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Taxes on Income | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Taxes on Income | Taxes on Income Registrant provides deferred income taxes for temporary differences under the accounting guidance for income taxes for certain transactions which are recognized for income tax purposes in a period different from that in which they are reported in the financial statements. The most significant items are the tax effects of accelerated depreciation, certain regulatory balancing accounts and advances for, and contributions in aid of construction. The accounting guidance for income taxes also requires that rate-regulated enterprises record deferred income taxes for temporary differences given flow-through treatment at the direction of a regulatory commission. The resulting deferred tax assets and liabilities are recorded at the expected cash flow to be reflected in future rates. Given that the CPUC has consistently permitted the recovery of flowed-through tax effects, GSWC has established regulatory liabilities and assets offsetting such deferred tax assets and liabilities (Note 2). Deferred investment tax credits (“ITC”) are amortized ratably to deferred tax expense over the lives of the property giving rise to the credits. GSWC is included in AWR’s consolidated federal income tax and combined California state franchise tax returns. California unitary apportionment provides a benefit or detriment to AWR’s state taxes, depending on a combination of the profitability of AWR’s non-California activities as well as the proportion of its California sales to total sales. Consistent with the method adopted for regulatory purposes, GSWC’s tax expense is computed as if GSWC were autonomous and files separate returns. Given that all of GSWC’s activities are conducted within California, GSWC’s state tax expense does not reflect apportionment of its income. As a regulated utility, GSWC treats certain temporary differences as flow-through adjustments in computing its income tax provision consistent with the income tax approach approved by the CPUC for ratemaking purposes. Flow-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase occurring in another period. Giving effect to these temporary differences as flow-through adjustments typically results in a greater variance between the effective tax rate (“ETR”) and the statutory federal income tax rate in any given period than would otherwise exist if GSWC were not required to account for its income taxes as a regulated enterprise. The GSWC ETRs deviated from the statutory rate primarily due to state taxes and differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (principally plant-, rate-case- and compensation-related items). The significant components of the deferred tax assets and liabilities as reflected in the balance sheets at December 31, 2013 and 2012 are:
|  | AWR |  | GSWC
|  | December 31, |  | December 31,
(dollars in thousands) |  | 2013 |  | 2012 |  | 2013 |  | 2012
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Regulatory-liability-related: ITC and excess deferred taxes |  | $ | 1,049 |  |  | $ | 1,649 |  |  | $ | 1,049 |  |  | $ | 1,649 |
Regulatory-liability-related: California Corp Franchise Tax |  | 4,337 |  |  | 3,690 |  |  | 4,337 |  |  | 3,690 |
Other non-property-related |  | 2,005 |  |  | 2,609 |  |  | 1,543 |  |  | 2,151 |
Contributions and advances |  | 8,655 |  |  | 9,443 |  |  | 8,655 |  |  | 9,443 |
|  | $ | 16,046 |  |  | $ | 17,391 |  |  | $ | 15,584 |  |  | $ | 16,933 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Fixed assets |  | $ | (131,534 | ) |  | $ | (121,802 | ) |  | $ | (131,548 | ) |  | $ | (121,881 | )
Regulatory-asset-related: depreciation and other |  | (21,575 | ) |  | (21,754 | ) |  | (21,575 | ) |  | (21,754 | )
Other property-related |  | (155 | ) |  | (152 | ) |  | (155 | ) |  | (151 | )
Balancing and memorandum accounts |  | (6,663 | ) |  | (1,020 | ) |  | (6,663 | ) |  | (1,020 | )
Deferred charges |  | (6,064 | ) |  | (6,632 | ) |  | (6,064 | ) |  | (6,632 | )
|  | (165,991 | ) |  | (151,360 | ) |  | (166,005 | ) |  | (151,438 | )
Accumulated deferred income taxes - net |  | $ | (149,945 | ) |  | $ | (133,969 | ) |  | $ | (150,421 | ) |  | $ | (134,505 | )
The current and deferred components of income tax expense from continuing operations are as follows:
|  | AWR
|  | Year Ended December 31,
(dollars in thousands) |  | 2013 |  | 2012 |  | 2011
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 13,741 |  |  | $ | 15,585 |  |  | $ | 9,107 |
State |  | 5,930 |  |  | 5,273 |  |  | 7,108 |
Total current tax expense |  | $ | 19,671 |  |  | $ | 20,858 |  |  | $ | 16,215 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  | $ | 14,769 |  |  | $ | 13,088 |  |  | $ | 15,189 |
State |  | 1,343 |  |  | 1,999 |  |  | (1,328 | )
Total deferred tax expense |  | 16,112 |  |  | 15,087 |  |  | 13,861 |
Total income tax expense from continuing operations |  | $ | 35,783 |  |  | $ | 35,945 |  |  | $ | 30,076 |
|  | GSWC
|  | Year Ended December 31,
(dollars in thousands) |  | 2013 |  | 2012 |  | 2011
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 10,768 |  |  | $ | 7,957 |  |  | $ | 5,246 |
State |  | 6,315 |  |  | 3,830 |  |  | 6,920 |
Total current tax expense |  | $ | 17,083 |  |  | $ | 11,787 |  |  | $ | 12,166 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  | $ | 14,691 |  |  | $ | 12,670 |  |  | $ | 15,118 |
State |  | 1,360 |  |  | 2,043 |  |  | (1,313 | )
