American States Water Co (AWR) 2011 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Today is November 7, 2011. Welcome to the American States Water Company Conference Call discussing the third quarter 2011 results. If you have not received a copy of this mornings news release announcing earnings for the quarter, please call 909-394-3600, extension 651 and one will be faxed or e-mailed to you. If you would like to listen to a replay of today's conference, it will begin this afternoon at approximately 2.00 PM Pacific Time and run through Monday, November 14, 2011. After logging onto the website, click the investors button at the top of the page. The archive is located just above the stock quotes section. At this time all participants will be in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder this call will be recorded and will be limited to no more than 1 hour. At this time I'd like to turn the conference call over to Eva Tang, Chief Financial Officer of American States Water Company. Ma'am, you may begin.

Thank you, Jamie. Welcome to American States Water Company Third Quarter earnings call. Thank you for joining us today. With me here is Bob Sprowls, our President and CEO. Before I begin, I would like to remind you that certain matters discussed during this conference call may be forward-looking statements intended to qualify for the Safe Harbor [on] liabilities established by the Private Securities Litigation Reform Act of 1995. Please review a description of the Company's risks and uncertainties in our most recent Form 10K and Form 10Q on file with the Securities and Exchange Commission. All forward-looking statements are made as of today, the Company's under no obligation to update such statements. With that, I will start with our financial results for the quarter.

I'm very pleased to report solid earnings for the quarter. Basic and diluted earnings for the third quarter of 2011 were $0.83 per share as compared to basic and fully diluted earnings of $0.36 and $0.35 per share for the third quarters of 2010 respectively. Fully diluted earnings from continuing operation were also $0.83 per share for the third quarter of 2011 as compared to $0.30 per share for the third quarter of 2010. That is an increase of $0.53 per share. The $0.53 per share increase over the prior year period's third quarter results reflected an increase from each of our 3 business segments.

I will first discuss the results from water operations under our regulated subsidiary of Golden State Water Company. Diluted earnings per share for our water operations increased by $0.45 per share to $0.64 per share for the third quarter of 2011. You may recall that during the third quarter of 2010 last year, we recorded a pretax charge of $9 million or $0.32 per share related to impairments of assets and loss contingencies resulting from regulatory matters. We had no similar charges recorded during the third quarter of 2011. Excluding the effect of this pretax charge in 2010, earnings from our water operations still increased by $0.13 per share. The improvement in earnings was primarily due to a higher water margin of $7.7 million or $0.24 per share during the quarter. I mean $7.7 million. Golden State Water had a water margin of $62.2 million for the third quarter, where margin is defined as revenues less supply costs. The 14% increase in margin over the third quarter of 2010 was as a result of increased water rates approved by the California Public Utility Commission in the fourth quarter of 2010 for all of our water regions.

Water revenue for the third quarter of 2011 increased by $7.1 million over the prior year's third quarter to $89.8 million. Supply costs decreased slightly to $27.5 million for the 3 months ended September 30, 2011, including costs for purchased water of $16.1 million, power for pumping of $3.1 million, pumped taxes of $3.8 million and supply cost balancing account of $4.5 million. The increase in water margin was partially offset by a increase of $2.6 million or $0.08 per share in operating expenses other than supply costs and the pretax charge discussed earlier. This increase was due to higher depreciation expenses of $1.2 million, an increase in administrative and general expenses resulting from higher labor related costs, and legal and consolidating costs, higher other operation expenses and property and other taxes. We anticipate that depreciation expenses will continue to increase as a function of ongoing infrastructure investment at Golden State Water.

There was an increase of $1 million or $0.03 per share interest expense during the quarter and other non-operating expenses due primarily to the issuance of $62 million in new notes in April of this year. $22 million of the proceeds were used to redeem notes with higher interest rates. We used the remaining balance to pay down Golden State Water's short-term borrowings. Under the holding company rules set by the California Public Utilities Commission, once a year Golden State Water is required to pay down all borrowings by its parent. We have a $100 million revolving Credit Facility established at the parent level to support all of American State's operations. The cost of new debt is reflected in our cost of capital settlement, which Bob will discuss later in the call.

