When executives at San Dimas-based American States Water Co. took a look at the company’s Arizona water subsidiary during a periodic review of operations recently, they decided it was time to call it quits.

The 700-employee water utility and services company last week announced it was selling Chaparral City Water Co., American States’ only utility outside California. Epcor Water USA, a subsidiary of Epcor Utilities Inc. in Edmonton, Alberta, will pay $29 million in cash and assume $6 million in long-term debt.

The deal, which still must be approved by Arizona regulators, ends American States’ 10-year ownership of Chaparral City, which serves about 13,000 customers in Fountain Hills and Scottsdale.

“Given the small size of Chaparral City Water Co. and its location in another state, it made sense for us to consider a sale,” said Eva Tang, chief financial officer for American States.

The company’s main operating subsidiary, Golden State Water Co., is a water utility serving more than 1 million customers in 75 communities in California. American States has other operations in a handful of other states, mostly water supply contracts at military bases in Maryland, North Carolina, Texas and Virginia.

Tang said the sale was not connected to a financial setback for Chaparral City. A local sanitation district had paid Chaparral City $1.5 million for one of its wells, and Chaparral City initially split the money, giving half to shareholders and half to ratepayers. But last year, Arizona utility regulators ordered Chaparral City to give all the money to ratepayers.

Chaparral City reported a loss of $760,000 during third quarter 2009 attributed to the refund.

American States had already hired New York investment bank New Harbor Inc. to shop Chaparral City at the time of the refund ruling.

On June 8, the day the sale of Chaparral City was announced, American States’ stock price rose slightly, but not enough to offset a monthlong slide that dropped shares by 20 percent to about $32. There were no announcements from the company to trigger this slide; the markets have fallen sharply over the last month, although not as steeply as American States shares.

The share price peaked at nearly $40 in early May after better-than-expected quarterly earnings results and a bullish report from New York’s Brean Murray Carret & Co., one of the few investment firms that follow American States. First quarter earnings were boosted by rate increases that American States was able to obtain from regulators in California and Arizona. That prompted Brean Murray – which has conducted stock placements for American States – to raise its target price to $45 a share from $41.