Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company, AWR, conference call discussing the company's first quarter 2013 results. If you have not received a copy of this morning's earnings release, please call (909) 394-3600, extension 651, 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 2 p.m. Pacific Time and run through Friday, May 17, 2013. After logging onto the website, click the Investors button at the top of the page. The archive is located just above the Stock Quote section. [Operator Instructions] As a reminder, this call will be recorded and will be limited to no more than 1 hour. [Operator Instructions] At this time, I would like turn the call over to Eva Tang, Chief Financial Officer of American States Water Company. Please go ahead.

Okay. On the call with me is our President and CEO, Bob Sprowls. I would like to first remind you that certain matters discussed during this conference call may be forward-looking statements intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. Please review a description of the company's risks and uncertainties in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. Before I start the first quarter's financial results, I would like for Bob to take a moment to discuss the general rate case for the company's water segment at American States subsidiary, Golden State Water Company.

Thank you, Eva. Depending upon where you are, good afternoon or good morning, ladies and gentlemen. As many of you are aware, yesterday, the California Public Utilities Commission, also known as the CPUC, issued a final decision on the water rate case for Golden State Water, approving new rates for 2013 through 2015 at all of the water service areas. You'll recall that this was our first consolidated water rate case, combining all 3 water regions in the General Office under one rate case filing. In 2012, we had reached a settlement agreement with the Division of Ratepayer Advocates and The Utility Reform Network on nearly all of the matters in the case. We're very pleased with the CPUC's final decision, among other things, approves the settlement. The decision demonstrates the CPUC's commitment to progressive regulation, which benefits both customers and shareholders. The new water rates will allow us to focus on our ongoing infrastructure improvements. We are continually focused on operational efficiency and evaluating various cost containment measures to minimize costs to our customers while still providing the highest standard of service. The decision is retroactive to January 1, 2013. With new rates in place, we expect additional water revenues of approximately $10 million in 2013 as compared to 2012 adopted revenues. This is a 3.4% increase in 2013 revenues. The 2013 adopted water gross margin is projected to increase by approximately $14 million or 6.6% as compared to the 2012 adopted water gross margin. Again, water gross margin is defined as revenues less water supply costs. I will now turn the call back over to Eva, so she can discuss the first quarter results.

Thank you. As Bob mentioned, our new rates are retroactive to January 1. Therefore, the final decision and the impact on rate has been reflected in our first quarter results of operations. Among other things, the final decision also reduced the overall composite depreciation rates on our utility plant. As a result of the change in customer rates, which incorporated the lower depreciation expense, our pretax earnings for the first quarter increased by approximately $4.2 million or $0.13 per share as compared to 2012 adopted numbers. In addition, the final decision also approved the recovery of various memorandum accounts, which track the certain costs that were previously expensed as incurred. This approval increased pretax income by approximately $3 million or $0.09 per share, which was also included in our first quarter results, primarily as a decrease in operating expenses. So overall impact of the final decision accounted for $0.22 per share of our first quarter results. With a recording of the $0.22 per share from the decision, our first quarter consolidated earnings increased by 30.2% to $0.69 per diluted share, as compared to $0.53 per share for the first quarter of last year. Net income for the quarter increased by $3.4 million or 33.1% compared to the same period in 2012. For the first quarter of 2013, our operating revenue increased by $3.7 million or 3.4% to $110.6 million. While the revenue at Golden State Water increased by $3 million or 4.6% to $69.2 million as compared to the same period in 2012, mainly due to the approval of our other water rate cases discussed previously. Electric revenue at Golden State Water remained relatively unchanged at approximately $10.7 million as compared to $10.8 million for the same period last year. Electric revenue for the first quarter of 2013 were based…

