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Taxes on Income | 12 Months Ended
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Dec. 31, 2016
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 differences in asset basis (including accelerated depreciation and capitalization methods), 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 deviate 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 ETRs at the AWR consolidated level also fluctuate as a result of ASUS's state income taxes, which vary among the jurisdictions in which it operates, and certain permanent differences. Changes in Tax Law: In December 2015, the Protecting Americans From Tax Hikes Act of 2015 extended bonus depreciation for qualifying property through 2019. For 2015 through 2017, bonus depreciation was extended at a 50% rate. For 2018-2019, bonus depreciation will be phased down to 40% and 30%, respectively. Although the change in law reduces AWR’s current taxes payable over these years, it does not reduce its total income tax expense or ETR. The significant components of the deferred tax assets and liabilities as reflected in the balance sheets at December 31, 2016 and 2015 are:
|  | AWR |  | GSWC
|  | December 31, |  | December 31,
(dollars in thousands) |  | 2016 |  | 2015 |  | 2016 |  | 2015
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Regulatory-liability-related: ITC |  | $ | 903 |  |  | $ | 952 |  |  | $ | 903 |  |  | $ | 952 |
Regulatory-liability-related: California Corp Franchise Tax |  | 3,365 |  |  | 4,530 |  |  | 3,365 |  |  | 4,530 |
Other non-property-related |  | 1,993 |  |  | 2,486 |  |  | 1,901 |  |  | 1,997 |
Contributions and advances |  | 7,464 |  |  | 8,026 |  |  | 7,712 |  |  | 8,026 |
|  | $ | 13,725 |  |  | $ | 15,994 |  |  | $ | 13,881 |  |  | $ | 15,505 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Fixed assets |  | $ | (200,378 | ) |  | $ | (178,004 | ) |  | $ | (203,133 | ) |  | $ | (179,660 | )
Regulatory-asset-related: depreciation and other |  | (24,402 | ) |  | (21,658 | ) |  | (24,402 | ) |  | (21,658 | )
California Corp Franchise Tax |  | (2,033 | ) |  | (2,440 | ) |  | (2,208 | ) |  | (3,051 | )
Other property-related |  | — |  |  | (66 | ) |  | (68 | ) |  | (65 | )
Balancing and memorandum accounts |  | (7,010 | ) |  | (1,824 | ) |  | (7,271 | ) |  | (1,824 | )
Deferred charges |  | (4,429 | ) |  | (4,849 | ) |  | (4,597 | ) |  | (4,905 | )
|  | (238,252 | ) |  | (208,841 | ) |  | (241,679 | ) |  | (211,163 | )
Accumulated deferred income taxes - net |  | $ | (224,527 | ) |  | $ | (192,847 | ) |  | $ | (227,798 | ) |  | $ | (195,658 | )
The current and deferred components of income tax expense are as follows:
|  | AWR
|  | Year Ended December 31,
(dollars in thousands) |  | 2016 |  | 2015 |  | 2014
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,297 |  |  | $ | 21,866 |  |  | $ | 5,595 |
State |  | 4,798 |  |  | 5,442 |  |  | 137 |
Total current tax expense |  | $ | 7,095 |  |  | $ | 27,308 |  |  | $ | 5,732 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  | $ | 26,715 |  |  | $ | 8,948 |  |  | $ | 24,815 |
State |  | 925 |  |  | 1,475 |  |  | 7,501 |
Total deferred tax expense |  | 27,640 |  |  | 10,423 |  |  | 32,316 |
Total income tax expense |  | $ | 34,735 |  |  | $ | 37,731 |  |  | $ | 38,048 |
|  | GSWC
|  | Year Ended December 31,
(dollars in thousands) |  | 2016 |  | 2015 |  | 2014
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | (3,115 | ) |  | $ | 16,196 |  |  | $ | 408 |
State |  | 3,625 |  |  | 5,557 |  |  | (2,754 | )
Total current tax expense |  | $ | 510 |  |  | $ | 21,753 |  |  | $ | (2,346 | )
Deferred |  |  |  |  |  |  |  |  |
Federal |  | $ | 25,864 |  |  | $ | 8,536 |  |  | $ | 24,373 |
State |  | 2,235 |  |  | 2,183 |  |  | 9,979 |
Total deferred tax expense |  | 28,099 |  |  | 10,719 |  |  | 34,352 |
Total income tax expense |  | $ | 28,609 |  |  | $ | 32,472 |  |  | $ | 32,006 |
