Robert Sprowls

Thank you, Dave. Welcome, everyone, and thank you for joining us today. I'll begin with some brief comments on the quarter. Eva will then discuss some financial details, and then I'll wrap it up with updates on regulatory activity, ASUS dividends, and then we'll take your questions.
I'm pleased to report that we recorded earnings per share for the third quarter were $0.10 per share higher compared to the third quarter of last year. The increase was in March part due to third year rate increases in our water segment and gains on our investments to fund a retirement plan, partially offset by higher operating expenses, some of which are due to timing, higher interest cost and a delay in receiving a decision in the pending electric general rate case.
Eva will discuss the results in more detail. Our regulated utilities have invested $172.5 million in company-funded infrastructure year-to-date, and we'll be investing a record high $210 million to $230 million on capital expenditures this year. As we discussed last quarter, Golden State Water and the Public Advocates Office of the California Public Utilities Commission, or Cal Advocates for short, reached a settlement agreement in connection with Golden State Water's general rate case that will set new water rates for the years 2025 through 2027.
Parties filed a joint motion in July to adopt the settlement agreement with the California Public Utilities Commission or CPUC. Among other items, the settlement authorizes Golden State Water to invest $573.1 million and capital infrastructure over the three-year capital cycle.
Additionally, last week, Bear Valley Electric, Cal Advocates and the other intervener in the proceeding filed a joint motion to adopt a settlement agreement between the parties resolving all issues in connection with the electric general rate case and will set new electric rates for 2023 through 2026 with new rates retroactive to January 1, 2023.
Among other things, the settlement authorizes Bear Valley Electric to invest $75.6 million in capital infrastructure over 2023 through 2026, including $23.1 million that will be filed for revenue recovery through advice letters upon project completion.
The joint settlement, if approved, enable our water and electric utilities to continue investing in their assets to strengthen the systems and ensure safety and service reliability for our customers. I will discuss these settlements in more detail later in the call. For the year-to-date September, ASUS is $0.06 per share ahead of last year for the same period.
You'll recall that ASUS contributed $0.50 per share to consolidated earnings for the full year 2023. We now project that ASUS will contribute $0.54 to $0.57 per share this year, higher than the $0.50 to $0.54 range we provided previously.
ASUS continues to enter into US government awarded contract modifications for new construction projects. I'm very pleased to announce that ASUS has been awarded a record high $54 million in new capital upgrade construction projects during the nine months ended September 30, 2024.
These newly awarded projects are expected to be completed during 2024 through 2027. With that, I'll turn the call over to Eva to discuss earnings and liquidity.

