. The CPUC has authorized GSWC to track in a memorandum account the settlement payments received by GSWC from lawsuits related to PFAS contamination in its water systems, which include the proceeds received for participation in class action lawsuits. The amounts in the memorandum account have been recorded as a regulatory liability to be used in the future to offset incremental investments in replacement and treatment of property, as well as operations and maintenance expenses and other direct expenses related to PFAS contamination.

GSWC continues to monitor contaminant levels in its water for PFAS compounds in accordance with final U.S. EPA regulations. Proceeds received from the defendants will not be sufficient to pay for all PFAS-related liabilities that will ultimately be incurred by GSWC, whether related to capital investments, operation and maintenance expenses, or litigation brought against GSWC. However, the CPUC has also authorized GSWC to track incremental expenses, including laboratory testing and monitoring costs, customer and public notification costs and chemical and operating treatment costs, incurred as a result of PFAS contamination in a separate memorandum account to be filed with the CPUC for future recovery.

Matters Relating to Environmental Cleanup

GSWC has been involved in environmental remediation and cleanup at one of its plant sites that contained an underground storage tank which was used to store gasoline for its vehicles. This 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 this site.

As of December 31, ~~2024~~2025, the total amount spent to clean up and remediate GSWC’s plant facility was approximately $6.89 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 December 31, ~~2024~~2025, GSWC has a regulatory asset and an accrued liability for the estimated remaining cost of $1.3 million to complete the ~~cleanup~~site atremediation ~~the site~~project. The estimate includes costs for continued activities ofto ~~groundwater~~monitor ~~cleanup and monitoring~~groundwater, ~~future~~conduct soil ~~treatment~~gas sampling, and ~~site~~appropriate ~~closure~~decommissioning/destruction ~~related~~of ~~activities~~the wells after case closure approval. The ultimate cost may vary asdepending ~~there~~on ~~are~~additional ~~many~~monitoring ~~unknowns~~or in remediation ofrequired ~~underground~~for ~~gasoline~~case ~~spills~~closure. ~~and~~The ~~this~~estimate is ~~an estimate~~ based on ~~currently~~best available information at this time. Management also believes it is probable that the estimated additional costs will continue to be approved in rate base by the CPUC as approved historically.

Lead and Copper Rule Revisions

On October 30, 2024, the U.S. EPA published its final Lead and Copper Rule Improvements. The rule went into effect on December 30, 2024. The rule sets a 10-year requirement for replacing lead service lines in drinking water systems, changes sampling requirements and reduces the lead action level from 15 parts per billion to 10 parts per billion. Although no lead service lines have been found yet in GSWC and ASUS and their customer service lines, the changes in this regulation are expected to increase expenses related to sampling, public education, and lead service line field verification activities. The CPUC has authorized GSWC to track any incremental expenses and carrying costs on capital investments incurred by GSWC as a result of the Lead and Copper Rule revisions in a memorandum account to be filed with the CPUC for future recovery.

Matters Relating to Military Base Contracts

Each of the ASUS’s subsidiaries is responsible for testing the water and wastewater systems on the military bases on which it operates in accordance with applicable federal, state and local requirements. Each of the ASUS’s subsidiaries has the right to seek an equitable adjustment to its contract in the event that there are changes in environmental laws, a change in the quality of water used in providing water service or wastewater discharged by the U.S. government, or contamination of the air

Each of the ASUS’s subsidiaries has the right to seek an equitable adjustment to its contract in the event that there are changes in environmental laws, a change in the quality of water used in providing water service or wastewater discharged by the U.S. government, or contamination of the air or soil not caused by the fault or negligence of ASUS’s subsidiary. These changes can impact operations and maintenance and renewal and replacement costs under the contracts. The U.S. government is responsible for environmental contamination due to its fault or negligence and for environmental contamination that occurred prior to the execution of a contract. 62

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or soil not caused by the fault or negligence of ASUS’s subsidiary. These changes can impact operations and maintenance and renewal and replacement costs under the contracts. The U.S. government is responsible for environmental contamination due to its fault or negligence and for environmental contamination that occurred prior to the execution of a contract.

Security Issues

We have physical and information security policies throughout our operations. Training on these matters begins during employee orientation and is ongoing through a series of training courses in addition to periodic, unannounced training exercises. We collaborate with various agencies, associations and third parties regarding information on possible threats and security measures for our operations. Risk assessments are conducted periodically to evaluate the effectiveness of existing security controls. These assessments provide areas for additional security focus, new controls, and policy changes.

Both GSWC and BVES have security systems and infrastructure in place intended to prevent unlawful intrusion, service disruption and cyberattacks. GSWC and BVES utilize a variety of physical security measures to protect their facilities. These measures consider advances in security and emergency preparedness technology and relevant industry developments in developing their respective capital improvement plans, and both intend to seek approval of the CPUC to recover any additional costs that either may incur in enhancing the security, reliability and resiliency of their utility systems.

