What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-23 compared with 2023-02-24 · 502 added, 399 removed, 902 unchanged (50% of the section changed)

27 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impact of Rate Regulation on the Financial Statements — Refer to Note 3 to the financial statements

13 unchanged sentences

Management judgments include assessing the probability of (1) recovery in future rates of incurred costs and (2) the requirement to refund amounts to customers.

Given that management’s accounting judgements are based on consideration of evidence, such as regulatory rules and decisions, past practice, and other facts and circumstances, and uncertain outcome of future regulatory decisions, auditing these judgements required specialized knowledge of accounting for rate regulation and the rate setting process due its inherent complexities and pervasive impact on the financial statements.

Given that management’s accounting judgements are based on consideration of evidence, such as regulatory rules and decisions, past practice, and the uncertain outcomes of future regulatory decisions, auditing these judgements required specialized knowledge of accounting for rate regulation and the rate setting process due its inherent complexities and pervasive impact on the financial statements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the consideration of evidence, such as regulatory rules and decisions, past practices, and other facts and circumstances, and the uncertain outcome of future regulatory decisions, that may impact the Company’s financial statement line items and disclosures impacted by rate regulation included the following, among others:

Our audit procedures related to the impacts of rate regulation include the following, among others:

• We tested the effectiveness of management’s controls over the initial recognition of amounts as utility plant and regulatory assets or liabilities and the evaluation of the probability of (1) the recovery in future rates of costs incurred as utility plant and deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities.

• We read regulatory orders issued by the Commissions to the Company, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to evaluate management’s determination of the accounting impacts of any new or revised regulatory decisions and their impact on measurement of related regulatory assets and liabilities.

We also tested the effectiveness of management’s controls over the monitoring and evaluation of regulatory developments that may affect the probability of recovering costs in future rates or of a future reduction in rates, and controls over relevant computations impacting certain regulatory asset or liability balances.

• We read regulatory orders issued by the Commissions to the Company, regulatory statutes, and other publicly available information to evaluate management’s determination of the accounting impacts of any new or revised regulatory decisions and their impact on measurement of related regulatory assets and liabilities.

• We obtained supporting documentation from management regarding the evidence, such as regulatory rules and decisions, past practices, and other facts and circumstances, used in the measurement of regulatory assets and liabilities for compliance with the related orders.

2 unchanged sentences

• We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded, and regulatory developments, were appropriate and consistent with the information obtained in our procedures.

Deloitte & Touche

KT Water Resources Acquisition — Refer to Note 14 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of KT Water Resources.

The Company accounted for the transaction as an asset acquisition and allocated the purchase price paid for the assets acquired and liabilities assumed on a relative fair value basis.

Given the significant amount of judgment required by management to estimate the relative fair value of the intangible assets, non-utility property and a production payment received as part of the acquisition, performing audit procedures to test the fair value allocation required a high degree of auditor judgment and increased effort, including involving valuation specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the relative fair value of assets acquired, liabilities assumed and the post-closing payment for KT Water Resources included the following, among others:

• We tested the effectiveness of controls over the allocation of the purchase price to assets acquired, liabilities assumed and the post-closing payment, and controls over the valuation methods used to value the assets and liabilities, including controls over management's evaluation of inputs and assumptions used in the valuation estimates.

• We obtained and evaluated the third-party valuation report and management's valuation, along with relevant supporting documentation, such as the executed purchase and sale agreement.

• With the assistance of our fair value specialists, we (1) evaluated the reasonableness of the valuation methodologies and significant assumptions used by management and their external valuation specialist, including comparing the key inputs to external market sources, (2) evaluated the reasonableness of the discount rates, including testing the source information underlying the determination of the discount rates, assessing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rates selected by management, and (3) assessed the mathematical accuracy of significant calculations in the valuation schedules.

• We evaluated the reasonableness of certain business assumptions used in the valuation, including the quantities of groundwater to be produced by the wells.

/s/ Deloitte & Touche LLP

San Jose, California

7 unchanged sentences

Depreciable plant and equipment 3,967,911 3,661,285

Construction in progress 116,851 176,427

Intangible assets 35,959 36,276

Construction work in progress

106,980 116,851

Intangible assets 35,946 35,959

Total utility plant 4,152,252 3,854,077

Less accumulated depreciation and amortization 981,598 1,223,760

2,630,317 2,497,499

Real estate investments and nonutility properties 58,033 57,632

Net utility plant 3,170,654 2,630,317

Nonutility properties and real estate investments 13,350 58,033

Less accumulated depreciation and amortization 194 17,158

Net nonutility properties and real estate investments

13,156 40,875

1 unchanged sentence

Cash and cash equivalents

Cash 12,344 10,908

Restricted cash — 1,211

Accounts receivable:

3 unchanged sentences

Other 3,684 5,560

Accrued unbilled utility revenue 45,722 44,026

Current regulatory assets, net 16,068 2,629

Accrued unbilled revenue

49,543 45,722

Assets held for sale

Prepaid expenses 11,110 9,753

Current regulatory assets

Other current assets 6,146 6,095

Total current assets

198,389 158,386

Other assets:

Net regulatory assets, less current portion 127,275 151,992

Regulatory assets, less current portion

235,910 246,035

Investments 16,411 14,819

Postretirement benefit plans

33,794 16,990

Other intangible asset

Goodwill 640,311 640,311

Other 8,056 7,323

Total other assets

962,868 925,478

12 unchanged sentences

Retained earnings 495,383 458,356

Accumulated other comprehensive income (loss) 1,477 ( 163 )

Accumulated other comprehensive income

Total stockholders’ equity 1,233,397 1,110,868

Long-term debt, less current portion 1,526,699 1,491,965

Total capitalization

2,760,096 2,602,833

7 unchanged sentences

Income tax payable — 2,696

Current regulatory liabilities

Other current liabilities 20,795 22,913

Total current liabilities

342,974 268,322

3 unchanged sentences

Postretirement benefit plans 46,836 59,738

Regulatory liabilities, less current portion

461,108 118,760

Other noncurrent liabilities 22,492 25,884

Commitments and contingencies

Total capitalization and liabilities

$ 4,345,067 3,755,056

21 unchanged sentences

Other (expense) income:

Interest on long-term debt, mortgage and other interest expense ( 58,062 ) ( 54,339 ) ( 54,255 )

Pension non-service cost 5,023 1,330 ( 374 )

Gain on sale of Texas Water Alliance (“TWA”) — 3,000 —

Gain on sale of real estate investments — 927 948

Interest on long-term debt and other interest expense

( 66,144 ) ( 58,062 ) ( 54,339 )

Pension non-service (cost) credit

( 1,230 ) 5,023 1,330

Other, net 8,882 4,385 10,697

3 unchanged sentences

Other comprehensive income:

Unrealized (loss) gain on investment, net of taxes of $( 188 ) in 2022, $ 68 in 2021 and $( 247 ) in 2020

Unrealized gain (loss) on investment, net of taxes of $ 166 in 2023, $( 188 ) in 2022 and $ 68 in 2021

530 ( 511 ) 185

28 unchanged sentences

Employee stock purchase plan 35,304 — 2,026 — — 2,026

Common stock issuance, net of costs 1,539,615 1 91,028 91,029

Dividends paid ($ 1.36 per share)

35 unchanged sentences

Deferred income taxes ( 8,510 ) ( 3,244 ) ( 2,851 )

