W H I L E W E D O N T C L A I M TO K N O W E V E RY T H I N G, W E VE A CCUMULAT E D E N O U G H O F W H AT M I G H T B E C A L L E D

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3 AWR 1 W H I L E W E D O N T C L A I M TO K N O W E V E RY T H I N G, W E VE A CCUMULAT E D E N O U G H O F W H AT M I G H T B E C A L L E D W I S D O M TO C O N S I S T E N T LY G R O W O U R C O M PA N Y A ND D ELIVER R E T U R N S T O O U R S H A R E H O L DERS. T HAT S W H Y O U R S T R AT E G Y F O R F U TURE S U C C E S S L O O K S VERY M UCH L I K E THE S TRAT E G Y THAT H A S S E RV E D U S W E L L S I NCE A S W E R E P O RT O U R A C H I E V E M ENTS F R O M A N D L O O K T O WARD T H E Y E A R S T O C O ME, W E T HOUGHT W E D S H A RE J U S T A B I T O F W H AT W E K N O W.

4 AWR 2 I N VESTING I N A WAT E R U T I L I TY I S A L O N G - T E RM P ROPOSITION. S O I S G R OWING O N E I N A B A L ANCED, M EASURED FA S H I O N. T H AT S W H Y B E FORE W E I N V E S T I N I N F R ASTRUCTURE, W E MAKE C E RTA I N W E C A N R ECOVER O U R C O S TS. W E A D D N E W C U S T O M E R S, B U T N O T B EFORE W E R E S U R E T H AT D O I N G S O W I L L B E P R O FITA B L E. A N D W E M AKE P R U D E N T U S E O F C R E DIT T O E N H A N C E O U R L I Q U I DITY, B UT M A INTA I N A S OLID C A P I TA L S T R U C T URE. I N S H O RT, W E B ELIEVE I N F ISCAL D I SCIPLINE A BOVE A L L E L S E. I T S T H E B E S T WAY W E K N O W T O M A KE S U R E T HAT THIS G E N E R AT I O N S S O U N D I N V ESTMENT W ILL B E AVA I L A BLE F O R FUTURE G E N E R AT IONS, T O O.

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6 AWR 4 YOU CAN TELL A LOT ABOUT A WATER COMPANY BY THE CONDITION. OF ITS PIPES.

7 AWR 5 THE NATION S WATER SYSTEM IS AGED AND IN NEED OF REPAIR. WHETHER WE WANT TO ACQUIRE NEW CUSTOMERS, PROVIDE EXCELLENT SERVICE TO EXISTING ONES, OR MINIMIZE WASTEFUL L EAKS, WE RE ONLY AS GOOD AS OUR INFRASTRUCTURE. THAT S WHY WE VE SPENT IN EXCESS OF $77 MILLION O N CAPITAL IMPROVEMENTS IN EACH OF THE PAST TWO YEARS.

8 AWR 6 A S S U R P R I S I N G A S I T M AY S O U N D, W E WA N T O U R C U S T O M E R S TO USE LESS WATER. IN CALIFORNIA AND MANY OTHER PARTS O F T H E W O R L D, T H E R E I S A S H O RTA G E O F WAT E R A N D S E R I O U S CONCERN ABOUT MEETING FUTURE WATER DEMANDS. AT T H E S A M E T I M E, W E D O N T WA N T S H A R E H O L D E R S T O S U F F E R WHEN OUR CUSTOMERS PRACTICE WATER-USE EFFICIENCY. T H AT S W H Y W E W O R K E D W I T H R E G U L AT O R S T O I M P L E M E N T A WATER REVENUE ADJUSTMENT MECHANISM, OR WRAM. T H E W R A M D E C O U P L E S O U R R E V E N U E S F R O M S A L E S SO WE CAN ENCOURAGE CUSTOMERS TO TURN OFF THE TAP W I T H O U T I N C U R R I N G F I N A N C I A L L O S S. R E S U LT? C O N S E RVAT I O N FOR THE FUTURE AND A REASONABLE RETURN TODAY.

9 AWR 7 CONSERVATION CAN BE WIN-WIN.

10 AWR 8 IN 2009, WE WERE H O NORED T O R E CEIVE V O T E S OF CONFIDENCE FROM L E N D E RS ( I N T H E F ORM O F A $ 4 0 MILLION S ENIOR NOTE), INVESTORS ( T H ROUGH A $ 3 4 M I L L I ON P U B L I C S TOCK OFFERING) AND S TA N D A R D & P O O R S, W HO A F F IRMED OUR A CORPORAT E R AT I N G A N D I M P ROVED OUR OUTLOOK F ROM STA B L E T O POSITIVE.

