REGULATORY ASSETS AND LIABILTIES

12 Months Ended

Dec. 31, 2024

REGULATORY ASSETS AND LIABILITIES

Regulatory assets and liabilities were comprised of the following as of December 31:


	Recovery Period	2024		2023
Regulatory Assets
Property-related temporary differences (tax benefits flowed through to customers)	Indefinite	$	178,279	$	158,486
IRMA long-term accounts receivable	Various	46,278		3,430
Asset retirement obligations, net	Indefinite	28,883		26,686
Other accrued benefits	Indefinite	25,439		25,363
Tank coating	Various	21,477		19,602
MWRAM long-term regulatory asset	1-2 years	16,353		—
Customer assistance program (CAP) and Rate support fund (RSF) accounts receivable	1 year	9,910		2,459
General district balancing account receivable	Various	9,393		390
Incremental cost balancing accounts (ICBA)	1 year	8,251		—
Net WRAM and MCBA long-term accounts receivable	Various	3,633		10,738
Recoverable property losses	Various	2,633		3,121
PCBA	Various	—		4,182
Other regulatory assets	Various	6,877		3,164
Total Regulatory Assets		$	357,406	$	257,621
Regulatory Liabilities
Cost of removal		$	483,108	$	447,356
Pension and retiree group health		174,708		88,728
Future tax benefits due to customers		106,184		118,051
Other components of net periodic benefit cost		18,287		10,348
PCBA		14,143		8,972
ICBA		6,003		—
HCBA		3,630		3,242
CEBA		3,294		1,200
Net WRAM and MCBA long-term payable		3,064		2,071
RSF regulatory liability		—		2,116
Other regulatory liabilities		2,130		1,633
Total Regulatory Liabilities		$	814,551	$	683,717

The property-related temporary differences are primarily due to: (i) the difference between book and federal income tax depreciation on utility plant that was placed in service before the regulatory Commissions adopted normalization for rate making purposes; and (ii) certain (state) deferred taxes for which flow through accounting continues to be applied to originating deferred taxes. The regulatory asset will be recovered in rates in future periods as the tax effects of the temporary differences previously flowed-through to customers reverse.

The IRMA regulatory asset increase was for the additional amount the Company would have billed customers in 2023 and the first five months of 2024 had the 2021 GRC been approved on time.

The asset retirement obligation regulatory asset represents the difference between costs associated with asset retirement obligations and amounts collected in rates. Tank coating represents the maintenance costs for tank coating projects that are recoverable from customers.

Other accrued benefits are accrued benefits for vacation, self-insured workers’ compensation, and directors’ retirement benefits.

The MWRAM regulatory asset represents the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate had been in effect.

The CAP and RSF are two programs offered by Cal Water that assist qualifying customers with their monthly water bill. The programs are funded by the customers who do not qualify for the assistance. The CAP and RSF regulatory assets represent the amounts due from customers to fund the CAP and RSF credits that were provided to assist qualifying customers. The RSF regulatory liability represents RSF credits that will be provided to assist qualifying customers. The liability was funded by customers.

The general district balancing account represents the residual balances from memorandum and balancing accounts that have been aggregated into one balancing account for future recovery.

The ICBA tracks differences between the authorized prices of water production costs and actual prices of water production costs by ratemaking area.

The net WRAM and MCBA long-term accounts receivable is the under-collected portion of recorded revenues that are not expected to be collected from customers within 12 months.

Cost of removal represents the cumulative differences between the recorded costs to remove assets and amounts collected in rates for expected costs to remove assets at the end of their estimated useful life.

The pension and retiree group health regulatory liability represents the over funded obligation of the Company’s postretirement benefit plans which the Company expects to refund to customers in the future. These plans are discussed in further detail in Note 11. The other components of net periodic benefit cost regulatory liabilities are authorized by the Commissions and are probable for customer refund through the capital program.

The future tax benefits due to customers primarily resulted from federal tax law changes enacted by the TCJA on December 22, 2017. The TCJA reduced the federal corporate income tax rate from 35 percent to 21 percent beginning on January 1, 2018, and GAAP requires the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate on the enactment date.

The PCBA regulatory asset/liability and the HCBA regulatory liability represent incurred pension and healthcare costs that exceeded/were below the cost recovery in rates and is recoverable/refundable from/to customers.

The CEBA regulatory liability is for incurred conservation costs that were below the cost recovery in rates and is refundable to customers.

Short-term regulatory assets and liabilities are excluded from the above table. The short-term regulatory assets as of December 31, 2024 and 2023 were $55.9 million and $64.2 million, respectively. The short-term regulatory assets, as of December 31, 2024 primarily consisted of IRMA and MWRAM receivables. As of December 31, 2023, the short-term regulatory assets primarily consisted of net WRAM and MCBA, and PCBA receivables.

The short-term portion of regulatory liabilities as of December 31, 2024 and 2023 were $22.6 million and $21.5 million, respectively. The short-term regulatory liabilities as of December 31, 2024 primarily consisted of TCJA regulatory liabilities, ICBA regulatory liabilities, and IRMA regulatory liabilities. As of December 31, 2023, the short-term regulatory liabilities primarily consisted of TCJA regulatory liabilities and HCBA liabilities.