What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-03-01 · 258 added, 264 removed, 217 unchanged (71% of the section changed)

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SJWNE LLC is a special purpose entity established to hold SJW Group’s investment in Connecticut Water Service, Inc.

CTWS with its headquarters located in Clinton, Connecticut was incorporated in 1974 in the state of Connecticut.

As part of the merger transaction between SJW Group and CTWS on October 9, 2019, CTWS became a wholly-owned subsidiary of SJWNE LLC.

CTWS is a holding company with four wholly-owned subsidiaries.

Connecticut Water Service, Inc.

with its headquarters located in Clinton, Connecticut was incorporated in 1974 in the State of Connecticut.

As part of the merger transaction between SJW Group and Connecticut Water Service, Inc.

on October 9, 2019, Connecticut Water Service, Inc.

and its subsidiaries (“CTWS”) became a wholly-owned subsidiary of SJWNE LLC.

Connecticut Water Service, Inc.

is a holding company with four wholly-owned subsidiaries.

The Connecticut Water Company (“Connecticut Water”) and The Maine Water Company (“Maine Water”) are public utilities in the business of providing water service to approximately 140,000 connections that serve a population of approximately 456,000 people in 81 municipalities throughout Connecticut and Maine and more than 3,000 wastewater connections in Southbury, Connecticut.

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(“NEWUS”), which provides contract water and sewer operations and other water related services.

Effective September 30, 2020, The Heritage Village Water Company (“HVWC”) and The Avon Water Company (“Avon Water”) merged into Connecticut Water after receiving merger approval from the Connecticut Public Utilities Regulatory Authority (“PURA”).

Prior to the merger, HVWC and Avon Water were subsidiaries of CTWS.

• SJWTX, Inc.

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is doing business as Canyon Lake Water Service Company (“CLWSC”).

CLWSC is a public utility in the business of providing water service to approximately 20,000 connections that serve approximately 59,000 people.

CLWSC’s service area comprises more than 247 square miles in the southern region of the Texas Hill Country in Blanco, Comal, Hays and Travis counties, the growing region between San Antonio and Austin, Texas.

CLWSC is a public utility in the business of providing water service to approximately 24,000 service connections that serve approximately 70,000 people.

CLWSC’s service area comprises more than 266 square miles in the southern region of the Texas Hill Country in Bandera, Blanco, Comal, Hays, Kendall, Medina and Travis counties, the growing region between San Antonio and Austin, Texas.

has a 25% interest in Acequia Water Supply Corporation (“Acequia”).

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As a result, Acequia has been consolidated with SJWTX, Inc.

On December 17, 2021, CLWSC completed its acquisition of Kendall West Utility and Bandera East Utility, companies that provide water services, including wastewater and recycled water services in Kendall, Bandera and Medina counties which are located in south central Texas.

Kendall West Utility and Bandera East Utility, together, added approximately 1,600 service connections that serve a population of approximately 5,000 people in a service area approximately 19 square miles to CLWSC’s operations.

SJWTX, Inc is undergoing a corporate reorganization to separate regulated operations from non-tariffed activities.

In November 2021, SJWTX Holdings, Inc.

(“SJWTX Holdings”) and Texas Water Operation Services LLC (“TWOS”) were formed for the purpose of effecting a corporate reorganization of our water services organization in Texas.

TWOS was created for non-tariffed operations and is wholly-owned by SJWTX Holdings.

SJWTX Holdings is a wholly-owned subsidiary of SJW Group, incorporated to hold the investments in SJWTX, Inc.

In addition, in 2022, SJWTX Holdings intends to create a new subsidiary to hold future wholesale water supply assets.

• SJW Land Company was incorporated in 1985.

SJW Land Company owns undeveloped land and operates commercial buildings in Tennessee.

SJW Land also has a 70% limited partnership interest in 444 West Santa Clara Street, L.P.

The partnership owned a commercial building in California which was sold by the partnership in 2017.

See Note 1 of “Notes to Consolidated Financial Statements” for a discussion of the sales transaction.

SJW Land Company owns undeveloped land in California and Tennessee and operates commercial buildings in Tennessee.

Together, SJWC, Connecticut Water, CLWSC, Maine Water and NEWUS, are referred to as “Water Utility Services.”

SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P.

and Chester Realty, Inc.

SJW Land Company and and Chester Realty, Inc.

are collectively referred to as “Real Estate Services.”

SJW Group and CTWS Merger

On October 9, 2019, SJW Group completed its previously announced acquisition of CTWS pursuant to the terms of the Second Amended and Restated Agreement and Plan of Merger, dated August 5, 2018, by and among SJW Group, Hydro Sub, Inc., a Connecticut corporation and a wholly-owned subsidiary of SJW Group, and CTWS.

SJW Group acquired all of the outstanding stock of CTWS for $70.00 per share in cash (without interest and less any applicable withholding taxes).

The total cash purchase price was approximately $838.5 million, less cash received of $3.0 million, and approximately $6.4 million related to outstanding awards of restricted stock units and deferred share units assumed in connection with the CTWS merger.

SJW Group financed the acquisition with net proceeds from its December 2018 sale of 7,762,000 shares of common stock of approximately $411.1 million, and its October 2019 issuance of $427.4 million in new fixed rate term loans.

SJW Group raised an additional $18.5 million in the debt financing to partially finance transaction costs incurred in connection with the CTWS acquisition.

SJW Group raised an additional $60.0 million through debt financing to partially refinance certain CTWS short-term borrowings on its existing lines of credit after the CTWS acquisition closed.

Regulation and Rates

Water Utility Services are subject to rate regulation based on cost recovery and meets the criteria of accounting guidance for rate-regulated operations, which considers the timing of the recognition of certain revenues and expenses.

SJW Group’s consolidated financial statements reflect the effects of the rate-making process.

The rate-making process is intended to provide revenues sufficient to recover normal operating expenses, provide funds for replacement of water infrastructure and produce a fair and reasonable return on stockholder common equity.

SJW Group’s regulated operations financing activity is designed to

achieve capital structures consistent with regulatory guidelines in the locations where the companies operate.

The following summarizes each state’s authorized rates and capital structure as of December 31, 2021:

California Connecticut Texas (a) Maine (a)

Authorized capital structure (debt/equity) 47% / 53% 47% / 53% 37% / 63% 54% / 46%

Authorized return on equity 8.90% 9.00% 10.88% 9.81%

Authorized rate base (in millions) $958.9 $549.4 $43.3 $63.3

Estimated rate base at year-end (in millions) $1,023.1 $613.6 $95.1 $87.6

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(a) Represents averages over water systems operating in the state.

California Regulatory Affairs

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Memorandum accounts 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 during periods of mandated water restrictions, water tariffs and other approved activities or as directed by the CPUC.

The purpose of balancing and memorandum accounts is to track the under-collection or over-collection associated with such expense changes and activities for future recovery considerations.

On July 20, 2018, the California Public Utilities Commission (“CPUC”) issued an Order Instituting Investigation (“OII”) No.

18-07-007 concerning SJW Group’s then proposed merger with CTWS.

A Scoping Memorandum was issued on September 7, 2018, which identified the issues to be considered in the proceeding as to whether the proposed merger is subject to CPUC approval and to evaluate the merger’s likely impacts within California.

On September 14, 2018, SJW Group and SJWC submitted joint comments in response to the issues identified in accordance with the Scoping Memorandum’s adopted schedule, and reply comments were submitted on October 19, 2018.

A Public Participation Hearing was held on January 31, 2019.

On March 4, 2019, the CPUC suspended this proceeding due to SJW Group’s announcement of its intention to file a new merger approval application with the PURA.

On April 3, 2019, SJW Group and CTWS jointly filed a new merger application with PURA.

After securing the required approvals from both PURA and the Maine Public Utilities Commission (“MPUC”), SJW Group announced the close of the merger on October 9, 2019, and notified the CPUC accordingly.

On August 31, 2020, the CPUC issued Decision 20-08-036 dismissing the OII and closing the proceeding.

On September 14, 2018, the CPUC issued OII No.

18-09-003 to which SJWC was named as a Respondent.

The OII was to determine whether the company unlawfully overcharged customers over a 30-year period by failing to pro-rate service charges when increases occurred during a billing period, and whether the company double-billed service charges during one billing period when allegedly switching from billing such charges in advance to billing in arrears.

The OII resulted from a report by the CPUC’s Consumer Protection and Enforcement Division (“CPED”), dated August 16, 2018, recommending an investigation into SJWC’s billing practice.

CPED calculated a refund obligation of approximately $2.1 million for the years 2014 to 2016 that had been the subject of SJWC’s Advice Letter No.

CPED calculated a further refund obligation of approximately $2.0 million for the years 1987 to 2013.

CPED also asserted that the company double-billed its customers during a billing period when it allegedly converted from billing in advance to billing in arrears, assumed that such double-billing occurred in January 2011, and calculated a refund obligation of approximately $4.9 million.

The OII notes these estimates and identifies the proper refund amount as an issue in the proceeding.