Total deferred tax expense |  | 16,051 |  |  | 14,713 |  |  | 13,805 |
Total income tax expense |  | $ | 33,134 |  |  | $ | 26,500 |  |  | $ | 25,971 |
The reconciliations of the effective tax rates to the federal statutory rate are as follows:
|  | AWR
|  | Year Ended December 31,
(dollars in thousands, except percent) |  | 2013 |  | 2012 |  | 2011
Federal taxes on pretax income at statutory rate |  | $ | 34,464 |  |  | $ | 31,533 |  |  | $ | 25,230 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |
State income tax, net of federal benefit |  | 5,111 |  |  | 4,957 |  |  | 3,781 |
Flow-through on fixed assets |  | 646 |  |  | 636 |  |  | 1,026 |
Flow-through on pension costs |  | 612 |  |  | 10 |  |  | 254 |
Flow-through on removal costs |  | (2,141 | ) |  | (943 | ) |  | (281 | )
Domestic production activities deduction |  | (2,944 | ) |  | (553 | ) |  | (277 | )
Investment tax credit |  | (91 | ) |  | (91 | ) |  | (91 | )
Other – net |  | 126 |  |  | 396 |  |  | 434 |
Total income tax expense from continuing operations |  | $ | 35,783 |  |  | $ | 35,945 |  |  | $ | 30,076 |
Pretax income from continuing operations |  | $ | 98,469 |  |  | $ | 90,093 |  |  | $ | 72,086 |
Effective income tax rate |  | 36.3 | % |  | 39.9 | % |  | 41.7 | %
|  | GSWC Year Ended December 31,
(dollars in thousands, except percent) |  | 2013 |  | 2012 |  | 2011
Federal taxes on pretax income at statutory rate |  | $ | 28,622 |  |  | $ | 23,002 |  |  | $ | 21,278 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |
State income tax, net of federal benefit |  | 5,372 |  |  | 4,048 |  |  | 3,707 |
Flow-through on fixed assets |  | 646 |  |  | 636 |  |  | 1,026 |
Flow-through on pension costs |  | 612 |  |  | 10 |  |  | 254 |
Flow-through on removal costs |  | (2,141 | ) |  | (943 | ) |  | (281 | )
Domestic production activities deduction |  | (1,316 | ) |  | (553 | ) |  | (277 | )
Investment tax credit |  | (91 | ) |  | (91 | ) |  | (91 | )
Other – net |  | 1,430 |  |  | 391 |  |  | 355 |
Total income tax expense |  | $ | 33,134 |  |  | $ | 26,500 |  |  | $ | 25,971 |
Pretax income |  | $ | 81,776 |  |  | $ | 65,720 |  |  | $ | 60,793 |
Effective income tax rate |  | 40.5 | % |  | 40.3 | % |  | 42.7 | %
AWR and GSWC had no unrecognized tax benefits at December 31, 2013, 2012 and 2011. Registrant’s policy is to classify interest on income tax over/underpayments in interest income/expense and penalties in “other operating expenses.” At December 31, 2013, AWR and GSWC included $757,000 and $704,000, respectively, of net interest receivables from taxing authorities in other current and noncurrent assets. AWR and GSWC recognized $99,000 and $21,000, respectively, of interest income from taxing authorities during the year ended December 31, 2013. At December 31, 2012, AWR and GSWC included $2,838,000 and $2,775,000, respectively, of net interest receivables from taxing authorities in other current and noncurrent assets. AWR and GSWC recognized $473,000 and $461,000 respectively, of interest income from taxing authorities during the year ended December 31, 2012. At December 31, 2011, AWR and GSWC included $2,364,000 and $2,314,000, respectively, of net interest receivables from taxing authorities in other current and noncurrent assets. AWR and GSWC recognized $121,000 and $102,000, respectively, of interest income from taxing authorities during the year ended December 31, 2011. At December 31, 2013, 2012 and 2011, Registrant had no significant accruals for income-tax-related penalties and did not recognize any significant income-tax-related penalties during the years ended December 31, 2013, 2012 and 2011. Registrant files federal and various state income tax returns. During 2012, the Congressional Joint Committee of Taxation completed, without exception, its review of the Internal Revenue Service’s (“IRS’s”) report sustaining refund claims filed for the years 2002-2004 in connection with the IRS’s examination of AWR’s implementation of a consent to change an accounting method (“Consent”). The IRS processed and issued the refunds in 2013. AWR’s 2007-2008 and 2010-2012 tax years remain subject to examination by the IRS. AWR has filed protective refund claims with the applicable state taxing authority for the 2002 through 2008 tax years, also in connection with the Consent. During 2012, the California Franchise Tax Board commenced examining these claims. The 2009-2012 tax years remain subject to examination by state taxing authorities. Changes in Tax Law In September 2013, the U.S. Treasury Department issued final regulations on the tax treatment of tangible property, including guidance on expensing certain repair and maintenance expenditures. The regulations are effective for tax years beginning on or after January 1, 2014. Registrant’s current tax treatment of tangible property continues to be permitted; however, Registrant is evaluating its water-pipeline tax repair-cost method, as well as other tax-method changes pursuant to these regulations. If Registrant were to adopt such guidance, the impact to total income tax expense and the effective tax rate is not expected to be significant. In January 2013, the American Taxpayer Relief Act of 2012 extended 50% bonus depreciation for qualifying property through 2013. Although this change in law reduces AWR’s current taxes payable, it does not reduce its total income tax expense or ETR.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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