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) |  | 2016 |  | 2015 |  | 2014
Federal taxes on pretax income at statutory rate |  | $ | 33,067 |  |  | $ | 34,375 |  |  | $ | 34,687 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |
State income tax, net of federal benefit |  | 3,029 |  |  | 4,843 |  |  | 4,781 |
Flow-through on fixed assets |  | 994 |  |  | 626 |  |  | 651 |
Flow-through on pension costs |  | (247 | ) |  | 267 |  |  | (507 | )
Flow-through on removal costs |  | (2,068 | ) |  | (929 | ) |  | (1,571 | )
Domestic production activities deduction |  | (78 | ) |  | (1,560 | ) |  | (643 | )
Investment tax credit |  | (83 | ) |  | (88 | ) |  | (91 | )
Other – net |  | 121 |  |  | 197 |  |  | 741 |
Total income tax expense from operations |  | $ | 34,735 |  |  | $ | 37,731 |  |  | $ | 38,048 |
Pretax income from operations |  | $ | 94,478 |  |  | $ | 98,215 |  |  | $ | 99,106 |
Effective income tax rate |  | 36.8 | % |  | 38.4 | % |  | 38.4 | %
|  | GSWC
|  | Year Ended December 31,
(dollars in thousands, except percent) |  | 2016 |  | 2015 |  | 2014
Federal taxes on pretax income at statutory rate |  | $ | 26,452 |  |  | $ | 28,022 |  |  | $ | 27,952 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |
State income tax, net of federal benefit |  | 3,118 |  |  | 5,151 |  |  | 4,693 |
Flow-through on fixed assets |  | 994 |  |  | 626 |  |  | 651 |
Flow-through on pension costs |  | (247 | ) |  | 267 |  |  | (507 | )
Flow-through on removal costs |  | (2,068 | ) |  | (929 | ) |  | (1,571 | )
Domestic production activities deduction |  | — |  |  | (1,268 | ) |  | (55 | )
Investment tax credit |  | (82 | ) |  | (88 | ) |  | (91 | )
Other – net |  | 442 |  |  | 691 |  |  | 934 |
Total income tax expense from operations |  | $ | 28,609 |  |  | $ | 32,472 |  |  | $ | 32,006 |
Pretax income from operations |  | $ | 75,578 |  |  | $ | 80,063 |  |  | $ | 79,863 |
Effective income tax rate |  | 37.9 | % |  | 40.6 | % |  | 40.1 | %
AWR and GSWC had no unrecognized tax benefits at December 31, 2016, 2015 and 2014. 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, 2016, 2015 and 2014, AWR included $461,000, $504,000 and $504,000, respectively, of net interest receivables from taxing authorities in other current and noncurrent assets. AWR recognized no interest income or expense during the year ended December 31, 2015, and recognized $8,000 and $19,000 of interest income during the years ended December 31, 2016 and 2014, respectively. At December 31, 2016, 2015 and 2014, GSWC included $499,000, $512,000 and $472,000, respectively, of net interest receivables from taxing authorities in other current and noncurrent assets. GSWC recognized $3,000 of interest expense during the year ended December 31, 2015, and $7,000 and $14,000 of interest income from taxing authorities during the years ended December 31, 2016 and 2014, respectively. At December 31, 2016, 2015 and 2014, Registrant had no significant accruals for income-tax-related penalties and had no significant income-tax-related penalties recognized during the years ended December 31, 2016, 2015 and 2014. Registrant files federal and various state income tax returns. AWR’s federal 2010 through 2012 refund claims were examined during 2015, and the Internal Revenue Service (“IRS”) completed its examination of them in February 2016. Its 2013-2015 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 in connection with the matters on the federal claims for these years and other state tax matters. During 2012, the California Franchise Tax Board commenced examining these claims. The 2009-2015 tax years remain subject to examination by state taxing authorities.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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 3: 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 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 + Details
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