Regulatory Matters

9 Months Ended

Sep. 30, 2022

Regulatory assets, net are comprised of the following as of September 30, 2022, and December 31, 2021:


	September 30, 2022		December 31, 2021
Regulatory assets:
Income tax temporary differences, net	$	33,811	22,420
Postretirement pensions and other postretirement benefits	64,934		62,197
Business combinations debt premium, net	18,031		19,937
Balancing and memorandum accounts, net	22,583		38,334
Water Rate Adjustment	(2,800)		2,588
Other, net	10,124		9,145
Total regulatory assets, net in Condensed Consolidated Balance Sheets	146,683		154,621
Less: current regulatory assets, net	738		2,629
Total regulatory assets, net, less current portion	$	145,945	151,992

As of September 30, 2022, and December 31, 2021, SJW Group’s regulatory assets, net, not earning a return primarily included postretirement pensions and the unfunded amount of other medical benefits, and business combination debt premiums, net. The total amount of regulatory assets, net not earning a return at September 30, 2022, and December 31, 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $86,113 and $84,887, respectively.

Balancing and Memorandum Accounts

SJWC has established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and 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 (“MWRAM”) 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. The Water Conservation Memorandum Account (“WCMA”) allows SJWC to track lost revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reductions. SJWC records the lost revenue captured in the WCMA balancing accounts. Drought surcharges collected are used to offset the revenue losses tracked in the WCMA. On October 11, 2022, the CPUC issued General Rate Case Decision No. 22-10-005, which approved a recovery of $18,174 in balancing and memorandum accounts from customers.

Balancing and memorandum accounts recorded to regulatory assets, net for the three and nine months ended September 30, 2022, and 2021 are as follows:


	Three months ended September 30, 2022				Three months ended September 30, 2021
	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance
Revenue accounts:
MWRAM	$	21,096	1,381	—	22,477	$	15,278	363	—	15,641
WCMA	(14,961)		3,868	(8,708)	(19,801)	668		—	—	668
Cost of capital memorandum account	(1,568)		(8)	—	(1,576)	(1,562)		—	—	(1,562)
All others	417		590	—	1,007	(1,164)		397	—	(767)
Total revenue accounts	4,984		5,831	(8,708)	2,107	13,220		760	—	13,980
Cost-recovery accounts:
Water supply costs	11,111		391	—	11,502	9,895		388	—	10,283
Pension	5,069		59	—	5,128	4,210		366	—	4,576
Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)	543		3	(106)	440	928		—	(121)	807
COVID-19 Catastrophic Event Memorandum Account (“CEMA”)	2,586		420	—	3,006	2,618		567	—	3,185
All others	479		(79)	—	400	446		—	—	446
Total cost-recovery accounts	19,788		794	(106)	20,476	18,097		1,321	(121)	19,297

Total	$	24,772	6,625	(8,814)	22,583	$	31,317	2,081	(121)	33,277


	Nine months ended September 30, 2022				Nine months ended September 30, 2021
	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance	Beginning Balance		Regulatory Asset Increase (Decrease)	Refunds (Collections) Adjustments	Ending Balance
Revenue accounts:
MWRAM	$	16,866	5,610	1	22,477	$	12,077	3,563	1	15,641
WCMA	3,534		2,768	(26,103)	(19,801)	666		—	2	668
Cost of capital memorandum account	(1,563)		(13)	—	(1,576)	(1,561)		(1)	—	(1,562)
All others	(386)		1,392	1	1,007	(1,139)		369	3	(767)
Total revenue accounts	18,451		9,757	(26,101)	2,107	10,043		3,931	6	13,980
Cost-recovery accounts:
Water supply costs	10,545		957	—	11,502	8,123		2,159	1	10,283
Pension	4,941		187	—	5,128	3,478		1,098	—	4,576
PRVMA	707		5	(272)	440	1,108		—	(301)	807
CEMA	3,245		(239)	—	3,006	2,266		919	—	3,185
All others	445		(45)	—	400	445		1	—	446
Total cost-recovery accounts	19,883		865	(272)	20,476	15,420		4,177	(300)	19,297

Total	$	38,334	10,622	(26,373)	22,583	$	25,463	8,108	(294)	33,277

All balancing accounts and memorandum 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.