Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company Conference Call discussing First Quarter 2008 results. If you have not yet received the copy of this morning’s news release announcing earnings for the quarter, please call 909-394-3600, extension 710, and one will be faxed or e-mailed to you. If you would like to listen to the replay of this call, it will begin this afternoon at approximately 3:00 p.m. Pacific Time and run through Thursday, May 15, 2008. The toll-free number for the replay is 800-642-1687, and the conference ID number is 44726541. At this time all participants are 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 one hour. I would like to turn the call over to Robert Sprowls, Executive Vice President and Chief Financial Officer. Please go ahead. Robert J. Sprowls – Executive Vice President and Chief Financial Officer: Good morning or afternoon, ladies and gentlemen and welcome to the presentation on American States Water Company's first quarter 2008 results. I am Bob Sprowls, Chief Financial Officer of American States, and Floyd Wicks, President and CEO of the company, is also with me today. As usual, following the conclusion of our prepared remarks, the call will be opened up for questions. I would like to remind you that certain matters discussed during this conference call are forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. I ask that you review the forward-looking information disclosure in our Form 10-K and Form 10-Qs on file with the Securities and Exchange Commission. The factors underlying the company’s forward-looking statements are dynamic…

(Operator Instructions). And our first question will come from the line of Debra Coy with Janney Montgomery Scott.

Thank you. Good afternoon, Bob and Floyd or good morning your time.

Hi Debra. Yes how are you?

I am good.

Good.

Coming back to look at the rate cases, a lot of moving parts there. You've got your 2008 pieces in place and with the combined filing pending, how should we -- leaving aside the potential increase in the ROE, how should we think about revenue adjustments on a combined basis for 2009? You mentioned 13 million for full year '08, but can you just remind us where we are in the multiple year kind of rolling process of how that should stack up for '09?

Sure it’s a great question because it is a moving target. As you know, our…

Yeah.

Our own company rate case plan was to file one region in – at one region a year which was essentially….

Per year right?

Now they're combined all three regions in one year is going to transition over time. Regions -- take them one at a time. The region one rate case, which concluded with its first increase being this year, will have another increase in '09 and a subsequent final year increase in 2010.

Right.

I don't have the numbers handy but Bob's looking to…

I think they are in the 10-K. So those will stay as they are with whatever adjustment related to the ROE adjustment.

That’s correct. The other -- region two, which concluded late Inc 2007…

Right.

Was really for calendar years '07, '08and '09..

Right.

So the year – the increase that we announced as part of today's call for January of '08 was actually the second year of that three-year cycle. So there is a planned increase for '09 as well for region two. Region three, which essentially we're…

From the third year?

In the third year, we had the third year increase in January of this year, there is some discussion currently between the company and the commission about a fourth year increase, although I can't say it's a guarantee at this point. But we're hopeful that the commission will allow a fourth year in the 2006 rate case. It will have to be noticed to be but there's not much else I can say about that right now because we don't have any of the details yet.

Okay. Well that helps me because that’s what I was trying to understand because it looked to me like you were missing a year.

Right.

The new rate scheduled in January 2010.

Yes that’s correct. So the worst case would be that region three would skip a year, namely 2009. But we're hoping to have at least some sort of an attrition number applied to the entire investment we have in region three.

Okay. And then on the regulatory front, my only other question is what's your current thought on timing for you of the ram and all the related pieces? By January of '09, is that what you're kind of planning on for implementation in your company?

Yes, we're hoping sooner than that, probably either the second quarter or third quarter of this year.

Okay.

And some companies have already been authorized rams in place. I don't know exactly how many, but we're hoping that we're not too far behind that.

And then you would go ahead and implement it mid-year?

That’s correct

Okay. And then moving across to ASUS, Bob outlined very clearly what the impact of the Fort Bliss contract was. I guess we would have understood that better if we would have had that level of detail last year. But leaving that out and any other potential construction contracts, can you give us an update of how we are doing on the ramp-up for the new contracts and I also know you have number of price adjustments pending. How are things looking in that business? I have kind of been expecting we would see some improvement on operating margins in that business around the middle of this year, based on price adjustments. Can you give us an update?