Share-based compensation 4,791 4,246 3,553

Gain on sale of TWA, real estate investments and nonutility properties ( 6,197 ) ( 11,421 ) ( 948 )

Stock-based compensation

4,647 4,791 4,246

Allowance for equity funds used during construction ( 2,114 ) ( 1,551 ) ( 1,926 )

Impairment of long-lived asset — — 2,211

Gain on sale of nonutility properties and other assets

— ( 6,197 ) ( 11,421 )

Changes in operating assets and liabilities, net of acquired assets and liabilities:

Accounts receivable and accrued unbilled utility revenue ( 8,222 ) ( 5,931 ) ( 18,918 )

Accounts receivable and accrued unbilled revenue

( 10,869 ) ( 8,222 ) ( 5,931 )

Accounts payable and other current liabilities 492 ( 1,388 ) 4,843

Accrued groundwater extraction charges, purchased water and power 4,772 2,507 ( 1,984 )

Tax receivable and accrued taxes ( 11,954 ) ( 6,416 ) ( 3,557 )

Tax receivable and payable, and other accrued taxes

( 22,415 ) ( 11,954 ) ( 6,416 )

Postretirement benefits ( 1,549 ) ( 7,108 ) ( 4,312 )

Regulatory assets and liabilities excluding income tax temporary differences, net and postretirement benefits 1,714 ( 14,629 ) ( 14,459 )

Up-front service concession payment ( 1,600 ) — ( 5,000 )

Other noncurrent assets and noncurrent liabilities 17,923 13,381 751

Regulatory assets and liabilities excluding income tax temporary differences and postretirement benefits

12,278 1,714 ( 14,629 )

Other noncurrent assets and liabilities

20,756 17,923 13,381

Other changes, net 218 ( 1,339 ) ( 2,123 )

4 unchanged sentences

Contributions in aid of construction ( 16,855 ) ( 22,935 ) ( 17,096 )

Additions to real estate investment ( 631 ) ( 826 ) ( 435 )

Payments for business/asset acquisitions ( 433 ) ( 23,587 ) —

Additions to nonutility assets and real estate investments

( 24,244 ) ( 631 ) ( 826 )

Payments for business acquisitions

( 7,537 ) ( 433 ) ( 23,587 )

Cost to retire utility plant, net of salvage ( 2,097 ) ( 2,520 ) ( 2,781 )

Proceeds from sale of TWA, real estate investments and nonutility properties 975 18,228 1,151

Proceeds from sale of assets

Other changes, net

Net cash used in investing activities ( 322,272 ) ( 244,328 ) ( 259,995 )

3 unchanged sentences

Long-term borrowings 70,000 55,000 247,000

Long-term borrowings held as restricted cash — — 4,000

Repayments of long-term borrowings ( 4,347 ) ( 89,177 ) ( 76,113 )

16 unchanged sentences

Utility property installed by developers $ 3,341 2,433 2,659

Seller financing in asset acquisition, net of discount

See Accompanying Notes to Consolidated Financial Statements.

2 unchanged sentences

Years ended December 31, 2023, 2022 and 2021

(Dollars in thousands, except share and per share data)

(Dollars in thousands, except share and per share data and where otherwise noted)

Organization and Operations

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SJW Group, its wholly owned subsidiaries, and two variable interest entities in which two SJW Group subsidiaries are the primary beneficiaries.

The accounting policies of SJW Group’s subsidiaries comply with the applicable uniform system of accounts prescribed by the respective regulators.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of SJW Group, its wholly owned subsidiaries, and one variable interest entity in which one SJW Group subsidiary is the primary beneficiary.

All intercompany transactions and balances have been eliminated in consolidation.

The accounting policies of SJW Group’s subsidiaries comply with the applicable uniform system of accounts prescribed by the respective regulators and conform to generally accepted accounting principles for rate-regulated public utilities.

SJW Group is a holding company of San Jose Water Company (“SJWC”), SJWNE LLC, SJWTX, Inc.

(“SJWTX”), SJW Land Company and SJWTX Holdings.

SJW Group is a holding company of San Jose Water Company (“SJWC”), SJWTX Holdings, Inc., SJW Land Company, and SJWNE LLC.

SJWNE LLC is a special purpose entity holding company for Connecticut Water Service, Inc.

(“CTWS”) (and its wholly subsidiaries, The Connecticut Water Company (“Connecticut Water”), The Maine Water Company (“Maine Water”), Chester Realty, Inc.

(“CTWS”) (and its wholly owned subsidiaries, The Connecticut Water Company (“CWC”), The Maine Water Company (“MWC”), Chester Realty, Inc.

and New England Water Utility Services, Inc.

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

Acequia has been determined to be a variable interest entity within the scope of Accounting Standards Codification (“ASC”) Topic 810 with SJWTX as the primary beneficiary.

As a result, Acequia has been consolidated with SJWTX.

SJW Group, through its wholly owned subsidiaries, primarily provides water utility and other related services in California, Connecticut, Maine and Texas.

SJW Group has business in property management and real estate investment activity conducted by SJW Land Company and Chester Realty, Inc.

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

In 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 and TWOS.

In 2022, SJWTX filed with the State of Texas an assumed named certificate to operate under the name The Texas Water Company.

SJWTX Holdings intends to create a new subsidiary to hold future wholesale water supply assets in 2023.

In the third quarter of 2023, the corporate reorganization of our water services organization in Texas was completed.

SJWTX Holdings, Inc.

is the holding company for SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”).

TWC is a public utility in the business of providing water service in Bandera, Blanco, Comal, Hays, Kendall, Medina and Travis Counties in the growing region between San Antonio and Austin, Texas.

TWC additionally provides wastewater service in Comal and Kendall counties.

TWC also holds a 25 % equity interest in Acequia Water Supply Corporation (“Acequia”).

Acequia has been determined to be a variable interest entity within the scope of Accounting Standards Codification (“ASC”) Topic 810—“Consolidation” with TWC as the primary beneficiary.

As a result, Acequia has been consolidated with TWC.

TWOS was created for non-tariffed service operations and TWR was formed to hold wholesale water supply assets.

Water sales are seasonal in nature and influenced by weather conditions.

7 unchanged sentences

The major components of depreciable plant and equipment as of December 31, 2023 and 2022 are as follows:

Equipment $ 652,723 598,285

Source of supply

$ 207,537 191,082

Pumping plant

284,308 269,246

Water treatment plant

354,617 327,492

Transmission and distribution plant 2,820,358 2,615,640

Office buildings and other structures 359,086 981,615

General plant

301,091 257,825

Total depreciable plant and equipment $ 3,967,911 3,661,285

1 unchanged sentence

The estimated service lives of depreciable plant and equipment are as follows:

Equipment 5 to 35 years

Source of supply

20 to 100 years

Pumping plant

5 to 70 years

Water treatment plant

5 to 50 years

Transmission and distribution plant 10 to 100 years

Office buildings and other structures 7 to 50 years

For the years 2022, 2021 and 2020, depreciation expense as a percent of the beginning of the year balance of depreciable plant was approximately 3.3 %, 3.2 % and 3.2 %, respectively.

General plant

4 to 61 years

For the years 2023, 2022 and 2021, depreciation expense as a percent of the beginning of the year balance of depreciable plant was 2.9 %, 3.3 % and 3.2 %, respectively.

