American States Water Company Announces Earnings for the Three and Twelve Months Ended December 31, 2003.

Business Editors

SAN DIMAS, Calif.--(BUSINESS WIRE)--March 23, 2004

American States Water Company (NYSE:AWR) today reported basic and fully diluted earnings of $0.78 per share for the twelve months ended December 31, 2003 as compared to basic earnings of $1.34 per share reported for the same period ended December 31, 2002, a decrease of 42%.

Commenting on the results for 2003, President and Chief Executive Officer Floyd E. Wicks said, "Fiscal 2003 was a challenging year and one that underscored the effect weather and regulation have on our revenues and earnings. While we are disappointed with the year-end results reported today, the story this year is much more involved. During 2003, there were two decisions by the California Public Utilities Commission ("CPUC"), a decision related to the Charnock Basin refund and the decision regarding water rights leased to the City of Folsom, which negatively affected earnings at our Southern California Water Company unit ("SCW"). In the aggregate, the CPUC decisions caused a pretax charge in the fourth quarter of approximately $9.8 million.

"Regardless of a CPUC Administrative Law Judge's finding to the contrary, the CPUC's order requires SCW to refund, to the customer, a portion of revenues received from the lease of company-owned water rights to the City of Folsom, California. The Company intends to file an appeal on the City of Folsom water rights decision.

"Although we continue to experience delayed implementation in rate increases, the CPUC in its March 16, 2004 decision did authorize an annualized increase of approximately $8.1 million, or 12.1%, in revenues for SCW's Region III service area. Also on the positive side, the decision authorized additional rate increases effective during 2004 and 2005 of $4.7 million in the aggregate, subject to CPUC earnings tests."

Full Year 2003 Results - The Company reported operating income of $33.6 million and net income of $11.9 million for the year ended December 31, 2003 compared with operating income of $37.6 million and net income of $20.3 million for the year ended December 31, 2002.

Total revenues for 2003 increased by 1.7% to $212.7 million as compared to $209.2 million reported in 2002. Of the total increase in revenues, water revenues only increased by 0.1% due to rate increases in Region II of SCW that were effective in early 2003, but offset by a 3.0% decline in water consumption, caused by wetter and cooler temperatures in most of SCW's service areas during 2003 as compared to 2002. Electric revenues increased by $3.2 million or 15% due to new rates implemented during the third quarter of 2002, authorized by the CPUC to recover purchased power costs under various power supply agreements.

Total operating expenses in 2003 increased by 4.4% to $179.1 million from the $171.6 million reported in 2002, reflecting increased recovery of previously deferred electric supply costs, the recording of a probable refund to customers of $3.5 million, pursuant to a proposed decision by the CPUC, representing the net proceeds received from polluters with respect to the Charnock Basin contamination, and increased administrative and general (A&G) expenses. The increase in A&G expense reflects increased legal and consulting costs associated with various litigation and non-regulated activities as well as the reversal in 2002 of $6.5 million of reserves originally booked against potential non-recovery of purchased power expense. Offsetting these increases were reduced supply costs, an unrealized gain on our purchased power contracts that generated an unrealized loss in 2002, and lower income tax expense.

Other income decreased significantly to a $3.6 million loss for the year ended December 31, 2003 as compared to $390,000 in income for the year ended December 31, 2002. The decrease reflects the after-tax impact from the CPUC decision on March 16, 2004, previously discussed, that ordered SCW to refund to customers 70% of the total amount of lease revenues received from the City of Folsom since 1994, plus interest.

Interest charges increased by 2.1% due to an increase in short-term borrowing to finance capital expenditures.

Fourth Quarter 2003 Results - The Company reported a loss for both basic and fully diluted earnings per share for the quarter ended December 31, 2003 of ($0.12), as compared to $0.23 basic and fully diluted earnings per share reported for the quarter ended December 31, 2002.

Operating income for the fourth quarter of 2003 was $6.5 million with a net loss of $1.8 million as compared with operating income of $8.0 million and net income of $3.5 million for the fourth quarter of 2002.