Eva Tang

Thank you, Bob, and hello, everyone. Let me start with our third quarter results. Consolidated earnings as recorded were $0.95 per share for the third quarter as compared to $0.85 per share for the third quarter of 2023. For our water utility, Golden State Water reported earnings were $0.84 per share as compared to $0.72 per share last year. The $0.12 per share increase was largely due to an increase in the third year water rate.
An overall increase in the authorized rate of return on rate base in 2024 gains generated from investment held for retirement plans and lower income taxes, partially offset by higher operating and interest expenses. Lastly, there was a decrease of earnings of approximately $0.01 per share due to the diluted effect from the issuance of equity under AWR's ad market offering program.
Our electric segment's earnings were $0.02 per share for the quarter as compared to $0.04 per share for 2023, primarily resulting from not having new rate effect as we await a decision on the electric CRC that will set new rates for 2023 to 2026, while also experiencing continued increases in interest cost. When the decisions issued, new electric rates are expected to be retroactive to January 2023 and cumulative adjustments will be recorded at that time.
Earnings from US were consistent for the quarter when compared to 2023 with a decrease of $0.01 per share mainly due to the effect of rounding. Consolidated revenue for the third quarter increased by $10 million as compared to last year. Revenues for the water segment increased by $7.8 million, largely due to an increase in third year water rate and the overall increase in authorized rate of return on rate base in 2024.
Electric revenues remains consistent as we are waiting for a decision on the electric general rate case. While there was an increase in revenue from US of $2.2 million primarily due to higher management fee revenue resulting from a resolution of various economic price adjustments and the commencement of operations of water and wastewater systems at Joint Base Cape Cod in the Naval Station, Patuxent River.
Turning to slide 10 and looking at total operating expenses other than supply cost. Consolidated expenses increased $5.3 million as compared to the third quarter of 2023. The increase was due to an increase in other operating expenses mainly related to the commencement of operations at the two new bases.
Higher administrative and general expenses due to higher online service costs related to the pending water general rate case proceeding and other regulatory filings and the insurance costs and an increase in depreciation and property tax expenses both of which are impacted by the increased capital expenditures for our regulated utilities.
The increases were partially offset by lower maintenance expenses. Interest expense net of interest income increased by $1.9 million due to increases in average interest rate and overall borrowing levels during the quarter. Lastly, other income net of other expenses increased by $3.4 million, largely because of gains recorded on investments held to fund, one of the company's retirement plan in the third quarter compared to losses in the same period of last year.
Slide 11 shows a EPS -- comparing reported EPS for the third quarter of 2014 against the same period last year. Consolidated year-to-date earnings as recorded were $2.42 per share as compared to $2.82 per share for the same period of 2023.
Included in the results of the first nine months of last year were $0.38 per share related to the impact of retroactive rate from the finance decision in the water general rate case for the full year of 2022 and a reversal of $0.13 per share for revenue subject to refund originally recorded in 2022 as a result of the final cost of capital decision in June of 2023. Both items related to our water segment.
Excluding the two items mentioned above from the year-to-date earnings -- 2023 earnings recorded an adjusted consolidated earnings for the nine months ended September 30, 2024, were $2.42 per share as compared to adjusted earnings of $2.31 per share for the same period in 2023, an increase of $0.11 per share.
Turning to liquidity. The cash provided by operating activities was $134.2 million for the nine months ended September 30, 2024, an as compared to $56.5 million for the same period of 2023. The increase in operating cash flow was primarily as a result of Golden State Water having implemented new rates in 2023 and 2024.
The collection of surcharges to recover retroactive revenues from 2022 through July 23, and higher water consumption in 2024. The increase in cash flow from operating activities also resulted from differences in the timing of billing and cash receipts for construction work at military bases at US as well as the timing of vendor payments.
For investing activities, as Bob mentioned earlier, our regulated utility invested $172.5 million on company-funded capital projects during the nine months ended September 30, 2024, and we project this to reach $210 million to $230 million for the full year of 2024.
American State Waters at the market offering program to sell common shares remain ongoing at as these programs allow the company additional discretion to sell up to $200 million over a three-year period. During the nine months ended September 30, 2020, and rate proceeds of $59.3 million, net of issuance costs and legal costs incurred.
American State Water currently maintain a credit rating of A stable with Standard and Poor's global ratings or S&P, while Golden State Water maintained an A+ stable rating with S&P and A2 stable rating with Moody's investor service. Each of these ratings has been affirmed during 2024. These are some of the highest credit ratings in the US investor-owned water utility industry.
With that, I'll turn the call back to Bob.