Depreciation expense for utility plant for the years ended December 31, 2023, 2022 and 2021 was $ 104,325 , $ 99,413 and $ 91,906 , respectively.

The cost of utility plant retired, including retirement costs (less salvage), is charged to accumulated depreciation and no gain or loss is recognized.

The cost of utility plant retired (less salvage) is charged to accumulated depreciation and no gain or loss is recognized.

To the extent SJW Group recovers retirement costs through rates during the life of the associated asset and before the costs are incurred, these amounts result in a regulatory liability being reported based on the amounts previously recovered through customer rates until the costs to retire those assets are incurred.

Allowance For Funds Used During Construction (“AFUDC”)

1 unchanged sentence

AFUDC is recorded to the extent approved by the respective states’ utility regulators and is recovered through water rates as the utility plant depreciates.

The amount of interest capitalized in 2022, 2021 and 2020 was $ 4,703 , $ 4,422 and $ 4,133 , respectively.

Interest on long-term debt is presented net of amounts capitalized on the Consolidated Statement of Comprehensive Income.

The amount of equity funds capitalized in 2022, 2021 and 2020 was $ 1,551 , $ 1,926 and $ 1,249 , respectively, reflected in “Other, net” on the Consolidated Statement of Comprehensive Income.

The amount of AFUDC debt capitalized in 2023, 2022 and 2021 was $ 2,900 , $ 4,703 and $ 4,422 , respectively.

Interest on long-term debt is presented net of AFUDC debt capitalized on the Consolidated Statement of Comprehensive Income.

The amount of AFUDC equity capitalized in 2023, 2022 and 2021 was $ 2,114 , $ 1,551 and $ 1,926 , respectively, reflected in “Other, net” on the Consolidated Statement of Comprehensive Income.

Intangible Assets

Intangible assets are recorded at cost and are amortized using the straight-line method over the estimated useful life of the asset, ranging from 5 to 70 years (see Note 8 , “Utility Plant Intangible Assets”).

Real Estate Investments and Nonutility Properties

Real estate investments and nonutility properties are recorded at cost and consist primarily of land and buildings.

Net gains and losses from the sale of real estate investments and nonutility properties are recorded as a component of other (expense) income and operating expense, respectively, in the Consolidated Statements of Comprehensive Income.

Finite-lived intangible assets are recorded at cost and are amortized using the straight-line method over the estimated useful life of the asset, ranging from 5 to 70 years.

Indefinite-lived intangibles assets are not amortized, but instead are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

(see Note 8 , “Intangible Assets”).

Nonutility Properties and Real Estate Investments

Nonutility properties and real estate investments are recorded at cost and consist primarily of land and buildings.

Net gains and losses from the sale of nonutility properties and real estate investments are recorded as a component of other (expense) income and operating expense, respectively, in the Consolidated Statements of Comprehensive Income.

Nonutility property is property that is neither used nor useful in providing water utility services to customers and is excluded from rate base for rate-setting purposes.

SJWC recognizes gain/loss on disposition of nonutility property in accordance with California Public Utilities Commission (“CPUC”) Code Section 790, whereby the net proceeds are reinvested back into property that is useful in providing water utility services to customers.

CTWS and SJWTX do not have regulatory restrictions on the use of proceeds from the sale of nonutility property.

SJWC recognizes gain or loss on the disposition of nonutility property in accordance with California Public Utilities Commission (“CPUC”) Code Section 790, whereby the net proceeds are reinvested back into property that is useful in providing water utility services to customers.

CTWS and TWC do not have regulatory restrictions on the use of proceeds from the sale of nonutility property.

There is no depreciation associated with Water Utility Services nonutility property as it is all undeveloped land.

The major components of real estate investments and nonutility properties as of December 31, 2022 and 2021 are as follows:

The major components of nonutility properties and real estate investments are as follows as of December 31:

Land $ 4,137 12,615

Wholesale water supply assets

Buildings and improvements 748 45,418

Total real estate investments and nonutility properties $ 58,033 57,632

Subtotal 13,350 58,033

accumulated depreciation and amortization 194 17,158

Total $ 13,156 40,875

Depreciation on buildings and improvements for real estate investments is computed using the straight-line method over the estimated useful lives of the assets, ranging from 7 to 39 years.

In March 2023, SJW Land Company entered into a broker agreement to sell its warehouse buildings and land property located in Knoxville, Tennessee.

The company reclassified the Tennessee properties from held-and-used to held-for-sale at March 31, 2023.

The Company’s intention is to complete the sale of these assets within a twelve-month period.

The company records the Tennessee properties at the lower of their carrying value or estimated fair value less cost to sell, and also stopped recording depreciation on assets held for sale.

SJW Group’s broker provides the estimated fair value of the Tennessee properties.

No impairment has been recorded as the estimated fair value less cost to sell exceeds carrying value.

The property is classified as part of the Real Estate Services reportable segment.

The sale of the Tennessee properties does not represent a strategic shift that has or will have a major effect on SJW Group;

therefore, the sale does not qualify for treatment as a discontinued operation.

The following represents the major components of the Tennessee warehouse building and land property recorded in assets held-for-sale on the Consolidated Balance Sheets as of December 31, 2023:

Land $ 13,170

Buildings and improvements 44,950

Subtotal 58,120

accumulated depreciation and amortization 17,270

Total $ 40,850

On October 29, 2021, SJWC sold two nonutility properties located in San Jose, California for $ 13,150 .

1 unchanged sentence

On February 15, 2022, the CPUC review was complete and SJWC recognized the deferred gain on sale of nonutility property in 2022.

A former wholly owned subsidiary of SJW Group, TWA was sold to Guadalupe-Blanco River Authority (“GBRA”) in 2017.

A former wholly owned subsidiary of SJW Group, Texas Water Alliance, was sold to Guadalupe-Blanco River Authority (“GBRA”) in 2017.

The sales agreement with GBRA included a holdback amount of $ 3,000 to be paid to SJW Group on June 30, 2021, subject to reduction under certain conditions.

2 unchanged sentences

SJW Group recognized a pre-tax gain on the sale of real estate investments of $ 927 , after selling expenses of $ 121 .

Real estate investments include $ 58,730 and $ 58,330 as of December 31, 2022 and 2021, respectively, of assets that are leased or available for lease.

The following schedule shows the future minimum rental payments to be received from third parties under operating leases that have remaining noncancelable lease terms in excess of one year as of December 31, 2023:

1 unchanged sentence

Rental Revenue

Thereafter 1,679

Business Combinations

SJW Group applies the provisions of ASC Topic 805—“Business Combinations” for the purchase accounting related to business acquisitions.

Topic 805 requires SJW Group to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values.

Business Combinations and Asset Acquisitions

SJW Group applies the provisions of Financial Accounting Standards Board (“FASB”) ASC Topic 805— “Business Combinations” for the accounting related to business and asset acquisitions.

First, SJW Group applies the guidance in Topic 805 to determine whether a transaction represents a business combination or an acquisition of assets.

If the transaction is a business combination, Topic 805 requires SJW Group to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed.

If the transaction is an acquisition of assets, the cost of the transaction, including transaction costs, is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill.

While SJW Group uses best available estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date, such estimates are inherently uncertain and subject to refinement.

As a result, during the one year measurement period from the acquisition date, we record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our Consolidated Statements of Comprehensive Income.

Accounting for business combinations requires SJW Group to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed and pre-acquisition contingencies.