I will ask Bob to jump in as well. But I believe we did walk through the special project I thought in sufficient detail last year, but…

Well, I just had never heard the cents per share before, that was very helpful to hear it laid out that way.

Yes we put out pre-tax operating income effect.

That’s true, okay good point Debra. I think we will – we are of course learning more as we go in terms of what's the best way we can provide the actual hands-on information to the investing public, and we started identifying ASUS separately, which I think has helped.

It has helped.

We are hopeful that with the two new bases added this year, namely Fort Bragg and Fort Jackson in North and South Carolina respectively, that those will start kicking in in terms of adding value over time. By the way, Fort Bragg is, I believe, the largest military installation in this country and it has a population of close to 100,000 people there, so it's really a medium sized city and we're hoping that that, with regard to their infrastructure needs there, we're going to be seeing more capital work throughout not just that base, but we're hoping others as well. We just can't forecast it yet. I don't know if that helps or not, but….

It does to a certain extent. I mean, I've been looking at that business certainly as having a lot of potential, and other than the Fort Bliss contract, the truth is it's been a money losing operation.

That’s true.

So what I'm trying to understand is, when we get to a more profitable perating income position, excluding these one-off construction contracts.

Well, I think those are all fair questions and I'll take Fort Bliss, for example. The military dragged its feet quite a bit on implementing the privatization contracts themselves and I'll focus on Fort Bliss, because that was our first one and we were working with numbers provided to the government, the initial bid was placed, I believe, in 2002.

Right.

So the numbers were fairly old by the time the bid was awarded. Realizing we have the right to submit price -- for price re-determinations, which has been done and we're -- this is basically like a rate case the way I've kind of identified it, but it's working with really old numbers and that's one of the reasons why, as you mentioned, we're not doing well financially there on the operations side. So hopefully getting through the first round of price redeterminations will help us get back on track from an earnings point of view in that company. Bob, would you like to add more?

Yeah, the redeterminations at the east coast bases have all been filed. We expect to get a resolution to those in 2008 and that will help us. Fort Bliss is a little more complicated because it's a different group that we're dealing with, but the plan there is to complete the filing and just having never been through this, we're not sure whether we'll get the response to the redetermination in 2008 or whether it will be in 2009.

Okay.

Debra, I may have misspoke. I think we're ready – almost ready to file the one at Fort Bliss. The others have been filed.

Okay. That is what I was looking for, was some sense of timing and it sounds like it's still a little unclear.

Yeah, and the other thing, I'm looking for any ray of sunshine as we can. There is indication by our people in charge of that company that the government is looking at having more of a central processing of these price redeterminations instead of having each base deal with it. They'll have more of a focused group, because what we found is some of the folks at the various military bases where we get to know them, then they're gone to some other part of the military, so it's like a revolving door. So we're -- like I said earlier, we're learning the process. We're very -- still very excited about the process with increase of its very good piece of our business and we'll hope to bring better numbers as time goes on here.

Okay. Alright, I'll get back in line. Thanks.

Thank you.

(Operator instruction). Our next question is from the line of Francesca McCann with Stanford Financial.

Hi, there.

Hello Francesca.

I am doing will thing. Well, a lot of questions just summed up there, so thank you, Debra. Another kind of follow-up, on the growth side, looking at potential acquisitions, perhaps moving more out of state, if you could just give us some idea of what you're seeing on the landscape there and what you might be looking into or just areas of potential expansion.

Well, we always are looking at a number of systems, almost constantly, and we have, without giving any information away really, we probably have in California close to a half a dozen small systems, nothing what I would call significant in size but they fit closely with our objective of looking at tuck-in acquisitions. We have one we're looking at as well in Arizona. And beyond that, there isn't a whole lot I can really say at this point. But certainly on our plan to get out there and find – be an acquirer.

Okay. Thank you. And then just other thing if you could remind us of the original ROEs for regions two and three?

I'm going to ask Bob to give me a hand.

Region three was 9.8. Region two 10.1.

Perfect. Thank you. I think that's all. Thank you.

Thank you.