Robert Sprowls

Thank you, Eva. I will start with Golden State Water's settlement agreement with Cal Advocates on its general rate case. As I mentioned earlier, in July of this year, Golden State Water and Cal Advocates filed a joint motion to adopt a settlement agreement in connection with the general rate case that determines water rates for the years 2025 through 2027.
If approved, the proposed settlement resolves most of the issues related to the 2025 annual revenue requirement. The settlement authorizes Golden State Water to invest approximately $573.1 million in capital infrastructure over the three-year capital cycle. This amount has settled includes $17.7 million of advice letter capital investments to be filed for revenue recovery during the second and third year attrition increases when those projects are completed.
In addition, the settlement agreement authorizes advice letter capital investments already under construction at the beginning of 2023 of $58.2 million to be filed for revenue recovery during the second and third year attrition increases when those projects are included. Excluding revenues for advice letter capital projects adopted operating revenues less water supply cost for 2025 were projected to increase by approximately $23 million when compared to 2024.
In addition, there are potential additional revenue increases of approximately $20 million for each of the years 2026 and 2027 based on inflation factors without factoring in the revenues from those advice letter capital project. The two remaining unresolved 2025 revenue requirement issues relate to the sales forecast and supply mix.
In addition, there were four regulatory mechanisms that Golden State Water requested and will be litigated. A full sales and revenue decoupling mechanism and full cost balancing account for water supply. The sales reconciliation mechanism supply mix adjustment mechanism and a request to modify the existing PFAS memorandum account to track carrying costs on capital investments needed to comply with the new PFAS regulation.
We requested and have been granted an oral argument in front of the administrative law judge on the unresolved issues. A proposed decision in the law general rate case is scheduled to be issued by the end of 2024, but new rates to become effective January 1, 2025.
Last week, our electric utility subsidiary, Cal Advocates and the other intervener in the preceding filed a joint motion to adopt a settlement agreement between all parties in the general rate case that determines electric rates for the years 2023 through 2026. If approved, the proposed settlement agreement resolves all issues in connection with the general rate case.
(inaudible) settlement, adopts the revenue requirements for years 2023 through 2026 authorizes the investment of $75.6 million and capital infrastructure over the four-year rate cycle, including $23.1 million through advice letter capital investments that will include an allowance for funds used during construction when the projects are completed, adopts a cost of capital that increases the adopted return on equity to 10.0% from 9.6% and lowers the cost of debt to 5.51% and maintains the capital structure of 57% equity and 43% debt.
And improved recovery of requested capital expenditures and incremental operating costs incurred prior to 2023 and in connection with its wildfire mitigation plans. These costs are not included in the current rate.
Excluding the additional revenues from the advice letter capital projects just discussed, under the terms of the settlement agreement, Bear Valley Electric adopted operating revenues less electric supply costs for 2023 are projected to increase by approximately $5.1 million as compared to the 2022 adopted and recorded operating revenues less electric supply costs.
To cover among other things, the higher incremental operating costs settled in the revenue requirement related to Bear Valley Electric's wildfire mitigation plans that were previously not included in customer rates and not expensed because they were being tracked in memorandum accounts. In addition, the settlement provides increases in the adopted operating revenues of $2.2 million for each of the years 2024 and 2025 and by $3.3 million in 2026.
The rate increases for 2024 through 2026 are not subject to an earnings test. Previously mentioned advice letter projects of $23.1 million, plus an allowance for funds used during construction are expected to generate additional annual operating revenues of approximately $3 million when the respective projects are completed, placed in service and filed for recovery in customer rates.
The new rates once approved, will be retroactive to January 1, 2023. CPUC has extended the statutory deadline for processing this application to January 31, 2025, and Therefore, at this time, we don't expect the decision to be issued in 2024. If the decision is not issued in time to reflect the new rates in the 2024 year cumulative adjustments for 2023 and 2024 related to the full impact from the terms of the settlement agreement previously discussed will be recorded at the time a decision is finally issued. Assuming the settlement agreement is approved, we estimate the impact related to 2023 and 2024 to be a combined $0.05 to $0.07 per share.
Turning our attention to slide 17. We present the growth in Golden State Water's adopted average water rate base from 2018 through 2024, which increased from $752.2 million in 2018 to $1.357.5 billion in 2024 at a compound annual growth rate of 10.3% for the 6-year period using 2018 as the base year for the calculation. Golden State Water anticipates a robust and sustained growth in its rate base over the next few years. Let's continue to ASUS. ASUS contributed earnings of $0.11 per share for the third quarter of 2024 as compared to $0.12 per share for the same period in 2023. The decrease was mainly due to the effects of rounding as earnings were consistent with the same period in 2023.
For the year-to-date September, ASUS' earnings were $0.44 per share as compared to $0.38 per share for the same period in 2023. As previously mentioned, we now project ASUS will contribute $0.54 to $0.57 per share this year. We're also very pleased that ASUS has received a significant increase in new capital upgrade awards through September of 2024 to $54.0 million in total as compared to $25.2 million for the full year of 2023. In addition to continued work on the existing bases we serve, we remain confident that we can effectively compete for new military-based contract awards. With this in mind, as we look ahead to 2025, we project that ASUS will contribute $0.59 to $0.63 per share next year.
I'd like to turn our attention to dividends, which remains a compelling part of our investment story. Our quarterly dividend rate has grown at a compound annual growth rate or CAGR of 8.8% over the last five years and is on pace to achieve a 10-year CAGR of 8% in the calendar year dividend payment. These increases are consistent with our policy to achieve a compound annual growth rate in the dividend of more than 7% over the long term. I'd like to conclude our prepared remarks by thanking you for your interest in American States Water, and we'll now turn the call over to the operator for questions.