For business combinations, Topic 805 provides for a measurement

period from the acquisition date of up to one year, during which we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to our Consolidated Statements of Comprehensive Income.

Accounting for business combinations and asset acquisitions requires SJW Group to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed and pre-acquisition contingencies.

Although SJW Group believes that the assumptions and estimates we make are reasonable and appropriate, they are based in part on historical experience and information obtained from the acquired company’s management and are inherently uncertain.

Events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets.

Although SJW Group believes the assumptions and estimates made are reasonable, they are based in part on historical experience, market conditions and information obtained from management of the acquired companies and are inherently uncertain.

Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to:

3 unchanged sentences

and discount rates.

See Note 14 , “Business Combinations” for further discussion.

See Note 14 , “Acquisitions” for further information on business combinations and asset acquisitions.

Impairment of Long-Lived Assets and Goodwill

In accordance with the requirements of Financial Accounting Standards Board (“FASB”) ASC Topic 360—“Property, Plant and Equipment,” the long-lived assets of SJW Group are reviewed for impairment when changes in circumstances or events require adjustments to the carrying values of the assets.

In accordance with the requirements of FASB ASC Topic 360—“Property, Plant and Equipment,” the long-lived assets of SJW Group, including property, plant and equipment and finite-lived intangible assets, are reviewed for impairment when changes in circumstances or events indicate that the carrying amount of the assets may not be recoverable.

In assessing qualitative factors, SJW Group considers the impact of these key factors:

change in industry and competitive environment, financial performance, and other relevant company-specific events.

When such changes in circumstances or events occur, the company assesses recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows.

To the extent an impairment exists, the asset is written down to its estimated fair value with a corresponding charge to operations in the period in which the impairment is identified.

Long-lived assets consist primarily of utility plant in service, goodwill, regulatory assets, real estate investments and intangible assets.

SJW Group first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

In assessing the qualitative factors, SJW Group considers the impact of these key factors:

change in industry and competitive environment, financial performance, and other relevant Company-specific events.

If SJW Group determines that as a result of the qualitative assessment it is more likely than not (> 50% likelihood) that the fair value is less than carrying amount, then a quantitative test is performed.

No impairments occurred during 2023 and 2022.

During the year ended December 31, 2021, SJW Group determined that an implementation project for a customer care billing system at SJWTX will no longer be pursued and accordingly wrote-off $ 2,211 of accumulated costs for the project that were previously recorded as construction in progress on the consolidated balance sheets.

Goodwill represents the excess of the purchase price paid over the estimated fair value of the assets acquired and liabilities assumed in the acquisition of a business.

Goodwill is not amortized but is tested for impairment annually on October 1st or

more frequently if an event occurs or circumstances change that would more likely than not, reduce the fair value of a reporting unit below its carrying amount.

SJW Group first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

During the year ended December 31, 2021, SJW Group determined that an implementation project for a customer care billing system at TWC will no longer be pursued and accordingly wrote-off $ 2,211 of accumulated costs for the project that were previously recorded as construction work in progress on the Consolidated Balance Sheets.

Goodwill is not amortized but is tested for impairment annually on October 1st or more frequently if an event occurs or circumstances change that would more likely than not, reduce the fair value of a reporting unit below its carrying amount.

Indefinite-lived intangible assets, other than goodwill, are not amortized but are tested for impairment annually on October 1 st or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of indefinite-lived intangible assets below their carrying amount.

In performing impairment tests of goodwill and indefinite-lived intangible assets, SJW Group first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.

In assessing the qualitative factors, SJW Group considers the impact of these key factors:

1 unchanged sentence

SJW Group’s goodwill is primarily associated with the recent merger with CTWS in 2019.

As of October 1, 2021, SJW Group performed a qualitative assessment and found no indicators of impairment and therefore did not perform the quantitative impairment test.

No goodwill impairments occurred during 2022, 2021 or 2020.

As of October 1, 2023, SJW Group performed qualitative assessments of both goodwill and indefinite-lived intangible assets and found no indicators of impairment and therefore did not perform quantitative impairment tests.

No impairments of goodwill or indefinite-lived intangible assets occurred during 2023, 2022 or 2021.

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of cash on deposit with banks with maturities of three months or less from the date of purchase.

Restricted funds consist of proceeds from state revolving fund bond issuances to Maine Water of $ 4,000 on December 23, 2020, for capital expenditures.

Proceeds were held by a trustee for the bonds and released when the funding conditions are met.

As of December 31, 2021, $ 2,789 of the proceeds from the December 23, 2020, bond were released by the trustee, and a balance of $ 1,211 remains.

Cash and cash equivalents primarily consisted of cash on deposit with banks and short-term, highly liquid investments with original maturities of three months or less.

Restricted funds consisted of proceeds from state revolving fund bond issuances to MWC of $ 4,000 on December 23, 2020, for capital expenditures.

Proceeds were held by a trustee for the bonds and released when the funding conditions were met.

As of December 31, 2021, $ 2,789 of the proceeds from the December 23, 2020, bond were released by the trustee, and the balance of $ 1,211 was released during the year ended December 31, 2022.

Accounts Receivable

Accounts receivable are recorded at the invoiced amounts.

The allowance for uncollectible accounts is SJW Group’s best estimate of credit losses in its existing accounts receivable and is determined based on current expected losses.

The estimate is based on historical loss information adjusted for current conditions.

Accounts balances are written off against the allowance when it is probable the receivable will not be recovered or is over a certain number of days outstanding.

Financial Instruments and Investments

The following instruments are not measured at fair value on the company’s Consolidated Balance Sheets but require disclosure of fair values:

cash and cash equivalents, accounts receivable and accounts payable.

cash and cash equivalents, accounts receivable, accounts payable, and lines of credit.

The estimated fair value of such instruments approximates their carrying value as reported on the Consolidated Balance Sheets.

The fair value of such financial instruments are determined using the income approach based on the present value of estimated future cash flows.

The fair value of such

financial instruments are determined using the income approach based on the present value of estimated future cash flows.

The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1.

1 unchanged sentence

SJW Group has investments in company owned life insurance which are valued at cash surrender value of the policies as reported by the insurer.

The value of these contracts is based principally on a referenced pool of investment funds that actively redeem shares, are observable and measurable, and are presented in “Other investments” on SJW Group’s Consolidated Balance Sheets.

The value of these contracts is based principally on a referenced pool of investment funds that actively redeem shares, are observable and measurable, and are presented in “Investments” on SJW Group’s Consolidated Balance Sheets.

As of December 31, 2023 and 2022, the value of the company owned life insurance was $ 8,220 and $ 7,342 , respectively, of which $ 3,937 and $ 3,420 , respectively, was related to assets to fund CTWS’ supplemental retirement plan agreements.

4 unchanged sentences

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

To the extent permitted by the regulators, investment tax credits resulting from utility plant additions are deferred and amortized over the estimated useful lives of the related property.

To the extent permitted by the regulators, investment tax credits resulting from public utility plant additions are deferred and amortized over the estimated useful lives of the related property.

In addition, investment tax credits resulting from other asset additions are recognized in the year the property is put in service.

Advances for Construction and Contributions in Aid of Construction

5 unchanged sentences

As of December 31, 2023, advances for construction were $ 146,582 of which $ 55,170 was related to non-refundable advances for construction and $ 30,437 was related to advances which are refunded based on service connections made.

December 31, 2022 and 2021, the fair value of the advances for construction refunded ratably over 40 years is $ 44,715 and $ 51,067 , respectively.

