XML 46 R11.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Regulatory Matters | 12 Months Ended
--- | ---
Dec. 31, 2023
Regulated Operations [Abstract] |
Regulatory Matters | Regulatory Matters In accordance with accounting principles for rate-regulated enterprises, GSWC and BVES record regulatory assets, which represent probable future recovery of costs from customers through the ratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the ratemaking process. At December 31, 2023, GSWC and BVES had approximately $68.4 million of regulatory liabilities, net of regulatory assets, not accruing carrying costs. Of this amount, (i) $74.0 million of regulatory liabilities are excess deferred income taxes arising from the lower federal income tax rate under the Tax Cuts and Jobs Act enacted in December 2017 that are being refunded to customers (Note 11), (ii) $4.3 million of net regulatory assets relates to flowed-through deferred income taxes including the gross-up portion on the deferred tax resulting from the excess deferred income tax regulatory liability (Note 11), (iii) $3.8 million of regulatory liabilities relates to the underfunded position in Registrant’s pension and other post-retirement obligations (excluding the two-way pension balancing accounts), and (iv) $2.4 million of net regulatory asset relates to a memorandum account authorized by the CPUC to track unrealized gains and losses on BVES’s purchase power contracts over the terms of the contracts. The remainder relates to other items that do not provide for or incur carrying costs. Regulatory assets represent costs incurred by GSWC and/or BVES for which they have received or expect to receive rate recovery in the future. In determining the probability of costs being recognized in other periods, GSWC and BVES consider regulatory rules and decisions, past practices, and other facts or circumstances that would indicate if recovery is probable. If the CPUC determines that a portion of either GSWC’s or BVES’s assets are not recoverable in customer rates, the applicable utility must determine if it has suffered an asset impairment that requires it to write down the asset’s value. Regulatory assets are offset against regulatory liabilities within each ratemaking area. Amounts expected to be collected or refunded in the next twelve months have been classified as current assets and current liabilities by ratemaking area. Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:
|  | December 31,
(dollars in thousands) |  | 2023 |  | 2022
GSWC |  |  |  |
2022/2023 general rate case memorandum accounts (unbilled revenue) |  | $ | 52,795 |  |  | $ | — |
Water revenue adjustment mechanism, net of the modified cost balancing account |  | 41,545 |  |  | 31,803 |
Asset retirement obligations (Note 1) |  | 7,099 |  |  | 6,411 |
COVID-19 memorandum accounts |  | 1,199 |  |  | 3,478 |
Flowed-through deferred income taxes, net (Note 11) |  | 3,190 |  |  | (1,134) |
Low income rate assistance balancing accounts |  | 5,763 |  |  | 2,526 |
Pensions and other post-retirement obligations (Note 12) |  | (4,867) |  |  | 738 |
Other regulatory assets |  | 9,462 |  |  | 10,289 |
Excess deferred income taxes (Note 11) |  | (70,189) |  |  | (71,870) |
Other regulatory liabilities |  | (268) |  |  | (8,815) |
Total GSWC |  | $ | 45,729 |  |  | $ | (26,574) |
BVES |  |  |  |
Derivative instrument memorandum account (Note 5) |  | 2,360 |  |  | (11,847) |
Wildfire mitigation and other fire prevention related costs memorandum accounts |  | 17,716 |  |  | 13,007 |
Electric supply cost adjustment mechanism |  | 2,583 |  |  | 3,627 |
Other regulatory assets |  | 7,697 |  |  | 4,338 |
Other regulatory liabilities |  | (6,578) |  |  | (8,005) |
Total AWR |  | $ | 69,507 |  |  | $ | (25,454) |
Water General Rate Case and the 2022/2023 General Rate Case Memorandum Accounts: On June 29, 2023, the CPUC adopted a final decision in GSWC's general rate case application for all its water regions and its general office that determines new water rates for the years 2022–2024. Among other things, the final decision (i) adopted the full settlement agreement between GSWC and the Public Advocates Office at the CPUC (“Public Advocates”) that resolved all issues related to the 2022 annual revenue requirement in the general rate case application and made the 2022 rates retroactive to January 1, 2022, and (ii) allowed for additional increases in adopted revenues for 2023 and 2024 subject to an earnings test and inflationary index values at the time of filing for implementation of the new rates. As a result, the impact of retroactive rates for the full year of 2022 have been reflected in the results of operations for the year ended December 31, 2023. Upon receiving the final decision, GSWC filed for the implementation of new 2023 rate increases that went into effect on July 31, 2023. The new rates for 2023 were retroactive to January 1, 2023. Due to the delay in finalizing the water general rate case, water revenues billed to customers for the year ended December 31, 