Question and Answer Session

Operator

(Operator Instructions) Jonathan Reeder, Wells Fargo.

Jonathan Reeder

Hey, Bob and Eva, how are you all today?

Robert Sprowls

Okay.

Eva Tang

Thank you, Jonathan. How about you?

Jonathan Reeder

Surprise, surprise. I literally just hopped on, so I apologize. I got a couple of questions. And if you address them in your prepared remarks, I do apologize for that. But I know year-to-date Bear Valley or the electric operations have contributed $0.07 of EPS versus $0.14 during the same period last year. If the proposed decision in the Bear Valley GRC would have been approved and in place at the start of 2024.
What would the year-to-date EPS have been? I'm trying to understand just what the EPS power would have looked like, obviously, excluding the retroactive portion related to 2023.

Robert Sprowls

Okay. So Jonathan, I don't know if you heard the $0.05 to $0.07 estimate for '23 and '24 together.

Jonathan Reeder

That would be the cumulative?

Robert Sprowls

Yes, both years combined.

Jonathan Reeder

Okay. So when you get the final order, you think the full-year impact of recording the retroactive would be that.

Robert Sprowls

Yes. For --

Eva Tang

Three years, yeah. Some of the CapEx, of course, is an (inaudible) projects. So it's been moved out in the rate cycle a bit.

Jonathan Reeder

Okay. Okay. And then when like if you were going to be able to get that recorded in 2024 results, when do you need to get like a final order? Is it just before you report year-end earnings? Or is it by I think I heard you say you don't expect to get a decision until 2025.
But if it's in January or early February, will you be able to book it in 2024 than cumulative gain?

Robert Sprowls

Yes. So it depends what decision we get if it's fully. If it fully adopts the settlement, we have, I would say, more flexibility to book a proposed decision into 2024. Then if it's the commission of the ALJ's proposed decision is different from the settlement agreement makes it more difficult to book the proposed decision into 2024 financial results. Eva, do you want to.

Eva Tang

Yes. If we have a final decision before the 10-K, then we'll be able to forget.

Robert Sprowls

Yes. Takes a month -- at least a month between proposes and final. So (inaudible) but --

Jonathan Reeder

Yes. So if you get a proposed decision that just fully adopts the settlement and that occurs for you got to file your 10-K then you might be able to you might feel comfortable booking at then as well?

Robert Sprowls

Yes.

Eva Tang

Yes.

Jonathan Reeder

Okay. Got you. And then ASUS does the big increase in capital work authorized? Does that reflect like PFOS mitigation work? Is it just a reflection of like the new bases that you've added in recent years?
Or what do you think drove that increase?

Robert Sprowls

Well, I think the government had some money to vote. Usually, there's a big rush in awarding these new capital upgrades by the end of the fiscal year, which is September 30th. And we continue to work really hard to build a strong relationship with the government. I also feel like I've heard that some of the contracting officers raised their hand for some of the money to be spent on water and wastewater operations. So we've taken great care to present projects that are meaningful to the government for these new capital upgrades.
But we'd be lying if we thought -- if we said we thought we were going to get $54 million. That's a big number for us.

Jonathan Reeder

Okay. Yes, that leads into my next question. I know like, well, two parts, I guess. Do you think that -- it sounds like maybe you don't believe that will be the new normal level going forward that this could just be a little bit of a one-off if there is extra money that needed to be spent before the end of the year.