The OII also identifies the CPUC’s authority to consider imposing penalties on SJWC in amounts ranging from $500 to $50,000 per offense, per day.

On July 24, 2019, SJWC and CPED jointly filed a motion for CPUC approval of a Settlement Agreement (“Agreement”) over SJWC’s past customer billing practices.

The Agreement requires the company to pay approximately $2.1 million in customer credits, consisting of $1.8 million for refunds during the period from 1987 to 2011 and an additional $0.4 million in customer credits to low-income water customers, and invest $5.0 million in utility plant that is not allowed an investment return or rate recovery.

The Agreement was subject to final approval by the CPUC.

A CPUC Presiding Officer’s Decision approved the Agreement in December 2019, but an appeal was filed in January 2020 by a group of SJWC customers.

A final CPUC decision approving the Agreement and dismissing the appeal was approved on February 27, 2020, and concluded this proceeding.

Advice Letter No.

545 was filed on March 13, 2020, requesting authorization to provide refunds to customers.

For a typical residential customer with a 3/4-inch meter, the one-time refund was $5.52.

This advice letter was approved effective April 12, 2020, and SJWC completed issuing refunds in mid-June 2020.

On June 19, 2019, the CPUC issued its final decision resolving the remaining issues in SJWC’s general rate case for 2019.

Decision 19-06-010 denied the establishment of a Water Revenue Adjustment Mechanism (“WRAM”) / Sales Reconciliation

Mechanism (“SRM”) and authorized the recovery of the Hydro Generation Research, Development and Demonstration Memorandum Account balance as of September 30, 2016.

SJWC filed Advice Letter No.

534 on August 1, 2019, to recover the $1.24 million Hydro Generation Memorandum Account balance as of September 30, 2017, via a surcharge over a three-year period.

The CPUC rejected the advice letter on October 10, 2019, citing an error in the name of the memorandum account and recommended a correction and a new filing for recovery.

SJWC filed to correct the record and received the CPUC’s decision on April 10, 2020.

Advice Letter 548 was filed on April 24, 2020, requesting recovery of $1.22 million via a 36-month surcharge.

The adjustment in the memorandum account balance reflected project costs incurred after September 30, 2016, which are not allowable per Decision 19-06-010.

Per Resolution W-5228 approved on August 27, 2020 by the CPUC, further adjustments were made to the memorandum account balance resulting in an approved recovery of $1.22 million which was recognized in the company’s regulatory assets as of September 30, 2020.

The recovery was approved in Advice Letter 548A effective August 31, 2020.

SJWC filed Advice Letter No.

537 with the CPUC requesting authorization to refund the balance in its 2018 Tax Accounting Memorandum Account as required by the general rate case decision on October 18, 2019.

On December 3, 2019, Advice Letter 537-A was filed to refund the balance via a one-time surcredit.

For a typical residential customer with a 3/4-inch meter, the one-time refund was $20.84 per customer.

This advice letter was approved effective January 21, 2020, and refunds to customers began and completed in January 2020.

SJWC filed Advice Letter No.

541 on November 20, 2019, with the CPUC requesting authorization to increase its revenue requirement by $8.6 million or 2.28% in 2020 for the first escalation year authorized in our 2018 General Rate Case Decision 18-011-025 which established rates for 2019, 2020, and 2021.

This advice letter was approved on December 26, 2019, and new rates became effective January 1, 2020.

On December 6, 2019, SJWC filed Application No.

19-12-002 with the CPUC requesting approval for cost recovery to deploy Advanced Metering Infrastructure throughout its service area.

The application seeks revenue increases of $2.3 million or 0.61% in 2021, $4.0 million or 1.04% in 2022, $2.5 million or 0.65% in 2023, and $0.3 million or 0.09% in 2024 based on current rates in effect.

A decision from the CPUC is anticipated in 2021.

On January 22, 2020, SJWC, along with three other California water utilities, filed a joint request for a one-year deferment on the Cost of Capital filings which would otherwise be due on May 1, 2020.

Postponing the filing one year would alleviate administrative processing costs on the utilities as well as the CPUC staff, and provide relief for both CPUC and utility resources already strained by numerous other proceedings.

The request was conditioned on no changes to the current Water Cost of Capital Mechanism in place during the one-year deferment.

On March 11, 2020, the CPUC approved the request.

The purpose of balancing and memorandum accounts is to track the under-collection or over-collection associated with such expense changes and activities for future recovery or refund considerations.

On March 17, 2020, the CPUC ordered its regulated water utilities to halt customer disconnection activities in connection with the COVID-19 pandemic.

On April 2, 2020, Governor Gavin Newsom issued Executive Order N-42-20 suspending customer disconnection activities until further notice.

On April 2, 2020, California Governor Gavin Newsom issued Executive Order N-42-20 suspending customer disconnection activities until further notice.

On April 16, 2020, the CPUC issued Resolution M-4842 directing utilities to implement emergency customer protections to assist customers such as waiving reconnection deposits, offering payment arrangements, and suspending disconnections for nonpayment.

This resolution is effective for up to one year, or April 15, 2021, with the option to extend.

On February 11, 2021, the CPUC approved extending customer protections required in Resolution M-4842 through June 30, 2021, through approval of Resolution M-4849 .

This resolution was effective for up to one year, or April 15, 2021, with the option to extend.

On February 11, 2021, the CPUC approved Resolution M-4849 extending customer protections required in Resolution M-4842 through June 30, 2021.

The resolution also requires water utilities to develop a transition plan regarding shutoffs and terminations with customers once the moratorium ends.

SJWC is currently working on such plan.

On March 19, 2020, SJWC filed Advice Letter 546 to extend customer protections listed in the company’s Disaster Relief Customer Protections and Outreach Plan as required by the CPUC in response to the COVID-19 pandemic.

The filing also activated SJWC’s Catastrophic Event Memorandum Account (“CEMA”) to track costs related to SJWC’s response which includes labor and materials, anticipated increase in bad debt from the suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage.

The customer protections and CEMA were approved effective March 4, 2020.

SJWC anticipates requesting recovery of the COVID-19 pandemic response costs in a future general rate case or other filings.

On April 10, 2020, SJWC filed Application No.

20-04-009 seeking authorization to issue $300 million in new debt and $50 million in new equity.

A final decision authorizing our financing application was approved on November 19, 2020.

On April 1, 2021, SJWC filed Advice Letter 560 which includes such plan and the filing was approved on June 16, 2021.

On June 11, 2021, Governor Newsom issued Executive Order N-08-21 which initially ended the suspension on customer disconnection activities on September 30, 2021.

On June 16, 2021, the CPUC directed its regulated water utilities to extend the suspension on customer disconnection activities through September 30, 2021, in response to the Governor’s order.

On June 23, 2021, SJWC filed Advice Letter 565 to extend Resolution M-4849’s emergency customer protections through September 30, 2021.

This advice letter was approved on July 1, 2021.

On July 20, 2021, the CPUC directed its regulated water utilities to continue to suspend customer disconnection activities until the sooner of further notice and direction from the CPUC or until February 1, 2022.

On September 23, 2021, Governor Newsom approved Senate Bill 155, which included a provision extending the water shutoff moratorium through December 31, 2021.

SJWC filed Advice Letter No.

552 with the CPUC requesting authorization to establish a Polyfluoroalkyl Substances Memorandum Account (“PFAS MA”) on August 18, 2020.

The advice letter was approved retroactive to March 1, 2019.

SJWC will track in this account incremental expenses related to PFAS monitoring, sampling, and customer outreach activities for potential future recovery.

SJWC filed Advice Letter 556 on November 16, 2020, with the CPUC requesting authorization to increase its revenue requirement by $11.8 million or 3.04% in 2021 for the final escalation year authorized in our 2018 General Rate Case Decision

556 on November 16, 2020, with the CPUC requesting authorization to increase its revenue requirement by $11.8 million or 3.04% in 2021 for the final escalation year authorized in our 2018 General Rate Case Decision No.

18-011-025 which established rates for 2019, 2020, and 2021.

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The application also includes requests to recover $18.5 million from balancing and memorandum accounts, authorization for a $435.0 million capital budget, further alignment between actual and authorized usage, and a shift to greater revenue collection in the service charge.

The application will undergo a year-long review process and the new rates, if approved, are expected to be effective January 1, 2022.

On January 5, 2021, SJWC, along with three other California water utilities, filed a joint request for another one-year deferment on the Cost of Capital filings which would otherwise be due on May 1, 2021.

Postponing the filing another year would alleviate administrative processing costs on the utilities as well as the CPUC staff, and provide relief for both CPUC and utility resources already strained by numerous other proceedings and COVID-19.

The request is conditioned on no changes to the current Water Cost of Capital Mechanism in place during the one-year deferment.

The request was denied on February 22, 2021.

The application will undergo a year-long review process and new rates, if approved, are expected to be effective by the second quarter of 2022.

Due to the processing delay, SJWC filed Advice Letter No.

