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Taxes on Income | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Taxes on Income | Taxes on Income Registrant records deferred income taxes for temporary differences pursuant to the accounting guidance that addresses items recognized for income tax purposes in different periods than when they are reported in the financial statements. These items include differences in net asset basis (primarily related to differences in depreciation lives and methods, and differences in capitalization methods) and the treatment of certain regulatory balancing accounts, and construction contributions and advances. The accounting guidance for income taxes requires that rate-regulated enterprises record deferred income taxes and offsetting regulatory liabilities and assets for temporary differences where the rate regulator has prescribed flow-through treatment for rate-making purposes (Note 3). Deferred investment tax credits (“ITC”) are amortized ratably to deferred tax expense over the remaining lives of the property that gave rise to the credits. GSWC is included in both AWR’s consolidated federal income tax and its combined California state franchise tax returns. The impact of California’s unitary apportionment on the amount of AWR’s California income tax liability is a function of both the profitability of AWR’s non-California activities and the proportion of AWR’s California sales to its total sales. GSWC’s income tax expense is computed as if GSWC were autonomous and separately files its income tax returns, which is consistent with the method adopted by the CPUC in setting GSWC’s customer rates. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into federal law. IRA, among other things, imposes a nondeductible 1% excise tax after December 31, 2022 on the fair market value of certain stock that is “repurchased” by a publicly traded U.S. corporation or acquired by certain of its subsidiaries. The taxable amount is reduced by the fair market value of certain issuances of stock throughout the year. Registrant did not have a stock repurchase program in effect for 2023 and does not have current plans to institute such a program; consequently, this excise tax was not incurred in 2023 and is not expected to have a material impact on its consolidated financial position in the future. If average annual adjusted financial statement income exceeds $1 billion over a 3-taxable-year period, IRA also imposes a 15% corporate alternative minimum tax on adjusted financial statement income for taxable years beginning after December 31, 2022. Registrant does not expect to incur this tax in the foreseeable future. The significant components of the deferred tax assets and liabilities as reflected in the balance sheets at December 31, 2023 and 2022 are:
|  | AWR |  | GSWC
|  | December 31, |  | December 31,
(dollars in thousands) |  | 2023 |  | 2022 |  | 2023 |  | 2022
Deferred tax assets: |  |  |  |  |  |  |  |
Regulatory-liability-related (1) |  | $ | 32,042 |  |  | $ | 31,330 |  |  | $ | 30,407 |  |  | $ | 29,623 |
Contributions and advances |  | 6,660 |  |  | 6,544 |  |  | 6,981 |  |  | 6,896 |
Other |  | 5,924 |  |  | 7,424 |  |  | 6,041 |  |  | 7,874 |
Total deferred tax assets |  | $ | 44,626 |  |  | $ | 45,298 |  |  | $ | 43,429 |  |  | $ | 44,393 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  | $ | (161,820) |  |  | $ | (155,955) |  |  | $ | (155,131) |  |  | $ | (150,133) |
Regulatory-asset-related: depreciation and other |  | (36,337) |  |  | (30,226) |  |  | (33,242) |  |  | (28,489) |
Balancing and memorandum accounts (non-flowed-through) |  | (8,046) |  |  | (8,794) |  |  | (2,514) |  |  | (4,559) |
Total deferred tax liabilities |  | (206,203) |  |  | (194,975) |  |  | (190,887) |  |  | (183,181) |
Accumulated deferred income taxes, net |  | $ | (161,577) |  |  | $ | (149,677) |  |  | $ | (147,458) |  |  | $ | (138,788) |
(1) Primarily represents the gross-up portion of the deferred income tax (on the excess-deferred-tax regulatory liability) brought about by the Tax Cuts and Jobs Act's reduction of the federal income tax rate. The current and deferred components of income tax expense are as follows:
|  | AWR
|  | Year Ended December 31,
(dollars in thousands) |  | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |  |
Federal |  | $ | 26,327 |  |  | $ | 14,845 |  |  | $ | 19,592 |
State |  | 10,489 |  |  | 6,016 |  |  | 7,270 |
Total current tax expense |  | $ | 36,816 |  |  | $ | 20,861 |  |  | $ | 26,862 |
Deferred |  |  |  |  |  |
Federal |  | $ | 4,157 |  |  | $ | 2,991 |  |  | $ | 2,802 |
State |  | 626 |  |  | (188) |  |  | 759 |
Total deferred tax (benefit) expense |  | 4,783 |  |  | 2,803 |  |  | 3,561 |