Thank you, Eva. I'm pleased with our continued strong earnings performance for the first quarter of 2013. The improvement in our operating results over the same period of 2012 is attributed to our regulated water business as a result of the approval of the water rate case. The water segment for Golden State Water accounted for approximately 74% of the company's consolidated net income for the first quarter of 2013 compared to 53% for the same period in 2012. Golden State Water continues to be our flagship subsidiary, and we're pleased with its continued earnings growth. With regard to other regulatory matters, we continue to work with the CPUC to move forward with a review of our electric general rate case. If rates are approved as filed, the rate increases are expected to generate approximately $1.3 million in annual revenues for 2013, based on normalized sales. A proposed decision on the general rate case is expected later in 2013. Before I move onto ASUS, I want to just touch on our cash position. At March 31 of this year, we had $32.8 million in cash with no short-term borrowings. Eva mentioned that Golden State Water plans to spend $85 million on capital expenditures on average for 2013, 2014 and 2015. Even with that stepped-up capital expenditure level, we do not see the need to issue equity in the foreseeable future. Now let's discuss the company's contracted services business under ASUS. For the 3 months ended March 31, 2013, earnings from ASUS remained relatively unchanged as compared to the same period in 2012, primarily due to increases in renewal and replacement work, partially offset by slower progress on the construction upgrade activities. As previously discussed during our last earnings call, we anticipate certain construction activity to be at a slower pace…

[Operator Instructions] We will begin with David Parker of Robert W. Baird. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: A couple of things maybe. Just a couple of things for my notes, with the current rate case, can you tell me what the rate base amount is that was authorized?

I think the authorized rate base for 2013 for water only, I believe, Dave, is around $690 million, a little over that, I think. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And for the value [ph] you're asking, what's the files for rate base, do you recall, Eva, on that?

Our request, you mean? David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Yes, on the request, right.

Oh, I don't have that information. This is a settled rate base amount. I can get you that information, Dave, after the call if you need it. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Perfect. All right. Great. And then the cost of capital allocation, I assume 54% of that's equity, and the remainder's debt.

Basically, 50%, 55% is equity through the cost of capital proceeding that we had, had a year or so back, so it's 55%. We'd actually gotten an extra 1%, we believe, anyway associated with getting a rate of return on our regulatory assets, which we had asked for. So pretty -- I think a pretty progressive step by the PUC. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Yes. Okay, good, good. Excellent. That's helpful. And then the -- because of the cost of capital adjustment, then the ROE's 9.43% are authorized, is that right?

Yes.

Yes, that's correct.

For water only, yes.

Yes, for water... David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: For water only. In the past, Bear Valley was 10.5, 10.7? Is that right? Or is that old data?

Right. Yes, 10.5, but of course, that will be resolved in the rate case. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: And general, I guess, your comments were you -- you were -- you're pretty happy with the approval of the settlement and not much changes were made. Is that correct?

Yes. So it was a settlement that we had reached with TURN and DRA, and it was a, we felt a very fair settlement to both the customers and shareholders, and we were glad that the PUC approved the settlement. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: It looks as if -- I know some other -- well, this rate case obviously slowed some of the approval of the settlement, and the CPUC got busy and put out quite a few orders yesterday. So does it -- it appears this may be in the backlog that we've seen kind of get jammed up here a little bit, Bob, is maybe freeing up and maybe that the electric utilities rate case may move through a little quicker.

Yes. That's hard to say, but it's quite possible. I'd -- things, as you know, had slowed down a bit, but -- and then, of course, yesterday, there was some movement forward there. So it's taken a little longer than it has in the past. I mean, our case was supposed to be done by the end of 2012, and so we had to wait an additional 4 months but I guess they've got a number of issues up there at the commission that they're dealing with, so... David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Yes, clearly, and hopefully, they got those taken care of here in the last week or so. Sounds good. All right. Perfect. Maybe if I could jump to ASUS for just a second and give us -- I mean, you basically made some good commentary and actually answered a lot of the questions I had there. But as we look at revenue for ASUS and we try to figure out or I try to model how much of the revenue is construction projects and how much is kind of ongoing kind of nuts and bolts to take care of the system sort of recurring revenue, is that a 50-50 split or a 60-40 or how do you see that breakdown?

Well, I think -- David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Well, first of all. Go ahead. No, go ahead, Eva. I'm sorry.

Okay, Dave, the breakdown is -- I think, will have much more construction revenue because if you look at the construction expenses down the line in our file, the 10-Q, you can kind of gauge how much construction revenue that would be because we have to earn a profit on top of [indiscernible] so that -- using that number comparing to the contracted services revenue, it's much higher percentage as you can see. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Right. And the price redeterminations, then, would apply to the other business, kind of the ongoing business. Is that correct?

