Allowance for Doubtful Accounts

12 Months Ended

Dec. 31, 2022

Registrant adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. The guidance requires estimated credit losses on financial instruments, such as Registrant’s trade and other receivables, be based on expected credit losses rather than incurred losses.

Registrant’s allowance for doubtful accounts as of December 31, 2022 was developed based on the observed lingering effects of the economic impact from the COVID-19 pandemic on GSWC’s and BVESI’s aging of utility customer accounts receivable, as well as economic data and other considerations that may impact the customers’ ability to pay their bills. The CPUC has authorized GSWC and BVESI to track incremental costs, including bad debt expense in excess of what is included in their respective revenue requirements, incurred as a result of the pandemic in COVID-19 related memorandum accounts to be filed with the CPUC for future recovery. In January 2022, GSWC received $9.5 million COVID relief funds from the state of California through the California Water and Wastewater Arrearage Payment Program, which were applied to delinquent customers’ eligible balances incurred during the COVID-19 pandemic. During 2022, BVESI received a total of $473,000 from the state of California for similar relief funding for unpaid electric bills incurred during the pandemic. Pursuant to CPUC requirements, as of December 31, 2022, GSWC and BVESI have reflected these relief funds as a reduction to its COVID-19 memorandum account, as well as a reduction to its estimated allowance for doubtful accounts.

Other accounts receivable consist primarily of amounts due from third parties (non-utility customers) for various reasons, including amounts due from contractors, amounts due under settlement agreements, and amounts due from other third-party prime government contractors pursuant to agreements for construction of water and/or wastewater facilities for such third-party prime contractors. Thus far, the COVID-19 pandemic has not materially impacted the collectability of these other accounts receivable.

The table below presents Registrant’s provision for doubtful accounts charged to expense and accounts written off, net of recoveries. Provisions included in 2022, 2021 and 2020 for AWR and GSWC are as follows:


	AWR
	December 31,
(dollars in thousands)	2022		2021		2020
Balance at beginning of year	$	3,569	$	5,316	$	916
Provision charged (1)	2,842		8,150		5,016
Accounts written off, net of recoveries (2)	(1,971)		(9,897)		(616)
Balance at end of year	$	4,440	$	3,569	$	5,316

Allowance for doubtful accounts related to accounts receivable-customer	$	4,387	$	3,516	$	5,263

Allowance for doubtful accounts related to other accounts receivable	53		53		53
Total allowance for doubtful accounts	$	4,440	$	3,569	$	5,316

(1) Includes amounts in excess of GSWC’s and BVESI’s respective revenue requirements incurred during the COVID-19 pandemic. These incremental amounts are recorded as regulatory assets.

(2) Reflects consideration of government relief funds received in 2022 from the state of California for unpaid water and electric utility bills incurred during the pandemic. A total of $9.5 million and $473,000 was received in 2022 for unpaid water and electric utility bills, respectively.


	GSWC
	December 31,
(dollars in thousands)	2022		2021		2020
Balance at beginning of year	$	3,221	$	4,960	$	916
Provision charged (3)	2,501		7,732		4,703
Balance transfer to BVESI (Note 20)	—		—		(79)
Accounts written off, net of recoveries (4)	(1,526)		(9,471)		(580)
Balance at end of year	$	4,196	$	3,221	$	4,960

Allowance for doubtful accounts related to accounts receivable-customer	$	4,143	$	3,168	$	4,907
Allowance for doubtful accounts related to other accounts receivable	53		53		53
Total allowance for doubtful accounts	$	4,196	$	3,221	$	4,960

(3) Includes amounts in excess of GSWC’s revenue requirement incurred during the COVID-19 pandemic. This incremental amount was recorded as a regulatory asset.

(4) Reflects consideration of government relief funds received in 2022 from the state of California for unpaid water and electric utility bills incurred during the pandemic. A total of $9.5 million and $473,000 was received in 2022 for unpaid water and electric utility bills, respectively.