Commitments

GSWC’s Water Supply:

GSWC obtains its water supply from its operating wells and purchases from others, principally member agencies of the Metropolitan Water District of Southern California (“MWD”). MWD is a public agency and quasi-municipal corporation created in 1928 by a vote of the electorates of several Southern California cities. MWD’s primary purpose was and is to provide a supplemental supply of water for domestic and municipal uses and purposes at wholesale rates to its member public agencies. GSWC has connections to MWD’s water distribution facilities and those of other member water agencies. MWD’s principal sources of water are the State Water Project and the Colorado River.

GSWC has contracts to purchase water or water rights for an aggregate amount of $5.5 million as of December 31, 2015. Included in the $5.5 million is a commitment of $3.0 million to lease water rights from a third party under an agreement which expires in 2028. The remaining $2.5 million are commitments for purchased water with other third parties which expire through 2038.

GSWC’s estimated future minimum payments under these purchased water supply commitments at December 31, 2015 are as follows (in thousands):



2016	$	393
2017	393
2018	394
2019	393
2020	394
Thereafter	3,570
Total	$	5,537

Bear Valley Electric:

Generally, GSWC’s electric division purchases power at a fixed cost, under long-term purchased power contracts, depending on the amount of power and the period during which the power is purchased under such contracts. During 2014, GSWC's power purchases were based on month-to-month arrangements, as the previous long-term purchase power contract expired in 2013. However, GSWC began taking power pursuant to new purchased power contracts approved by the CPUC effective January 1, 2015 at a fixed cost over three and five year terms depending on the amount of power and period during which the power is purchased under the contracts. As of December 31, 2015, GSWC's commitment under these contracts totaled approximately $24.8 million.

The ability of GSWC to deliver purchased power to customers in its BVES service area is limited by the ability of the transmission facilities owned by Southern California Edison Company to transmit this power.

Operating Leases:

Registrant leases equipment and facilities primarily for its Regional and District offices and ASUS operations under non-cancelable operating leases with varying terms, provisions and expiration dates. Rent expense for leases that contain scheduled rent increases are recorded on a straight-line basis. During 2015, 2014 and 2013, Registrant’s consolidated rent expense was approximately $2,740,000, $2,982,000 and $2,982,000, respectively. Registrant’s future minimum payments under long-term non-cancelable operating leases at December 31, 2015 are as follows (in thousands):



2016	$	2,526
2017	2,151
2018	1,717
2019	1,345
2020	1,094
Thereafter	830
Total	$	9,663

There is no material difference between the consolidated operations of AWR and the operations of GSWC in regards to the future minimum payments under long-term non-cancelable operating leases.

Construction Program:

GSWC maintains an ongoing water distribution main replacement program throughout its customer service areas based on the age and type of distribution system materials, priority of leaks detected, remaining productive life of the distribution system and an underlying replacement schedule. In addition, GSWC upgrades its electric and water supply facilities in accordance with industry standards, local requirements and CPUC requirements. As of December 31, 2015, GSWC has unconditional purchase obligations for capital projects of approximately $44.5 million.