Yes. The -- there are several different revenue streams that come from the government. You have the O&M revenue stream, and then the construction piece can be broken into sort of several different pieces. There's renewal and replacement, which is sort of the standard renewal and replacement over the 50-year period. Additionally then, you've got initial capital upgrades that are sort of front-end loaded capital upgrades as you have taken over the base. Maybe in the first 5 to 7 years, you'll see an increase in construction that sort of get the system back to where it needs to be. And then you'll see something called new capital upgrades that occur that are just special project at the base that are new, related to either growth or issues that do come up. But the price redetermination generally works on the first 2 revenue streams, the operations and maintenance revenue stream and the renewal and replacement revenue stream. The other pieces are more a function of contract modifications. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: And those price redeterminations, are they filed as needed? Or is there an annual basis, Bob? Or what's -- is that something you just traditionally do on an annualized basis? How does that work?

Yes, the general program is you're allowed -- when you bid the O&M and R&R, I'm sorry, renewal and replacement, you bid it on a sort of a levelized payment stream over 50 years, and then 2 years after you take over the base, you have the opportunity to file for a price redetermination and then every 3 years thereafter. So it's 2 years after you've been on the base, you can file for a price redetermination, and then it's every 3 years after. Now it's gone more slowly than that for us at the bases that we operate because, let's be honest, this program is new to the U.S. government as well. And so there's a lot of things to work through. But for all but Bragg and Jackson at this point, we've gotten through the redetermination process, at least the first time, which we would expect it to be streamlined going forward. And then we hope to get through both Bragg and Jackson with our first price redetermination this year. And generally, what happens is the redeterminations, once they're granted, they are retroactive back to when you filed for the redetermination. So it does create a little bit of lumpiness in our earnings, but we wouldn't want to give up on the ability to go back and get the rectroactivity there. This fact that we're at sort of an every 3-year approach suggests why we like that business and why it's so similar to our utility business because, as you know, on the utility side, we're on a 3-year rate case cycle process there. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Right. I think I've heard that there had been some talk about the government maybe changing the way that they look at, getting to your point, Bob, a little closer to like the way you're compensated for at any utility. You look at a set of assets that you're maintaining for the government and then allowing some kind of return on that with pass-throughs or things that you can't really forecast like labor cost, materials, et cetera. Is that trend or has that change moved anywhere? Or are we still kind of the stuck like everything else in D.C. these days?

What we've heard folks talk about is more of a sort of inflation adjustor on your costs going forward to streamline the ability to get these redeterminations. So I don't see it sort of never being quite like the utility model where it's kind of a return on assets, that sort of thing because, really, the government is the one that's funding the assets. They're paying for the assets, which has allowed us to keep very little capital in that business. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Right, right. I guess I would say, as a funny aside, of course, I'm paying the government to pay for those. But anyway, ha ha. Last but not least, last year, first quarter in '12, weather was pretty helpful for activity on the construction side, and you still put up pretty darn good numbers at the ASUS, kind of surprised me. Any additional color there?

Well, yes. I mean, I think on the East Coast there, we were -- some of our construction work was a little slower this year. Fortunately, we had some renewal and replacement work elsewhere that had been able to kick in here. So in terms of looking at the year, we had told folks that we didn't think 2013 would be quite as good as 2012, and I think that's still our position for ASUS, that is. David E. Parker - Robert W. Baird & Co. Incorporated, Research Division: Okay. At $0.01 off year-over-year, that's not bad. That's almost as good.

[Operator Instructions] The next question comes from Jonathan Reeder of Wells Fargo.

Bob and Eva, Dave obviously asked a lot of questions, and most of mine were wrapped in there somewhere, but the one that he didn't touch on, I'd just be interested in hearing your comments is regarding the lower depreciation rates and just wondering if the impact reported in Q1 would be a good representation of the future quarterly impacts that we should expect this year.

I believe so, Jonathan, because every time the decision resets the composite rate for utility plant, so we have to adjust all our depreciation expense based on the authorized depreciation composite rate. So the first quarter should be a good benchmark going forward for this year.

Okay, great. And I appreciate the changes of the release. It was a lot easier to understand this time around.

[Operator Instructions] Seeing that there are no further questions, I would like to turn the floor back over to present CEO, Bob Sprowls.

Yes, thank you, Andrew. Again, thank you all for your participation today and for your continued interest and investment in American States Water Company. Everyone, have a nice weekend.

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 Friday, May 10, 2013, at 5 p.m. Eastern Time, 2 p.m. Pacific time, and will run through Friday, May 17, 2013. After logging on to the website, click on the Investors button at the top of the page. The archive is located just above the Stock Quote section. Thank you for your participation. You may now disconnect.