American States Water bought less power for resale in the latest three months: $2.8 million, down $0.7 million from the comparable period. Lower customer usage and lower average prices helped. That is the tidy part of the three-month period.

The bigger change came from construction. Revenue rose 11.2% to $181.3 million, while operating income increased 25.5% to $64.0 million. Operating margin widened to 35.3% from 31.3%, giving the period the look of a utility business getting more profit from each dollar of activity.

Management linked the contracted-services improvement directly to more work and higher management fees:

"The increase was primarily due to an increase in construction activities and an increase in management fees from economic price adjustments."

([AWR](https://jodie.ai/t/AWR), 10-Q, August 5, 2026)

That explanation matters because the margin expansion was not just a power-cost story. The filing says construction activity and management fees lifted revenue, while lower power costs helped the electric business. Net income rose 28.4% to $43.3 million, and diluted earnings per share increased to $1.09 from $0.87.

The financing line adds a second layer. AWR said electric-segment interest expense increased because lower AFUDC was recognized on certain CPUC-approved projects, interest income on regulatory assets declined, and average borrowing levels rose:

"The increase in interest expense at the electric segment between periods is primarily due to lower AFUDC recognized in 2026 related to certain advice letter projects approved by the CPUC in the latest general rate case, together with lower interest income earned on regulatory assets, and an increase in interest expense from higher average borrowing levels."

AWR, 10-Q, August 5, 2026

In plain English, the same construction-and-regulation machinery that supports the business also changes how much of the financing cost reaches earnings. Elsewhere, interest expense fell at contracted services and the parent because average borrowing levels and interest rates were lower. The result is not one clean interest-rate direction across AWR, but a segment-by-segment tug of war.

Cash generation improved on the reported numbers. Capital spending fell 17.7% from the comparable period, free-cash-flow margin expanded by 8.3 percentage points, and cash ended at $21.7 million versus $20.2 million a year earlier. Accounts receivable edged down 1.2%, so the revenue increase did not arrive with a larger receivables balance.

That leaves the central trade-off in sharper focus. AWR is doing more construction work and producing wider accounting margins, while the financing and regulatory treatment of those projects is part of the earnings equation. The latest annual results show the company had already grown revenue 10.5% in 2025, so the current increase is not appearing against a flat recent backdrop.

AWR's next report is the natural place to compare whether construction activity and capital spending keep moving together, and whether the company continues to describe interest expense through AFUDC, regulatory-asset income, and borrowing levels. For now, the three-month period's arithmetic is simple enough: more projects, cheaper power, and financing still gets a speaking part.

AWR's 10-Q describes higher construction activity, lower power costs, and interest expense shaped by regulatory accounting and borrowing levels.