ALJ/TRP/sid Mailed 2/16/2007

Decision 07-02-014 February 15, 2007

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of GOLDEN STATE WATER COMPANY (U-133-W) for authority to: (1) Issue, Sell, and Deliver Common Shares and One or More Types of Preferred Shares or Debt, the Total Aggregate Amount of Such Offerings) not to Exceed $200,000,000; (2) Enter into One or More Interest Rate Risk Management Agreements; and (3) Obtain an Exemption From the Commission's Competitive Bidding Rule.

Application 06-10-029 (Filed October 25, 2006)

OPINION GRANTING APPLICATION TO ISSUE UP

TO $200 MILLION IN NEW SECURITIES

I. Introduction

This decision grants Golden State Water Company (GSWC) the authority requested in Application (A.) 06-10-029 (Application), pursuant to Public Utilities Code Sections 816-830¹ associated with the issue, sale, and delivery of securities not exceeding $200,000,000. GSWC is a public utility under the jurisdiction of this Commission, providing water service in portions of Los Angeles, Orange, San Bernardino, Ventura, Lake, San Luis Obispo, Sacramento, Imperial, Contra Costa and Santa Barbara Counties, and electric service in the Big Bear Lake area of San Bernardino County. GSWC was organized as a California corporation on December 31, 1929, and in July 1998, became a wholly owned subsidiary of American States Water Company (ASWC).

GSWC filed its application on October 25, 2006. Notice of the filing of the Application appeared on the Commission's Daily Calendar of October 27, 2006. No protests have been received.

GSWC was previously granted financing authority in Decision (D.) 00-12-054, dated December 21, 2000, for the issuance, sale, and delivery of $160 million in securities consisting of common shares, bonds, debentures and notes. As of June 30, 2006, GSWC had utilized $90 million of new debt, and issued $60.1 million of common shares. Remaining authority under D.00-12-054 totals $9.9 million. GSWC anticipates substantial cash requirements in the next few years to upgrade aging infrastructure and to invest in various capital projects to ensure a reliable water supply, to meet environmental regulations, and to refinance short-term debt. In view of these requirements, GSWC anticipates a need for up to $200 million over the next five years. Accordingly, in the instant Application, GSWC seeks Commission authorization:

a. To issue, sell and deliver by public offering or private placement securities not exceeding $200,000,000 in aggregate offering amount, said securities consisting of, but not limited to, (i) common shares and preferred shares (New Equity Securities), and (ii) bonds, debentures, medium-term notes, loans and tax exempt debt (New Debt Securities) on terms and conditions in accordance with its Application (collectively, the New Securities);

b. To use the net proceeds to be received from the New Securities for the purposes permitted under Section 817, including (i) retirement and discharge of all or a portion of its then-outstanding short-term debt issued for temporary financing of additions to GSWC's utility plant, (ii) reimbursement of GSWC for capital expenditures and for the acquisition of utility properties, and (iii) refund of existing long-term debt obligations;

c. To execute and deliver one or more indentures, supplemental indentures, or board resolutions and/or loan, credit, or note purchase agreements or other agreements; in connection with any issue of Debt Securities, and to assign, mortgage or encumber utility property in connection with the issuance and sale of Debt Securities;

d. To be exempt from the Commission's Competitive Bidding Rule GSWC's issuance of any and all of the New Securities;

e. To utilize interest rate management techniques to enhance its New Debt Securities in accordance with this Application;

f. For specification that the instruments set forth in Sections VII and VIII of the Application shall not be counted against GSWC's authorized amount of New Securities since these instruments would not affect the amount of the underlying securities issued;

g. For specification that the authority granted shall become effective upon payment of fees prescribed by Public Utilities Code Sections 1904(b) and 1904.1; and

h. For such other and further relief as the Commission may deem appropriate in this matter.

As set forth in Exhibit D of its Application, covering the period 2007-2011 GSWC allocates the $200 million, in the following manner:

Category (in $000s)

New Debt Issuance $113,000

New Equity Issuance 62,000

Refunding Existing Debt 25,000

Total Security Issuance $200,000

GSWC requests the authorizations summarized above as additions to the unused authority previously granted in D.00-12-054.

¹ Subsequent section references are to the Public Utilities Code.