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REGULATORY ASSETS AND LIABILTIES | 12 Months Ended
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Dec. 31, 2022
Regulated Operations [Abstract] |
REGULATORY ASSETS AND LIABILTIES | REGULATORY ASSETS AND LIABILITIES Regulatory assets and liabilities were comprised of the following as of December 31:
| Recovery Period |  | 2022 |  | 2021
Regulatory Assets |  |  |  |  |
Pension and retiree group health | Indefinitely |  | $ | 171 |  |  | $ | 17,607 |
Property-related temporary differences (tax benefits flowed through to customers) | Indefinitely |  | 143,546 |  |  | 130,565 |
Other accrued benefits | Indefinitely |  | 24,946 |  |  | 23,280 |
Net WRAM and MCBA long-term accounts receivable | 1-2 years |  | 41,558 |  |  | 29,789 |
Asset retirement obligations, net | Indefinitely |  | 24,548 |  |  | 22,935 |
IRMA long-term accounts receivable | 1-2 years |  | 3,682 |  |  | 9,032 |
Tank coating | Various |  | 16,395 |  |  | 13,680 |
Recoverable property losses | 7 Years |  | 3,144 |  |  | 3,843 |
PCBA | Various |  | 19,091 |  |  | 21,500 |
Other components of net periodic benefit cost | Indefinitely |  | — |  |  | 3,342 |
General district balancing account receivable | Various |  | 377 |  |  | 568 |
Customer assistance program (CAP) and Rate support fund (RSF) accounts receivable | 1 year |  | 2,965 |  |  | 5,991 |
Other regulatory assets | Various |  | 3,197 |  |  | 3,560 |
Total Regulatory Assets |  |  | $ | 283,620 |  |  | $ | 285,692 |
Regulatory Liabilities |  |  |  |  |
Future tax benefits due to customers |  |  | $ | 131,155 |  |  | $ | 135,027 |
Pension and retiree group health |  |  | 58,678 |  |  | 27,294 |
HCBA |  |  | 14,318 |  |  | 9,687 |
Conservation program |  |  | 6,036 |  |  | 7,206 |
Net WRAM and MCBA long-term payable |  |  | 172 |  |  | 143 |
Other components of net periodic benefit cost |  |  | 2,475 |  |  | 353 |
Other regulatory liabilities |  |  | 845 |  |  | 718 |
Total Regulatory Liabilities |  |  | $ | 213,679 |  |  | $ | 180,428 |
The Company's pension and retiree group health regulatory asset represents the unfunded obligation of the Company’s pension and postretirement benefit plans which the Company expects to recover from customers in the future for these plans. The pension and retiree group health regulatory liability represents the over funded obligation of the Company’s postretirement benefit plans which the Company expects to refund to customers in the future. These plans are discussed in further detail in Note 11. The PCBA regulatory asset and the HCBA regulatory liability represent incurred pension and healthcare costs that exceeded/was below the cost recovery in rates and is recoverable/refundable from/to customers. The other components of net periodic benefit cost regulatory asset are authorized by the Commissions and are probable for rate recovery through the capital program. The property-related temporary differences are primarily due to: (i) the difference between book and federal income tax depreciation on utility plant that was placed in service before the regulatory Commissions adopted normalization for rate making purposes; and (ii) certain (state) deferred taxes for which flow through accounting continues to be applied to originating deferred taxes. The regulatory asset will be recovered in rates in future periods as the tax effects of the temporary differences previously flowed-through to customers reverse. Other accrued benefits are accrued benefits for vacation, self-insured workers' compensation, and directors' retirement benefits. The net WRAM and MCBA long-term accounts receivable is the under-collected portion of recorded revenues that are not expected to be collected from customers within 12 months. The IRMA long-term accounts receivables is the additional amount the Company would have billed customers in 2020 and 2021 had the 2018 GRC been approved on time. The asset retirement obligation regulatory asset represents the difference between costs associated with asset retirement obligations and amounts collected in rates. Tank coating represents the maintenance costs for tank coating projects that are recoverable from customers. The CAP and RSF are two programs offered by Cal Water that assist qualifying customers with their monthly water bill. The programs are funded by the customers who do not qualify for the assistance. The CAP and RSF regulatory assets represent the amounts due from customers to fund the CAP and RSF credits that were provided to assist qualifying customers. The future tax benefits due to customers primarily resulted from federal tax law changes enacted by the TCJA on December 22, 2017. The TCJA reduced the federal corporate income tax rate from 35 percent to 21 percent beginning on January 1, 2018, and GAAP requires the Company to re-measure all existing deferred income tax assets and liabilities to reflect the reduction in the federal tax rate on the enactment date. The conservation program regulatory liability is for incurred conservation costs that were below the cost recovery in rates and is refundable to customers. Short-term regulatory assets and liabilities are excluded from the above table. The short-term regulatory assets as of December 31, 2022 and 2021 were $66.8 million and $78.6 million, respectively. The short-term regulatory assets, as of December 31, 2022, and 2021 primarily consisted of net WRAM and MCBA, IRMA, and PCBA receivables. The short-term portion of regulatory liabilities as of December 31, 2022 and 2021 were $12.2 million and $32.9 million, respectively. The short-term regulatory liabilities as of December 31, 2022, primarily consist of TCJA liabilities. The short-term regulatory liabilities as of December 31, 2021, primarily consist of TCJA liabilities and HCBA liabilities. Cost of Capital Application On May 3, 2021, Cal Water filed its required application with the CPUC to review its cost of capital for 2022 through 2024. Cal Water currently has an approved return on equity of 9.2%, a cost of debt of 5.51%, and a capital structure of 53.4% equity to 46.6% debt ratio. Cal Water requested a return on equity of 10.35%, a cost of debt of 4.23%, and a capital structure of 53.4% equity to 46.6% debt ratio. The California Public Advocates Office recommended a return on equity of 7.81%, a cost of debt of 4.23%, and a capital structure of 49.4% equity to 50.6% debt ratio. Evidentiary hearings were held in May 2022 and the case was submitted to the CPUC at the end of the second quarter of 2022 for review. In the event that the CPUC adopts the cost of capital components retroactively to January 1, 2022, the Company estimates the reduced cost of debt, if adopted at the Company's proposed equity capital structure, would reduce annual revenue by approximately $11.0 million. The Company has not reserved for any potential outcome of the proceeding as the Company has determined that it is not probable that the proceeding will be approved retroactively to January 1, 2022.

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