Leases

12 Months Ended

Dec. 31, 2024

Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. As of December 31, 2024, Registrant has right-of-use assets of $8.0 million, short-term operating lease liabilities of $2.1 million and long-term operating lease liabilities of $6.4 million. Currently, Registrant does not have any financing leases.

Significant assumptions and judgments made as part of the lease standard include determining (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset. The discount rates used to calculate the present value of lease payments were determined based on hypothetical borrowing rates available to Registrant over terms similar to the lease terms.

Registrant’s leases consist of real estate and equipment leases, which are mostly GSWC’s. Most of Registrant’s leases require fixed lease payments. Some real estate leases have escalation payments which depend on an index. Variable lease costs were not material. Lease terms used to measure the lease liability include options to extend the lease if the option is reasonably certain to be exercised. Lease and non-lease components were combined to measure lease liabilities.

Registrant’s supplemental lease information is as follows (in thousands, except for weighted average data):


	For The Year Ended December 31, 2024	For The Year Ended December 31, 2023

Operating lease costs	$2,543	$2,486
Short-term lease costs	$323	$147

Weighted average remaining lease term (in years)	3.87	4.55
Weighted-average discount rate	4.7%	4.0%

Non-cash transactions
Lease liabilities arising from obtaining right-of-use assets	$2,210	$565

For the years 2024, 2023 and 2022, Registrant’s consolidated rent expense was approximately $2.6 million, $2.3 million and $2.6 million, respectively. Registrant’s future minimum payments under long-term non-cancelable operating leases as of December 31, 2024 are as follows (in thousands):


2025	$	2,422
2026	2,373
2027	2,087
2028	1,786
2029	617
Thereafter	—
Total lease payments	9,285
Less: imputed interest	817
Total lease obligations	8,468
Less: current obligations	2,074
Long-term lease obligations	$	6,394

The consolidated operations of AWR and the operations of GSWC in regard to future minimum payments under long-term non-cancelable operating leases are not materially different.