On October 23, 2018, America’s Water Infrastructure Act became law. GSWC must now conduct additional risk and resilience assessments and develop emergency response plans for each of its water systems. These assessments and plans include natural hazards as well as malevolent acts. The first such assessments were completed in 2020. They will be reviewed and must be resubmitted every five years.

ASUS’s subsidiaries operate facilities within the boundaries of military bases, which provide limited access to the general public. To further enhance security, in prior years, certain upgrades, such as key card requirements at all access points and security camera systems, were completed at military bases through contract modifications funded by the U.S. government.

Registrant has evaluated its cybersecurity systems and continues to address identified areas of improvement with respect to U.S. government regulations regarding cybersecurity of government contractors. These improvements include the physical security at all of the office and employee facilities it operates.

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Despite its efforts, Registrant cannot guarantee that intrusions, cybersecurity incident or other attacks will not cause water, wastewater or electric system problems, disrupt service to customers, compromise important data or systems or result in unintended release of customer or employee information.

Water Supply

GSWC

During ~~2024~~2025, GSWC delivered approximately 5657.75 million hundred cubic feet (“ccf”) of water to its customers, which is an average of about ~~357~~362 acre-feet per day or ~~116~~118 million gallons per day (an acre-foot is approximately 435.6 ccf or 326,000 gallons). Approximately 5750% of GSWC’s supply came from groundwater produced from wells situated throughout GSWC’s service areas. GSWC supplemented its groundwater production with wholesale purchases from MWD member agencies and regional water suppliers (roughly 4048% of total demand) and with authorized diversions from rivers (roughly 32%) under agreements with the United States Bureau of Reclamation and the Sacramento Municipal Utility District. GSWC also utilizes recycled water supplies to serve recycled water customers in several service areas. GSWC continually assesses its water rights and groundwater storage assets to maximize use of lower cost groundwater sources where available.

Groundwater

GSWC has a diverse water supply portfolio which includes adjudicated groundwater rights, surface water rights, and a number of unadjudicated water rights to help meet supply requirements. The productivity of GSWC’s groundwater resources varies from year to year depending upon a variety of factors, including natural replenishment from snow-melt or rainfall, the availability of imported replenishment water, the amount of water previously stored in groundwater basins, natural or man-made contamination, legal production limitations, and the amount and seasonality of water use by GSWC’s customers and others. GSWC actively participates in efforts to protect groundwater basins from over-use and from contamination. In some periods, these efforts may require reductions in groundwater pumping and increased reliance on alternative water resources. GSWC also participates in the implementation of California’s Sustainable Groundwater Management Act.

From time to time, GSWC may purchase or temporarily use water rights from others for delivery to customers. GSWC has contracts to purchase water or water rights for an aggregate amount of $2.30 million as of December 31, ~~2024~~2025. Included in the $2.30 million is a remaining commitment of $10.19 million under an agreement with the City of Claremont to lease water rights that were ascribed to the City as part of the Six Basins adjudication. The initial term of the agreement expires in 2028. GSWC may exercise an option to renew this agreement for ten additional years. The remaining $1.21 million is for commitments for purchased water with other third parties, which expire through 2038.

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Imported Water

GSWC also manages a portfolio of water supply arrangements with water wholesalers who may import water from outside the immediate service area. ~~For example,~~ GSWC ~~has~~purchases ~~contracts~~water ~~with~~from various governmental entities and other parties ~~to purchase water~~ through a total of 5961 connections for distribution to customers, in addition to numerous emergency connections. The largest water wholesaler that GSWC interacts with is the Metropolitan Water District of Southern California (“MWD”), which is a public agency organized and managed to provide a supplemental, imported supply to its member public agencies in the Southern California region. There are 26 such member agencies, consisting of 14 cities, 11 municipal water districts and one county water authority. ~~GSWC~~ ~~has~~Out 45of the 61 connections mentioned, 46 connections are to MWD’s water distribution facilities and those of member agencies. GSWC purchases MWD water through six separate member agencies aggregating 4251,~~708~~534 acre-feet annually. MWD sources its supplies from Northern California via the State Water Project and the Colorado River through the Colorado River Aqueduct, which it owns and operates, and from local programs and transfer arrangements.

MWD currently has supply levels of 1.3 million acre-feet (“MAF”) with annual demands of approximately 1.4 MAF resulting in a supply gap of approximately 100 thousand acre feet. MWD also has a record level of 3.8 MAF of water in storage at the end of 2024. MWD has available access to store more than 1.6 MAF of water in Lake Mead as part of an intentionally created surplus program developed under a 2007 Interim Shortage agreement and is available for use during dry years. Currently, 1.6 MAF is stored as Intentionally Created Surplus credit.