Contributions in aid of construction represent funds received from developers that are not refundable under applicable regulations.

As of December 31, 2023 and 2022, the fair value of the advances for construction refunded ratably over 40 years is $ 40,915 and $ 44,715 , respectively.

Contributions in aid of construction represent funds or property received from developers that are not refundable under applicable regulations.

Depreciation applicable to utility plant constructed with these contributions is charged to contributions in aid of construction.

6 unchanged sentences

It reflects principally the retirement costs of wells and other anticipated clean-up costs, which by law, must be remediated upon retirement.

Retirement costs have historically been recovered through rates at the time of retirement.

As a result, a regulatory asset is also recorded.

As of December 31, 2023 and 2022, the asset retirement obligation is as follows:

2 unchanged sentences

Retirement obligation, present value $ 862 920

Management has determined that the company has principally five categories of revenues.

The first category is recognized in accordance with ASC Topic 606—“Revenue from Contracts with Customers” and represents metered revenue of Water Utility Services which includes billings to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period.

SJW Group recognizes revenue under ASC Topic 606—“Revenue from Contracts with Customers” for metered revenue of Water Utility Services, which includes billings to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period.

SJW Group satisfies its performance obligation upon delivery of water to the customer at which time the customer consumes the benefits provided by the company.

The customer is typically billed on a quarterly or bi-monthly basis after water delivery has occurred.

The customer is generally billed on a quarterly, monthly, or bi-monthly basis after water delivery has occurred.

The customer is charged both a service charge which is based upon meter size and covers a portion of the fixed costs of furnishing water to the customer and a consumption charge based on actual water usage.

2 unchanged sentences

Actual results could differ from those estimates, which may result in an adjustment to revenue when billed in a subsequent period.

The second category is recognized in accordance with ASC Topic 980-605-25—“Alternative Revenue Programs”.

Under Programs established by the CPUC and Public Utilities Regulatory Authority of Connecticut (“PURA”), allowing for automatic adjustment of future rates, the company recognizes revenue when it is objectively determinable, probable of recovery and expected to be collected within 24 months of the year-end in which the revenue is recognized.

A reserve, based on an estimate of actual usage over the recovery period, is recorded for amounts SJW Group estimates will not be collected within the 24-month period.

SJW Group also recognizes revenue under ASC Topic 980-605-25—“Alternative Revenue Programs.” Under programs established by the CPUC and Public Utilities Regulatory Authority of Connecticut (“PURA”), allowing for automatic adjustment of future rates, the company recognizes revenue when it is objectively determinable, probable of recovery and expected to be collected within 24 months of the year-end in which the revenue is recognized.

A reserve, based on an estimate of actual usage over the recovery period, is recorded for any amounts SJW Group estimates will not be collected within the 24-month period.

SJW Group’s alternative revenue programs include SJWC’s Water Conservation Memorandum Account (“WCMA”) and CTWS’s Water Rate Adjustment mechanism (“WRA”).

• 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.

In 2021, with the declaration of a drought emergency and conservation mandates in California by Governor Gavin Newsom and Santa Clara Valley Water District (“Valley Water”), SJWC obtained approval to reestablish a WCMA effective July 20, 2021.

For the year ended December 31, 2022 and 2021, SJWC recognized $ 4,041 and $ 3,243 , respectively, in lost revenues accumulated in the WCMA.

Effective on November 11, 2022, the CPUC approved the net refund of the overcollected drought surcharges of $ 23,753 and lost revenues in WCMA of $ 3,279 in Advice Letter No.

• The WRA allows Connecticut Water to mitigate risk associated 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 companies to implement a surcharge or surcredit as necessary to recover 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.

The third and fourth category represents the impact of other balancing and memorandum accounts and other regulatory mechanisms that are accounted for under FASB ASC Topic 980—“Regulated Operations”.

Balancing and memorandum accounts are recognized by SJWC when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process.

The last category, rental income, represents lease rental income.

See further discussion on WCMA and WRA in Note 3 , “Regulatory Matters.”

SJW Group’s revenues also reflect the impact of other balancing and memorandum accounts and other regulatory mechanisms that are accounted for under FASB ASC Topic 980—“Regulated Operations.” Balancing and memorandum accounts are recognized when it is probable that future recovery of previously incurred costs or future refunds that are to be credited to customers will occur through the ratemaking process.

See further discussion in Note 3 , “Regulatory Matters.”

SJW Group also recognizes revenue from rental income, which represents lease rental income.

Tenants pay monthly in accordance with lease agreements and SJW Group recognizes the income ratably over the lease term as this is the most representative of the pattern in which the benefit is expected to be derived from SJW Group’s underlying asset.

The major streams of revenue for SJW Group are as follows:

Detail of SJW Group’s revenue is as follows for the years ended December 31:

2023 2022 2021

1 unchanged sentence

Alternative revenue programs, net 3,634 ( 1,312 ) 5,304

Other balancing and memorandum accounts, net 30,179 5,138 11,856

Other regulatory mechanisms, net ( 692 ) ( 1,703 ) ( 1,639 )

Other balancing and memorandum accounts and regulatory mechanisms, net

( 17,123 ) 29,487 3,435

Rental income 5,684 5,605 5,379

11 unchanged sentences

Earnings per Share

Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the year.

Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with deferred restricted common stock awards under SJW Group’s Long-Term Incentive Plan and shares potentially issuable under the Employee Stock Purchase Plans.

Basic earnings per share is calculated using income available to common stockholders, divided by the weighted average number of shares outstanding during the period.

Diluted earnings per share is calculated using income available to common stockholders divided by the weighted average number of shares of common stock including both shares outstanding and shares potentially issuable in connection with restricted common stock awards under SJW Group’s long-term incentive plans, shares potentially issuable under the performance stock plans assumed through the business combination with CTWS, and shares potentially issuable under SJW Group’s employee stock purchase plans.

Restricted common stock units of 14,193 , 25,127 and 16,347 as of December 31, 2023, 2022 and 2021, respectively, were excluded from the dilutive earnings per share calculation as their effect would have been anti-dilutive.

Reclassifications

Certain reclassifications have been made to prior periods in the Consolidated Financial Statements and Notes to conform to the current presentation.

New Accounting Standards

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, “Improvements to Reportable Segment Disclosures.” (“ASU 2023-07”).

Among other changes, the ASU requires disclosure of significant segment expenses and extends certain annual disclosures to interim periods.

The ASU is effective for SJW Group beginning with its annual financial statements for the year ending December 31, 2024.

Early adoption is permitted.

SJW Group is currently evaluating the requirements of ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures.” The ASU amends certain income tax disclosure requirements, including adding requirements to present the reconciliation of income tax expense computed at the statutory rate to actual income tax expense using both percentages and amounts and providing a disaggregation of income taxes paid.

Further, certain disclosures are eliminated, including the current requirement to disclose information on changes in unrecognized tax benefits in the next 12 months.

The ASU is effective for SJW Group beginning with its annual financial statements for the year ending December 31, 2025.

Early adoption is permitted.

SJW Group is currently evaluating the requirements of ASU 2023-09.

Regulatory Matters

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.

Regulatory Assets, Net

Water Utility Services recognizes regulatory assets and liabilities for amounts that are deemed probable of recovery from, or refund to, customers.