Robert Sprowls

Yes. I think the -- it's approximately double what our average recent average has been. So I think it's too early to tell whether that's the new normal. I will say this, one of the new bases contributed to that number. And then in the future, we think those two bases will help increase the NCU awards from what the historical average has been.

Jonathan Reeder

Sure. And as we think of it like the annual construction expense for ASUS has been in that $50 million to $60 million range for many years. just given that award. And I know there's other ways you get projects approved and everything. What are you assuming for 2025 in the guidance range for annual construction expense relative to that historical $50 million to $60 million total.

Robert Sprowls

Yes. It goes back to our $0.59 to $0.63. I don't know if you heard that the $0.59 to $0.63 estimate 2025 on the earnings side.

Jonathan Reeder

Yes. I was wondering what's embedded in that estimate in terms of construction expense like knowing that you've got that $54 million or whatever it is appropriation. And then I know there's other projects that come into the fold over the course of the year and everything, like historically, when you've gotten more like 25%, you still have $50 million to $60 million in annual construction expense, right? So what what might construction expense look like in 2025 given the higher awards?

Robert Sprowls

The $54 million is for the period 2024 through 2027. We -- the other part of construction expenses is renewal and replacement. And we have the ability to move that number up or down depending upon the efforts that need to take place on the new capital upgrade work. So we're -- we've got a lot to manage here, I guess, is what I'm saying. But we typically haven't given an estimate for what our construction expenses or revenues are going to be.

Jonathan Reeder

Okay. But I mean, I guess if you can move the stuff around and maybe like we shouldn't expect a huge jump in that annual construction expense, and I guess, like maybe some increase in 2025, but it's not like saying that $20 million or $25 million higher because of that $54 million award versus $25 million.

Robert Sprowls

Right. I wouldn't do that if I were you. I wouldn't move it all in there because we've got to manage all of this. I mean it's very, very nice to be awarded all this, but it's we've got to manage that along with the renewal and replacement work.

Eva Tang

And usually, Jonathan, the annual NCU award has a long runway two to three years. So we can manage and plan our better this way because we have a healthy backlog of new capital upgrades to allow our capital program be able to plan ahead two, three years rather than a bounding one year. So just more planning involved to schedule it out.

Robert Sprowls

John, just a little sideline on the $59 million to $63 million debt per share and why that's higher than what we're expecting this year. Some of that is due to having the new basis for a full year versus call it, 8.5 or 9 months. We took over Pax River on April 1 and KBCC on April 15. So we'll have a full year of their contribution, but some of that increase is also due to a higher level of new capital upgrade awards that we were given. If that helps.

Jonathan Reeder

No, that's very helpful. And then I guess, what drove the increase in the 2024 guidance range? I don't know if you mentioned that because I think the midpoint was $0.52, and now you're more at like $55 million or $56 million.

Robert Sprowls

Yes. So I would say a couple of things. One is we've had a pretty good year from a construction standpoint. We've encountered fewer unforeseen site conditions and had a very cooperative weather than we anticipated. Additionally, the new operations for us at Joint Base Cape Cod and Naval Air Station, Patuxent River contributed.
We were perhaps a bit conservative when we were providing the range as to what these two bases we're going to generate for us and in 2024. And they've done a bit better. So it's a combination of a better, I would say, better construction situation and then the new base is contributing better than what we had anticipated, which is a really good sign, I would say.

Jonathan Reeder

Yeah. No, and it sounds like that would be an ongoing thing in terms of their contribution being higher than what you're thinking. So no, that's good stuff.

Robert Sprowls

Yeah.

Jonathan Reeder

Okay. That's it for me. I appreciate you taking my questions. Congrats on those GRC settlements and hopefully, we'll get the approval in the not too distant future.

Robert Sprowls

Thank you, Jonathan.

Eva Tang

Enjoy.

Operator

(Operator Instructions) This concludes our question-and-answer session. I would like to turn the conference back over to Bob Sprowls for any closing remarks.

Robert Sprowls

As I wrap up today, I just want to thank everyone for their participation today and we look forward to speaking with you next quarter. Thank you, all.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.