Drought Impact

The California Legislature passed two bills in 2018 ~~that~~to ~~provide~~establish a framework for long-term water-use efficiency standards and drought planning and resiliency. The framework sets aggressive water use objective standards and performance metrics that water suppliers will be required to meet by the year 2040 ~~with interim milestones, as revised by the recent Conservation Regulation described below~~. AThe ~~key~~framework ~~milestone~~includes ~~is the establishment of~~ an indoor water use standard ofthat 55is reduced over time, with 42 gallons per capita per day (“gpcd”) ~~until 2025. As of January 1, 2025 the standard was dropped to 47 gpcd per legislation signed~~ by ~~the governor of California into law in September 2022. The indoor standard will now set at 47 gpcd will be reduced to 42 gpcd in~~ 2030. ~~The~~being ~~California SWRCB approved~~ the ~~Conservation~~final ~~Regulation~~indoor ~~referred~~water touse ~~as “To Make Conservation a California Way of Life” on July 3, 2024 and became effective on January 1, 2025~~standard. Each Urban Water Supplier will have an overall water use objective that will include both an indoor standard as well as outdoor use standards.

66Water year 2024-25 (“WY2025”), which ended on September 30, 2025, started out with normal conditions but became increasingly drier as the water year progressed. Water year 2025-26 (“WY2026”) began on October 1, 2025. As of January 28, 2026, the average level for the State’s major reservoirs is at 125% of the historical average for this time of the year. The Northern Sierra and Central Sierra snowpacks as of February 4, 2026 are trending below normal with the snowpack in the northern Sierra at 41% of normal and in the southern Sierra at 75% of normal. The northern Sierra precipitation is currently at 32.8 inches which is 139% of the average for the 2026 water year.

~~Table~~The State Water Project (“SWP”) allocation for WY2026 increased from 10% to 30% as of ~~Contents~~January 29, 2026. Invasive Golden Mussels were detected in the SWP conveyance network in mid-2025 which may impact groundwater basin spreading operations that are critical water recharge facilities used to manage groundwater extractions in Southern California. As such, the Los Angeles County Department of Public Works, which owns and operates key spreading facilities in the San Gabriel Basin have already placed a moratorium on allowing SWP into their spreading basins. Basin agencies are working on mitigation plans to address this impact to basin management. The WY2026 began with drier conditions than in WY2025, but a series of November and December precipitation events has improved state conditions. As of February 10, 2026, the U.S. Drought Monitor reported that 1% of California was in an “Abnormally Dry” condition, as compared to a year ago where nearly 21% of California was considered to be in “Extreme Drought.”

~~Water~~Prolonged ~~year~~drought ~~2024-25~~conditions ~~(“WY2025”)~~continue ~~began~~in onthe ~~October~~Colorado 1River System, ~~2024~~which ~~with~~has ~~the~~experienced ~~State’s~~historically ~~major~~low ~~reservoirs~~reservoir ~~currently~~levels atin ~~above~~Lake ~~average~~Mead ~~capacity~~and ~~with~~ Lake ~~Oroville~~Powell since 2023. Projected 2026 inflow scenarios for the Colorado River at ~~74%~~continued oflow ~~capacity~~flow levels are expected and ~~Lake~~a ~~Shasta~~Level at1 ~~77%~~Shortage ~~capacity.~~Condition ~~The~~will ~~State~~continue ~~Water~~into ~~Project~~2026 ~~allocation~~that ~~for~~will ~~WY2025~~impose ~~was~~mandatory ~~initially~~water ~~set~~reductions atto 5%the inlower ~~early~~Colorado ~~December~~River ~~and~~States. ~~was~~Urgent ~~increased~~action to ~~20%~~reduce water demand on ~~January~~the ~~28,~~lower ~~2025~~river ~~with~~by ~~good~~2 ~~early~~to ~~precipitation~~4 million acre feet annually has been requested by the US Bureau of Reclamation (the “Bureau”) which resulted in ~~northern~~a multi-year agreement known as the “California. ~~The~~Colorado ~~new~~River ~~water~~Contractor ~~year~~Forbearance ~~has~~Agreement ~~begun~~for ~~with~~2024-2026” ~~good~~by ~~conditions~~the ~~but~~Imperial ~~has~~Irrigation ~~progressively~~District, ~~become~~Coachella ~~drier~~Valley ~~statewide~~Water District, MWD, Palo Verde Irrigation District and asthe City of ~~February~~Needles. 11This agreement commits to collective Colorado River water savings of 300,000 ~~2025~~acre-feet annually with a three-year cap of 700,000 ~~the~~acre Ufeet.S. ~~Drought~~Operational ~~Monitor~~agreements ~~reported~~on ~~that~~how ~~21%~~the ofColorado ~~California~~River ~~was~~is managed will expire in ~~extreme~~2026. ~~drought~~The Bureau is working with ~~35%~~both ~~identified~~the asupper ~~“severe~~and ~~drought”~~lower asstates ~~compared~~on toa revised set of agreements and a ~~year~~consensus ~~ago~~has ~~when~~not 0%yet ~~was~~been inreached. ~~“moderate~~GSWC ~~drought”~~will continue to monitor developments related to the Colorado River System and 7%assess ~~was~~its ~~listed~~impact ason ~~“abnormally~~MWD ~~dry~~and GSWC's systems that utilized water sources provided by MWD member agencies.”