2022 and for the period from January 1, 2023 to July 30, 2023 were based on 2021 adopted rates. GSWC was authorized to create general rate case memorandum accounts to track the revenue differences between the 2021 adopted rates and the new 2022 and 2023 rates authorized by the CPUC. As of December 31, 2023, there is a net aggregate $52.8 million under-collection in the general rate case memorandum accounts that GSWC has recorded as regulatory assets for retroactive water revenues related to difference between the 2021 adopted rates billed to customers and the rates authorized in the final decision for the full year of 2022 and the 2023 second-year rate increases recorded from January 1 to July 30, 2023. In October 2023, surcharges were implemented by GSWC to recover the cumulative retroactive rate differences over 36 months. Cost of Capital Proceeding: On June 29, 2023, a final decision was adopted by the CPUC in the cost of capital proceeding that, among other things, (i) adopts GSWC’s requested capital structure of 57% equity and 43% debt; (ii) adopts a cost of debt of 5.1% for GSWC as compared to 6.6% previously authorized; (iii) adopts a return on equity of 8.85% for GSWC as compared to 8.9% previously authorized; (iv) allows for the continuation of the Water Cost of Capital Mechanism (“WCCM”) through December 31, 2024; and (v) adopts the new cost of capital for the three-year period commencing January 1, 2022 through December 31, 2024. Based on the Company’s assessment of the final decision issued in June, all adjustments to rates are to be prospective. GSWC filed an advice letter that implemented the new cost of capital effective July 31, 2023. Following the receipt of the final decision adopted on June 29, 2023 in the cost of capital proceeding, management updated its analysis and reassessed the accounting estimates recorded to date related to GSWC’s lower cost of debt. Accordingly, GSWC recorded a change in its estimate that resulted in an increase to water revenues for the year ended December 31, 2023 in the amount of $6.4 million as a result of reversing its regulatory liability for revenues subject to refund that it had recorded during 2022. The WCCM adjusts the return on equity and rate of return on rate base between the three-year cost of capital proceedings only if there is a positive or negative change of more than 100 basis points based on the average of Moody’s Aa utility bond rate as measured over the period from October 1 through September 30. If there is a positive or negative change of more than 100 basis points, the return on equity is adjusted by one half of the difference. For the period from October 1, 2021 through September 30, 2022, Moody’s Aa utility bond rate increased by 102.80 basis points from the benchmark, which triggered the WCCM adjustment. GSWC recognized revenues for the period from January 1 through July 30, 2023 and all of 2022 based on the previously authorized return of equity of 8.9% that had also been billed to water customers through the same period. On June 30, 2023, GSWC filed an advice letter to establish the WCCM for 2023, which increased GSWC’s 8.85% adopted return on equity in the decision to 9.36% effective July 31, 2023. Additionally, for the period from October 1, 2022 through September 30, 2023, the Moody's Aa utility bond rate increased by 139.70 basis points from the benchmark, which triggered another WCCM adjustment. On October 12, 2023, GSWC filed an advice letter to establish the WCCM for 2024, which has been approved by the CPUC. As a result of this approval, GSWC’s 9.36% adopted return on equity increased to 10.06% effective January 1, 2024. Alternative-Revenue Programs: GSWC records the difference between what it bills its water customers and that which is authorized by the CPUC using the Water Revenue Adjustment Mechanism (“WRAM”) and the Modified Cost Balancing Account (“MCBA”) approved by the CPUC. The over- or under-collection of the WRAM is aggregated with the MCBA over- or under-collection for the corresponding ratemaking area and bears interest at the current 90-day commercial paper rate. As of December 31, 2023, GSWC had an aggregated regulatory asset of $41.5 million, which is comprised of a $43.9 million under-collection in the WRAM accounts and a $2.4 million over-collection in the MCBA accounts. During 2023, GSWC recorded additional net under-collections in the WRAM/MCBA accounts of approximately $30.1 million related to the 2023 year that resulted largely from lower-than-adopted water usage as authorized in the general rate case decision. GSWC recorded a net reduction of $9.8 million of under-collections during the first quarter of 2023 to reflect the cumulative full-year impact of 2022 based on authorized 2022 amounts approved in the general rate case decision for both the WRAM and MCBA accounts. On July 27, 2023, the CPUC approved the recovery of all pre-2023 WRAM/MCBA balances. Accordingly, GSWC has implemented surcharges and surcredits to recover/refund all of its WRAM/MCBA balances accumulated