573 on December 30, 2021, to request interim rates effective January 1, 2022, which will allow SJWC to retroactively apply approved rates to January 1, 2022.

Interim rates are proposed to be set equal to present rates in order to avoid customer confusion and short-term bill changes.

This advice letter was approved with an effective date of January 1, 2022.

SJWC and the Public Advocates Office filed a settlement agreement resolving all issues in the proceeding on January 13, 2022, which will be considered by the CPUC for adoption.

The settlement recognizes the need for continued investments in the water system to deliver safe and reliable water service.

Additionally, it further aligns authorized and actual consumption, particularly for business customers, addresses our water supply mix challenge, and provides greater revenue recovery in the fixed charge.

On May 3, 2021, SJWC filed Application No.

21-05-004 requesting authority to adjust its cost of capital for the period from January 1, 2022 through December 31, 2024.

The request seeks a revenue increase of $6.4 million or 1.61% in 2022.

The application also proposes a rate of return of 8.11%, an increase from the current rate of 7.64%, a decrease in the average cost of debt rate from 6.20% to 5.48%, and a return of equity of 10.30%, an increase from the current rate of 8.90%.

In addition, the request seeks to adjust SJWC’s currently authorized capital structure of approximately 47% debt and 53% equity to approximately 45% debt and 55% equity.

If approved, rates are expected to be effective in the third quarter of 2022.

On May 27, 2021, SJWC filed Advice Letter No.

561/561A with the CPUC requesting authorization to increase revenue by $17.3 million or 4.34% to recover the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges implemented by Santa Clara Valley Water District (“Valley Water”) and South Bay Water Recycling.

This advice letter was approved with an effective date of July 1, 2021.

On June 9, 2021, Valley Water declared a water shortage emergency and mandated its retailers to reduce consumption by 15% based on 2019’s volume.

On June 18, 2021, SJWC filed Advice Letter No.

563 with the CPUC to activate Stage 3 of its Rule 14.1, Water Shortage Contingency Plan, in response to Valley Water’s declaration of drought emergency and call for 15% mandatory conservation.

Advice Letter No.

564 was also filed on June 9, 2021, to establish a Water Conservation Memorandum Account to track the revenue impact of authorized versus actual water consumption and the incremental expenses required to implement our mandatory water conservation plan.

Similar memorandum accounts were authorized during the previous drought.

Advice Letters No.

564 and 563 were approved with the effective dates of July 20, 2021, and August 5, 2021, respectively.

On August 5, 2021, SJWC filed Advice Letter No.

567 with the CPUC requesting authorization to update its Drought Allocations and Drought Surcharges program contained within its Schedule 14.1.

This filing updates the program developed during the drought of 2014-2017.

Advice Letter No.

567 was approved with an effective date of September 6, 2021.

This approval does not authorize program activation.

On October 15, 2021, SJWC filed Advice Letter No.

569 with the CPUC requesting authorization to activate Schedule 14.1 effective November 15, 2021, as approved in Advice Letter No.

The drought surcharges collected will be used to offset the revenue losses tracked in the Water Conservation Memorandum Account authorized in Advice Letter No.

This advice letter was approved with an effective date of November 15, 2021.

Connecticut Regulatory Affairs

Connecticut Water’s rates, service and other matters affecting its business are subject to regulation by the PURA.

Our Connecticut regulated operations seek rate relief as necessary to achieve an authorized rate of return.

Connecticut Water’s rates, service and other matters affecting its business are subject to regulation by The Public Utilities Regulatory Authority of Connecticut (“PURA”).

PURA allows the Connecticut regulated operations to add surcharges to customers’ bills in order to recover certain costs associated with approved eligible capital projects through the Water Infrastructure Conservation Adjustment (“WICA”) in between full rate cases, as well as approved surcharges for the Water Revenue Adjustment (“WRA”).

Connecticut Water and the HVWC division mitigate the risk associated with changes in demand through a PURA approved WRA mechanism.

Connecticut Water mitigates the risk associated with changes in demand through a PURA approved WRA mechanism.

The WRA is used to reconcile actual water demands with the demands projected in the most recent general rate case and allows companies to implement a surcharge or surcredit as necessary to recover the revenues approved in the general rate case.

The WRA removes the financial disincentive for water utilities to develop and implement effective water conservation programs.

The WRA allows water companies to defer on the balance sheet, as a regulatory asset or liability, for later collection from or crediting to customers the amount by which actual revenues deviate from the revenues allowed in the most recent general rate proceedings, including WICA proceedings.

Projects eligible for WICA surcharges include certain types of aging utility plant, primarily water mains, meters, and service lines.

Additionally, certain energy conservation projects, improvements required to comply with streamflow regulations, and improvements to acquired systems are eligible for WICA surcharges.

As of December 31, 2020, WICA surcharges for Connecticut Water and the Avon Water division were 5.75% and 9.31%, respectively.

The HVWC division does not have an approved WICA surcharge.

On January 28, 2020, Connecticut Water filed a WICA application representing an additional 2.6% surcharge, for a cumulative WICA surcharge of 5.84%.

Additionally, on February 7, 2020, Connecticut Water and the Avon Water division separately filed their annual WICA reconciliations which called for 0.09% and 0.05% reductions of the WICA surcharges, respectively.

On October 28, 2020, Connecticut Water filed a WICA application representing an additional 1.11% surcharge or approximately $1.0 million increase in revenues, for a cumulative WICA surcharge of 6.94% which became effective April 1, 2021.

Additionally, on February 1, 2021, Connecticut Water and the Avon Water division separately filed their annual WICA

reconciliation which called for a 0.09% increase and 0.80% reduction of the WICA surcharge, respectively.

On March 3, 2021, in separate decisions, PURA approved a net cumulative 7.03% WICA surcharge for Connecticut Water and a net cumulative 8.51% WICA surcharge for the Avon Water division, both of which became effective on customers’ bills on April 1, 2021.

On March 3, 2020, Connecticut Water filed an application, Docket No.

20-03-04, with PURA to merge Avon Water and HVWC division’s with and into Connecticut Water.

The application was made to streamline borrowings, regulatory filings and internal administrative tasks associated with maintaining separate corporate entities and was approved by PURA on September 16, 2020.

The merger became effective on September 30, 2020.

After the approval and prior to the completion of the merger, the outstanding debt balances held at Avon Water and HVWC division’s were repaid in full.

The rates and applicable surcharges for the former subsidiaries remain in effect for those operating divisions until changes are approved by PURA in the next Connecticut Water general rate case, which was filed on January 15, 2021.

On January 15, 2021, Connecticut Water filed an application with PURA to amend rates for its customer, including those of former AWC and HVWC companies.

The WICA surcharge was reset to zero as part of the July 28, 2021 rate case decision, and remained zero until December 31, 2021.

On January 15, 2021, Connecticut Water filed an application with PURA to amend rates for its customers, including the divisions of Avon Water and Heritage Village Water.

The filing requests an increase of $20.2 million in annual revenues that includes more than $265.5 million in completed infrastructure investments that are not currently in approved rates and surcharges.

The proposed increase will be applied across the company but may differ by rate divisions, meter size and between customer rate categories, i.e.

for residential, commercial, industrial, etc.

The application also reflects the costs of operating and maintaining the utility, including expenditures on power and treatment additives that have increased since the company’s last

general rate case in 2010.

PURA has 200 days from the filing to review the application, and the approved rates will go into effect soon thereafter.

On March 12, 2020, PURA issued Docket No.

20-03-15 to establish a State of Emergency Utility Shut-off Moratorium for the COVID-19 pandemic.

The moratorium ordered regulated utility companies to refrain from terminating utility service to residential customers, except for safety reasons until August 1, 2020, or until such other time as determined by the PURA.

The moratorium was extended through October 1, 2020 at which time the company was permitted to resume standard collection practices until or unless there is further action by PURA.

In the same docket, PURA directed the public service companies to offer COVID-19 payment plans for the duration of the Governor’s Emergency Order (currently through April 20, 2021), and allow customers up to 24 months for payment arrangements on their water bills.

The docket directs the public service companies to maintain a detailed record of costs incurred and revenues lost as a result of implementing its orders in the docket and allows for the establishment a regulatory asset to track incurred costs.

Approval for recovery of additional costs incurred and/or revenues lost relating to the COVID-19 pandemic would be considered for recovery in the Connecticut Water’s next general rate case proceeding.

The PURA statutes for utility regulation were amended by the legislature in October 2020, with the most notable changes that affect water companies were adjustments to extend the timelines for adjudication of various regulatory proceedings.

In particular, the following proceeding timelines were increased:

general rate case from 150 days with 30 day extension (180 days maximum) to 200 days, change in control from 120 days with 30 day extension (150 days maximum) to 200 days with an opportunity for a 30 day extension (230 days maximum), and financing from 30 days to 60 days.

In addition, there is a new requirement that any future change in control or merger approvals would require the composition of the board of directors of the holding company to include a proportional percentage of Connecticut-based directors.