Prolonged drought conditions continue on the Colorado River System, which has experienced historically low reservoir levels in Lake Mead and Lake Powell since 2023. Lake Powell and Lake Mead are at 36 and 34 percent capacity as of January 21, 2025, which is comparable to the same approximate value a year ago. Urgent action to reduce water demand on the lower river by 2 to 4 million acre feet annually has been requested by the US Bureau of Reclamation (the “Bureau”). On October 1, 2024, a multi-year agreement known as the “California Colorado River Contractor Forbearance Agreement for 2024-2026” was put in place by Imperial Irrigation District, Coachella Valley Water District, Metropolitan Water District of Southern California, Palo Verde Irrigation District and the City of Needles. This agreement commits to collective Colorado River water savings of 300,000 acre-feet annually with a three-year cap of 700,000 acre feet. In 2026, operational agreements on how the Colorado River is managed will expire. The Bureau is working with both the upper and lower states on a revised set of agreements and a draft is expected in early 2025. GSWC will continue to monitor developments related to the Colorado River System and assess its impact on GSWC.

Military Base Operations

The U.S. government is responsible for providing the source of supply for all water on each of the bases served by ASUS’s subsidiaries at no cost to ASUS’s subsidiaries. Once received from the U.S. government, ASUS’s subsidiaries are responsible for ensuring the ~~continued~~ compliance ~~of the provided source of supply~~ with all federal, state and local regulations. Furthermore, ASUS’s subsidiaries are responsible for ensuring compliance with the reduction and/or removal of all constituents as required under its wastewater treatment plant operating permits. ASUS works closely with state regulators and industry associations to stay current with emergent issues and proactively addresses any change in wastewater treatment regulation to ensure permit compliance.

New Accounting Pronouncements

Registrant is subject to newly issued accounting requirements as well as changes in existing requirements issued by the Financial Accounting Standards Board. See Note 1 of Notes to Consolidated Financial Statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Registrant is exposed to certain market risks, including fluctuations in interest rates, and commodity price risk primarily relating to changes in the market price of electricity. Market risk is the potential loss arising from adverse changes in prevailing market rates and prices.

Interest Rate Risk

A significant portion of Registrant’s capital structure is comprised of fixed-rate debt consisting of notes and debentures. A market risk related to our fixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. At December 31, ~~2024~~2025, the fair value of Registrant’s long-term debt was $~~608~~790.28 million. A hypothetical ten percent change in market interest rates would result in an increase or decrease of approximately $21.48 million in the fair value of Registrant’s long-term debt.

Registrant is also exposed to risks resulting from changes in interest rates as a result of its issuances of short-term debt through unsecured revolving credit facilities. At December 31, ~~2024~~2025, Registrant had outstanding consolidated borrowings under its credit facilities of $~~289~~141.0 million that are exposed to variable short-term interest rate risk. The impact of a 100-basis point change in interest rates on pretax income is approximately $21.94 million as of December 31, ~~2024~~2025.

Commodity/Derivative Risk

BVES is exposed to commodity price risk primarily relating to changes in the market price of electricity. To manage its exposure to energy price risk, BVES from time to time executes purchased power contracts that qualify or have elements of the contract that qualify as derivative instruments, requiring mark-to-market derivative accounting under the accounting guidance for derivatives.

BVES has historically entered into long-term fixed price contracts to purchase power ~~over~~with ~~three~~current delivery periods that range from 2025 through 2035. In May 2025, the CPUC approved a new power purchase contract between BVES and ~~five-year~~a ~~terms~~third party. ~~These~~The ~~long-term~~new ~~contracts~~contract ~~expired~~provides ~~during~~for the ~~fourth~~purchase ~~quarter~~ of ~~2024~~electricity during a delivery period from June 1, 2025 through December 31, 2028 and ~~were~~is subject to the accounting guidance for derivatives and ~~required~~requires mark-to-market ~~derivative~~ accounting. In ~~July 2023~~addition, ~~the CPUC approved a new power purchase agreement between~~ BVES ~~and~~continues ~~a third party~~ to procure renewable portfolio standard eligible energy and ~~RECs~~renewable energy credits as a bundled product. ~~BVES~~through ~~began~~a ~~taking~~contract ~~power~~that ~~under~~delivers ~~this~~through ~~long-term~~December ~~contract~~31, ~~during~~2035. ~~the~~Under ~~fourth~~this ~~quarter~~contract, ofthere ~~2024~~is toan ~~replace~~embedded ~~the~~derivative ~~existing~~that ~~expiring~~also ~~contracts.~~requires ~~The~~mark-to-market ~~new~~ accounting.

