American States Water (AWR) risk factors, FY2025 10-K

Other

1. 01Regulated Water and Electric Utility Operations
2. 02Contract Services Operations
3. 03We 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

Other Business Risks

1. 04Delays in obtaining approval of general rate cases could adversely impact our liquidity
2. 05Changes in laws, regulations and policies of regulatory agencies can significantly affect our business
3. 06Our assets at our regulated utilities are subject to condemnation
4. 07Our costs of obtaining and complying with the terms of franchise agreements are increasing42% rewritten
5. 08governments. 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 levelsNew
6. 09Our liquidity and earnings may be adversely affected by maintenance costs at our regulated utilities
7. 10Adverse publicity and reputational risks can lead to increased regulatory oversight or sanctions
8. 11Our liquidity and earnings may be adversely affected by wildfires
9. 12We may, in certain circumstances, be held strictly liable for damages to property caused by our equipment even if we are not negligent49% rewritten
10. 13We may be subject to financial losses, penalties and other liabilities if we fail to maintain safe work sites, equipment or facilities
11. 14We may sustain losses that exceed or are excluded from our insurance coverage or for which we are not insured
12. 15We operate in areas subject to natural disasters
13. 16Our operations may be the target of terrorist activities50% rewritten
14. 17Our operating costs may increase as a result of groundwater contamination
15. 18We 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
16. 19The adequacy of our water supplies depends upon weather and a variety of other uncontrollable factors
17. 20Our liquidity may be adversely affected by changes in water supply costs44% rewritten
18. 21Our liquidity and earnings may be adversely affected by our conservation efforts
19. 22Our electric segment operates in a high wildfire risk area70% rewritten
20. 23Our liquidity may be adversely affected by increases in electricity and natural gas prices in California
21. 24Unexpected 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
22. 25We may not be able to procure sufficient renewable energy resources to comply with CPUC rules
23. 26Our contracts for servicing military bases create certain risks that are different from our public utility operations62% rewritten
24. 27We may be adversely affected by disputes with the U.S. government regarding our performance of contracted services on military bases
25. 28We depend, to some extent, upon subcontractors to assist us in the performance of contracted services on military bases85% rewritten
26. 29We may not be fully reimbursed for all of our construction costs or may only receive payment on a delayed basis

Other Contracted Services Segment Risks

1. 30Risks associated with wastewater systems are different from those of our water distribution operations
2. 31We may have responsibility for water quality at the military bases we serve22% rewritten
3. 32Our earnings may be affected, to some extent, by weather during different seasons
4. 33We continue to incur costs associated with the expansion of our military base contract activities
5. 34We face intense competition for new military base contracts60% rewritten
6. 35Use of Artificial Intelligence (“AI”) by our employees, subcontractors and third parties engaged by us could have an adverse impact on our business and operationsNew

Human Capital Management Risks

1. 36Failure to attract, retain, train, motivate, develop and transition key employees could adversely affect our business
2. 37The accuracy of our judgments and estimates about financial and accounting matters will impact our operating results and financial condition
3. 38Market conditions and demographic changes may adversely impact the value of our benefit plan assets and liabilities
4. 39Payment of our debt may be accelerated if we fail to comply with restrictive covenants in our debt agreements
5. 40The price of our Common Shares may be volatile and may be affected by market conditions beyond our control
6. 41As 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
7. 42The final determination of our income tax liability may be materially different from our income tax provision
8. 43Our operations are geographically concentrated in California