The law also authorizes, but does not require, the PURA to consider adoption of a framework for performance-based regulation of private water companies.

On July 28, 2021, Connecticut Water received the final decision approving an increase of $5.2 million in annual revenues, a return on equity of 9.0%, with new rates effective July 28, 2021.

The final decision also approved a low-income rate, tiered block rate structure for residential water customers and the cost of debt and equity percentage as requested.

The final decision did not include all of the requested pro forma plant in service due to the timing of its completion.

However, no plant was disallowed.

Connecticut Water will seek recovery for the projects in the future.

The portion of plant which is eligible for recovery through WICA was included in the October 26, 2021 WICA filing discussed below or will be included in future WICA filings.

In addition, the final decision reset WICA, which was approaching its statutory caps, to zero.

On August 11, 2021, Connecticut Water filed a petition for reconsideration with PURA to consider matters specific to excess deferred income taxes contained in the July 28, 2021 decision.

The proposed increased revenues associated with the petition is $2.2 million.

On November 17, 2021, PURA issued a final decision approving $2.1 million of Connecticut Water’s request.

On October 26, 2021, Connecticut Water filed for a WICA increase of approximately $21.7 million in completed projects.

Many of the projects were those that were not considered by PURA in the rate case because of the deadline in the proceeding for pro forma capital additions.

On December 22, 2021, PURA approved a WICA surcharge of 2.44% to be added to bills of all Connecticut Water customers, including those of the former The Avon Water Company and The Heritage Village Water Company, effective January 1, 2022 which is expected to generate approximately $2.6 million in additional revenue.

Long-term debt issuances for Connecticut Water require regulatory authorization which is typically obtained for a specified amount of debt to be issued during a specified period of time.

On March 16, 2021, Connecticut Water filed for PURA approval for the issuance of up to $100.0 million of long-term borrowings in 2021.

Connecticut Water received approval of the financings from PURA on June 9, 2021.

Texas Regulatory Affairs

CLWSC’s rates are subject to the economic regulation of the Public Utilities Commission of Texas (“PUCT”).

The PUCT authorize rate increases after the filing of an Application for a Rate/Tariff Change.

The PUCT may authorize rate increases after the filing of an Application for a Rate/Tariff Change.

Rate cases may be filed as they become necessary, provided there is no current rate case outstanding.

Furthermore, rate cases may not be filed more frequently than once every 12 months.

As required, CLWSC submitted on January 27, 2020, its Water Pass-Through Charge (“WPC”) true-up report for the Canyon Lake area systems 2019 purchased water costs.

This WPC is an annual filing to change the component of CLWSC’s water rates for changes in purchased water costs since the prior year annual true-up report.

The 2019 WPC true-up report for the water systems located in the Canyon Lake area resulted in a reduction of the WPC usage rate from $1.05 to $0.95 per thousand gallons which became effective on February 1, 2020.

The WPC filing for the Canyon Lake area was approved by the Public Utilities Commission of Texas (“PUCT”) and a new tariff with the WPC rate was issued in May 2020.

The Deer Creek Ranch water system has a separate water pass-through charge.

On January 29, 2021, CLWSC submitted its Water Pass-Through Charge (“WPC”) true-up report for the Canyon Lake area water systems’ 2020 purchased water costs.

The WPC is the annual filing to update the monthly per thousand gallons charge for changes in purchased water costs since the last annual true-up report.

The 2020 WPC true-up report resulted in a reduction of the WPC usage rate from $0.95 dollars to $0.70 dollars per thousand gallons which became effective on March 1, 2021.

In August 2021, the Guadalupe-Blanco River Authority (“GBRA”) increased its debt service rate by 82% and announced a 15% increase in the Operations & Maintenance rate and a 4% increase in the firm water rate effective September 1, 2021.

CLWSC filed its annual WPC true-up report on January 31, 2022 under Docket No.

The 2022 WPC usage rate will increase from $0.70 to $1.02 dollars per thousand gallons due to CLWSC under-collecting the actual cost of purchased water and GBRA increasing its rates.

The new usage rate will be effective starting March 1, 2022.

The Deer Creek Ranch water system has a separate WPC.

A WPC filing for Deer Creek Ranch is required only when there is a change in purchased water costs.

The WPC true-up report for this system was submitted December 1, 2020, which resulted in a decrease in the usage charge from $2.02 to $1.84 per thousand gallons, and an increase in the monthly base charge of $0.51 per residential account.

The Deer Creek Ranch WPC rate changes became effective October 1, 2020.

In connection with the disaster declaration in Texas, the PUCT issued Order No.

50664-106 to mitigate the impact of the COVID-19 pandemic on residential water utility customers.

CLWSC responded to this order by stopping disconnections for nonpayment of utility bills, and not charging fees for late payments.

The PUCT allowed this order to expire on June 13, 2020.

The PUCT also issued Accounting Order under No.

50664-108, which instructs utilities to record the incremental costs and lost revenues from the COVID-19 pandemic in a regulatory tracking account for future recovery.

These amounts will be considered by the PUCT for recovery during the utility’s next rate application.

CLWSC received notice of an increase of 4% for the Deer Creek purchased water cost from West Travis Public Utility Agency (“WTPUA”), effective in October 2021.

SJWTX also received notice from the Lower Colorado River Authority (“LCRA”) of an increase of 7% per acre-foot for the firm water rate and the reservation rate.

The WPC true-up report for this system was submitted on December 1, 2021, which will result in an increase in the usage charge from $1.84 to $1.87 dollars per thousand gallons, and an increase in the monthly base charge of $1.04 dollars per residential account effective January 1, 2022.

A disaster declaration was issued on February 12, 2021, by the PUCT because of severe winter weather.

The PUCT issued orders under Docket No.

51812-6 which prohibited disconnections for non-payment, suspended the rules for late fees and interest, and allowed for estimated billing for the duration of the disaster declaration.

On March 5, 2021, the PUCT reinstituted the utilities’ ability to resume charging late fees, and on June 15, 2021, removed the prohibition on disconnections for non-payment.

The Texas Legislature passed Senate Bill No.

3 on August 6, 2021.

Under this bill, utilities are obligated to report to the PUCT steps they are taking to mitigate the type of long-term power outages experienced during the February 2021 storm.

CLWSC filed its emergency preparedness plans under Docket No.

52299 on November 1, 2021.

CLWSC expects to incur capital expenditures related to meeting these new requirements, largely for procurement of backup generators.

On June 28, 2021, CLWSC announced that it reached an agreement to acquire the Kendall West and Bandera East utilities in Bandera, Kendall, and Medina counties in Texas and that change in ownership applications had been filed with the PUCT under Docket No.

The PUCT approved the acquisition on December 10, 2021 and the transaction closed on December 17, 2021.

The acquisition increased CLWSC’s customers served by 1,600 service connections.

Rates will remain the same for those customers of the acquired Certificate of Convenience and Necessity.

Maine Regulatory Affairs

Maine Water’s rates, service and other matters affecting its business are subject to regulation by the MPUC.

As with the Connecticut regulated operations, rate relief is sought as necessary to enable the company to achieve an authorized rate of return.

Maine Water’s rates, service and other matters affecting its business are subject to regulation by the Maine Public Utilities Commission (“MPUC”).

MPUC approves rates on a division-by-division basis in Maine and allows Maine Water to add surcharges to customers’ bills in order to recover certain costs associated with capital projects through the Water Infrastructure Surcharge (“WISC”) in between general rate cases.

Projects eligible for WISC surcharges include all infrastructure replacement or repair projects, excluding meters, that are necessary for the transmission, distribution or treatment of water.

In 2015, a WRA mechanism law in Maine became available to regulated water utilities.

MPUC is authorized to allow a WRA mechanism to regulated water utilities.

Maine’s rate-adjustment mechanism could provide revenue stabilization in divisions with declining water consumption and Maine Water expects to request usage of this mechanism in future rate filings when consumption trends support its use.

On December 20, 2019, Maine Water filed a general a rate increase for their Skowhegan Division seeking approximately $0.2 million, or 14.7%, in additional revenue with the MPUC.

On June 17, 2020, the MPUC approved a general rate increase for Skowhegan Division customers allowing $0.2 million in additional revenue.

Per the MPUC decision, the increase will be implemented in two steps:

Per the MPUC decision, the increase was implemented in two steps:

an initial 9.80% rate increase effective June 15, 2020, and a 3.51% rate increase effective July 1, 2021.

The combined rate increase is 13.31%.

On January 20, 2020, Maine Water filed WISC applications with the MPUC in four divisions requesting an increase between 1.76% and 3.00%, representing approximately $0.4 million in additional revenues.

The WISC application was approved on February 26, 2020 and the surcharges were effective March 1, 2020.

On March 16, 2020, MPUC issued an emergency moratorium on utility disconnection activities in connection to the COVID-19 pandemic.

The moratorium directed public utility companies not to engage in any disconnection activities including disconnection notices for all classes of customers until further notice from MPUC.

Maine Water is tracking COVID-19 related costs for potential future recovery in rates charged to customers.