67The CPUC authorized BVES’s use of 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 derivative instruments in purchase power contracts are deferred on a monthly basis into a non-interest-bearing regulatory memorandum account that tracks the changes in fair value of the derivative throughout the terms of the contracts. As a result, these unrealized gains and losses do not impact Registrant’s earnings. As of December 31, 2025, the fair value of the derivative liability was $15.5 million for the purchase power contracts, with corresponding regulatory assets recorded in the derivative instrument memorandum account as a result of overall fixed prices under BVES’s purchase power contracts being higher than future energy prices.

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contract provides for the purchase of electricity during a delivery period from November 1, 2024 through December 31, 2035. Under this contract, there is an embedded derivative that also requires mark-to-market accounting.

The CPUC authorized the use of 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 derivative instruments in purchase power contracts are deferred on a monthly basis into a non-interest-bearing regulatory memorandum account that tracks the changes in fair value of the derivative throughout the terms of the contracts. As a result, these unrealized gains and losses do not impact Registrant’s earnings. As of December 31, 2024, the fair value of the derivative liability was $8.8 million for the purchase power contract, with a corresponding regulatory asset recorded in the derivative instrument memorandum account as a result of overall fixed prices under BVES’s purchase power contracts being higher than future energy prices.

Except as discussed above, Registrant has had no other derivative financial instruments, financial instruments with significant off-balance sheet risks or financial instruments with concentrations of credit risk.

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Item 8. Financial Statements and Supplementary Data

Reports of Independent Registered Public Accounting Firm (PCAOB ID 238)			7067
American States Water Company
Consolidated Balance Sheets - December 31, 2024 and 2023			74
Consolidated Balance Sheets - December 31, 2025 and 2024			71
Consolidated Statements of Capitalization - December 31, 2024 and 2023			76
Consolidated Statements of Capitalization - December 31, 2025 and 2024			73
Consolidated Statements of Income - For the years ended December 31, 2024, 2023 and 2022			77
Consolidated Statements of Income - For the years ended December 31, 2025, 2024 and 2023			74
Consolidated Statements of Changes in Common Shareholders’ Equity - For the years ended December 31, 2024, 2023 and 2022			78
Consolidated Statements of Changes in Common Shareholders’ Equity - For the years ended December 31, 2025, 2024 and 2023			75
Consolidated Statements of Cash Flows - For the years ended December 31, 2024, 2023 and 2022			79
Consolidated Statements of Cash Flows - For the years ended December 31, 2025, 2024 and 2023			76
Golden State Water Company
Balance Sheets - December 31, 2024 and 2023			80
Balance Sheets - December 31, 2025 and 2024			77
Statements of Capitalization - December 31, 2024 and 2023			82
Statements of Capitalization - December 31, 2025 and 2024			79
Statements of Income - For the years ended December 31, 2024, 2023 and 2022			83
Statements of Income - For the years ended December 31, 2025, 2024 and 2023			80
Statements of Changes in Common Shareholder’s Equity - For the years ended December 31, 2024, 2023 and 2022			84
Statements of Changes in Common Shareholder’s Equity - For the years ended December 31, 2025, 2024 and 2023			81
Statements of Cash Flows - For the years ended December 31, 2024, 2023 and 2022			85
Statements of Cash Flows - For the years ended December 31, 2025, 2024 and 2023			82
Notes to Consolidated Financial Statements			8683

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of American States Water Company

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets and statements of capitalization of American States Water Company and its subsidiaries (the "“Company"”) as of December 31, ~~2024~~2025 and ~~2023~~2024, and the related consolidated statements of income, of changes in common shareholders'’ equity and of cash flows for each of the three years in the period ended December 31, ~~2024~~2025, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "“consolidated financial statements"”). We also have audited the Company'’s internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 ~~2024~~ and ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2024~~2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2024~~2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company'’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company'’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of Regulatory Matters

As described in Notes 1 and 3 to the consolidated financial statements, in accordance with accounting principles for rate-regulated enterprises, the Company 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. Under such accounting guidance, rate-regulated entities defer costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that those costs and credits will be recognized in the ratemaking process in a period different from the period in which they would have been reflected in income by an unregulated company. As of December 31, ~~2024~~2025, there were $~~149~~132.83 million of regulatory assets and $95123.10 million of regulatory liabilities.

