Employee Benefit Plans:

The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan and Supplemental Executive Retirement Plan (“SERP”) for the three months ended March 31, 2014 and 2013 are as follows:



	For The Three Months Ended March 31,
	Pension Benefits						Other Postretirement Benefits						SERP
(dollars in thousands)	2014			2013			2014			2013			2014		2013
Components of Net Periodic Benefits Cost:
Service cost	$	1,487		$	1,864		$	99		$	106		$	192	$	201
Interest cost	1,915			1,731			130			113			154		129
Expected return on plan assets	(2,215		)	(1,893		)	(113		)	(95		)	—		—
Amortization of transition	—			—			104			105			—		—
Amortization of prior service cost (benefit)	30			30			(50		)	(50		)	40		40
Amortization of actuarial (gain) loss	7			711			(66		)	—			35		85
Net periodic pension cost under accounting standards	1,224			2,443			104			179			421		455
Regulatory adjustment — deferred	300			(510		)	—			—			—		—
Total expense recognized, before allocation to overhead pool	$	1,524		$	1,933		$	104		$	179		$	421	$	455

Registrant expects to contribute approximately $8.4 million to the pension plan during 2014.

Regulatory Adjustment:

In May 2013, the CPUC issued a final decision that authorized GSWC to establish a two-way balancing account for its water regions and the general office to track differences between the forecasted annual pension expenses adopted in rates and the actual annual expense recorded by GSWC in accordance with the accounting guidance for pension costs. As of March 31, 2014, GSWC has a $4.4 million under-collection in the two-way pension balancing account included as part of the pension regulatory asset (Note 2). A surcharge is currently in place to recover a portion of this under-collection.

Affordable Care Act:

In 2010, the Patient Protection and Affordable Care Act ("Affordable Care Act") was passed and was to become effective in 2014. In July 2013, compliance with the employer mandate and certain reporting requirements under the Affordable Care Act were delayed until 2015. Registrant’s health care plan meets the current requirements of the Affordable Care Act for the majority of its employees. Registrant is evaluating alternatives to address those employees for which the plan may not currently meet the requirements. Registrant continues to assess the impact of the Affordable Care Act on its health care benefit costs, but does not expect it to have a material impact in the near future on the Registrant's consolidated financial position, results of operations or cash flows.