Determining probability requires significant judgement by management and includes assessing evidence that may exist prior to regulatory authorization, including regulatory rules and decisions, historical ratemaking practices, and other facts and circumstances that would indicate that recovery or refund is probable.

If the utility determines that it is no longer probable that regulatory assets would be recovered or reflected in future rates, or if the utility ceased to be subject to rate regulation, the regulatory assets would be charged against income in the period in which that determination was made.

If regulatory accounting did not apply, the utility’s future financial results could become more volatile as compared to historical financial results due to the differences in the timing of expense or revenue recognition.

The company adjusts the related asset and liabilities for these items through its regulatory asset and liability accounts at year-end, except for certain postretirement benefit costs and balancing and memorandum accounts which are adjusted monthly.

Rate-regulated enterprises are required to charge a regulatory asset to earnings if and when it is determined that the asset is no longer probable of recovery.

SJW Group continually evaluates the recoverability of regulatory assets by assessing whether the amortization of the balance over the remaining life can be recovered through expected and undiscounted future cash flows.

SJW Group’s net regulatory assets not earning a return primarily included postretirement pensions and other medical benefits unfunded amounts, and business combinations debt premium, net.

The total amount of net regulatory assets not earning a return at December 31, 2022 and 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $ 52,066 and $ 84,887 , respectively.

Regulatory assets, net are comprised of the following as of December 31:

Water Utility Services, excluding non-tariffed activities, are subject to rate regulation based on cost recovery and meets the criteria of accounting guidance for rate-regulated operations under ASC Topic 980, which affects the timing of the recognition of certain revenues and expenses.

SJW Group’s consolidated financial statements reflect the actions of regulators in 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.

Water Utility Services, excluding non-tariffed activities, recognizes regulatory assets for incurred costs that are deemed probable of recovery from customers.

Also, Water Utility Services recognizes regulatory liabilities for amounts expected to be refunded to customers in the rate-making process and for amounts collected in advance of the related expenditures.

Regulatory assets or liabilities are also recognized for special revenue programs such as WCMA and WRA in accordance with guidance on alternative revenue programs under ASC Topic 980.

Application of ASC 980, including determining whether recovery is probable, requires significant judgment by management and includes assessing evidence that may exist prior to regulatory authorization, including regulatory rules and decisions, historical ratemaking practices, and other facts and circumstances that would indicate that recovery or refund is probable.

If the regulated utility determines that it is no longer probable that regulatory assets or liabilities would be recovered or refunded through the regulatory process, or if the utility ceased to be subject to rate regulation, the affected regulatory assets and liabilities would be derecognized with a corresponding adjustment to income in the period in which that determination was made.

SJWC has established balancing accounts for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes.

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 Monterey Water Revenue Adjustment (“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 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 reduction.

SJWC records the lost revenue captured in the WCMA balancing accounts.

Applicable drought surcharges collected are used to offset the revenue losses tracked in the WCMA.

Mandatory water conservation requirements from Santa Clara Valley Water District (“Valley Water”) 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 current customer rates 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 PURA to utilize WRA, a decoupling mechanism, to mitigate risks associated 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 sur-credit 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 December 31, 2023 and 2022, SJW Group’s regulatory assets not earning a return primarily included unrecognized pensions and other postretirement benefits and business combinations debt premium.

The total amount of regulatory assets not earning a return at December 31, 2023 and 2022, either by interest on the regulatory asset or as a component of rate base at the allowed rate of return was $ 43,141 and $ 66,373 , respectively.

Regulatory Assets and Liabilities

Regulatory assets and liabilities are comprised of the following as of December 31:

Regulatory assets:

Income tax temporary differences, net (a) $ 43,434 22,420

Postretirement pensions and other medical benefits 31,493 62,197

Business combinations debt premium 17,396 19,937

Balancing and memorandum accounts, net 45,769 38,334

WRA (b) ( 4,488 ) 2,588

Other, net (c) 9,739 9,145

Total regulatory assets, net 143,343 154,621

current regulatory asset, net 16,068 2,629

Total regulatory assets, net, less current portion $ 127,275 151,992

Income tax temporary differences (a)

$ 157,669 137,860

(a) The company expects to recover regulatory assets related to plant depreciation income tax temporary differences over the average lives of the plant assets of between 5 to 75 years.

(b) WRA is a Connecticut Water decoupling mechanism that qualifies as an alternative revenue program.

It 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.

(c) Other, net includes other regulatory mechanisms, accrued benefits for vacation, and asset retirement obligations that have not yet been passed through in rates.

Balancing and Memorandum Accounts

In California, the CPUC has established a balancing account mechanism for the purpose of tracking the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes.

SJWC also maintains memorandum accounts to track revenue impacts due to catastrophic events, certain unforeseen water quality expenses related to new federal and state water quality standards, energy efficiency, water conservation, water tariffs, and other approved activities or as directed by the CPUC.

All balancing accounts and memorandum-type accounts not included for recovery or refund in the current general rate case will be reviewed by the CPUC in SJWC’s next general rate case or at the time an individual account balance reaches a threshold of 2 % of authorized revenue, whichever occurs first.

As of December 31, 2022, the total balance in SJWC’s balancing and memorandum accounts combined, including interest, that has not been recorded into the financial statements was a net under-

collection of $ 655 .

On October 11, 2022, the CPUC issued General Rate Case Decision No.

22-10-005, which approved a recovery of $ 18,174 in balancing and memorandum accounts from customers.

SJWC met the recognition requirements for certain of its balancing and memorandum accounts and certain amounts subject to balancing and memorandum accounts and recorded regulatory assets, net, as follows:

For the year ended December 31, 2022

Beginning Balance Regulatory Asset

Increase (Decrease) Refunds (Collections)

Adjustments Ending

Revenue accounts:

Monterey Water Revenue Adjustment Mechanism (“MWRAM”) $ 16,866 6,089 ( 12,091 ) 10,864

WCMA (a) 3,534 4,041 ( 12,614 ) ( 5,039 )

Cost of capital memorandum accounts ( 1,563 ) ( 28 ) 1,416 ( 175 )

2022 GRC interim memorandum account — 20,650 — 20,650

All others ( 386 ) 2,034 795 2,443

Total revenue accounts 18,451 32,786 ( 22,494 ) 28,743

Cost-recovery accounts:

Water supply costs 10,545 3,830 ( 4,502 ) 9,873

Pension 4,941 ( 249 ) ( 1,857 ) 2,835

PRVMA (b) 707 9 ( 365 ) 351

CEMA (c) 3,245 240 — 3,485

All others 445 1,830 ( 1,793 ) 482

Total cost-recovery accounts 19,883 5,660 ( 8,517 ) 17,026

Total $ 38,334 38,446 ( 31,011 ) 45,769

For the year ended December 31, 2021

Beginning Balance Regulatory Asset

Increase (Decrease) Refunds (Collections)

Adjustments Ending

Revenue accounts:

MWRAM $ 12,077 4,788 1 16,866

WCMA (a) 666 3,243 ( 375 ) 3,534

Cost of capital memorandum accounts ( 1,561 ) ( 2 ) — ( 1,563 )

All others ( 1,139 ) 750 3 ( 386 )

Total revenue accounts 10,043 8,779 ( 371 ) 18,451

Cost-recovery accounts:

Water supply costs 8,123 2,421 1 10,545

Pension 3,478 1,464 ( 1 ) 4,941

PRVMA (b) 1,108 1 ( 402 ) 707

CEMA (c) 2,266 979 — 3,245

All others 445 — — 445

Total cost-recovery accounts 15,420 4,865 ( 402 ) 19,883

Total $ 25,463 13,644 ( 773 ) 38,334

Unrecognized pensions and other postretirement benefits (b)

24,593 45,799

(a) In 2021, with the declaration of a drought emergency and conservation mandates in California by Governor Gavin Newsom and Valley Water, SJWC obtained approval to reestablish a WCMA effective July 20, 2021.