The principal considerations for our determination that performing procedures relating to accounting for the effects of regulatory matters is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the probability of recovery of regulatory assets and settlement of regulatory liabilities.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of regulatory proceedings, including controls over the probability of recovery of regulatory assets, settlement of regulatory liabilities, and the related accounting and disclosure impacts. These procedures also included, among others (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and settlement of regulatory liabilities and (ii) testing, on a sample basis, regulatory assets and regulatory liabilities, based on the provisions and formulas outlined in rate orders and other regulatory proceedings and correspondence, as well as application of relevant regulatory precedents.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 1918, ~~2025~~2026

We have served as the Company’s auditor since 2002.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholder of Golden State Water Company

Opinion on the Financial Statements

We have audited the accompanying balance sheets and statements of capitalization of Golden State Water Company (the "“Company"”) as of December 31, ~~2024~~2025 and ~~2023~~2024, and the related statements of income, of ~~changes in~~ common shareholder'’s equity and of cash flows for each of the three years in the period ended December 31, ~~2024~~2025, including the related notes (collectively referred to as the "“financial statements"”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 ~~2024~~ and ~~2023~~2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 ~~2024~~ in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company'’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for the Effects of Regulatory Matters

As described in Notes 1 and 3 to the consolidated financial statements, in accordance with accounting principles for rate-regulated enterprises, the Company 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. Under such accounting guidance, rate-regulated entities defer costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that those costs and credits will be recognized in the ratemaking process in a period different from the period in which they would have been reflected in income by an unregulated company. As of December 31, ~~2024~~2025, there were $~~107~~82.60 million of regulatory assets and $89119.50 million of regulatory liabilities.

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others (i) evaluating the reasonableness of management’s assessment regarding the probability of recovery of regulatory assets and settlement of regulatory liabilities and (ii) testing, on a sample basis, regulatory assets and regulatory liabilities, based on the provisions and formulas outlined in rate orders and other regulatory proceedings and correspondence, as well as application of relevant regulatory precedents.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California

February 1918, ~~2025~~2026

We have served as the Company’s auditor since 2002.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED BALANCE SHEETS

December 31,

(in thousands)

~~2024~~2025

~~2023~~2024

Assets

Utility Plant

Regulated utility plant, at cost:

Water

2,~~227~~414,~~311~~314

2,~~082~~227,~~927~~311

Electric

~~171~~229,~~127~~792

~~156~~171,~~471~~127

Total

2,~~398~~644,~~438~~106

2,~~239,~~398,438

Non-regulated utility property, at cost

4450,~~457~~397

4044,~~223~~457

Total utility plant, at cost

2,~~442~~694,~~895~~503

2,~~279~~442,~~621~~895

Less — accumulated depreciation

(~~648~~653,~~199~~667)

(~~624~~648,~~472~~199)

1,794,696

1,655,149

2,040,836

1,794,696

Construction work in progress

~~304~~255,~~929~~483

~~237~~304,~~131~~929

Net utility plant

2,~~099~~296,~~625~~319

12,~~892~~099,~~280~~625

Other Property and Investments

5058,~~418~~664

4250,~~932~~418

50,418

42,932

58,664

50,418

Current Assets

Cash and cash equivalents

2618,~~661~~824

1426,~~073~~661

Accounts receivable — customers, less allowance for doubtful accounts

3738,~~699~~321

3437,~~250~~699

Unbilled receivable (Note 2)

2826,~~446~~621

2328,~~516~~446

Receivable from U.S. government, less allowance for doubtful accounts (Note 2)

4146,~~000~~400

4941,~~306~~000

Other accounts receivable, less allowance for doubtful accounts

6,~~415~~127

6,~~340~~415

Income taxes receivable

65—

5265

Materials and supplies

1516,~~140~~406

1715,~~574~~140

Regulatory assets — current

5039,~~504~~396

4550,~~144~~504

Prepayments and other current assets

7,~~286~~551

57,~~767~~286

Contract assets (Note 2)

2031,~~130~~428

920,~~956~~130

Total current assets

~~233~~231,~~346~~074

~~205~~233,~~978~~346

Other Assets

Unbilled revenue — receivable from U.S. government (Note 2)

31,~~423~~258

43,~~886~~423

Receivable from U.S. government (Note 2)

3527,~~486~~660

4235,~~183~~486

Contract assets (Note 2)

~~1,518~~79

41,~~422~~518

Operating lease right-of-use assets

86,~~028~~093

78,~~982~~028

Regulatory assets

2730,~~101~~073

2527,~~585~~101

Other

4163,~~264~~872

1941,~~874~~264

Total other assets

~~116~~129,~~820~~035

~~104~~116,~~932~~820

Total Assets

2,~~500~~715,~~209~~092

2,~~246~~500,~~122~~209

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED BALANCE SHEETS

December 31,

(in thousands)

