Regulatory Approval Provides Revenue Clarity for American States Water

The California Public Utilities Commission (CPUC) has granted full second-year rate increases to Golden State Water Company (GSWC), a subsidiary of American States Water. Effective January 1, 2026, this regulatory decision is projected to boost the company's adopted water revenues for that year, excluding water supply costs, by approximately $32.0 million compared to 2025 levels. This action solidifies near-term revenue predictability for the utility's regulated operations.

• CPUC Ruling: Full second-year rate increases approved for GSWC, taking effect January 1, 2026.
• Financial Impact: Expected increase of about $32.0 million in 2026 adopted water revenues (net of water supply costs) versus 2025.
• Capital Projects: Roughly $11.0 million of this amount is attributed to agreed-upon capital investments now incorporated into the 2026 rate base.
• Upcoming Report: The Q4 2025 earnings release is anticipated around February 18, 2026.
• Analyst Sentiment: The current consensus rating among market researchers is "Sell," with an average price target near $77.50.
• Trading Range: Shares are trading in the mid-$70s, within a 52-week span of $69.45 to $82.94 (as of January 15, 2026).

Basis and Implications of the Decision

This authorization follows GSWC's successful completion of the necessary earnings tests across its service areas. It allows for the implementation of the incremental rate hikes outlined in the established 2025–2027 rate cycle. A notable component of the order is the inclusion of nearly $11.0 million for specific capital projects into the calculation of the 2026 rate base, providing a return on those investments.

From a financial perspective, the move translates to a direct uplift in planned water revenue for the coming year. The guaranteed income enhances operational stability for the regulated business segment in the short term. It is worth noting that past discussions regarding the potential elimination of full revenue decoupling mechanisms could, if realized, introduce greater volatility to future earnings.

Should investors sell immediately? Or is it worth buying American States Water?

Growth Estimates and Forward Look

Market experts forecast earnings per share (EPS) growth of approximately 5.4% for 2026, following an estimated 4.4% increase for 2025. Despite the supportive regulatory news, the prevailing analyst consensus maintains a cautious "Sell" stance.

The upcoming fourth-quarter 2025 results, scheduled for release around February 18, 2026, will offer initial insight into how the newly approved rates are translating into financial performance. Looking ahead to 2026, the CPUC's clear endorsement provides a tangible revenue foundation that is likely to factor into subsequent quarterly earnings discussions and valuation models.