Drought surcharges collected are used to offset the revenue losses tracked in the WCMA.

For the year ended December 31, 2022 and 2021, SJWC recognized $ 4,041 and $ 3,243 , respectively, in lost revenues accumulated in the WCMA.

Effective on November 11, 2022, the CPUC approved the refund of the net WCMA balance of $ 20,474 to customers.

(b) On August 27, 2020, the Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”) costs of $ 1,219 were approved for recovery by the CPUC.

In response, the CPUC ordered its regulated water utilities to implement emergency customer protections in accordance with the Company’s Disaster Relief Customer Protections and Outreach Plan, including waiving reconnection deposits, offering payment arrangements, suspending water service disconnections due to non-payment and requiring water utilities to develop a transition plan regarding shutoffs and terminations with customers once the moratorium ends.

protections extended through to February 1, 2022.

CPUC authorized water utilities to activate a COVID-19 Catastrophic Event Memorandum Account (“CEMA") in order to track savings and costs related to SJWC’s response, which includes labor and materials, increases in bad debt from the suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage.

The CEMA was activated for SJWC through the filing of Advice Letter No.

546 on March 19, 2020.

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

SJWC has determined that future recovery of the account is probable and recognized a regulatory asset of $ 240 and $ 979 in the years ended December 31, 2022 and 2021, respectively.

Business combinations debt premium (c)

14,855 17,396

Employee benefit costs (d)

Customer Assistance Program (“CAP”) balancing account (f)

Catastrophic event memorandum accounts (“CEMA”) (g)

2022 general rate case interim memorandum account (h)

Water supply costs (i)

Total regulatory assets

240,186 265,775

current regulatory asset (k)

Total regulatory assets, less current portion

$ 235,910 246,035

Regulatory liabilities:

Cost of removal (l)

Future income tax benefits due to customers (m)

88,610 94,426

Unrecognized pensions and other postretirement benefits (b)

20,196 14,307

Revenue adjustment mechanisms (n)

Total regulatory liabilities

464,167 122,432

current regulatory liabilities (p)

Total regulatory liabilities, less current portion

$ 461,108 118,760

___________________________________

(a) Consists primarily of temporary income tax differences that are flowed through to customers, which will be recovered in future rates as these temporary differences reverse.

The company expects to recover regulatory assets related to plant depreciation income tax temporary differences over the lives of the plant assets, which are between 4 to 100 years.

(b) Represents actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain pension and other postretirement benefit plans.

(c) Consists of debt fair value adjustments recognized through purchase accounting for the completed merger with CTWS in 2019.

(d) Includes deferrals of pension and other postretirement benefit expense and cost of accrued benefits for vacation.

(e) MWRAM is described in the previous section.

(f) Represents costs associated with SJWC’s CAP.

(g) Primarily related to increased bad debt expenses associated with SJWC’s response to COVID-19.

The CPUC has authorized water utilities to activate CEMA accounts in order to track savings and costs related to SJWC’s response to catastrophic events, which includes external labor and materials, increases in bad debt from suspension of shutoffs for non-payment, waived deposits and reconnection fees, and divergence from actual versus authorized usage.

(h) Represents the difference between revenues collected in interim rates in effect as of January 1, 2022 and revenues that would result from rates authorized in SJWC’s 2022 general rate case retroactive to January 1, 2022.

(i) Reflects differences in actual water supply costs compared to amounts assumed in setting rates, including applicable changes and variations in costs and quantities that affect the overall mix of the water supply.

(j) Other includes other balancing and memorandum accounts and regulatory mechanisms, deferred costs for certain information technology activities, asset retirement obligations and rate case expenses.

(k) As of December 31, 2023, primarily relates to MWRAM.

As of December 31, 2022, primarily relates to the 2022 general rate case interim memorandum account.

(l) Represents amounts collected in rates from customers for estimated costs to retire assets at the end of their expected useful lives before the costs are incurred.

During 2023, the Company completed a new depreciation study and as of December 31, 2023, recorded a classification adjustment of $ 346,418 as cost of removal regulatory liabilities.

As of December 31, 2022, cost of removal regulatory liabilities of $ 316,647 are included in net utility plant - accumulated depreciation and amortization.

Management has concluded a classification adjustment to the prior year balance sheet is not necessary because the impact is immaterial.

(m) On December 22, 2017 the Tax Act was signed into law.

The Tax Act included a reduction in the federal income tax rate from 35% to 21%.

The rate reduction was effective on January 1, 2018 and resulted in a regulatory liability for the excess deferred income taxes.

The benefit of amortization of excess deferred income taxes flows back to the customers under current normalization rules and agreed upon methods with the commissions.

(n) Consists of WRA and WCMA, which are described in the previous section.

(o) Other includes other balancing and memorandum accounts, other regulatory mechanisms and accrued tank painting costs.

(p) As of December 31, 2023 and 2022, primarily relates to WRA.

Capitalization

3 unchanged sentences

At December 31, 2023 and 2022, no shares of preferred stock were issued or outstanding.

On November 17, 2021, SJW Group entered into an equity distribution agreement (the “Equity Distribution Agreement”) with J.P.

In March 2023, SJW Group entered into Amendment No.

1 to the equity distribution agreement (the “Equity Distribution Agreement”), dated November 17, 2021, between SJW Group and J.P.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company may offer and sell shares of its common stock, $ 0.001 par value per share, from time to time in “at-the-market” offerings, having an aggregate gross sales price of up to $ 240,000 .

For the twelve months ended December 31, 2022, SJW Group issued and sold a total of 529,736 shares of common stock with a weighted average price of $ 75.49 per share and received approximately $ 39,179 in net proceeds under the Equity Distribution Agreement.

For the year ended December 31, 2023, SJW Group issued and sold a total of 1,119,806 shares of common stock with a weighted average price of $ 73.68 per share and received $ 80,659 in net proceeds under the Equity Distribution Agreement.

Since the inception of the Equity Distribution Agreement, SJW Group has issued and sold 2,004,657 shares of common stock with a weighted average price of $ 73.57 for a total net proceeds of $ 143,998 and has a remaining $ 92,509 under the Equity Distribution Agreement to issue into shares.

4 unchanged sentences

The Offering closed on March 11, 2021, and the offering of option shares closed on March 16, 2021.

SJW Group received net proceeds of approximately $ 66,775 from the Offering and the sale of option shares, after deducting the underwriting discounts and commissions and offering expenses.

SJW Group received net proceeds of $ 66,775 from the Offering and the sale of option shares, after deducting the underwriting discounts and commissions and offering expenses.