~~2024~~2025

~~2023~~2024

Capitalization and Liabilities

Capitalization

Common shareholders’ equity

~~920~~1,~~051~~045,581

~~776~~920,~~109~~051

Long-term debt

~~640~~782,~~382~~700

~~575~~640,~~555~~382

Total capitalization

1,~~560~~828,~~433~~281

1,~~351~~560,~~664~~433

Current Liabilities

Notes payable to banks

~~124,000~~—

42124,000

Long-term debt — current

~~385~~8,209

~~353~~385

Accounts payable

8886,~~591~~021

6888,~~705~~591

Income taxes payable

~~481~~1,169

~~492~~481

Accrued other taxes

1612,~~694~~871

1416,~~654~~694

Accrued employee expenses

1516,~~523~~193

1415,~~738~~523

Accrued interest

89,~~133~~545

8,~~607~~133

Contract liabilities (Note 2)

511,~~662~~735

15,~~352~~662

Operating lease liabilities

2,~~074~~062

12,~~856~~074

Purchase power contract derivative at fair value (Note 5)

815,~~823~~503

28,~~360~~823

Other

1511,~~159~~304

1115,~~506~~159

Total current liabilities

~~285~~174,~~525~~612

~~166~~285,~~623~~525

Other Credits

Notes payable to banks

~~165~~141,000

~~291~~165,~~500~~000

Advances for construction

6977,~~856~~976

6769,~~431~~856

Contributions in aid of construction — net

~~160~~179,~~306~~277

~~151~~160,~~414~~306

Deferred income taxes

~~180~~194,~~173~~121

~~161~~180,~~577~~173

Regulatory liabilities

2260,~~926~~205

122,~~222~~926

Unamortized investment tax credits

~~942~~873

~~1,011~~942

Accrued pension and other post-retirement benefits

3336,~~816~~557

3233,~~652~~816

Operating lease liabilities

64,~~394~~406

6,~~619~~394

Other

1417,~~838~~784

14,~~409~~838

Total other credits

~~654~~712,~~251~~199

~~727~~654,~~835~~251

Commitments and Contingencies (Notes 14 and 15)

Total Capitalization and Liabilities

2,~~500~~715,~~209~~092

2,~~246~~500,~~122~~209

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CAPITALIZATION

	December 31,
(in thousands, except number of shares)	~~2024~~2025		~~2023~~2024
Common Shareholders’ Equity:
Common Shares, no par value:
Authorized: 60,000,000 shares
Outstanding: 38,151,027 shares in 2024 and 36,980,612 shares in 2023	$	355,143	$	263,179
Outstanding: 39,082,470 shares in 2025 and 38,151,027 shares in 2024	$	425,153	$	355,143
Retained earnings	~~564~~620,~~908~~428		~~512~~564,~~930~~908
	920,051		776,109
	1,045,581		920,051
Long-Term Debt
Notes/Debentures:
6.81% notes due 2028	15,000		15,000
6.59% notes due 2029	40,000		40,000
7.875% notes due 2030	20,000		20,000
7.23% notes due 2031	50,000		50,000
6.00% notes due 2041	62,000		62,000
Private Placement Notes:
3.45% notes due 2029	15,000		15,000
5.87% notes due 2028	40,000		40,000
2.17% notes due 2030	85,000		85,000
2.90% notes due 2040	75,000		75,000
4.548% notes due 2032	17,500		17,500
4.949% notes due 2037	17,500		17,500
5.12% notes due 2033	100,000		100,000
5.22% notes due 2038	30,000		30,000
5.50% notes due 2027	65,000		—65,000
6.12% notes due 2030	50,000		—
5.30% notes due 2032	75,000		—
5.65% notes due 2037	25,000		—
Tax-Exempt Obligations:
5.50% notes due 2026	7,730		7,730
State Water Project due 2035	12,~~807~~466		1,~~729~~807
Other Debt Instruments:
American Recovery and Reinvestment Act Obligation due 2033	2,~~356~~114		2,~~588~~356
	643,893		579,047
	794,310		643,893
Less: Current maturities	(~~385~~8,209)		(~~353~~385)
Debt issuance costs	(3,~~126~~401)		(3,~~139~~126)
	640,382		575,555
	782,700		640,382
Total Capitalization	$	1,~~560~~828,~~433~~281	$	1,~~351~~560,~~664~~433

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31,

(in thousands, except per share amounts)

~~2024~~2025

~~2023~~2024

~~2022~~2023

Operating Revenues

Water

~~417~~464,~~410~~114

~~433~~417,~~473~~410

~~340~~433,~~602~~473

Electric

5157,~~645~~217

4151,~~832~~645

3941,~~986~~832

Contracted services

~~126~~136,~~404~~742

~~120~~126,~~394~~404

~~110~~120,~~940~~394

Total operating revenues

~~595~~658,~~459~~073

595,~~699~~459

~~491~~595,~~528~~699

Operating Expenses

Water purchased

7498,~~274~~224

7274,~~864~~274

7572,~~939~~864

Power purchased for pumping

1514,~~025~~076

1215,~~829~~025

1112,~~861~~829

Groundwater production assessment

2421,~~145~~489

2024,~~850~~145

1920,~~071~~850

Power purchased for resale

1118,~~630~~110

1311,~~275~~630

1513,~~039~~275

Supply cost balancing accounts

(15,~~894~~014)