On September 17, 2020, the MPUC issued an order lifting the moratorium on utility disconnections in Maine effective November 1, 2020.

The Order requires specific notifications by utilities to their customers prior to resuming disconnection activities and requires a waiver of late payment fess for customers who enter into payment arrangements on or before December 31, 2020.

Maine Water is providing customer notices as required and resumed utility disconnections in November, 2020.

On October 9, 2020, Maine Water filed a request for approval of a special rate contract between Maine Water and the Kennebec Water District (“KWD”).

Maine Water has purchased water from KWD under a special rate contract approved by the MPUC since November 2000.

The MPUC approved the request in an Order dated January 5, 2021 that continues the existing relationship between the two water utilities and extends the agreement for an additional 20 years.

On November 23, 2020, Maine Water filed WISC applications with the MPUC in five divisions requesting an increase of between 1.1% and 5%, representing approximately $0.3 million in additional revenues.

The WISC applications were approved on December 15 and December 22, 2020 and the surcharges became effective January 1, 2021.

On March 10, 2021, Maine Water filed a general rate increase application for the Biddeford Saco Division seeking approximately $6.7 million, or 77.5%, in additional revenue.

The application proposed a three step, multi-year rate plan designed to ease the transition to higher water bills over the period from July 2021 to July 2023.

The primary driver for the increase in rates is the support for a new drinking water treatment facility on the Saco River, a $60.0 million project to replace the existing facility that is expected to be in service in the second quarter of 2022.

On June 23, 2021, the MPUC approved the first step in the plan by adopting the proposed rate smoothing mechanism and implementing a temporary 22.65% surcharge on all customer bills.

The surcharge will be in effect for one year.

On September 8, 2021, Maine Water filed a supplemental application to update its request to increase base rates, initiating the second step in the rate plan.

The supplemental application updates the March application and seeks $6.9 million, or 80.1% in additional revenue and provides a bill credit funded by the year one surcharge to offset a portion of the increase.

The bill credit will be in effect for one year.

A decision on the requested revenue increase is expected in the second quarter of 2022, corresponding with the completion of the new water treatment facility.

On October 28, 2021, Maine Water filed a WISC application with the MPUC for the Skowhegan division requesting an increase of 3%, representing approximately $0.1 million in additional revenues.

The WISC application was approved on December 27, 2021, and the surcharge became effective January 1, 2022.

Please also see Item 1A , “Risk Factors,” Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of “Notes to Consolidated Financial Statements.”

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The principal business of Water Utility Services consists of the production, purchase, storage, purification, distribution, wholesale and retail sale of water and wastewater services.

SJWC provides water services to approximately 231,000 connections that serve approximately one million people residing in portions of the cities of San Jose and Cupertino and in the cities of Campbell, Monte Sereno, Saratoga and the Town of Los Gatos, and adjacent unincorporated territories, all in the County of Santa Clara in the State of California.

SJWC provides water services to approximately 231,000 connections that serve approximately one million people residing in portions of the cities of San Jose and Cupertino and in the cities of Campbell, Monte Sereno, Saratoga and in the Town of Los Gatos, and adjacent unincorporated territories, all in the County of Santa Clara in the State of California.

The CTWS companies provide water service to approximately 140,000 service connections that serve a population of approximately 456,000 people in 81 municipalities with a service area of approximately 269 square miles throughout Connecticut and Maine and 3,000 wastewater connections in Southbury, Connecticut.

CLWSC provides water service to approximately 20,000 connections that serve approximately 59,000 people in a service area comprising more than 247 square miles in the region between San Antonio and Austin, Texas.

CLWSC provides water service to approximately 24,000 service connections that serve approximately 70,000 people in a service area comprising more than 266 square miles in the region between San Antonio and Austin, Texas.

Together, the Water Utility Services distribute water to customers in their respective service areas in accordance with accepted water utility methods.

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These non-tariffed services include water system operations, maintenance agreements and antenna site leases.

In addition, in October 1997, SJWC commenced operation of the City of Cupertino municipal water system under the terms of a 25-year lease.

In addition, in October 1997, SJWC commenced operation of the City of Cupertino municipal water system under a 25-year lease

which is due to expire in September of 2022 and was amended on January 8, 2020.

The system is adjacent to the SJWC service area and has approximately 4,600 service connections.

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SJWC assumed responsibility for all maintenance and operating costs of the system, while receiving all payments for water service.

SJWC and the City of Cupertino signed an amendment to the lease agreement dated January 8, 2020.

Under the terms of the amended lease agreement, SJWC agreed to make an additional up-front payment of $5 million that could be used to invest in capital improvements in Cupertino’s water system prior to the expiration of the lease in September 2022.

Under the terms of the amended lease agreement in 2020, SJWC agreed to make an additional up-front payment of $5 million that could be used to invest in capital improvements in Cupertino’s water system prior to the expiration of the lease.

Any unspent funds at lease termination remain the property Cupertino.

NEWUS provides contracted services to water utilities in the State of Connecticut, as well as offers Linebacker® protection plans for public drinking water customers.

On November 2, 2021, the City of Cupertino approved another amendment to the current lease agreement executed on January 8, 2020.

This second amendment provides the City of Cupertino options to extend the lease agreement by periods of six months, two years, or three years with modifications of additional capital improvement funds of $0.4 million, $1.6 million and $2.5 million, respectively, depending on the lease extension period option.

These options are intended to provide the City of Cupertino more time, if needed, to complete its RFP process for a new lease term and conduct analyses of other alternatives for the operation of the water system.

CTWS provides contracted services to water utilities, as well as offers Linebacker® protection plans for public drinking water customers in the States of Connecticut and Maine.

Linebacker plans cover a limited amount of the cost of repairs to water and wastewater service lines and in-home plumbing.

Services provided are dependent on the selected plan.

SJW Land Company owns undeveloped real estate property, commercial and warehouse properties in Tennessee and holds a 70% limited partnership interest in 444 West Santa Clara Street, L.P.

SJW Land Company owns undeveloped real estate property in California and Tennessee, as well as commercial and warehouse properties in Tennessee.

Chester Realty, Inc.

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California Water Supply

SJWC’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from the Santa Clara Valley Water District (“Valley Water”) under the terms of a master contract with Valley Water expiring in 2051.

SJWC’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from Valley Water under the terms of a master contract with Valley Water expiring in 2051.

During normal rainfall years, purchased water provides approximately 40% to 50% of SJWC’s annual production.

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In 2021, the level of water in the Santa Clara Valley groundwater basin, which is managed by the Valley Water, experienced a decrease due to an increase in groundwater pumping by various water retailers in the region, and lower than normal local rainfall and natural recharge.

As reported by Valley Water at the end of 2020, the groundwater level in the Santa Clara Plain was 15 feet lower compared to the same time in 2019, and 14 feet lower than the five-year average.

As reported by Valley Water at the end of 2021, the groundwater level in the Santa Clara Plain was 2 feet lower compared to the same time in 2020.

The total groundwater storage at the end of 2021 was within Stage 1 (Normal) of the Valley Water’s Water Shortage Contingency Plan.

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In addition, the rainfall at SJWC’s Lake Elsman was measured at 32.17 inches for the period from July 1, 2021 through December 31, 2021, which is 257.8% of the five-year average.

Subsequent to December 31, 2021, California has returned to drier than normal weather patterns.

Local surface water is a less costly source of water than groundwater or purchased water and its availability significantly impacts SJWC’s results of operations.

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SJWC believes that its various sources of water supply will be sufficient to meet customer demand in 2022.

On June 9, 2021, Valley Water declared a water shortage emergency and asked its retailers to reduce consumption by 15% based on 2019 usage.

In response to Valley Water’s declaration of drought emergency and call for conservation, SJWC filed with the CPUC to activate Stage 3 of its Rule 14.1 Water Shortage Contingency Plan.

Like the most recent drought, the current restrictions center on outdoor water usage which typically accounts for half of a residential customer’s consumption.

The restrictions include limits on watering days and times, use of potable water for washing structures and other non-porous surfaces except to protect public health and safety, and no outdoor watering during and up to 48 hours after measurable rainfall.

California also faces long-term water supply challenges.

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Connecticut Water Supply

As of December 31, 2020, the Connecticut water utility services’ infrastructure consisted of 65 noncontiguous water systems in the State of Connecticut.

Connecticut Water’s infrastructure consists of 65 noncontiguous water systems in the State of Connecticut.

These systems, in total, consist of approximately 1,800 miles of water main and reservoir storage capacity of 2.4 billion gallons.

The safe, dependable yield from our 235 active wells and 18 surface water supplies is approximately 65 million gallons per day.

The safe, dependable yield from 235 active wells and 18 surface water supplies is approximately 65 million gallons per day.

Water sources vary among the individual systems, but overall approximately 80% of the total dependable yield comes from surface water supplies and 20% from wells.

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Texas Water Supply

CLWSC’s water supply consists of groundwater from wells and purchased treated and raw water from the Guadalupe-Blanco River Authority (“ GBRA”).

