Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2023

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


	2023		2022
Regulatory assets:
Income tax temporary differences (a)	$	157,669	137,860
Unrecognized pensions and other postretirement benefits (b)	24,593		45,799
Business combinations debt premium (c)	14,855		17,396
Employee benefit costs (d)	9,815		8,068
MWRAM (e)	9,361		10,864
Customer Assistance Program (“CAP”) balancing account (f)	5,457		3,417
Catastrophic event memorandum accounts (“CEMA”) (g)	4,819		3,485
2022 general rate case interim memorandum account (h)	4,571		20,650
Water supply costs (i)	583		9,873
Other (j)	8,463		8,363
Total regulatory assets	240,186		265,775
Less: current regulatory asset (k)	4,276		19,740
Total regulatory assets, less current portion	$	235,910	246,035
Regulatory liabilities:
Cost of removal (l)	$	346,418	—
Future income tax benefits due to customers (m)	88,610		94,426
Unrecognized pensions and other postretirement benefits (b)	20,196		14,307
Revenue adjustment mechanisms (n)	5,536		9,528
Other (o)	3,407		4,171
Total regulatory liabilities	464,167		122,432
Less: current regulatory liabilities (p)	3,059		3,672
Total regulatory liabilities, less current portion	$	461,108	118,760

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(a)Consists primarily of temporary income tax differences that are flowed through to customers, which will be recovered in future rates as these temporary differences reverse. The company expects to recover regulatory assets related to plant depreciation income tax temporary differences over the lives of the plant assets, which are between 4 to 100 years.

(b)Represents actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain pension and other postretirement benefit plans.

(c)Consists of debt fair value adjustments recognized through purchase accounting for the completed merger with CTWS in 2019.

(d)Includes deferrals of pension and other postretirement benefit expense and cost of accrued benefits for vacation.

(e)MWRAM is described in the previous section.

(f)Represents costs associated with SJWC’s CAP.

(g)Primarily related to increased bad debt expenses associated with SJWC’s response to COVID-19. The CPUC has authorized water utilities to activate CEMA accounts in order to track savings and costs related to SJWC’s response to catastrophic events, which includes external labor and materials, increases in bad debt from suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage.

(h)Represents the difference between revenues collected in interim rates in effect as of January 1, 2022 and revenues that would result from rates authorized in SJWC’s 2022 general rate case retroactive to January 1, 2022.

(i)Reflects differences in actual water supply costs compared to amounts assumed in setting rates, including applicable changes and variations in costs and quantities that affect the overall mix of the water supply.

(j)Other includes other balancing and memorandum accounts and regulatory mechanisms, deferred costs for certain information technology activities, asset retirement obligations and rate case expenses.

(k)As of December 31, 2023, primarily relates to MWRAM. As of December 31, 2022, primarily relates to the 2022 general rate case interim memorandum account.

(l)Represents amounts collected in rates from customers for estimated costs to retire assets at the end of their expected useful lives before the costs are incurred. During 2023, the Company completed a new depreciation study and as of December 31, 2023, recorded a classification adjustment of $346,418 as cost of removal regulatory liabilities. As of December 31, 2022, cost of removal regulatory liabilities of $316,647 are included in net utility plant - accumulated depreciation and amortization. Management has concluded a classification adjustment to the prior year balance sheet is not necessary because the impact is immaterial.

(m)On December 22, 2017 the Tax Act was signed into law. The Tax Act included a reduction in the federal income tax rate from 35% to 21%. The rate reduction was effective on January 1, 2018 and resulted in a regulatory liability for the excess deferred income taxes. The benefit of amortization of excess deferred income taxes flows back to the customers under current normalization rules and agreed upon methods with the commissions.

(n)Consists of WRA and WCMA, which are described in the previous section.

(o)Other includes other balancing and memorandum accounts, other regulatory mechanisms and accrued tank painting costs.

(p)As of December 31, 2023 and 2022, primarily relates to WRA.