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Balancing and Memorandum Account Recovery Procedures | 6 Months Ended
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Jun. 30, 2017
Regulated Operations [Abstract] |
BALANCING AND MEMORANDUM ACCOUNT RECOVERY PROCEDURES | Balancing and Memorandum Account Recovery Procedures San Jose Water Company established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes. San Jose Water Company also maintains memorandum accounts to track revenue impacts due to catastrophic events, certain unforeseen water quality expenses related to new federal and state water quality standards, energy efficiency, WCMA, drought surcharges, Monterey Water Revenue Adjustment Mechanism, and other approved activities or as directed by the CPUC. Balancing and memorandum accounts are recognized by San Jose Water Company when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process. In addition, in the case of special revenue programs such as the WCMA, San Jose Water Company follows the requirements of ASC Topic 980-605-25—“Alternative Revenue Programs” in determining revenue recognition, including the requirement that such revenues will be collected within 24 months of the year-end in which the revenue is recorded. A reserve is recorded for amounts SJW Group estimates will not be collected within the 24-month period. This reserve is based on an estimate of actual usage over the recovery period, offset by applicable drought surcharges. In assessing the probability criteria for balancing and memorandum accounts between general rate cases, San Jose Water Company considers evidence that may exist prior to CPUC authorization that would satisfy ASC Topic 980 subtopic 340-25 recognition criteria. Such evidence may include regulatory rules and decisions, past practices, and other facts and circumstances that would indicate that recovery or refund is probable. When such evidence provides sufficient support, the balances are recorded in SJW Group’s financial statements. Based on ASC Topic 980-605-25, San Jose Water Company recognized regulatory assets of $4,989 and $7,049 due to lost revenues accumulated in the 2017 WCMA account for the three and six months ended June 30, 2017, respectively. These regulatory assets were offset by a regulatory liability in the amount of $3,988 and $6,048 for three and six months ended June 30, 2017, respectively, created by Tariff Rule 14.1 drought surcharges collected as allowed for in Advice Letter 473A. As of June 30, 2017, there was no longer a balance of drought surcharges collected to fully offset the 2017 WCMA account. The remaining balance at June 30, 2017 related to drought surcharges collected outside of the California regulated entity. Of the $4,989 and $7,049 recognized in the 2017 WCMA account for the three and six months ended June 30, 2017, respectively, $1,277 was not covered by drought surcharges and was recognized as revenue for the three and six months ended June 30, 2017 less a $276 reserve for the estimated amount that may not be collected within the 24-month period defined in the guidance. These amounts have been recorded in the 2017 WCMA row shown in the table below. On June 1, 2017, the CPUC approved Advice Letter No. 508 to reinstate surcharges to recover the remaining balances from the 2014 WCMA and 2015 WCMA accounts which are expected to be recovered in full within a 12-month period. For the three and six months ended June 30, 2017, in accordance with ASC Topic 980-605-25 San Jose Water Company recognized in revenue the reserve balances of $978 and $2,219 for the 2014 WCMA and 2015 WCMA, respectively, which are recorded in their respective rows in the table below.
| Three months ended June 30, 2017 |  | Three months ended June 30, 2016
Beginning Balance |  | Revenue Increase (Reduction) |  | Refunds (Collections) |  | Surcharge Offset |  | Ending Balance |  | Beginning Balance |  | Revenue Increase (Reduction) |  | Refunds (Collections) |  | Surcharge Offset |  | Ending Balance
Memorandum accounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2014 WCMA* | $ | — |  |  | 978 |  |  | (70 | ) |  | — |  |  | 908 |  |  | $ | 2,427 |  |  | (152 | ) |  | (712 | ) |  | — |  |  | 1,563 |
2015 WCMA* | 398 |  |  | 2,183 |  |  | (486 | ) |  | — |  |  | 2,095 |  |  | 5,352 |  |  | (77 | ) |  | (528 | ) |  | — |  |  | 4,747 |
2016 WCMA | — |  |  | 45 |  |  | — |  |  | (45 | ) |  | — |  |  | — |  |  | 3,747 |  |  | — |  |  | (3,747 | ) |  | — |
2017 WCMA* | — |  |  | 4,989 |  |  | — |  |  | (3,988 | ) |  | 1,001 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
All others | 3,680 |  |  | 658 |  |  | 212 |  |  | — |  |  | 4,550 |  |  | 1,110 |  |  | 551 |  |  | — |  |  | — |  |  | 1,661 |
Total memorandum accounts | 4,078 |  |  | 8,853 |  |  | (344 | ) |  | (4,033 | ) |  | 8,554 |  |  | 8,889 |  |  | 4,069 |  |  | (1,240 | ) |  | (3,747 | ) |  | 7,971 |