CLWSC’s water supply consists of groundwater from wells and purchased treated and raw water from the GBRA.

CLWSC has long-term agreements with the GBRA, which expire in 2037, 2040, 2044 and 2050.

The agreements, which are take-or-pay contracts, provide CLWSC with an aggregate of 7,650 acre-feet of water per year from Canyon Lake at prices that may be adjusted periodically by GBRA.

CLWSC also has raw water supply agreements with the

Lower Colorado River Authority (“LCRA”) and West Travis Public Utility Agency (“WTPUA”) expiring in 2059 and 2046, respectively, to provide for 250 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

CLWSC also has raw water supply agreements with the LCRA and WTPUA expiring in 2059 and 2046, respectively, to provide for 250 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

Maine Water Supply

As of December 31, 2020, the Maine Water infrastructure consisted of 12 noncontiguous water systems in the State of Maine.

Maine Water’s infrastructure consists of 12 noncontiguous water systems in the State of Maine.

These systems, in total, consists of approximately 600 miles of water main and reservoir storage capacity of 7.0 billion gallons.

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Water sources vary among the individual systems, but overall approximately 90% of the total dependable yield comes from surface water supplies and 10% from wells.

Maine Water supplements their water supplies with purchase water contracts with neighboring utilities.

Maine Water relies on legislatively granted water rights in order to serve customers.

In some instances, these rights were granted to predecessor water companies specially chartered by the Maine legislature many decades ago, with those entities later having been merged into Maine Water.

The legislation incorporating these predecessor water companies did not address whether chartered rights may be transferred to another entity without special legislative action.

The Maine Business Corporation Act generally provides that property and contract rights of a merged corporation are vested in the surviving corporation without reversion or impairment.

In the MPUC proceedings that approved the mergers of these Maine Water predecessor companies, the survivorship of water rights was not contested.

Please also see further discussion under Item 1A , “Risk Factors” and Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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None of the franchises have a termination date, other than the franchise for the unincorporated areas of Santa Clara County, which terminates in 2035.

The Connecticut Water’s utility services hold the necessary franchises to provide water in portions of the towns of Ashford, Avon, Beacon Falls, Bethany, Bolton, Brooklyn, Burlington, Canton, Chester, Clinton, Colchester, Columbia, Coventry, Deep River, Durham, East Granby, East Haddam, East Hampton, East Windsor, Ellington, Enfield, Essex, Farmington, Griswold, Guilford, Haddam, Hebron, Killingly, Killingworth, Lebanon, Madison, Manchester, Mansfield, Marlborough, Middlebury, Naugatuck, Old Lyme, Old Saybrook, Oxford, Plainfield, Plymouth, Portland, Prospect, Simsbury, Somers, Southbury, South Windsor, Stafford, Stonington, Suffield, Thomaston, Thompson, Tolland, Vernon, Voluntown, Waterbury, Westbrook, Willington, Windsor Locks and Woodstock.

Additionally, HVWC division serves the Town of Southbury with wastewater services.

Connecticut Water’s utility services hold the necessary franchises to provide water in portions of the towns of Ashford, Avon, Beacon Falls, Bethany, Bolton, Brooklyn, Burlington, Canton, Chester, Clinton, Colchester, Columbia, Coventry, Deep River, Durham, East Granby, East Haddam, East Hampton, East Windsor, Ellington, Enfield, Essex, Farmington, Griswold, Guilford, Haddam, Hebron, Killingly, Killingworth, Lebanon, Madison, Manchester, Mansfield, Marlborough, Middlebury, Naugatuck, Old Lyme, Old Saybrook, Oxford, Plainfield, Plymouth, Portland, Prospect, Simsbury, Somers, Southbury, South Windsor, Stafford, Stonington, Suffield, Thomaston, Thompson, Tolland, Vernon, Voluntown, Waterbury, Westbrook, Willington, Windsor Locks and Woodstock.

Additionally, the Heritage Village Water division serves the Town of Southbury with wastewater services.

None of the franchises of the Connecticut water utility services have a termination date.

Maine Water holds franchises in the towns served are Biddeford, Saco, Old Orchard Beach, Scarborough (Pine Point), Porter, Parsonsfield, Hiram, Freeport, Camden, Rockland, Rockport, Owls Head, Union, Thomaston, Warren, Bucksport, Skowhegan, Oakland, Hartland, Millinocket and Greenville.

Maine Water holds franchises necessary to provide water services in the towns served are Biddeford, Saco, Old Orchard Beach, Scarborough (Pine Point), Porter, Parsonsfield, Hiram, Freeport, Camden, Rockland, Rockport, Owls Head, Union, Thomaston, Warren, Bucksport, Skowhegan, Oakland, Hartland, Millinocket and Greenville.

None of the franchises with Maine Water have a termination date.

CLWSC holds the franchises for water and wastewater services to the City of Bulverde and the City of Spring Branch, which terminate in 2029 and 2036, respectively.

The unincorporated areas that CLWSC serves in Comal, Blanco, Hays, and Travis Counties do not require water service providers to obtain franchises.

CLWSC holds the franchises necessary to provide water and wastewater services to the City of Bulverde and the City of Spring Branch, which terminate in 2029 and 2036, respectively.

The unincorporated areas that CLWSC serves in Comal, Blanco, Bandera, Hays, Kendall, Medina and Travis Counties do not require water service providers to obtain franchises.

Seasonal Factors

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Under Texas law, municipalities, water districts and other public agencies are authorized to engage in the ownership and operation of water systems.

Such entities are empowered to acquire property, whether public or private, real or personal, by the exercise of the right of eminent domain, which entails payment to the owner of the just compensation for the property taken.

However, under current case law those entities may not exercise that right of eminent domain to take the entire operation of an investor-owned utility.

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In such a taking, the acquiring entity must furnish the condemnee just compensation.

To the company’s knowledge, no municipality, water district or other public agency has pending any proceeding to condemn any part of its existing water systems.

To the company’s knowledge, no municipality, water district or other public agency has any pending proceeding to condemn any part of its existing water systems.

The company is also unaware of any eminent domain proceeding to take any of its property or operations.

Environmental Matters

Water Utility Services produce potable water and wastewater services in accordance with all applicable county, state and federal environmental rules and regulations.

Water Utility Services produce potable water and generates wastewater and hazardous wastes in accordance with all applicable county, state and federal environmental rules and regulations.

Additionally, public utilities are subject to environmental regulation by various other state and local governmental authorities.

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Other state and local environmental regulations apply to our Water Utility Services’ operations and facilities.

These regulations relate primarily to the handling, storage and disposal of hazardous materials and discharges to the environment, including wastewater operations in the States of Connecticut and Texas.

SJWC began performing hazardous materials site assessments and remediation prior to the construction phase of capital projects in 2006.

These regulations relate primarily to the handling, storage and disposal of hazardous materials and discharges to the environment, including

wastewater operations in the States of Connecticut and Texas.

In 2016, SJWC began performing hazardous materials site assessments and remediation prior to the construction phase of capital projects.

The site assessments are performed to remove any legacy materials and to obtain site closures from the Santa Clara County Department of Environmental Health under its Voluntary Cleanup Program.

SJWC is currently in compliance with all state and local regulations governing hazardous materials, point and non-point source discharges and the warning provisions of the California Safe Drinking Water and Toxic Enforcement Act of 1986.

CTWS and its subsidiaries are currently in compliance with all state and local public health and environmental regulations applicable to their operations.

Water Utility Services are currently in compliance with all state and local public health and environmental regulations applicable to their operations.

Please also see Part II, Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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We believe our employees are our most important asset.

Throughout our organizations, our employees embrace the company’s values of integrity, respect, service, compassion, trust, teamwork and transparency in everything we do.

Our employees participate in semi- annual employee engagement and satisfaction surveys providing feedback that enables the Company to continually assess and implement initiatives to enhance employee satisfaction and retention.

Throughout our organization, our employees embrace the company’s values of integrity, respect, service, compassion, trust, teamwork and transparency in everything we do.

Employees participate in semi- annual employee engagement and satisfaction surveys providing feedback that enables the Company to continually assess and implement initiatives to enhance employee satisfaction and retention.

Through our board and its committees, we are empowered to address factors that impact our employee strategy and drive positive change in our company and our communities.

Our human capital measures and objectives focus on providing a safe and productive work environment that has clear positive and ethical values;

a culture that embraces diversity, respect and equity;

jobs that offer competitive wages and benefits;

jobs that offer fair wages as benchmarked to the markets that we live and work in;

competitive wages and benefits;

and training and development opportunities that support our employees to establish and succeed in meaningful careers at SJW Group.

Basic Workforce Data

As of December 31, 2020, SJW Group had 748 full-time employees, of whom 370 were SJWC employees, 229 were Connecticut Water employees, 78 were Maine Water employees, and 71 were CLWSC employees.

At SJWC, 137 are executive, administrative or supervisory personnel, and 233 are members of unions.