Moving on to the Electric Division of Golden State Water Company. Diluted earnings for our electric business increased by $0.03 per share during the third quarter of 2011 due primarily to rate increases. For the third quarter of '11, revenues for Electric Division increased by $829,000 to $8.7 million and supply costs increased slightly to $3.6 million. Earnings from our contracted services business under American States Utility Services, or ASUS, also improved during this quarter. Diluted earnings from ASUS increased by $0.03 per share during the 3 months ended September 30, 2011. The increase is primarily due to a contract modification issued by the US government approving the first product redetermination for 3 of the 4 Virginia bases, which resulted in a management fee increase of $420,000 retroactive to April 2008.

There was also an increase in construction revenue compared to the same period in 2010 as a result of increased construction activities at the Fort Bliss military base in Texas. Revenue for contracted services were $21.4 million for the third quarter of 2011. That is a 3.1% increase over the prior year's quarter. Bob will give more detail on our military base business in a moment. Earnings from our AWR parent increased by $0.02 per share as compared to the same period in 2010 due to a loss incurred at 1 of AWR's investments during the third quarter of 2010, which did not recur in the third quarter of 2011. A more detailed discussion of our quarter and year-to-date results are included in our earnings release issued this morning and will be provided in our Form 10Q, which will be filed later today.

Now, for an update of our liquidity and capital resources. Cash from operating activity for the first 9 months of 2011 increased by $25.5 million, primarily due to improved earnings, rate increases, and surcharges in place to recover previously recorded regulatory assets, including the water revenue adjustment mechanism or the WN balances. Furthermore, cash provided by operating activities increased as a result of a lower income tax payment, mostly as a result of bonus depreciation tax law changes. Due to these tax law changes for the 9 months ended September 30, 2011, AWR's tax payment was reduced by approximately $10.7 million. Although the bonus depreciation reduced our current tax payable, it does not reduce our total income tax expense on the Income Statement or our effective income tax rate.

Bonus depreciation only benefits cash flow for us here. As discussed during our last quarter's earnings call, we completed the sale of Chaparral City Water Company and received approximately $30 million in cash proceeds from the sale. Through the first 9 months of 2011, Golden State Water invested $62 million on capital projects and we are on pace to invest approximately $80 million for 2011. We are spending 2 to 3 times depreciation as we invest in our systems, which allow us to be able to deliver high quality reliable service to our customers. As you know, infrastructure investment is also a vital part of the Company's goals. Impacting cash flow from financing activity was the issuance of $62 million of 6% notes in April 2011 by Golden State Water. As I mentioned earlier, the proceeds from the issuance were used to redeem $22 million of notes with higher interest rates and to pay down short-term borrowings.

I'd like to take a few minutes to discuss the impact of the WM and the modified cost balancing account. These mechanisms, which decouple revenue from water sales and may otherwise be adversely affected by sales reduction due to conservation efforts, are designed to keep us whole in the water margin and provide our shareholder consistent return. As I mentioned earlier, the water gross margin is defined as water revenues less cost of supply. Under the CPUC decoupling approach, the Company has been able to record water growth margin to the adopted level, despite the fact that the water usage declined by 7.4% in 2009, 8.4% in 2010, and 2.6% for the 9 months of 2011.

When compared with the consumption level adopted in the 2011 rates, actual water usage for 2011 was approximately 16% lower than the 9 months ended September 30, 2011. The implementation of the WM and the modified supply cost balancing accounts allowed us to record an additional $15.1 million to our water margin to make up the shortfall in actual customer consumption and achieve adopted water margins. We expect to implement surcharges during the first quarter of 2012 to collect the 2011 WM balances. For the first 9 months of 2011, we have billed $10.8 million to customers for collection of the 2009 and 2010 WM balances. It is important to know that when collected, the surcharges decrease the WM balances, increase the Company's cash flow and do not impact earnings.

Lastly, we're getting ready to file the third year escalation increases for Golden State Water's Region II and Region III and the second year increases for the rate making areas in Region I. The expected revenue increases from these findings based on the recent inflation rates provided by the CPUC are approximately $5 million for 2012. As a result of fighting our first consolidated rate case for all water regions in July 2011, would anticipate a significantly greater increase to revenues in 2013. Bob will speak more about the 3 year general rate cases file for Golden State Water for rates in 2013 and provide an update on our cost of capital settlement. And with that I'd now like to turn the call over to Bob.