Total income tax expense |  | $ | 41,599 |  |  | $ | 23,664 |  |  | $ | 30,423 |
|  | GSWC
|  | Year Ended December 31,
(dollars in thousands) |  | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |  |
Federal |  | $ | 22,564 |  |  | $ | 10,582 |  |  | $ | 13,698 |
State |  | 10,176 |  |  | 4,909 |  |  | 6,089 |
Total current tax expense |  | $ | 32,740 |  |  | $ | 15,491 |  |  | $ | 19,787 |
Deferred |  |  |  |  |  |
Federal |  | $ | 2,867 |  |  | $ | 1,507 |  |  | $ | 2,251 |
State |  | 82 |  |  | (652) |  |  | 57 |
Total deferred tax (benefit) expense |  | 2,949 |  |  | 855 |  |  | 2,308 |
Total income tax expense |  | $ | 35,689 |  |  | $ | 16,346 |  |  | $ | 22,095 |
The reconciliations of the effective tax rates (“ETR”) to the federal statutory rate are as follows:
|  | AWR
|  | Year Ended December 31,
(dollars in thousands) |  | 2023 |  | 2022 |  | 2021
Federal taxes on pretax income at statutory rate |  | $ | 34,969 |  |  | $ | 21,433 |  |  | $ | 26,202 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |
State income tax, net of federal benefit |  | 9,785 |  |  | 4,335 |  |  | 6,425 |
Excess deferred tax amortization |  | (1,648) |  |  | (1,311) |  |  | (1,356) |
Flow-through on fixed assets |  | 1,067 |  |  | 1,076 |  |  | 1,069 |
Flow-through on removal costs |  | (2,255) |  |  | (1,802) |  |  | (1,962) |
Investment tax credit |  | (71) |  |  | (71) |  |  | (71) |
Other – net |  | (248) |  |  | 4 |  |  | 116 |
Total income tax expense from operations |  | $ | 41,599 |  |  | $ | 23,664 |  |  | $ | 30,423 |
Pretax income from operations |  | $ | 166,520 |  |  | $ | 102,060 |  |  | $ | 124,770 |
Effective income tax rate |  | 25.0 | % |  | 23.2 | % |  | 24.4 | %
|  | GSWC
|  | Year Ended December 31,
(dollars in thousands) |  | 2023 |  | 2022 |  | 2021
Federal taxes on pretax income at statutory rate |  | $ | 29,063 |  |  | $ | 14,724 |  |  | $ | 19,175 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |
State income tax, net of federal benefit |  | 9,169 |  |  | 3,119 |  |  | 4,923 |
Excess deferred tax amortization |  | (1,681) |  |  | (1,130) |  |  | (1,184) |
Flow-through on fixed assets |  | 1,041 |  |  | 1,010 |  |  | 1,008 |
Flow-through on removal costs |  | (2,225) |  |  | (1,715) |  |  | (1,954) |
Investment tax credit |  | (71) |  |  | (71) |  |  | (71) |
Other – net |  | 393 |  |  | 409 |  |  | 198 |
Total income tax expense from operations |  | $ | 35,689 |  |  | $ | 16,346 |  |  | $ | 22,095 |
Pretax income from operations |  | $ | 138,397 |  |  | $ | 70,116 |  |  | $ | 91,310 |
Effective income tax rate |  | 25.8 | % |  | 23.3 | % |  | 24.2 | %
The AWR and GSWC ETRs differ from the federal corporate statutory tax rate of 21% primarily due to (i) state taxes; (ii) permanent differences, including certain tax effects from stock compensation; (iii) the ongoing amortization of the excess deferred income tax liability; and (iv) differences between book and taxable income that are treated as flowed-through adjustments in accordance with regulatory requirements (principally from plant, rate-case, and compensation-related items). As regulated utilities, GSWC and BVES treat certain temporary differences as being flowed through to customers in computing their income tax expense consistent with the income tax method used in their CPUC-jurisdiction rate making. Flowed-through items either increase or decrease tax expense and thus impact the ETR. AWR and GSWC had no unrecognized tax benefits at December 31, 2023, 2022 and 2021. Registrant’s policy is to classify interest on income tax over/underpayments in interest income/expense and penalties in “other” expenses. Registrant did not have any material interest receivables/payables from/to taxing authorities as of December 31, 2023 and 2022, nor did it recognize any material interest income/expense or accrue any material tax-related penalties during the years ended December 31, 2023, 2022 and 2021. Registrant files federal, California and various other state income tax returns. AWR’s 2020–2022 tax years remain subject to examination/assessment by the Internal Revenue Service. AWR filed refund claims with the California Franchise Tax Board (“FTB”) for the 2005 through 2020 tax years in connection with prior federal refund claims, other state issues, or both, and the FTB continues to review the claims. While the statute of limitations to assess tax has closed through the tax year 2018, the 2019–2022 tax years remain subject to examination/assessment by the FTB.

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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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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