On November 12, 2019 and February 20, 2020, SJWC reached three-year bargaining agreements with the International Union of Operating Engineers, representing certain employees in the engineering department, and the Utility Workers of America, representing the majority of all non-administrative employees at SJWC, respectively, covering the period from January 1, 2020 through December 31, 2022.

The agreements include a 3% wage increase in 2020, 3% in 2021 and 4% in 2022 for the union workers.

As of December 31, 2021, SJW Group had 751 full-time employees, of whom 362 were SJWC employees, 228 were Connecticut Water employees, 84 were CLWSC employees, and 77 were Maine Water employees.

At SJWC, 226 employees are members of unions.

Employees working for Connecticut Water, Maine Water and CLWSC are not represented by unions.

On November 12, 2019 and February 20, 2020, SJWC reached three-year bargaining agreements with the International Union of Operating Engineers, representing certain employees in the engineering department, and the Utility Workers of America, representing the majority of all non-administrative employees at SJWC covering the period from January 1, 2020 through December 31, 2022.

The agreements include a 3% wage increase in 2020, 3% in 2021 and 4% in 2022 for the union workers.

Employee Safety and Pandemic Response

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Protecting the health and safety of our employees is a top priority.

Recently, we expanded our safety team to include safety-focused professionals from each of our new operating utilities.

This significantly improved standardization of our employee health and safety programs, which focus on four core elements:

Our employee health and safety programs, focus on four core elements:

• Safety Leadership:

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Incident and crisis management of both known and unknown threats to employee health and safety are anticipated and planned for by our safety team.

We have implemented several management systems to plan and respond to incidents such as pandemics, wildfires, earthquakes, cyber threats and extreme weather, among others.

Our 2021 Sustainability Plan incorporates specific targets that set the trajectory of our safety program to ensure continuous improvement, including:

• Implement processes and systems to track, monitor, report and continually improve health and safety performance;

• Communicate the updated Health and Safety Policy to employees to promote compliance, consultation, and participation of workers on health and safety matters;

• Strive for zero accidents and injuries.

We have implemented several management systems to plan and respond to workplace safety and training as well as incidents such as pandemics, wildfires, earthquakes, cyber threats and extreme weather, among others.

The goal is to safeguard our employees’ health and safety during local, national, or global incidents.

Locally, these hazards are identified by onsite inspections and from near-miss investigations.

Locally, workplace hazards are identified by onsite inspections and from near-miss investigations.

More broadly, the team collaborates to anticipate and plan for external events

such as pandemic or for extreme weather or other external events that could impact our operations.

Proactive identification of hazards keeps us one step ahead of our constantly changing workplace conditions.

During the COVID-19 pandemic, SJW Group’s primary focus has been to protect the health and safety of employees, customers and the community from the spread of the disease in the workplace, while continuing to deliver reliable, clean and safe drinking water and service.

With additional COVID-19 protections in place and beginning in March 2020, we paused all non-essential services for two months;

Beginning in March 2020, with additional COVID-19 protections in place, we paused all non-essential services for two months;

transitioned our office employees to company-wide remote work;

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As the pandemic and knowledge of the virus evolved, our safety, human resources and operations teams implemented additional guidance protocols with a focus on cleaning and disinfection of facilities, vehicles, and tools;

implementing engineering and administrative control such as social distancing;

implementing engineering and administrative controls such as social distancing;

and wearing face coverings to limit the transmission of the virus.

In response to various stay-at-home government orders, we provided the flexibility to employees who are able to work from home and supported remote-working by upgrading technology infrastructure, enhancing IT capabilities and implementing processes to facilitate online and remote communications.

We are also actively monitoring all evolving federal, state and local guidance from public health authorities to ensure that our measures are in compliance with such rules and regulations.

In response to various stay-at-home government orders, we implemented policies and procedures to provide the flexibility to employees who are able to work from home and support remote-working by upgrading technology infrastructure, enhancing IT capabilities and implementing processes to facilitate online and remote communications.

In an effort to ensure the safety and protection of our workplace and those customers and vendors with whom we serve and work, SJW Group announced a universal vaccination requirement for all employees by January 17, 2022 for three of our operating utilities and by February 14, 2022 at SJWC.

On January 22, 2022, SJWC received a letter from the National Labor Relations Board (“NLRB”) stating that it would investigate the allegations from the Utility Workers Union of America Local 259 that SJWC failed to bargain in good faith by imposing a COVID vaccine mandate and threatening to terminate noncompliant employees and for, otherwise, failing to bargain over its decision to impose the mandate.

SJWC intends to cooperate with the NLRB’s investigation requests for affidavits from SJWC management and relevant documents.

We continue to actively monitor all evolving federal, state and local guidance from public health authorities to ensure that our measures are in compliance with such rules and regulations and are effective in the continually changing pandemic environment.

Diversity and Inclusion

SJW Group believes that a workplace supporting diversity and inclusion not only promotes equity, teamwork, productivity and collaboration among employees, but also enables us to provide the best services to our customers, communities, and partners and enhances value for our stockholders.

We are committed to fostering and maintaining a culture of diversity and inclusion,

and we have been tracking our workforce demographics to identify employee teams, geographies, or seniority levels where hiring of minorities or specific demographic representation needs to be addressed.

In 2020, in our continued commitment to diversity, equity and inclusion, SJW Group formed a National Diversity, Equity & Inclusion (“DEI”) Council, consisting of management level and front-line employees that has the full support of our Board of Directors.

The DEI (i) supports and advocates for diversity, equity and inclusion initiatives, (ii) promotes knowledge, skills and practices that support diversity, equity and inclusion, (iii) provides a forum for consultation on diversity issues that may arise, and (iv) takes into consideration how diversity, equity and inclusion can help us serve our external stakeholders -customers, communities, stockholders and the environment.

The DEI maintains an active line of communication with our executive leadership team.

In addition, our Board of Directors has adopted policies and procedures to further our efforts to create a more diverse workforce at all levels in the organization.

For example, the Board adopted a Human Rights Policy that sets forth clear statements on our mission to create an environment where diversity, equity and inclusion are fundamental to everything we do.

Moreover, we are fully compliant with California laws that require a minimum number of female directors and a minimum number of directors from underrepresented communities on our Board of Directors.

Competitive Wage and Benefits

We are committed to fostering and maintaining a culture of diversity and inclusion, and we have been tracking our workforce demographics to identify employee teams, geographies, or seniority levels where hiring of minorities or specific demographic representation needs to be addressed.

In 2021, CEO Eric Thornburg signed on to the CEO Action for Diversity & Inclusion™ CEO pledge, which outlines a specific set of actions the signatory CEOs will take to cultivate a trusting environment where all ideas are welcomed and employees feel comfortable and empowered to have discussions about diversity and inclusion.

The Company’s Diversity, Equity and Inclusion Council has implemented several impactful initiatives in 2021, including ongoing education and communications and an unconscious bias training program for all employees.

We work to ensure training and development opportunities are available so that all employees can establish and succeed in meaningful careers at SJW Group.

In addition, we currently comply with California’s board diversity legislation requiring a minimum number of female directors and directors from underrepresented communities on our board of directors.

Community Involvement

In support of our mission as trusted, passionate and socially responsible professionals, we are dedicated to the people and the environment of the communities where we live, work, and serve.

SJW Group provides various opportunities for our employees to participate in outreach programs from free virtual education programs for adults, employee-led courses for elementary school aged children, winter coat donation drives, environmental cleanups, community events, and grant programs supporting schools and fire departments.

In addition, each of our subsidiaries supports their communities through charitable donations or sponsorships with a focus on the communities served.

SJWC and Connecticut Water also have matching donations for certain programs to further promote our employees’ involvement in their communities.

In California, the SJWC Employees Community Fund is a 501(c)(3) charitable organization that uses funds from employee contributions and company matches to provide grants to non-profit organizations supported by our employees.

Fair Wages and Competitive Benefits

SJW Group’s future success is largely dependent upon our ability to attract and retain highly-skilled and qualified employees.

Our California and Connecticut subsidiaries operate in very competitive labor markets, we believe our compensation package and benefit programs allow us to recruit and retain talented and qualified personnel.

Our California and Connecticut subsidiaries operate in particularly competitive labor markets, we believe our compensation package and benefit programs allow us to recruit and retain talented and qualified personnel.

Our compensation and benefits programs include:

• Competitive employee wages that are consistent with employee roles and responsibilities, skill levels, experience, knowledge and geographic location;

• Fair employee wages as benchmarked to the markets that our employees live and work in that are consistent with employee roles and responsibilities, skill levels, experience, and knowledge;

• Engagement of nationally, recognized outside compensation and benefits consulting firms to independently evaluate the appropriateness and effectiveness of compensation for our executive and other officers and to provide benchmarks for executive compensation as compared to peer companies;

• Short-term incentive compensation for management level staff aligning with company financial and operational goals targeted to our stakeholders:

customers, communities, employees and stockholders;

• Alignment with stockholder value by utilizing equity awards linked to investment performance over time, as well as certain absolute financial results;

• A comprehensive annual review process pursuant to which we determine and communicate to employees annual merit increases, promotions and other changes to responsibilities and duties;

• A comprehensive annual employee performance review process pursuant to which we determine and communicate to employees annual merit increases, promotions and other changes to responsibilities and duties;

• Eligibility for all employees to participate in health insurance, dental, vision, cafeteria plans, life and disability/accident coverage, retirement plans and/or salary deferral plans, an Employee Stock Purchase Plan, paid and unpaid leaves, a commuter assistance program, professional education and training, and tuition assistance.

