Balancing and Memorandum Accounts

3 Months Ended

Mar. 31, 2021

SJWC has 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. SJWC 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, water conservation, water tariffs, and other approved activities or as directed by the CPUC. The Monterey Water Revenue Adjustment Mechanism (“WRAM”) tracks the difference between the revenue received for actual metered sales through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate would have been in effect.

Balancing and memorandum accounts are recognized by SJWC 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 Water Conservation Memorandum Account (“WCMA”) and Water Revenue Adjustment (“WRA”), SJWC and CTWS follow 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.

In assessing the probability criteria for balancing and memorandum accounts between general rate cases, SJWC considers evidence that may exist prior to CPUC authorization that would satisfy ASC Topic 980-340-25—“Other Assets and Deferred Costs” 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 condensed consolidated financial statements.


	Three months ended March 31, 2021				Three months ended March 31, 2020
	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance

Revenue accounts:
Monterey WRAM	$	12,077	1,776	—	13,853	$	7,015	1,970	(27)	8,958
2014-2017 WCMA	666		—	—	666	708		—	(43)	665
2012 General Rate Case true-up	752		—	1	753	752		—	—	752
Cost of capital memorandum account	(1,561)		—	—	(1,561)	(1,553)		(5)	—	(1,558)
Tax memorandum account	333		—	—	333	(6,643)		(3)	6,978	332
All others	(2,224)		(175)	—	(2,399)	(2,219)		(205)	(67)	(2,491)
Total revenue accounts	$	10,043	1,601	1	11,645	$	(1,940)	1,757	6,841	6,658
Cost-recovery accounts:
Water supply costs	8,123		787	—	8,910	4,328		767	(34)	5,061
Pension	3,478		366	—	3,844	2,449		415	22	2,886
Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)	1,108		—	(81)	1,027	—		—	—	—
COVID-19 Catastrophic Event Memorandum Account (“CEMA”)	2,266		—	—	2,266	—		—	—	—
All others	445		—	—	445	446		1	(4)	443
Total cost-recovery accounts	$	15,420	1,153	(81)	16,492	$	7,223	1,183	(16)	8,390

Total	$	25,463	2,754	(80)	28,137	$	5,283	2,940	6,825	15,048

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 SJWC’s next general rate case or at the time an individual account balance reaches a threshold of 2% of authorized revenue, whichever occurs first.