Thank you, Eva, and good afternoon, ladies and gentlemen. I'm extremely pleased with our strong performance in the third quarter of 2011. The Company was able to achieve solid financial results and surpass analysts' expectations. Each of our 3 continuing business segments achieved favorable results. Earnings before interest, taxes, depreciation and amortization, or EBITDA, from continuing operations increased by $17 million to $42 million for the third quarter of 2011 as compared to the third quarter of 2010. As you know, our fourth quarter revenues and earnings naturally tend to taper off due to seasonality and historical low water usage during this period. But overall, as we exit 2011, we feel good about our execution this year. I'm also pleased to announce that on October 25, 2011, the Board of Directors of American States Water approved a quarterly cash dividend of $0.28 per share on the common shares of the Company.

The $0.28 per share dividend is consistent with the dividend approved in July. For more than 57 consecutive years, American States Water Company shareholders have received an increase in their aggregate annual dividend and we are among a handful of companies on the New York Stock Exchange that can boast of such a long period of dividend increases. Our focus for the dividend going forward is to achieve a 5 year compound annual growth rate of at least 5% over the long term. Now, I'll discuss the status of key regulatory filings and other matters for the Company. On May 2, 2011, Golden State Water filed its cost of capital application with the PUC for 2012 through 2014.

I'm pleased to report that on November 2, 2011, Golden State Water Company entered into a Settlement Agreement with the Division of Rate Pair Advocates or DRA of the California Public Utilities Commission along with 3 other participating utilities who also jointly settled with DRA. If approved by the PUC, the settlement will authorize a return on equity of 9.99%, a rate making capital structure for Golden State Water of 55% equity and 45% debt, and will update the cost of capital for our current embedded cost of debt. This results in a weighted cost of capital or rate of return on rate base of 8.64%. We estimate that the impact of changing from the currently authorized rate of return on a rate base of 8.9% to the proposed 8.64% will result in a reduction in 2012 revenues of approximately $200,000 before income taxes.

We believe the cost of capital proceeding is a fair resolution for Golden State Water Company's shareholders and customers. Since the last cost of capital proceeding, we have diligently reduced our debt costs by issuing debt with lower interest rates and redeeming high interest rate debt. As a result, the debt cost in the settlement reflects our actual weighted debt cost, which is approximately 55 basis points lower than the authorized cost of debt currently in place. The reduction in debt costs will be reflected in customer rates. In addition, the combination of a 4 percentage point higher equity ratio in Golden State Water's capital structure and a slightly lower allowed return on equity provide an opportunity for higher earnings. Golden State Water has invested approximately $225 million over the past 3 years in its water distribution infrastructure and we plan to continue making significant investments in the future.

We are pleased that the DRA recognizes that California's investor owned water utilities require a fair return in order to finance these investments. When finalized, the rate of return authorized by the PUC will be implemented into water rates prospectively for all of our water regions. A decision on the cost of capital Settlement Agreement is expected in the fourth quarter of 2011 or first quarter of 2012. For Golden State Water's Electric Division, we will still have an authorized return on equity of 10.5%. The settlement also maintains the automatic adjustment mechanism, called the Water Cost of Capital Mechanism, previously adopted by the California Public Utility Commission to adjust the return on equity and rate of return on rate base between cost of capital proceedings. In October 2012, rates to customers will be adjusted only if there's 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, 2011 through September 30, 2012 compared to the AA rate for the period October 1, 2010 through September 2011.

Turning to other matters. We are encouraged that the California Public Utilities Commission has named a Water Commissioner, Katherine Sandoval. Having a Water Commissioner is good for Golden State Water and for the water industry and we look forward to working with Commissioner Sandoval going forward. As previously discussed, Golden State Water filed a general rate case on July 21, 2011 for all of its water regions and the general office. This is our first consolidated water rate case.

We expect these rates to be effective on January 1, 2013. If rates are approved as filed, the rate increases are expected to generate approximately $31.3 million in annual revenues based on normalized sales starting in 2013 as compared to 2011 adopted revenues. The proposed rate increases for 2014 over 2013 are $9.1 million and the 2015 proposed increases over 2014 amount to $11.5 million.

In December 2010, the California Public Utility Commission issued a final decision in the rate case related to the 7 customer service areas in Golden State Water's Region I, approving rate increases for 2011 and 2012. In addition to rate increases of $1.9 million over 2010 adopted revenues, the PUC has also authorized approximately $18.5 million of capital projects to be filed for revenue recovery with advice letters when those projects are completed. The majority of these projects are expected to be completed between 2011 and 2013. The decision also allows us to recover the cost of debt and equity used to finance these capital projects prior to their inclusion in rates.

