Nov. 7--American States Water Co.'s $9.7million in third-quarter profit is more than double that of the year-ago period.

It's partially due to an expense deferral.

The San Dimas-based company's regulator, the California Public Utilities Commission, is letting it defer losses from purchasing-power contracts, a practice used by utility providers to more accurately reflect their financial health.

Because of this, $7million in losses have been blocked from the company's balance sheets since Jan. 1.

But the third quarter's profit also came from higher water rates charged by the utility parent company's Golden State Water retailer, a subsidiary making up 80percent of American States' assets.

Water rates have been jumping for several Golden State customers between 1percent and20 percent -- and even higher in some areas -- since Jan. 1, according to Eva Tang, chief financial officer.

Also, a surcharge will be added to customer bills in the future, she said.

That's because Golden State has been promoting water conservation, which means the company anticipates less consumption and lower incoming revenues to pay for expenses. The commission-approved surcharge helps the company make up for lower revenues.

Tang said American States sees growth potential in its group of military-service subsidiaries, which have submitted bids at military bases around the country to start new water utility projects.

Currently, the company

owns and operates water and wastewater utilities at eight bases in six states.

"We don't have much of a customer base to grow in California anymore," Tang said about the company's Golden State water retailer. "So our American States Utility Services (subsidiary) is the potential for growth."

American States Water earned $16.4million in the first half of 2009. Its nonregulated division, American States Utility Services Inc., contracts with U.S. military bases for water utility and wastewater services. The basics

American States Water Co. (NYSE: AWR) sells water and electricity through its subsidiaries, including Golden State Water Co.

The company's water services extend to more than 250,000 California customers and 13,000 Arizona customers.

Headquarters: 630 E. Foothill Blvd., San Dimas

(909) 394-3600; www.aswater.com

On the market

Monday's open: $33.02

Friday's close: $34.71

52-week range: $27.56-$38.79

Average volume: 75,088

Market capitalization: $642 million

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