as of December 31, 2022. As required by the accounting guidance for alternative revenue programs, GSWC is required to collect its WRAM balances within 24 months following the end of the year in which an under-collection is recorded. As of December 31, 2023, there were no material WRAM under-collections that were estimated to be collected over more than 24 months. Pensions and Other Post-retirement Obligations: A net regulatory liability and asset have been recorded at December 31, 2023 and 2022, respectively, for costs that would otherwise be charged to “other comprehensive income” within shareholders’ equity for the funded status of Registrant’s pension and other post-retirement benefit plans because the cost of these plans has historically been recovered through rates. As discussed in Note 12, as of December 31, 2023, Registrant’s overfunded position for these plans that have been recorded as regulatory liabilities totaled $3.8 million. In addition, the CPUC has authorized GSWC and BVES to each use two-way balancing accounts to track differences between the forecasted annual pension expenses adopted in their respective customer rates and the actual annual expense to be recorded in accordance with the accounting guidance for pension costs. The two-way balancing accounts bear interest at the current 90-day commercial paper rate. As of December 31, 2023, GSWC has a $1.1 million over-collection related to the general office and water regions, and BVES has a $277,000 over-collection in its two-way balancing account. COVID-19 Emergency Memorandum Accounts: The CPUC has authorized GSWC and BVES to track incremental costs, including bad debt expense in excess of what is included in their respective revenue requirements, the purchase of personal protective equipment, and other incremental COVID-19 related costs incurred as a result of the pandemic in COVID-19 emergency-related memorandum accounts, which GSWC and BVES both intend to file with the CPUC for future recovery of these costs. In December 2023, GSWC filed an application with the SWRCB through the Extended Arrearage Program to obtain additional COVID relief funds to provide further assistance to its customers for their water debt accrued during the COVID-19 pandemic. GSWC has received confirmation from SWRCB that it is currently processing GSWC's application and expects to disburse approximately $3.5 million in additional COVID relief funds through this program. All funds to be received will be applied to customer eligible delinquent balances. As of December 31, 2023, GSWC has recorded a reduction to its bad debt-related amounts included in its COVID-19 memorandum account, with a corresponding reduction to its estimated customer bad debt reserves. As of December 31, 2023, GSWC and BVES had approximately $1.2 million and $500,000, respectively, in regulatory asset accounts related to the purchase of personal protective equipment, bad debt expense in excess of their revenue requirements, additional incurred printing costs, and other incremental COVID-19-related costs. Emergency-related memorandum accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are recognized as regulatory assets for future recovery. As a result, the amounts recorded in the COVID-19 emergency-related memorandum accounts have not impacted GSWC’s or BVES’s earnings. The CPUC requires that amounts tracked in GSWC’s and BVES’s COVID-19 memorandum accounts for unpaid customer bills be first offset by any (i) federal and state relief for water or electric utility bill debt, and (ii) customer payments through payment plan arrangements, prior to receiving recovery from customers at large. As of December 31, 2023, GSWC fully offset its bad debt-related CEMA balance as a result of additional COVID relief funds approved. In addition, BVES has filed to recover the remaining balance in its COVID-19 memorandum account through its general rate case application filed in August 2022. Low Income Balancing Accounts: This regulatory asset reflects the net balance of the incremental administration costs, not already reflected in authorized rates, the customers’ discounts issued and the revenues generated by the low-income surcharges for the Customer Assistance Program in GSWC’s water regions and the California Alternate Rates for Energy program for BVES. These low-income programs, which are mandated by the CPUC, currently provide a flat discount based on 20% of a typical customer bill for qualified low-income water customers and a 20% discount for qualified low-income electric customers. The low-income balancing accounts accrue interest at the prevailing 90-day commercial paper rate. As of December 31, 2023, there is an aggregate $5.7 million under-collection in the low-income balancing accounts. Surcharges have been implemented to recover the costs included in these balancing accounts. Other BVES Regulatory Assets: Wildfire Mitigation and Other Fire Prevention Related Costs Memorandum Accounts The CPUC adopted regulations intended to enhance the fire safety of