Regulatory Matters

9 Months Ended

Sep. 30, 2023

Regulatory assets, net are comprised of the following as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
Regulatory assets:
Income tax temporary differences, net	$	62,745	43,434
Postretirement pensions and other postretirement benefits	30,076		31,493
Business combinations debt premium, net	15,490		17,396
Monterey Water Revenue Adjustment Mechanism (“MWRAM”)	12,162		10,864
Water Conservation Memorandum Account (“WCMA”)	(7,683)		(5,039)
2022 General Rate Case Interim Memorandum Account	9,513		20,650
Cost recovery balancing and memorandum accounts	8,267		16,545
All other balancing and memorandum accounts	4,344		2,749
Water Revenue Adjustment (“WRA”)	(5,428)		(4,488)
Other, net	10,507		9,739
Total regulatory assets, net in Condensed Consolidated Balance Sheets	139,993		143,343
Less: current regulatory assets, net	8,573		16,068
Total regulatory assets, net, less current portion	$	131,420	127,275

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. In 2022, SJWC’s general rate case decision approved the use of the Full Cost Balancing Account to track the water supply costs and energy consumption. The MWRAM balancing account 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.

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 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. Mandatory water conservation requirements from Santa Clara Valley Water District ended on April 11, 2023, which also ended SJWC’s Mandatory Conservation Plan, that included drought allocations and surcharges. On October 2, 2023, the CPUC approved the continuation of WCMA and Water Conservation Expense Memorandum Account under the voluntary call for conservation effective April 20, 2023. 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.

CWC has been authorized by the Connecticut Public Utilities Regulatory Authority to utilize a WRA, a decoupling mechanism, to mitigate risk with changes in demand. The WRA is used to reconcile actual water demands with the demands projected in the most recent general rate case and allows the company to implement a surcharge or surcredit as necessary to recover or refund the revenues approved in the general rate case. The WRA allows the company to defer, as a regulatory asset or liability, the amount by which actual revenues deviate from the revenues allowed in the most recent general rate proceedings.

As of September 30, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $48,954 and $52,066, respectively.