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Floyd, a business that we don't talk very much about on these calls, but just to go back and look at the electric business, obviously we're about to wrap up the power hedging contract that has yanked earnings around. But, when I back that out, I'm looking at a business that has substantially lower operating margins than your water business. I don't know about returns, because I can't see those separately. But, I wonder if you could just give us a sense of how you're thinking about that business strategically. You did mention that you're filing a case with a new asset that's been brought into service, but I'm not really seeing the benefit of that business in terms of how I can look at it from where I sit and I'm wondering how you're thinking about it strategically. You know, why is American States still in the electric business?

Fair question. We've had -- we've owned that property up there since about 1935 and many times we haven't emphasized it enough I think in the earlier years, when the company was probably the number one money maker in the -- under Golden State Water Company. It was when it was called Southern California Water Company, you may recall.

I recall.

And what really upset the apple cart was, frankly, very poor regulation in California in the early part of this decade and which you I'm sure recall had PG&E in bankruptcy and Edison close to it. And the electric business in our company affected the entire company dramatically. You could make a filing at the time with regard to rate cases, but you -- it essentially was handcuffing us from really getting the job done from a regulatory point of view until the new regulators came on board here a couple of years ago. The PUC did in fact allow us to file, I'd say partial rate cases, but our last filed rate case, what we refer to as a general rate case, was in 1996. So that's one reason our numbers are fairly old. We believe now that the regulation is -- has improved to the point where we can sit down and get some logical filing done and out the door in a reasonable period of time with some fair rates of return, and that's exactly was we're doing. We're hoping as well that a new -- the new purchased power contracts we're going to enter into before year end will be preapproved by the commission. That's our hope. We're filing in that regard, to get a green light on acceptance of the new purchase power contracts. We're bound by the old one, the old PUC essentially during the bad regulation period, let's say, limited the company as to what it could charge the customer for purchased power.

Right.

And I think what really started the whole mess was that we had built into rates when the energy crisis hit, we had $2.50 per kilowatt hour built into the tariff that the customers were paying for that, the power we were buying. While we were buying from the spot market, power at $9.50 per kilowatt hour, actually higher than that. The $9.50 was the first contract we were able to find and at the time $9.50 was a real bargain. So we were paying the power companies that were providing the power $9.50, but only collecting 2.50 and as you know, you can't make that up on volume. So we really had a very serious cash crunch in the company. We're beyond that now. We're collecting that past amount of money we paid to the power companies, is in the balancing account and we're currently collecting it from the customers. It's about the worst example of regulation I've seen in a long time, but it's very promising, what's there now. The regulators understood or understand what did take place and they're -- they've made very remarkable corrections to the regulation and we're hopeful this rate case that we're filing is going to bring us right back where we were with Bear Valley Electric for nearly six decades in being a good money maker.

So with the filing you said coming in the second quarter, we would assume that we'd get a decision on that sometime early-ish or second of '09 is that right?

No, the expectation is that this will be a shorter term rate case, it would be a 1/1 2009 effective date. We can't guarantee that.

Right, but that's the plan.

That's the plan.

And Then, Bob, can you tell me or give me at least a general sense of kind of what is the rate base in Bear Valley and what you're earning on it now?

We have never really put out rate base specific numbers for any of our entities.

We keep trying because it's the only way to really understand what you're earning on your assets.

Right.

Can you tell me what you are earning on it?

We haven't really –

5%, 4%, 3%...

Yeah, we haven't really published that number.

I think the rate case, when we filed the case coming up, Deborah, will be a public document.

Yes.

And it will be filed this month. So we'll get those numbers put out there because once it's public, we'll be able to at least give that information out.

Okay. Because what I'm getting at, as you can tell, is that there's clearly some -- if you can get that improved, there's clearly some upside potential and I was just trying to quantify what's the amount of under earning and what's the upside if you get that back to where it should be.

I see. That's all good questions and very fair and we'll follow up certainly by our next call.

Okay, thanks very much.

Thank you.

(Operator instruction). Your next question comes from the line of Tim Winter with Smith Moore.

Hello, Floyd and Bob.

Hi, Tim, how are you doing?

Good. I know you guys said you're expecting a decision on the items from California Water action plan come the second or third quarter. Is there a process that we're waiting for, or procedural schedule, or are you just simply waiting for them to return a decision? And then once they do, what's the process for actually implementing these items?