As Eva mentioned earlier, we will be filing the third year escalation increases for Golden State Water's Region II and Region III and the second year increases for the rate making areas in Region I. Based on the information we currently have, we believe most of Golden State Water's rate making areas will meet the earnings test. Expected revenue increases from these filings based on the most recent inflation rates provided by the PUC are approximately $5 million for 2012. For our Bear Valley Electric Division we intend to file our rate case in December 2011 for rates expected to be effective January 1, 2013. In connection with advancing the PUC's renewable portfolio standard program goals, we entered into 2 contracts that were approved by the PUC in June 2011. Additionally, we are in the process of filing for approval for the purchase of renewable energy credits, which will count towards our efforts to achieve the interim target levels of the renewable portfolio standard program goals. The cost of any renewable energy credits will be included in the electric supply balancing account.

Let's turn our discussion to the Company's contracted services segment that provides water and wastewater services for military bases throughout the country under American States Utility Services, Inc, or ASUS. We are pleased to report that for the 9 months ended September 30, 2011, ASUS has contributed $0.31 per share to American States earnings. We believe successful price redeterminations and requests for equitable adjustment or REA filings will provide added revenues perspectively that helps offset increasing costs and provide ASUS the opportunity to consistently generate positive operating income at its subsidiaries that serve military bases. We are still working to finalize certain price redeterminations and requests for equitable adjustment at various bases, which include adjustments to reflect inflation in cost and changes in operating conditions and infrastructure levels from that assumed at the time of the execution of the contracts. The timing of the conclusion of such filings is somewhat unpredictable.

To summarize, I'll quickly talk about the status of each of our price redeterminations. In 2008, the first price redeterminations were filed, 2 privatization contracts to serve 4 military bases in Virginia under ASUS's subsidiary, Old Dominion Utility Services. The operations and maintenance portion of the redetermination filing for Fort Lee has been finalized, resulting in a slight 0.43% decrease effective February 2011 as compared to the interim increase previously in place of 16.93%. The renewal and replacement portion of the Fort Lee redetermination is expected to be finalized by the end of this year. On September 30, 2011, the government issued a settlement for the price redetermination filed for the Fort Eustis, Fort Monroe and Fort Story military bases in Virginia. The modification provides for a 4.1% increase in operations and maintenance revenues, in addition to the 16.93% interim increase previously in place. The contract for Fort Monroe terminated on September 2, 2011 due to the closure of Fort Monroe under the Base Realignment and Closure Act of 2005. This closure had been anticipated as part of the original privatization contract for these 3 Virginia bases.

The first price redetermination for the contract to serve Andrews Air Force Base was filed in December 2007. In August 2010, the government approved an interim adjustment amounting to an 18.93% increase, or $288,000 annually retroactive to February 2008. Terrapin Utilities Services, the ASUS subsidiary that serves Andrews Air Force Base, has filed its proposed settlement for this redetermination, which if approved as filed would result in an increase of approximately $280,000 of annual revenues for operations and maintenance beyond the interim adjustment. This price redetermination is expected to be resolved during the fourth quarter of 2011. In connection with the inventory settlement with the US government reached in January 2010, Ford Bliss Water Services, the ASUS subsidiary that serves Fort Bliss, and the government agreed to wave the first and second price redeterminations for the contract to serve Fort Bliss, required under the original 50 year contract.

The third price redetermination is scheduled to be filed by July 1, 2012. ASUS subsidiary, Palmetto State Utility Services, expects to file the first price redetermination on the contract to serve Fort Jackson during the fourth quarter of 2011. This price redetermination is to be effective beginning February 16, 2010. Pending resolution of this filing, an interim increase of 3.4% retroactive to February 2010 is currently in effect. ASUS subsidiary Old North Utility Services expects to file the first price redetermination for the Fort Bragg contract during the fourth quarter of 2011 to be effective beginning March 1, 2010. Pending resolution of this filing, an interim increase of 3.6% retroactive to March 2010 is currently in effect. In April 2009, Old North Utility Services filed a request for equitable adjustment with the US government in connection with costs associated with initial system deficiency work. This REA has not been finalized at this time. Before I turn the conference over to the Operator to entertain questions, I would like to thank you again for your continued support and interest in the Company.