Total operating revenues of $50.5 million for the fourth quarter of 2003 were relatively flat with the $50.3 million recorded in the fourth quarter of 2002. Total operating expenses, however, increased by 4% to $44.0 million for the three months ended December 31, 2003 as compared to the $42.3 million recorded for the same period in 2002 due to the recording of a probable refund of $3.5 million to customers representing the net proceeds received from polluters with respect to the Charnock Basin contamination, and increased administrative and general expenses reflecting primarily the reversal of $6.5 million during the 2002 fourth quarter. The increases in expenses were partially offset by (i) the reversal of certain water-quality-related reserves totaling $1.9 million, (ii) a decrease in the workers' compensation reserves due to an updated actuarial analysis, (iii) reduced water supply costs, and (iv) a decrease in the unrealized loss on Bear Valley Electric purchased power contracts.

Other income decreased significantly to a $3.8 million loss for the three months ended December 31, 2003 as compared to $64,000 in income for the three months ended December 31, 2002. The decrease again reflects the after-tax impact from the CPUC decision that ordered SCW to refund a portion of the total amount of lease revenues received from the City of Folsom since 1994, plus interest.

Interest charges decreased by 2.9% to $4.5 million for the quarter ended December 31, 2003 as compared to interest charges of $4.6 million for the quarter ended December 31, 2002, due primarily to lower short-term interest rates.

Other - Certain matters discussed in this news release with regard to the Company's expectations may be forward-looking statements that involve risks and uncertainties. The assumptions and risk factors that could cause actual results to differ materially include those described in the Company's Form 10-Q and Form 10-K filed with the Securities and Exchange Commission.

American States Water Company is a holding company that, through its subsidiaries, provides water service to 1 out of 30 Californians located within 75 communities throughout 10 counties in Northern, Coastal and Southern California and to approximately 12,000 customers in the city of Fountain Hills, Arizona, and portions of Scottsdale, Arizona. The Company distributes electricity to approximately 22,000 customers in the Big Bear recreational area of California, and contracts with various municipalities and private entities in both California and Arizona to provide services to an additional 97,000 customers.

                    American States Water Company
                             Consolidated

Comparative Condensed Balance Sheets (in thousands)

                                     Dec. 31, 2003       Dec. 31, 2002
---------------------------------------- -----------------------------
                                                  (Unaudited)
Assets

Utility Plant-Net                        $602,298            $563,311
Other Property and Investments             22,120              22,670
Current Assets                             58,359              53,848
Deferred Charges                           74,698              60,724
----------------------------------------------------------------------
                                         $757,475            $700,553
----------------------------------------------------------------------

Capitalization and Liabilities

Capitalization                           $442,286            $444,368
Current Liabilities                        95,898              77,975
Other Credits                             219,291             178,210
----------------------------------------------------------------------
                                         $757,475            $700,553
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Condensed Statements of Income (in thousands, except per share
 amounts)

                                   Three Months      Twelve Months
                                      Ended              Ended
                                   December 31,       December 31,
-------------------------------------------------- -------------------
                                  2003     2002      2003      2002
-------------------------------------------------- -------------------
                                             (Unaudited)

Operating Revenues               $50,451  $50,306  $212,669  $209,205
                                 ----------------- -------------------
Operating Expenses:
      Operations                 $31,934  $32,237  $131,923  $122,786
      Maintenance                  3,502    3,207     9,932     9,839
      Depreciation and
       amortization                4,956    4,574    19,792    18,302
      Taxes on income              1,467      594     9,167    12,949
      Property and other taxes     2,140    1,714     8,250     7,681
                                 ----------------- -------------------
Total operating expenses         $43,999  $42,326  $179,064  $171,557

Net operating income              $6,452   $7,980   $33,605   $37,648
Other Income (Expense)            (3,802)      64    (3,643)      390
Interest Charges                   4,455    4,586    18,070    17,699
-------------------------------------------------- -------------------
Net Income                       $(1,805)  $3,458   $11,892   $20,339
Dividends on Preferred Shares          -        -         -       (29)
-------------------------------------------------- -------------------
Earnings Available for Common
 Shareholders                    $(1,805)  $3,458   $11,892   $20,310
-------------------------------------------------- -------------------
Weighted Average Shares
 Outstanding                      15,205   15,171    15,200    15,144
-------------------------------------------------- -------------------
Earnings Per Common Share         $(0.12)   $0.23     $0.78     $1.34
-------------------------------------------------- -------------------
Weighted Average Diluted Shares   15,230   15,195    15,227    15,157
-------------------------------------------------- -------------------
Earnings Per Diluted Share        $(0.12)   $0.23     $0.78     $1.34
-------------------------------------------------- -------------------
Dividends Paid Per Common Share   $0.221   $0.221    $0.884    $0.872
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