American States Water Announces Acquisition of Water Rights by American States Utility Services

Feb. 6, 2006

On January 31, 2006, American States Water Co. (AWR), through its American States Utility Services, Inc. (ASUS) subsidiary, entered into a water purchase agreement to acquire 5,000 acre-ft of water rights from Natomas Central Mutual Water Co. Natomas is a California Corporation that currently provides water service to agricultural customers in portions of Sacramento and Sutter Counties in northern California.

Pursuant to the terms of the agreement, Natomas will sell, transfer and convey to ASUS, in perpetuity, water rights and entitlements to divert from the Sacramento River up to 5,000 acre-ft of water per year. Terms of the acquisition, among other things, include a base price of $2,500 per acre-ft of water payable in payments contingent on meeting specific milestones and events over a 10-year period. Natomas will pay to ASUS a commission of 16% of the sale price over the same 10-year period under an existing agreement between the two companies.

At the same time the water sale agreement was completed, Natomas and ASUS also entered into a settlement agreement that released Natomas from previously established reimbursement obligations it has with ASUS under existing agreements.

This acquisition provides ASUS and AWR with a water rights platform that offers options for the company to engage in transactional opportunities with developers or to initiate a California Public Utilities Commission regulated franchise in Sutter County.

Source: American States Water Co.

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