American States Water SWOT and PESTLE Analysis

Strength

1. Large water distribution network across the U.S.A: American state water (AWR) controls Golden state water company, bear valley Inc, and American state utility service. Through these three subsidiaries it provides water across nine states and daily serves about a million people in United States. The Golden state company serves in the northern, southern, coastal Californian regions for 80 communities. Also, the Bear valley provides electricity connections to customers from California's San Bernardino area. The AWR also serves military bases for water distribution and wastewater treatment facilities. In 2020, Golden state water and Bear valley invested $123 million in the new infrastructure for a reliable water and electricity services. In 2020, about $7138 investment was made in regulated utilities accounting per customer connection. This huge, spanned water infrastructure helps AWR to perform financially better than its competitors; in 2020 despite the pandemic, AWR witnessed 3.03% YoY rise in revenues, and total assets scale by 9.2%.

2. Has a 50-year water utility privatization contract with the US government: American state water has been a preferred service partner of the US government to facilitate water operations, maintenance, and wastewater treatments for 11 military bases in the country. The contract has been made for a 50-year period. In Q1 2021, its subsidiary American state utility services was awarded by VIQCTORY as ‘Military Friendly Company, Bronze’ designation for raising the bar every time. The award has been rewarded for creating sustainable path, community outreach and enduring partnership. The steadfast support for military bases has been paying off for AWR. This creates a steady cash flow stream, and inculcates a positive feeling along with rising revenues for potential investors.

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Weakness

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Opportunity

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Threats

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Increasing micro earthquakes are turning water resources acidic: Research published by University of Strathclyde on Micro seismic events, has brought to light the fact, that small earthquakes that may not be felt on the surface of the earth, create chemical changes in ground water making it acidic. The team that monitored pH of such groundwater found a drop of 1-3 units within a 24-hour period. The micro earthquakes are regular and create a threat to scarce groundwater sources across the country. A longer exposure term can render the water highly acidic and increase operational costs for water agencies for purifications. American Water Company owns about 72,400-acre feet of groundwater rights. Micro earthquakes pose risk of contamination for these resources. AWR has been monitoring water supplies and has developed contingency plans. GSWC has invested efforts to reducing excess groundwater pumping and increasing usage of alternative sources.

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