Regulatory Matters

12 Months Ended

Dec. 31, 2025

Regulatory Assets and Liabilities

The Company’s regulatory assets and liabilities consisted of the following:


(in thousands)	Recovery Period	December 31, 2025		December 31, 2024

Regulatory Assets
Acquisition premiums	25 or 50 years	$	5,478	$	2,589
Income taxes recoverable through future rates	Various	1,247		1,326



Other regulatory assets	Various	497		117
Total regulatory assets		7,222		4,032
Less: current portion		219		—
Total noncurrent regulatory assets		$	7,003	$	4,032

Regulatory Liabilities
Acquired ICFAs		$	4,243	$	4,243
Income taxes payable through future rates		449		468
Depreciation adjustment		653		675

Total regulatory liabilities		5,345		5,386
Less: current portion		131		—
Total noncurrent regulatory liabilities		$	5,214	$	5,386

Acquisition Premiums

In Decision No. 79383 (2024) and 78644 (2022), the ACC approved acquisition premiums of approximately $1.8 million to be amortized over a 50-year period and approximately $0.8 million to be amortized over a 25-year period, respectively. In Decision No. 80695 (2025), the ACC approved an additional acquisition premium, and deferral of recovery, of approximately $3.0 million, which will not begin amortizing until further authorized by the ACC in a future GW-Farmers rate case, subject to the GW-Farmers utility being found viable by the ACC.

Income Taxes Recoverable/Payable Through Future Rates

The TCJA required the Company to remeasure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate. For the Company’s regulated entities, substantially all of the change in deferred income taxes is recorded as an offset to either a regulatory asset or liability because the impact of changes in the rates are expected to be recovered from or refunded to customers.

Acquired ICFAs

The ICFA regulatory liability, established in compliance with a 2014 settlement agreement with the ACC, relates to the offset of intangible assets related to ICFA contracts obtained in connection with the GW-Santa Cruz, GW-Palo Verde, and Sonoran acquisitions. When funds are received related to the acquired ICFA intangible asset, a portion of these funds reduce the acquired ICFA regulatory liability and partially offset the amortization expense recognition of the related intangible asset. The regulatory liability is classified as long term due to the long term nature of these arrangements and the uncertainty of the timing of receipt of funds to be received against the acquired ICFA intangible asset.

Depreciation

Decision No. 78644 (2022) approved an adjustment to update previously approved depreciation rates. The adjustment was incorporated into rates in accordance with the rate decision.

Recent ACC Rulings and Activity

2025 GW-Santa Cruz and GW-Palo Verde Rate Case

On March 5, 2025, GW-Santa Cruz and GW-Palo Verde each filed a general rate case application with the ACC for water and wastewater rates, respectively. The GW-Santa Cruz and GW-Palo Verde rate case is based on a test year ending December 31, 2024, with updates for changes in post-test year plant. On October 1, 2025, the ACC Utilities Division (“ACC Staff”) and RUCO filed their respective initial written testimonies with the ACC in the rate case. Subsequent rebuttal, surrebuttal and rejoinder testimonies were filed by the parties in the fourth quarter of 2025. The hearing with the ALJ, originally scheduled to begin December 15, 2025, was delayed until August 3, 2026, and an additional round of testimony is scheduled for Q2 2026.

2024 GW-Farmers Rate Case - Decision No. 80695 - Issued April 29, 2025

On June 27, 2024, GW-Farmers filed a rate case application with the ACC for increased water rates based on a 2023 test year, with updates for changes in post-test year plant through December 31, 2024. On April 29, 2025, the ACC approved GW-Farmers’ rate case application in Decision No. 80695. Among other approvals, Decision No. 80695 approved an increase in GW-Farmers’ annual revenue requirement of $1.1 million and a return on equity of 9.6%, with increased rates to be phased-in over three periods. 50% of the increase was effective on May 1, 2025, with another 25% effective on November 1, 2025. The final 25% increase will be phased in on May 1, 2026. In addition to the rate increase, Decision No. 80695 also approved a deferral of the recovery of an acquisition premium of approximately $3 million related to the Company’s acquisition of GW-Farmers, which the Company recorded as of March 31, 2025. Decision No. 80695 calls for the acquisition premium to be recovered in a future rate case, subject to the GW-Farmers utility being found viable by the ACC. Refer to Note 8 – “Goodwill and Intangible Assets” for additional information.

2022 GW-Saguaro Rate Case - Decision No. 79383 - Issued June 20, 2024

On June 20, 2024, the ACC issued Decision No. 79383, which related to each of the rate case applications filed by seven of the Company’s regulated water utilities for increased water rates based on a 2022 test year. Decision No. 79383 approved, among other things, a collective annual revenue increase of approximately $351,000. The approved rates are being phased-in over five periods with the first increase effective July 1, 2024. The subsequent four increases will be effective on January 1 of each subsequent year. The majority of the revenue increase was phased in on January 1, 2025.

Southwest Plant

In January 2024, the Company discovered that approximately $7.8 million of construction costs for the Southwest Plant had been prematurely included as “plant in service” for rate making purposes in 2007 and were reflected in the calculation of customer rates in Decision No. 71878 (September 15, 2010). Those costs were also included as “plant in service” in Decision No. 74364 (February 26, 2014) and Decision No. 78644 (July 27, 2022). The Company disclosed this circumstance to the ACC on March 1, 2024, and on April 25, 2024, GW-Palo Verde filed an application with the ACC requesting a monthly bill credit for customers that would be in place until the conclusion of the next GW-Palo Verde rate case. The ACC issued Decision No. 79424 on July 18, 2024 approving the bill credit with an effective date of August 1, 2024. The bill credit reduced revenue earned by $0.6 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.