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13 AWR 11 O U R J O B I S N T JUST T O P R O V I D E WAT E R T O C U S T O M E R S A N D R ETURNS T O S HAREHOLDERS T O D AY. I T A L S O R E Q U I R E S THAT W E T REAT O UR S U B S TA N T I AL WAT E R P O RT FOLIO L IKE T H E TREASURE I T I S A N D O PERAT E A C O MPA N Y T H AT I S B O T H E N V I R ONMENTA L LY AND ECONOMICALLY SUSTAINABLE. THROUGH OUR EFFORTS TO INCREASE WAT E R - USE EFFICIENCY, W E H E L P S AV E H U N D R E D S O F MILLIONS OF GALLONS OF WATER EVERY YEAR. WHETHER WE RE MINIMIZING WASTE, H E L P ING T O T E ACH K I DS H O W TO S AV E WAT E R, O R D I S T R I B U T I N G T HOUSANDS OF H O M E C O N S E RVAT I ON K I TS, W E R E W O R K ING T O M E ET T HE N E E DS O F T O D AY S C U S TOMERS I N A WAY T H AT W I L L ENABLE US TO MEET THE NEEDS OF TOMORROW S CUSTOMERS, TOO.

14 AWR 12 FELLOW SHAREHOLDERS In December 2009, American States Water Company (AWR) celebrated its 80th year in business. We are proud to have provided our service to customers and value to shareholders for so long. In that time, we ve learned a great deal as a company. And our 80th year tested our knowledge. Along with the normal challenges associated with operating two water utilities, an electric division and a contracted services provider, we also faced difficult capital markets during the first half of the year, along with unprecedented water supply shortages in California due to the third year of drought and cutbacks in water allocations from the California State Water Project. We are pleased to report that applying what we ve learned over the decades by sticking to what we know well we met those challenges head on. While many companies were cutting back their capital expenditure programs due to concerns about the capital markets and their ability to finance their business, we demonstrated our financial strength by issuing $40 million of debt at our largest subsidiary, Golden State Water Company (GSWC), in March 2009, and by completing a $34 million common stock offering in May Given the uncertainty in the capital markets at the time and not knowing what the future held, we took the opportunity to raise the funds to finance our businesses for the future. With these financings in place, we were able to stick to our capital expenditure plan and invest $77.5 million in infrastructure to better meet the needs of our customers. Approximately 55% of the water GSWC delivers to our customers comes from owned groundwater and surface water sources. About 45% is purchased from other water providers, principally member agencies of the Metropolitan Water District of Southern California (MWD). MWD receives a significant amount of their water from the California State Water Project (SWP). Due to cutbacks in its supply from the SWP resulting from the drought and issues associated with the Sacramento-San Joaquin Delta, MWD implemented a 10% regional reduction to its customers for the July 2009-June 2010 time frame, with significant penalties for retailers exceeding their allocation. In response, we implemented a water shortage plan in those GSWC service areas that rely on MWD water. Through strong action on our part and on the part of our customers, we expect to meet the allocation limits without incurring penalties. POSITIONING OUR COMPANY FOR THE FUTURE Despite capital market difficulties and the California water shortage, we grew our earnings, dividend rate, and stock price, and continued pursuing our strategic direction.

15 SHAREHOLDER INFORMATION design: brown463 copy: kevin jones principal photography: jeff corwin executive portrait: mark harmel printing: cenveo, los angeles This report is printed on a paper that is 20% recycled and acid-free. ANNUAL MEETING OF SHAREHOLDERS All shareholders are invited to attend the Annual Meeting of Shareholders, which will be held on Thursday, May 27, 2010, beginning at 10:00 a.m. at The Langham Hotel, 1401 South Oak Knoll Ave, Pasadena, CA Notice of meeting and proxy materials will be mailed. STOCK LISTING Common shares of American States Water Company are traded on the New York Stock Exchange (NYSE) under the symbol AWR. The high and low NYSE prices and the dividends paid on the common shares for the past two years were: 2009 High Low Dividends Paid First Quarter $ $ $ 0.25 Second Quarter Third Quarter Fourth Quarter $ High Low Dividends Paid First Quarter $ $ $ 0.25 Second Quarter Third Quarter Fourth Quarter $ 1.00 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS PricewaterhouseCoopers, LLP 350 South Grand Avenue, 44th Floor Los Angeles, California CORPORATE REPORTS Shareholders with questions, or who wish to obtain a copy of the Company s reports to the Securities and Exchange Commission without charge, should contact: AMERICAN STATES WATER COMPANY Attn: Corporate Secretary 630 East Foothill Boulevard San Dimas, California Phone: Fax: SHAREHOLDER ASSISTANCE Shareholders with questions about replacement of dividend checks, transferring stock, replacing lost or stolen certificates or other matters related to their ownership of stock, should contact: BNY MELLON INVESTOR SERVICES LLC Attn: Shareholder Relations Dept. PO Box Pittsburgh, PA COMMON SHARE PURCHASE AND DIVIDEND REINVESTMENT PLAN The Company has a Common Shares Purchase and Dividend Reinvestment Plan ( Plan ) that is sponsored and administered by BNY Mellon Shareowner Services. The Plan provides a simple and cost-effective method for current and potential shareholders to build ownership in the Company through the direct purchase of common shares from the Company and the reinvestment of their cash dividends. A Prospectus and enrollment form may be obtained from BNY Mellon Shareowner Services at (888) or from the Company at (877) (INFOAWR) DIVIDEND SCHEDULE The following schedule shows the anticipated common share record and payment dates for 2010: RECORD DATES PAYMENT DATES February 12 March 1 May 12 June 1 August 9 September 1 November 8 December 1 INTERNET ADDRESS:

16 630 East Foothill Blvd, San Dimas, CA