overhead electric power lines. Those regulations included increased minimum clearances around electric power lines. BVES was authorized to track incremental costs incurred to implement the regulations in a fire hazard prevention memorandum account for the purpose of obtaining cost recovery in a future general rate case. In August 2019, the CPUC issued a final decision on the electric general rate case, which set new rates through the year 2022. Among other things, the decision authorized BVES to record incremental costs related to vegetation management, such as costs for increased minimum clearances around electric power lines, in a CPUC-approved memorandum account for potential future recovery. As of December 31, 2023, BVES has approximately $11.8 million in incremental vegetation management costs recorded as a regulatory asset. BVES has requested recovery of these costs in its general rate case application filed with the CPUC in August 2022 for future recovery. The incremental costs related to vegetation management included in the memorandum account will be subject to review during the general rate case proceeding. California legislation enacted in September 2018 requires all investor-owned electric utilities to have a wildfire mitigation plan (“WMP”) approved by the Office of Energy Infrastructure Safety (“OEIS”) and ratified by the CPUC. The WMP must include a utility’s plans on constructing, maintaining, and operating its electrical lines and equipment to minimize the risk of catastrophic wildfire. In May 2023, BVES submitted its WMP covering the period from 2023 to 2025 to OEIS for approval prior to going to the CPUC for ratification. In the fourth quarter of 2023, OEIS issued a final decision of approval and the CPUC ratified BVES’s 2023-2025 WMP. As of December 31, 2023, BVES has approximately $5.9 million related to expenses accumulated in its WMP memorandum accounts that have been recognized as regulatory assets for future recovery. All capital expenditures and other costs incurred through December 31, 2023 as a result of BVES’s WMPs are not currently in rates and have been filed for future recovery in BVES’s general rate case application. These costs will be subject to review during the general rate case proceeding. 2023 Winter Storm Other Regulatory Asset BVES activated a CEMA to track the incremental costs incurred in response to a severe winter storm that occurred during certain weeks of the first and second quarters of 2023. The governor of California declared a state of emergency for the storm. Incremental costs of approximately $1.3 million were incurred and included in the CEMA account, which has been recorded as a regulatory asset as of December 31, 2023 for future recovery. The incremental costs included in the CEMA account will be subject to review and approval by the CPUC. CEMA accounts are well-established cost recovery mechanisms authorized as a result of a state/federal declared emergency, and are therefore recognized as regulatory assets for future recovery. As a result, the amounts recorded in this CEMA account has not impacted BVES’s earnings. Electric Supply Cost Adjustment Mechanism Under the current electric supply cost adjustment mechanism approved by the CPUC, BVES tracks the difference between its adopted supply costs included in rates and actual supply costs, which consist largely of purchased power for resale under the existing long-term fixed price purchase power agreements. The under‑collections included in the electric supply cost balancing account are being recovered through surcharges. Annually, BVES files an advice letter with the CPUC to revise the surcharge that incorporates the under-collected balances through the previous calendar year's end if the balance meets the minimum balance filing threshold. During 2023, BVES recorded an additional under-collection of $1.9 million in the electric supply cost balancing account. In January 2024, BVES filed an advice letter to implement a revised surcharge to recover the cumulative balances as of December 31, 2023. The new surcharge was effective February 1, 2024. Other Regulatory Assets: Other regulatory assets represent costs incurred by GSWC or BVES for which they have received or expect to receive rate recovery in the future. Registrant believes that these regulatory assets are supported by regulatory rules and decisions, past practices, and other facts or circumstances that indicate recovery is probable. If the CPUC determines that a portion of either GSWC’s or BVES’s assets are not recoverable in customer rates, the applicable entity must determine if it has suffered an asset impairment that requires it to write down the regulatory asset to the amount that is probable of recovery.

X
- References No definition available. + Details
Name: | us-gaap_RegulatedOperationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit. + References No definition available. + Details
Name: | us-gaap_ScheduleOfRegulatoryAssetsAndLiabilitiesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration