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Regulatory Matters | 12 Months Ended
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Dec. 31, 2024
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, 2024, GSWC and BVES ha d a combined $54.7 million of net regulatory assets on the balance sheets, which included $149.8 million of regulatory assets net of $95.1 million o f regulatory liabilities. As authorized by the CPUC, the majority of the regulatory assets and liabilities accrue interest at the current 90-day commercial-paper rate. There are approximately $26.3 million of regulatory assets not accruing a carrying cost, which included $14.3 million related to flowed-through deferred income taxes, including the gross-up portion on the deferred tax resulting from the excess deferred income tax regulatory liability, and $8.8 million related to memorandum accounts authorized by the CPUC to track unrealized gains and losses on BVES’s purchase power contracts over the term of the contracts. The remaining $3.2 million relates to other regulatory assets that do not provide for a carrying cost. Furthermore, there are $92.1 million of regulatory liabilities not incurring interest that consisted of $67.5 million related to 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, and $23.5 million related to the net over funded position in Registrant’s pension and other retirement obligations (not including the two-way pension balancing accounts, which accrues interest). The remaining $1.1 million related to other regulatory liabilities do not accrue interest. 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) |  | 2024 |  | 2023
GSWC |  |  |  |
2022/2023 general rate case memorandum accounts (unbilled revenue) |  | $ | 37,711 |  |  | $ | 52,795 |
Water revenue adjustment mechanism, net of the modified cost balancing account |  | 29,738 |  |  | 41,545 |
Asset retirement obligations (Note 1) |  | 7,501 |  |  | 7,099 |
Flowed-through deferred income taxes, net (Note 11) |  | 12,506 |  |  | 3,190 |
Low income rate assistance balancing accounts |  | 8,834 |  |  | 5,763 |
Other regulatory assets |  | 11,352 |  |  | 10,661 |
Excess deferred income taxes (Note 11) |  | (63,682) |  |  | (70,189) |
Pensions and other post-retirement obligations (Note 12) |  | (25,179) |  |  | (4,867) |
Other regulatory liabilities |  | (608) |  |  | (268) |
Total GSWC |  | $ | 18,173 |  |  | $ | 45,729 |
BVES |  |  |  |
2023/2024 general rate case memorandum accounts (unbilled revenue) |  | 9,777 |  |  | — |
Derivative instrument memorandum account (Note 5) |  | 8,823 |  |  | 2,360 |
Wildfire mitigation and other fire prevention related costs memorandum accounts |  | 14,681 |  |  | 17,716 |
Other regulatory assets |  | 8,853 |  |  | 10,280 |
Other regulatory liabilities |  | (5,628) |  |  | (6,578) |
Total BVES |  | $ | 36,506 |  |  | $ | 23,778 |
Total AWR |  | $ | 54,679 |  |  | $ | 69,507 |
Water General Rate Case and the 2022/2023 General Rate Case Memorandum Accounts: In June 2023, the CPUC adopted a final decision in GSWC’s general rate case application for all its water regions and its general office that determined new water rates for the years 2022–2024. The new rates approved were retroactive to January 1, 2022. Upon receiving the final decision, GSWC filed for the implementation of new 2023 rate increases that went into effect on July 31, 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 2022 and 2023 rates authorized by the CPUC for future recovery. In October 2023, surcharges were implemented to recover the cumulative retroactive rate differences over 36 months. As of December 31, 2024, there is an aggregate cumulative amount of $37.7 million under-collection in the general rate case memorandum accounts that GSWC recorded as regulatory assets for retroactive water revenues. Alternative-Revenue Programs: Since 2008, GSWC has recorded 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, 2024, GSWC had an aggregated regulatory asset of $29.7 million, which is comprised of a $29.1 million under-collection in the WRAM accounts and a $0.6 million under-collection in the MCBA accounts. During 2024, GSWC recorded additional net under-collections in the WRAM/MCBA accounts of approximately $8.0 million that resulted largely from lower-than-adopted water usage as authorized in the general rate case decision. In May 2024, the CPUC approved the recovery of all pre-2024 WRAM/MCBA balances, with the majority of the balances to be recovered within 18 months. Accordingly, effective May 1, 2024, GSWC implemented surcharges to recover all of its WRAM/MCBA balances accumulated as of December 31, 2023. GSWC plans to file its 2024 WRAM/MCBA balances in the first quarter of 2025. As required by the accounting guidance for alternative revenue programs, in order to recognize the revenues under these 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, 2024, there were no material WRAM under-collections that were estimated to be collected over more than a 24 month period. On January 30, 2025, the CPUC issued a final decision in connection with GSWC's general rate case that adopted a settlement agreement between GSWC and Cal Advocates and will set new rates for 2025 – 2027. In addition, the final d ecision rejected GSWC’s request for the continuation of the WRAM and MCBA, and instead orders GSWC to transition to a modified rate adjustment mechanism (a Monterey-style WRAM or “M-WRAM”) and an incremental cost balancing account (“ICBA”) for supply costs. The M-WRAM tracks the difference between the revenue based on actual metered sales through a tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a standard quantity rate had been in effect. The ICBA for supply costs tracks differences between the authorized per-unit prices of water production costs and actual per-unit prices of water production costs. Both the M-WRAM and the ICBA are effective January 1, 2025. The final decision does not affect the recovery of the cumulative WRAM/MCBA balances recorded as of December 31, 2024. Electric General Rate Case and the 2023/2024 General Rate Case Memorandum Accounts: On August 30, 2022, BVES filed a general rate case application that will determine new electric rates for the years 2023 – 2026. On November 1, 2024, BVES, Cal Advocates, and the other intervenor in the proceeding filed a joint motion to adopt a settlement agreement between the parties resolving all issues in connection with the pending general rate case. On December 12, 2024, BVES received a proposed decision from the assigned administrative law judge at the CPUC in connection with the general rate case proceeding. On January 16, 2025, the CPUC adopted a final decision that, among other things, set the final new rates for the years 2023 – 2026, and adopts the settlement agreement in its entirety. BVES was authorized by the CPUC to establish a general rate case memorandum account that made the new rates retroactive to January 1, 2023. Because of the delay in finalizing the electric general rate case, billed electric revenues for the years of 2023 and 2024, were based on 2022 adopted rates. The general rate case memorandum account tracks the revenue differ ences between the 2022 adopted rates and the 2023 and 2024 rates authorized by the CPUC for future recovery. As of December 31, 2024, an aggregate cumulative under-collection amount of $9.8 million in retroactive revenues related to the full year of 2023 and 2024 was recorded during the fourth quarter of 2024 along with a corresponding increase to BVES’s regulatory assets for future recovery from customers. Because of receiving a proposed decision in December 2024 followed by a final decision in January 2025, both of which approved the settlement agreement in its entirety, the impact of retroactive rates for the full year of 2023 and the 2024 second-year rate increases have been reflected in 2024 as it became probable that the approved retroactive rates would be permitted to be billed to customers in the future. Within 90 days from the effective date of the final decision, BVES will also file for recovery of the cumulative retroactive amounts related to 2023 and 2024, which are expected to be recovered over a 36 month period. Among other things, the settlement agreement also approves for recovery the requested capital expenditures and other incremental operating costs already incurred in connection with BVES’s wildfire mitigation plans that are currently not included in customer rates as discussed below. Cost of Capital Proceeding: In July 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%; (iii) adopts a return on equity of 8.85%; (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 2023, which made all adjustments to rates prospective and effective July 31, 2023, 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. Pensions and Other Post-retirement Obligations: Net regulatory liabilities have been recorded at December 31, 2024 and 2023, 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 have historically been recovered through rates. As discussed in Note 12, as of December 31, 2024, Registrant’s overfunded position for these plans have been recorded as regulatory liabilities and total $23.5 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, 2024, GSWC has a $1.7 million over-collection related to the general office and water regions, and BVES has an insignificant balance in its two-way balancing account. 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, 2024, there is an aggregate $8.8 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 Balancing and 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. On January 16, 2025, the CPUC issued a final decision in the electric general rate case that set new rates effective for 2023 through the year 2026, and included higher level of costs related to vegetation management, such as costs for increased minimum clearances around electric power lines. In addition, the final decision approved for recovery the incremental vegetation management costs incurred prior to 2023 that were not included in customer rates and were being tracked in a CPUC-approved balancing account for future recovery. The decision approves BVES’s recovery of vegetation management costs recorded prior to 2023. As of December 31, 2024, BVES has approximately $9.9 million in pre-2023 incremental vegetation management costs recorded as a regulatory asset. Furthermore, 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 the fourth quarter of 2024, OEIS approved BVES’s 2025 WMP update to its 2023-2025 WMP, which was ratified by the CPUC on January 16, 2025. The general rate case decision approved by the CPUC on January 16, 2025 also included costs related to BVES’s WMP in BVES’s revenue requirement. The final decision also authorized the recovery of incremental costs recorded prior to 2023 related to wildfire mitigation activities through WMP memorandum accounts. As of December 31, 2024, BVES recorded approximately $4.8 million as regulatory assets related to pre-2023 expenses accumulated in its WMP memorandum accounts for future recovery. Within 90 days from the effective date of the final decision in the general rate case, BVES will file for recovery of all pre-2023 costs included in the vegetation management and other WMP memorandum accounts discussed above, which are expected to be recovered over a 36-month surcharge. 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.

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- 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
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