Community Involvement

In support of our mission to serve communities and our employees’ desire to make an impact on the communities we serve, SJW Group provides various opportunities for our employees to participate in community outreach programs such as free virtual education programs for adults, winter coat donations, a specialized in-school education course for elementary school aged children, grant programs that support firefighters as well as grants to schools in certain parts of our service territories for water bottle filling stations.

In addition, we hold community open houses, support the Happy Hollow Foundation, sponsor special events such as Thanksgiving in January, the Guadalupe River Park Conservancy Super Bowl Run, and participate in community service events such as Rebuilding Together.

Employees are further encouraged and supported in their efforts to give back to their communities through the SJWCECF.

The SJWCECF is an employee-led foundation, where employees’ tax-deductible contributions are matched by the company and distributed to organizations where employees are involved.

Executive Officers of the Registrant

The following table summarizes the name, age, offices held and business experience for each of our senior executive officers, as of March 1, 2021:

The following table summarizes the name, age, offices held and business experience for each of our executive officers, as of February 25, 2022:

Name Age Offices and Experience

Willie Brown 54 SJW Group— Vice President, General Counsel and Corporate Secretary.

Brown serves as Vice President, General Counsel and Corporate Secretary of SJW Group and SJWC since June 1, 2021.

Brown served as Corporate Secretary and Assistant General Counsel of SJW Group and SJWC since January 1, 2020.

Since April 2018, Mr.

Brown has served as counsel and Corporate Secretary of various subsidiaries of the Corporation.

Since joining SJWC in 2008, Mr.

Brown has held various legal positions of increasing scope and responsibly.

Prior to joining SJWC, Mr.

Brown was an associate at two Silicon Valley law firms and is a member of the State Bar of California.

Gere 55 SJWC—President and Chief Operating Officer.

12 unchanged sentences

From October 2019 to December 2020, Mr.

Gere served as Chairman of the National Association of Water Companies (“NAWC”).

Gere served as Chairman of the National Association of Water Companies.

Johnson 55 SJW Group—Chief Administrative Officer.

3 unchanged sentences

She served as the Corporate Secretary of Maine Water until July 2020.

Lynch 61 SJW Group—Chief Financial Officer and Treasurer.

Lynch serves as Chief Financial Officer and Treasurer since October 2010.

He is also Chief Financial Officer and Treasurer of SJWC, SJW Land Company, and SJWTX, Inc.

and Vice President and Treasurer of SJWNE LLC.

Lynch 62 SJW Group—Chief Accounting Officer.

Lynch also serves as Chief Accounting Officer of SJWC and SJW Land Company since January 2022.

Lynch served as Chief Financial Officer and Treasurer until January 2022.

He also served as Chief Financial Officer and Treasurer of SJWC, SJW Land Company, and SJWTX, Inc.

from September 2010 until January 2022.

He served as Treasurer of SJWTX Holdings, Inc.

until January 2022.

Lynch served as Chief Financial Officer and Treasurer of Texas Water Alliance Limited from October 2010 until November 16, 2017.

Prior to joining the SJW Group, Mr.

Prior to joining the Corporation Mr.

Lynch was an Audit Partner with KPMG LLP.

1 unchanged sentence

Lynch is a certified public accountant.

Suzy Papazian 45 SJW Group— Senior Vice President and General Counsel.

Papazian serves as Senior Vice President and General Counsel for SJW Group and SJWC since January 1, 2021 and was previously the General Counsel and Vice President for SJW Group and SJWC since January 1, 2020.

From April 2014 through December 2019, Ms.

Papazian was the General Counsel and Corporate Secretary.

From February 2005 to April 2014, Ms.

Papazian was Corporate Secretary and Attorney.

She is also the Vice President of SJW Land Company and SJWTX, Inc.

since January 1, 2020 and was previously the Corporate Secretary since 2009.

From 2009 until 2017, Ms.

Papazian served as Secretary of Texas Water Alliance Limited.

She was admitted to the California State Bar in January 2000 and thereafter was an Associate Attorney at The Corporate Law Group from March 2000 until February 2005.

Thornburg 60 SJW Group—President, Chief Executive Officer and Chairman of the Board.

Thornburg 61 SJW Group—President, Chief Executive Officer and Chair of the Board.

Thornburg serves as President and Chief Executive Officer of SJW Group and SJW Land Company and Chief Executive Officer of SJWC and SJWTX, Inc.

since November 6, 2017.

He has served as the Chairman of the Board of Directors of SJW Group, SJWC, SJW Land Company and SJWTX, Inc.

since April 25, 2018 and Chairman of the Board of Directors of SJWNE LLC, CTWS and its subsidiaries since October 9, 2019.

He has served as the Chair of the Board of Directors of SJW Group, SJWC, SJW Land Company and SJWTX, Inc.

since April 25, 2018 and Chair of the Board of Directors of SJWNE LLC, CTWS and its subsidiaries since October 9, 2019.

Prior to joining SJW Group, Mr.

Thornburg served as President and Chief Executive Officer of CTWS since 2006, and Chairman of the Board of CTWS since 2007.

Thornburg served as President and Chief Executive Officer of CTWS since 2006, and Chair of the Board of CTWS since 2007.

Thornburg served as President of Missouri-American Water, a subsidiary of American Water Works Corporation from 2000 to 2004.

From July 2004 to January 2006, he served as Central Region Vice President-External Affairs for American Water Works Corporation.

Walters 50 SJW Group—Chief Corporate Development Officer and Integration Executive.

Walters serves as Chief Corporate Development Officer and Integration Executive of SJW Group since November 2019 and previously served as Chief Administrative Officer of SJWC since January 31, 2014.

Walters is also currently the Vice President of Business Planning of CTWS and Connecticut Water as of November 7, 2019.

Prior to joining SJWC, Mr.

Walters 51 SJW Group—Chief Financial Officer and Treasurer.

Walters serves as Chief Financial Officer and Treasurer of SJWC, SJW Land Company, and SJWTX, Inc.

since January 2022.

Walters served as Chief Corporate Development Officer and Integration Executive of SJW Group from November 2019 until January 2022 and previously served as Chief Administrative Officer of SJWC since January 31, 2014.

Walters is also currently the Vice President of Business Planning of Connecticut Water Service, Inc.

and Connecticut Water Company as of November 7, 2019.

Prior to joining SJWC in 2014, Mr.

Walters was a managing director and a senior acquisitions officer in the Infrastructure Investments Group of JP Morgan Asset Management from January 2009 to June 2013.

Prior to this, Mr.

Walters served in the Investment Banking Division of Citigroup as managing director and head of infrastructure for the Americas and in other roles focused on mergers and acquisitions and capital raising for clients, since 1993.

Westbrook 63 CTWS—President.

3 unchanged sentences

Westbrook has held various positions of increasing scope and responsibility.

She had served as the Vice President of Customer and Regulatory Affairs of Connecticut Water since 2008, assuming that role for Avon Water and HVWC when those utilities were acquired by CTWS.

She had served as the Vice President of Customer and Regulatory Affairs of Connecticut Water since 2008, assuming that role for The Avon Water Company and The Heritage Village Water Company when those utilities were acquired by CTWS.

Prior to joining Connecticut Water in 1988 she worked at the Connecticut Department of Public Health and in local and regional planning.

Principal Accounting Officer of the Registrant

The following table summarizes the name, age, offices held and business experience for our principal accounting officer, as of March 1, 2021:

Name Age Offices and Experience

Avila-Walker 57 SJW Group—Vice President of Finance, Controller and Assistant Treasurer.

Avila-Walker serves as Vice President of Finance, Controller and Assistant Treasurer of SJWC and SJW Group since April 2018.

Avila-Walker is also the Assistant Treasurer and Assistant Secretary of SJWNE LLC.

From September 2009 to April 2018, Ms.

Avila-Walker served as Controller of SJWC and from October 2014 to April 2018, Ms.

Avila-Walker was Controller of SJW Group.

From August 2008 to September 2009, Ms.

Avila-Walker served as Director of Compliance of SJWC.

From May 2005 to May 2008, Ms.

Avila-Walker served as Director of Reporting and Finance of SJWC.

Available Information

1 unchanged sentence

The content of SJW Group’s website is not incorporated by reference to or part of this report.

You may obtain electronic copies of our reports filed with the SEC on the SEC internet website at http://www.sec.gov .

You may obtain electronic copies of our reports filed with the SEC on the SEC website at http://www.sec.gov .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business