Balancing accounts, net assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Water supply costs | 5,684 |  |  | 1,358 |  |  | 272 |  |  | — |  |  | 7,314 |  |  | 2,436 |  |  | 257 |  |  | (52 | ) |  | — |  |  | 2,641 |
Drought surcharges | (5,054 | ) |  | — |  |  | 60 |  |  | 4,033 |  |  | (961 | ) |  | (512 | ) |  | — |  |  | (4,951 | ) |  | 3,747 |  |  | (1,716 | )
Pension | (2,539 | ) |  | 273 |  |  | (641 | ) |  | — |  |  | (2,907 | ) |  | (427 | ) |  | 280 |  |  | (373 | ) |  | — |  |  | (520 | )
2012 General Rate Case true-up | 18,424 |  |  | — |  |  | (2,659 | ) |  | — |  |  | 15,765 |  |  | 30,572 |  |  | — |  |  | (2,832 | ) |  | — |  |  | 27,740 |
2015 General Rate Case true-up | 4,097 |  |  | — |  |  | (1,686 | ) |  | — |  |  | 2,411 |  |  | — |  |  | 8,767 |  |  | — |  |  | — |  |  | 8,767 |
All others | (623 | ) |  | (232 | ) |  | (305 | ) |  | — |  |  | (1,160 | ) |  | 1,225 |  |  | (97 | ) |  | (27 | ) |  | — |  |  | 1,101 |
Total balancing accounts | $ | 19,989 |  |  | 1,399 |  |  | (4,959 | ) |  | 4,033 |  |  | 20,462 |  |  | $ | 33,294 |  |  | 9,207 |  |  | (8,235 | ) |  | 3,747 |  |  | 38,013 |
Total | $ | 24,067 |  |  | 10,252 |  |  | (5,303 | ) |  | — |  |  | 29,016 |  |  | $ | 42,183 |  |  | 13,276 |  |  | (9,475 | ) |  | — |  |  | 45,984 |
| Six months ended June 30, 2017 |  | Six months ended June 30, 2016
Beginning Balance |  | Revenue Increase (Reduction) |  | Refunds (Collections) |  | Surcharge Offset |  | Ending Balance |  | Beginning Balance |  | Revenue Increase (Reduction) |  | Refunds (Collections) |  | Surcharge Offset |  | Ending Balance
Memorandum accounts: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2014 WCMA* | $ | — |  |  | 1,089 |  |  | (181 | ) |  | — |  |  | 908 |  |  | $ | 2,944 |  |  | (152 | ) |  | (1,229 | ) |  | — |  |  | 1,563 |
2015 WCMA* | 1,589 |  |  | 2,113 |  |  | (1,607 | ) |  | — |  |  | 2,095 |  |  | 5,372 |  |  | (97 | ) |  | (528 | ) |  | — |  |  | 4,747 |
2016 WCMA | — |  |  | 1,452 |  |  | — |  |  | (1,452 | ) |  | — |  |  | — |  |  | 6,761 |  |  | — |  |  | (6,761 | ) |  | — |
2017 WCMA* | — |  |  | 7,049 |  |  | — |  |  | (6,048 | ) |  | 1,001 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
All others | 2,768 |  |  | 1,329 |  |  | 453 |  |  | — |  |  | 4,550 |  |  | 594 |  |  | 1,068 |  |  | (1 | ) |  | — |  |  | 1,661 |
Total memorandum accounts | 4,357 |  |  | 13,032 |  |  | (1,335 | ) |  | (7,500 | ) |  | 8,554 |  |  | 8,910 |  |  | 7,580 |  |  | (1,758 | ) |  | (6,761 | ) |  | 7,971 |
Balancing accounts, net assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Water supply costs | 5,190 |  |  | 1,555 |  |  | 569 |  |  | — |  |  | 7,314 |  |  | 2,771 |  |  | (56 | ) |  | (74 | ) |  | — |  |  | 2,641 |
Drought surcharges | (7,688 | ) |  | — |  |  | (773 | ) |  | 7,500 |  |  | (961 | ) |  | (359 | ) |  | — |  |  | (8,118 | ) |  | 6,761 |  |  | (1,716 | )
Pension | (2,009 | ) |  | 446 |  |  | (1,344 | ) |  | — |  |  | (2,907 | ) |  | (552 | ) |  | 560 |  |  | (528 | ) |  | — |  |  | (520 | )
2012 General Rate Case true-up | 20,682 |  |  | — |  |  | (4,917 | ) |  | — |  |  | 15,765 |  |  | 33,070 |  |  | — |  |  | (5,330 | ) |  | — |  |  | 27,740 |
2015 General Rate Case true-up | 5,528 |  |  | — |  |  | (3,117 | ) |  | — |  |  | 2,411 |  |  | — |  |  | 8,767 |  |  | — |  |  | — |  |  | 8,767 |
All others | (151 | ) |  | (446 | ) |  | (639 | ) |  | 76 |  |  | (1,160 | ) |  | 1,366 |  |  | (227 | ) |  | (38 | ) |  | — |  |  | 1,101 |
Total balancing accounts | $ | 21,552 |  |  | 1,555 |  |  | (10,221 | ) |  | 7,576 |  |  | 20,462 |  |  | $ | 36,296 |  |  | 9,044 |  |  | (14,088 | ) |  | 6,761 |  |  | 38,013 |
Total | $ | 25,909 |  |  | 14,587 |  |  | (11,556 | ) |  | 76 |  |  | 29,016 |  |  | $ | 45,206 |  |  | 16,624 |  |  | (15,846 | ) |  | — |  |  | 45,984 |
* As of June 30, 2017, the reserve balance for the 2017 WCMA was $276 which has been netted from the three and six months ended June 30, 2017 balance above. As of June 30, 2016, the reserve balance for the 2014 WCMA and 2015 WCMA was $1,431 and $2,420, respectively, which has been netted from the three and six months ended June 30, 2016 balances above. As of June 30, 2017, the total balance in San Jose Water Company’s balancing and memorandum accounts combined, including interest, that has not been recorded into the financial statements was a net under-collection of $3,635. All balancing accounts and memorandum-type accounts not included for recovery or refund in the current general rate case will be reviewed by the CPUC in San Jose Water Company’s next general rate case or at the time an individual account reaches a threshold of 2% of authorized revenue, whichever occurs first.

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