Today Cadiz Inc. (NASDAQ: CDZI) announced that the Golden State Water Company (“Golden State”), a subsidiary of American States Water (NYSE: AWR) and California’s second largest investor-owned water utility, has executed an Option Agreement to acquire conserved water and related storage capacity in the Cadiz Water Conservation & Storage Project (“Cadiz Project”), joining Santa Margarita Water District (“Santa Margarita”) and Three Valleys Municipal Water District (“Three Valleys”), which approved similar agreements last week. The agreements, which were executed on June 25, 2010 and filed today by the Company with the Securities and Exchange Commission (“SEC”), grant Golden State the right to acquire a firm annual supply of water and commit funds to the environmental review of the Project.
Under the terms of its agreements with Cadiz, upon completion of the environmental review, Golden State will have the right to acquire an annual supply of 5,000 acre-feet of water at a pre-determined formula competitive with its incremental cost of new water. In addition, Golden State will have options to acquire storage rights in the Project that will allow it to manage this supply to complement its other water resources. Golden State has also committed funds to the California Environmental Quality Act (“CEQA”) review process and will share in the costs of the environmental review with Santa Margarita, Three Valleys and Cadiz.
Golden State, which signed a Letter of Intent with Cadiz in June 2009, approved its agreements after completing its own due diligence and analysis of the feasibility of the Project.
“Golden State is committed to meeting our customers’ water needs by working to stabilize their costs and ensure a sustainable and reliable water supply. The Cadiz Project, which has been designed based on scientific analysis, can help to provide additional reliability in our Southern California service areas at a price competitive with alternative sources of new supply available in that region,” said Robert Sprowls, CEO of American States Water Company and Golden State Water Company.