12(1,~~118~~894)

(12,~~000)~~118

Other operation

4147,~~318~~041

4041,~~271~~318

3840,~~095~~271

Administrative and general

~~100~~102,~~941~~811

88100,~~273~~941

8688,~~190~~273

Depreciation and amortization

4347,~~647~~784

4243,~~403~~647

4142,~~315~~403

Maintenance

2021,~~255~~663

1420,~~218~~255

1314,~~392~~218

Property and other taxes

2728,~~091~~008

2427,~~046~~091

2224,~~894~~046

ASUS construction

5460,~~544~~606

5754,~~912~~544

5357,~~171~~912

Gain on sale of assets

—

~~(100)~~—

(75100)

Total operating expenses

~~410~~454,~~976~~798

~~398~~410,~~959~~976

~~364~~398,~~892~~959

Operating Income

~~184~~203,~~483~~275

~~196~~184,~~740~~483

~~126~~196,~~636~~740

Other Income and Expenses

Interest expense

(5046,~~382~~776)

(4250,~~762~~382)

(2742,~~027~~762)

Interest income

75,~~874~~650

7,~~416~~874

27,~~326~~416

Other, net

7,~~466~~649

57,~~126~~466

~~125~~5,126

Total other income and expenses

(3533,~~042~~477)

(3035,~~220~~042)

(2430,~~576~~220)

Income before income tax expense

~~149~~169,~~441~~798

~~166~~149,~~520~~441

~~102~~166,~~060~~520

Income tax expense

3039,~~173~~356

4130,~~599~~173

2341,~~664~~599

Net Income

~~119~~130,~~268~~442

~~124~~119,~~921~~268

78124,~~396~~921

Weighted Average Number of Shares Outstanding

3738,~~464~~550

3637,~~976~~464

36,~~955~~976

Basic Earnings Per Common Share

3.1737

3.3717

23.1237

Weighted Average Number of Diluted Shares

3738,~~583~~673

37,~~077~~583

37,~~039~~077

Fully Diluted Earnings Per Share

3.1737

3.3617

23.1136

Dividends Paid Per Common Share

1.~~791~~939

1.~~655~~791

1.~~525~~655

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CHANGES

IN COMMON SHAREHOLDERS’ EQUITY

	Common Shares
	Number
	of			Retained
(in thousands)	Shares	Amount		Earnings		Total
Balances at December 31, 2021	36,936	$	258,442	$	427,505	$	685,947
Balances at December 31, 2022	36,962	$	260,158	$	449,391	$	709,549
Add:
Net income				78,396		78,396
Issuances of Common Shares under stock-based compensationplans	26	—				—
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements		1,562				1,562
Dividend equivalent rights on stock-based awards not paid in cash		154				154
Deduct:
Dividends on Common Shares				56,356		56,356
Dividend equivalent rights on stock-based awards not paid in cash				154		154
Balances at December 31, 2022	36,962	260,158		449,391		709,549
Add:
Net income				124,921		124,921
Issuances of Common Shares under stock-based compensationplans	19	—				—
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements		2,834				2,834
Dividend equivalent rights on stock-based awards not paid in cash		187				187
Deduct:
Dividends on Common Shares				61,195		61,195
Dividend equivalent rights on stock-based awards not paid in cash				187		187
Balances at December 31, 2023	36,981	263,179		512,930		776,109
Add:
Net income				119,268		119,268
Issuance of Common Shares from an at-the-market program, net of issuance costs	1,145	88,661				88,661
Issuances of Common Shares under stock-based compensationplans	25	—				—
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements		3,030				3,030
Dividend equivalent rights on stock-based awards not paid in cash		273				273
Deduct:
Dividends on Common Shares				67,017		67,017
Dividend equivalent rights on stock-based awards not paid in cash				273		273
Balances at December 31, 2024	38,151	$355,143	~~355,143~~	$564,908	~~564,908~~	$920,051	~~920,051~~
Add:
Net income				130,442		130,442
Issuance of Common Shares from an at-the-market program, net of issuance costs	904	66,998				66,998
Issuances of Common Shares under stock-based compensationplans	27	—				—
Stock-based compensation, net of taxes paid from shares withheld from employees related to net share settlements		2,748				2,748
Dividend equivalent rights on stock-based awards not paid in cash		264				264
Deduct:
Dividends on Common Shares				74,658		74,658
Dividend equivalent rights on stock-based awards not paid in cash				264		264
Balances at December 31, 2025	39,082	$	425,153	$	620,428	$	1,045,581

The accompanying notes are an integral part of these consolidated financial statements.

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AMERICAN STATES WATER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

(in thousands)

~~2024~~2025

~~2023~~2024

Filing Compare · AMERICAN STATES WATER CO