XML 72 R15.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Revenue from Contract with Customer
 12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customer REVENUE RECOGNITION
On January 1, 2019, the Company adopted ASC 606, using the modified retrospective approach. The Company identified its sources of revenue streams that fall within the scope of this guidance and applied the five-step model to all qualifying revenue streams to determine when to recognize revenue. The Company concluded that there is not a material change to how revenue was recognized before and after the adoption of ASC 606; therefore, no cumulative retained earnings adjustment was required.
Regulated Revenue
The Company's operating revenues are primarily attributable to regulated services based upon tariff rates approved by the ACC. Regulated service revenues consist of amounts billed to customers based on approved fixed monthly fees and consumption fees, as well as unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing historical customer data recorded as accrued revenue. The measurement of sales to customers is generally based on the reading of their meters, which occurs on a systematic basis throughout the month. At the end of each month, the Company estimates consumption since the date of the last meter reading and a corresponding unbilled revenue is recognized. The unbilled revenue estimate is based upon the number of unbilled days that month and the average daily customer billing rate from the previous month (which fluctuates based upon customer usage). The Company applies the invoice practical expedient and recognizes revenue from contracts with customers in the amount for which the Company has a right to invoice. The Company has the right to invoice for the volume of consumption, service charge, and other authorized charges.
The Company satisfies its performance obligation to provide water and wastewater services over time as the services are rendered. Regulated services may be terminated by the customers at will, and, as a result, no separate financing component is
recognized for the Company's collections from customers, which generally require payment within 15 days of billing. The Company applies judgment, based principally on historical payment experience, in estimating its customers' ability to pay.
The Company has elected to apply the sales tax practical expedient, whereby qualifying excise and other taxes collected from customers and remitted to governmental authorities are not included in reported revenues.
Unregulated Revenue
Unregulated revenues represent those revenues that are not subject to the ratemaking process of the ACC. Unregulated revenues are limited to rental revenue and imputed revenues resulting from a portion of ICFA funds received. ICFAs are agreements with developers and homebuilders where the Company provides services to plan, coordinate, and finance the water and wastewater infrastructure that would otherwise be required to be performed or subcontracted by the developer or homebuilder. In return, the developers and homebuilders pay the Company an agreed-upon amount per dwelling unit for the specified development or portion of land. In addition, under ICFA agreements, the Company has a contractual obligation to ensure physical capacity exists through its regulated utilities for water and wastewater to the developer when needed. This obligation persists regardless of connection growth.
The Company believes that these services are not distinct in the context of the contract because they are highly interdependent with the Company’s ability to provide fitted capacity for water and wastewater services. The Company concluded that the goods and services provided under ICFA contracts constitute a single performance obligation.
IFCA revenue is recognized at a point in time when the Company has the necessary capacity in place within its infrastructure to provide water/wastewater services to the developer. The Company exercises judgment when estimating the number of equivalent dwelling units that the Company has capacity to serve.
Disaggregated Revenues
For the years ended December 31, 2019 and 2018, disaggregated revenues from contracts with customers by major source and customer class are as follows (in thousands):

Three Months Ended December 31,Year Ended December 31,
2019201820192018
REGULATED REVENUE
Water Services
Residential$2,867  $2,731  $11,519  $10,931  
Irrigation556  486  3,008  2,685  
Commercial185  174  768804
Construction48  31152231
Other water revenues143  148696693
Total water revenues3,799  3,570  16,143  15,344  
Wastewater and recycled water services
Residential4,355  4,124  17,053  15,581  
Commercial230  201  908  803  
Recycled water revenues205  178  922  876  
Other wastewater revenues81  99  380  394  
Total wastewater and recycled water revenues4,871  4,602  19,263  17,654  
TOTAL REGULATED REVENUE8,670  8,172  35,406  32,998  
UNREGULATED REVENUE
ICFA revenues—  68  —  2,456  
Rental revenues15  13  64  58  
Other Miscellaneous revenues—  —  1  3  
TOTAL UNREGULATED REVENUE15  81  65  2,517  
TOTAL REVENUE8,685  8,253  35,471  35,515  
Contract Balances

Our contract assets and liabilities consist of the following (in thousands):
December 31, 2019December 31, 2018
CONTRACT ASSETS
Accounts receivable
Water services791  795
Wastewater and recycled water services926838
Total contract assets(1)
1,717  1,633  
CONTRACT LIABILITIES
Deferred revenue - ICFA17,372  17,358  
Refund liability - regulated(2)
587340
Total contract liabilities17,959  17,698  

(1) The increase in accounts receivable was primarily due to the increase in customers in 2019 compared to 2018.
(2) The increase in refund liability is due to the phase-in approach approved in Rate Decision No. 76901. Refer to Note 1—"Basis of Presentation, Corporate Transactions, Significant Accounting Policies, and Recent Accounting Pronouncements — Corporate Transactions — ACC Tax Docket" of the notes to the condensed consolidated financial statements for further details.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Contracted revenue expected to be recognized in future periods was approximately $17.4 million at both December 31, 2019 and December 31, 2018. Deferred revenue is recognized as revenue once the obligations specified within the applicable ICFA are met, including construction of sufficient operating capacity to serve the customers for which revenue was deferred. Due to the uncertainty of future events, the Company is unable to estimate when to expect recognition of deferred revenue.