(Operator Instructions) Heike Doerr from Robert W. Baird.

I wondered if we could start talking about fourth quarter expectations. There's quite a large range of estimates out in the street and I know in the fourth quarter of last year we had that very large one-time retroactive gain. I believe that, that was $0.30 in the fourth quarter last year that was actually retroactive. Can we talk what a clean fourth quarter of 2010 should have looked like?

Sure.

Sorry to put you on the spot. I think it's around $0.37 but wanted to be sure.

It is $0.30 (multiple speakers).

So that's what we should be using to compare on a more apples-to-apples basis.

The $0.30 is really for the 3 quarters of 2010 that gets approved in the fourth quarter. So, yes, I think you should exclude the $0.30 for your comparison (multiple speakers).

And I apologize, I missed it. Can you repeat the CapEx that you spent year-to-date and what the total 2011 expectations are?

It's $62 million year-to-date and we're looking to be at about $80 million by year-end.

And thanks for the extra clarity on those price predeterminations. It's helpful to hear what's going on, on a base by base -- on a case by base matter. I'm wondering though, I know you mentioned that for Fort Bliss we would see an additional price redetermination coming in July of 2012. Can you tell us as we look out what else we'll be seeing as new filings?

Well, sure. That will be a filing that we plan to have done by July 1 of 2012. We do plan on, as I mentioned, filing the first price predeterminations at Fort Jackson and at Fort Bragg before year-end. And then we'll be filing the second price predeterminations for the Virginia bases and for Andrews Air Force base I believe in the second half of 2012.

And can you tell us in total kind of what amount may be in millions we're talking about, those altogether the request is?

Well, the problem is we're still working on the 2012 filings and actually still working on the 2011 filings, so we're still going through that process.

Okay.

I can't really help you with that one, Heike.

Okay, thanks, that's all I've got.

Okay.

(Operator Instructions) Michael Roomberg from Ladenburg Thalmann.

I'm sorry if I missed this in your prepared remarks. Can you talk about what advice letter projects there may be outstanding for the next 15 months or so for Golden State Water and what the financial impact of these projects could be?

The amount of the projects that we got approved in the rate case in terms of being able to then resubmit once they were done was $18.5 million.

That's in capital value or in revenue terms?

That's in capital. And the plan then is to -- we're working on those projects and submitting them as we get them done, but the plan is to get those done between 2011 and 2013.

And do you have an estimate? I guess, obviously, it's subject to the completion times, but do you have an estimate of the revenue impact of those projects?

Let's see here.

I think we plan to do about $10 million next year, so--

That's the capital dollars?

Capital dollar amount so you'll earn the return on that and gross up to revenue.

Okay.

You know the formula, Michael. Turning to ASUS. Just kind of wondering from a bigger picture perspective, aside from the current filings that are out there, are you hearing any speculation from your military customers as to how the looming federal budget changes may affect the availability of additional military base contract opportunities, the prospects for construction activity at your current bases? And then from a wider perspective, can you kind of update us as to whether the Company continues to have a high degree of interest in growing this business through pursuing new contracts that may come up for bid in the future?

I'm going to maybe start with your second question first and the Company is still very interested growing ASUS. We feel like we have -- continue to make progress in that business, getting our policies and procedures put together to interact with the Defense Logistics Agency Energy, which is where all of the bases that are on the East Coast, the contracting officers work for the DLAE and we believe we have a good relationship there. And we're, as I say, getting I think our arms around better what their expectations of us are in terms of submitting price redetermination's and I think it's a generally a very improving relationship there. I did have a chance, along with our Senior Vice President, Bud Harris, to meet with all the contracting officers in July in Virginia and there's some things we've got to do better, but we're very focused on improving paperwork there and we know what we need to do and we've been working on it. So, we like that business. The business has been giving us good returns and so we continue to be a part of that business.

Now, regarding the looming budget issues for the US government and how does that affect the DOD. We believe there, over the next 5 years there's still going to be substantial privatization that continues in the water and wastewater space. The Air Force, for instance, is very -- has not really had substantial amount of these privatizations, so they appear to be very interested in doing privatization and we believe there's really good opportunities to grow our business. But we do recognize that there will be potential cutbacks to the DOD budget. It's not clear at this point whether that will have an effect on the privatization activities.