Well, I can give you kind of a bird's eye view with regard to the part of the conservation rate design, where there's a tiered rate that the commission is wanting utilities to implement. We have reached agreement with the PUC staff on the rate itself and so basically, what we're waiting for in that regard is a proposed decision by the administrative law judge. There are other elements of the OII that I'd have to get -- I don't know all the details of that. Bob, maybe is there something we have in the K on that?

Well, my understanding is there not going to be a proposed decision on that. There will just be a decision when a commission is ready to put it out.

Okay. On the tiered rate design?

Okay.

Also my understanding that the -- any ROE adjustment associated with the request will be as part of that decision.

.:

Right.

I'm just trying to figure out why some of the companies have a timing advantage to some of the other companies when it's basically already -- all these items have basically been approved.

Well, yes, Tim, the only thing that is probably holding things up here is the ROE question. That -- for some of the companies that are considered Phase I A companies, the commission hasn't dealt with the ROE issue for them and it's my understanding that that will be taken up when the commission makes a decision on Phase I B.

And there is a potential, at least what I would think would be a more fair way of dealing with it, is to bring it into the return on equity filing that we just made May 1st. So it's taken into account with other risk factors as opposed to only being considered as one item in a whole laundry list of risks. So, that's my understanding. There could be a good possibility that that could be -- that phase of it could be brought into this return on equity filing we just made. By the way, that filing, the energy companies have been processing their filings like this for years, where the commission doesn't – they determine the return on equity for gas and electric companies totally separate from general rate cases. So they're looking at doing this now for the water utilities as well and I think it's a good step forward.

Right. Well, sounds like it's going to get easier, from the consolidated filings, but –

Right.

Also, can you provide a little more color on these rate redeterminations at the military bases? I mean, are you going to be resetting contract prices at several of these bases?

Yes.

And are the actual bases losing money, or is it the fixed cost back at the ASUS level that's causing the negative earnings?

Well, I'd say yes to both of those questions and in terms of -- there are a lot of oh, I'd say moving parts again here because the price re-determinations will indeed look at every element of our bid and will be -- the numbers, we'll be the ones to file for what we believe are the new numbers and then go through a series of discussions with the local bases, but there's also one other factor that enters in, and it's various bases where the inventory, I'll use Fort Bliss again, the inventory at the base upon which we placed our bid was significantly underestimated. In other words, there was -- there were many more assets in place, water and wastewater assets, and there's another part of their price redetermination feature called an equitable adjustment. If we believe, for example, that the inventory in place is significantly different from that which we bid, we can make what's known as an equitable adjustment request, and we have done that as well or we will do in the case of Fort Bliss. I believe two or three other bases as well, Bob.

That’s right. And the way the redetermination process works is two years after commencement of the contract, you have a chance to get a rate increase and then every three years thereafter and as we said, the east coast bases that we've had for a few years, we've already done our filing there and the expectation is we'll have a result to that in '08. And then Fort Bliss is more complicated and as Floyd mentioned we are planing on filing soon in that.

And I think the other thing to keep in mind, Tim and others still on the call, that these bases, these are long-term contracts. These are 50 year contracts. We believe the government wants us there and we want to be there and we believe the early years are obviously difficult because we're still trying to figure out government contracts. I mean, we think we have them figured out but they're not easy. So we're in it, though, because we believe we know how to run water and wastewater systems. It's what we do. And we think it's a good place for our people to spend their time and our shareholders hopefully will be rewarded in a relatively short period of time.

At this time, there are no further questions. I would now like to turn the conference back over to management for closing remarks.

Okay. Well, I would really just like to take this period to thank you all for your participation today. And please listen next time, we'll have more to say about the military operations and other questions we weren't able to answer very well on this call, but thank you for your continued interest and your investment in American States Water Company.

This concludes today's American States Water conference call. If you would like to listen to the replay of this call, it will begin this afternoon in approximately 3.00 p.m. Pacific Time and run through Thursday, May 15, 2008. The toll-free number for the replay is 800-642-1687 and the conference ID number is 44726541. Thank you for your participation, you may now disconnect.