Turning back to GSWC real quick, can you talk about the outlook for -- well actually turning back to the entire Company. Can you talk about the outlook for A&G expenses and also the other operating expenses? Sometimes it's somewhat difficult year to year to predict the direction of that and so can you talk a little bit what's coming down the pike in 2012 that you're aware of and how you see expense inflation playing out in 2012?

Well, we're focused in not allowing our expenses to grow at a significant rate. We understand the need to really keep our arms around the expenses. We don't see anything substantial coming down the pike that makes it difficult to do that. Of course, medical cost is one expense item that is very difficult to keep that at the general inflation rate. In our rate case we've actually asked for a balancing account for that so that we can not take a hit in terms of getting lower inflation rates in rates than what it's going to take to manage that cost. Other than that, I don't see any looming expenses coming along. We, of course, will have -- we will need to spend some money on processing the rehearing of the Region II, Region III general office case. That we'll have to spend some legal dollars in terms of representation on that matter, but other out of the ordinary kinds of things, we're obviously going to process our rate case that we had filed in July, but as you know, the expenses of processing that generally are covered as part of the rate case process.

And Michael, the estimate we provided to you for next year for Golden State Water's water regions, $5 million increase in revenue, that was based on the inflation factor posted on the PUC website for July. So, for compensation that factor is about 2.7% and labor is 3% and the non-labor is 1.7%. So, that's how we use to calculate our estimated increase for next year.

Got it, got it. Thank you so much, guys, and congrats on a great quarter. Thank you.

Thank you.

(Operator Instructions) Christopher Purtill from Jane Montgomery Scott.

Was hoping you could give us an update on the 2013 general rate case and I know it's early, but can you just talk about some of the filings that we've seen so far, the intervener applications. Do you feel like the overall number that's come in and the pushback there has been as you would normally expect in this process or maybe heavier than normal given the economic condition in California or maybe even less than normal?

CJ, I would say we're getting probably a little more pushback than we normally get and I think that's a function of the recession and unemployment and some of the areas we serve are areas that are impoverished and so nobody likes to see their rates go up. But we're going through the public participation hearing process and we're explaining to customers the need for the infrastructure replacement and how that infrastructure replacement then will result in higher rates. So, every time we put through a rate increase, we go through this, but I would say it's a little more pushback this time around.

And on CapEx 2012, can you just give us an idea of what you think you're looking to spend, what's in the rate case there, are we still looking around $75 million to $80 million a year into '12?

Yes, what we have in the rate case is, I think, in the neighborhood of $75 million to $82 million for the water space and then of course we've got Bear Valley Electric, which is in the neighborhood of $3 million on top of that. So, we're in that $75 million to $85 million range, Eva, is that?

Yes, I think that's about right. So, about $80 million.

So we're kind of heading -- the mid point is about $80 million, so it may look a bit like 2011.

And then just lastly on ASUS. Just on the revenue there, there have been kind of some one-time adjustments that we've seen in past quarters. I'm curious if in this quarter that the $21.4 million, you talked about the $400,000 that was the retroactive, but was there kind of anything else in there that would have skewed that number one way or another, any kind of large, I guess, construction projects that would have inflated that or is kind of the $20 million to $21 million kind of the general run rate that we should be using as we add on the redeterminations that you talked about?

Yes, in the third quarter there was one project that was unique, I guess, was a combat aviation brigade project at Fort Bliss. But it seems like every quarter there's a special project here, a special project there, so I wouldn't say that the combat aviation brigade project was so significant that it would tilt the third quarter revenues sort of beyond normal. Just we have projects going on at all of the bases and so I would think I would take that project out and adjust the revenues there.

Okay. Great. Very helpful, thanks again.

Thank you.

Thanks, CJ.

(Operator Instructions) Everyone, at this time, I'm showing no additional questions. I'd like to turn the conference call back over to Mr. Sprowls for any closing remarks.

Thank you, Jamie. Well, I just wanted to wrap up today by just again thanking you all for your participation today and for your continued interest and investment in American States Water Company. So thank you.

This concludes today's American States Water Company Conference Call. As a reminder the call will be archived on our website and can be replayed beginning Monday, November 7, 2011 at 2 PM Pacific Time and will run through Monday, November 14, 2011. After logging on to the website, click the Investors button at the top of the page. The archive is located just above the stock quotes section. Thank you for your participation. You may now disconnect your telephone lines.