Lines of Credit

7 unchanged sentences

CTWS 90,000 53,000 37,000 20,000

SJWTX 20,000 — 20,000 —

TWC 20,000 2,500 17,500 —

Total syndicated credit agreement 300,000 121,500 178,500 115,000

CTWS credit agreement December 14, 2023 10,000 4,578 5,422 22,996

CTWS credit agreement August 2, 2028 10,000 10,000 — 4,578

CTWS credit agreement May 15, 2025 40,000 40,000 — 40,000

$ 350,000 171,500 178,500 159,578

On August 2, 2022, SJW Group, SJWC, SJWTX, and CTWS entered into a $ 300,000 credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent (“JP Morgan”), Wells Fargo Bank, National Association, as Documentation Agent, and a syndicate of banks.

SJW Group, SJWC, TWC, and CTWS have entered into a $ 300,000 credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent (“JP Morgan”), Wells Fargo Bank, National Association, as Documentation Agent, and a syndicate of banks dated August 2, 2022.

Proceeds of borrowings under the Credit Agreement will be used for refinancing existing debt, working capital, and general corporate purposes.

The Credit Agreement has a maturity date of August 2, 2027.

Under the terms of the Credit Agreement, each of SJW Group, SJWC, SJWTX, and CTWS is a borrower with several and not joint liability.

The Credit Agreement had a maturity date of August 2, 2027.

On August 2, 2023, SJW Group, SJWC, TWC, and CTWS entered into the First Amendment to the Credit Agreement with JPMorgan Chase Bank which provided for, among other matters, an extension of the maturity date from August 2, 2027 to August 2, 2028.

Under the terms of the Credit Agreement, each of SJW Group, SJWC, TWC, and CTWS is a borrower with several and not joint liability.

Each borrower has an initial borrowing entitlement, or sublimit, which can be periodically adjusted from time to time as set forth in the Credit Agreement.

4 unchanged sentences

The applicable rate and pricing is variable depending on credit ratings of the borrower.

The Credit Agreement contains customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, asset sales, and fundamental changes.

The Credit Agreement also includes a financial covenant that requires each of the borrowers to maintain its funded debt to capitalization ratio at or below 70 %.

This Credit Agreement replaces the existing $ 140,000 credit agreement, dated April 23, 2021, between SJWC and JP Morgan and the existing $ 5,000 credit agreement, dated April 23, 2021, between SJWTX and JP Morgan, with SJW Group as guarantor, both of which were terminated upon entering into the Credit Agreement and were set to mature on December 31, 2023.

In addition, on August 2, 2022, CTWS and Citizens Bank, National Association, entered into a fourth modification to the amended and restated revolving credit facility, dated December 18, 2019, as amended, pursuant to which the credit commitment was reduced from $ 75,000 to $ 10,000 .

On October 31, 2022, CTWS and Citizens Bank, National Association, entered into a fifth modification to the amended and restated revolving credit facility to update the interest rate from London Interbank Offered Rate (“LIBOR”) plus the applicable rate to SOFR plus the applicable rate.

The Credit Agreement includes a financial covenant that requires each of the borrowers to maintain its funded debt to capitalization ratio at or below 70 %.

On October 31, 2022, CTWS and Citizens Bank, National Association, entered into a fifth modification to the amended and restated revolving credit facility of $ 10,000 to update the interest rate from London Interbank Offered Rate (“LIBOR”) plus the applicable rate to SOFR plus the applicable rate.

In August 2023, SJW Group, SJWC, TWC, and CTWS entered into the First Amendment to Credit Agreement with JPMorgan Chase Bank which provided for, among other matters, an extension of the maturity date from August 2, 2027 to August 2, 2028.

On February 6, 2023, CTWS modified its existing $ 40,000 credit agreement with CoBank to update the interest rate from LIBOR plus the applicable rate to SOFR plus the applicable rate.

1 unchanged sentence

CTWS previously locked the interest rate under this agreement such that this amendment has no impact.

Cost of borrowing on the lines of credit averaged 3.41 % and 1.32 % as of December 31, 2022 and 2021, respectively.

The weighted-average interest rate on short-term borrowings outstanding at December 31, 2023 was 6.48 % compared to 5.40 % at December 31, 2022.

All of SJW Group’s and subsidiaries’ lines of credit contain customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, acquisitions and investments, restricted payments, asset sales, and fundamental changes.

13 unchanged sentences

2027, 2037 16,457 18,444

Connecticut Water:

Connecticut Innovations Revenue Bonds, variable rate 2028 - 2029 22,050 22,050

3 unchanged sentences

2028 - 2036 96,295 96,295

Total Connecticut Water 313,345 303,140

313,345 313,345

Senior note (a) 6.27 % 2036 15,000 15,000

1 unchanged sentence

2041, 2052 45,000 45,000

Total SJWTX 60,000 45,000

Total TWC 60,000 60,000

TWR seller financing debt

5.61 % 2053 29,000 —

State revolving fund loans 0.00 % - 2.23 %

3 unchanged sentences

2024 - 2043 49,500 49,500

Total Maine Water 66,999 54,464

Total MWC 64,639 66,999

Total debt 1,583,441 1,488,788

Unamortized debt premium, net (b) 17,396 19,937

Unamortized debt premium and discount, net

Unamortized debt issuance costs ( 9,350 ) ( 9,859 )

2 unchanged sentences

___________________________________

(a) Senior notes held by institutional investors are unsecured obligations of SJW Group, SJWC, Connecticut Water, SJWTX and Maine Water and require interest-only payments until maturity.

(a) Senior notes held by institutional investors are unsecured obligations of SJW Group, SJWC, CWC, TWC and MWC and require interest-only payments until maturity.

To minimize issuance costs, the companies’ debt has primarily been placed privately.

(b) Consists of fair value adjustments recognized through purchase accounting for the completed merger with CTWS on October 9, 2019.

The following is a table of the consolidated company’s schedule of principal payments:

Thereafter 1,459,597

The estimated fair value of long-term debt as of December 31, 2022 and 2021 was approximately $ 1,294,354 and $ 1,651,825 , respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the Company.

The fair value of long-term debt would be categorized as Level 2 of the fair value hierarchy.

On July 14, 2022, SJWC entered into a note purchase agreement with certain affiliates of New York Life Insurance, Metropolitan Life Insurance, Northwestern Mutual Life Insurance, and John Hancock Life Insurance (collectively the “Purchasers”), pursuant to which the company will sell an aggregate principal amount of $ 70,000 of its 4.85 % Senior Notes, Series P (“Series P Notes”) to the Purchasers.

The estimated fair value of long-term debt as of December 31, 2023 and 2022 was $ 1,394,412 and $ 1,294,354 , respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company.

Of the total fair value of long-term debt, $ 1,378,683 would be categorized as Level 2 in the fair value hierarchy and $ 15,729 would be categorized as Level 3 in the fair value hierarchy.

On July 14, 2022, SJWC entered into a note purchase agreement with certain affiliates of New York Life Insurance, Metropolitan Life Insurance, Northwestern Mutual Life Insurance, and John Hancock Life Insurance (collectively the “Purchasers”), pursuant to which the company sold an aggregate principal amount of $ 70,000 of its 4.85 % Senior Notes, Series P (“Series P Notes”) to the Purchasers.

The Series P Notes are unsecured obligations of SJWC and are due on February 1, 2053.

3 unchanged sentences

The closing of the note purchase agreement occurred on January 25, 2023.

Connecticut Water

On June 28, 2022, Connecticut Water entered into a note purchase agreement with certain affiliates of New York Life Insurance Company, pursuant to which Connecticut Water sold an aggregate principal amount of $ 25,000 of its 4.71 % Senior Notes, Series 2022, due 2052.

On June 28, 2022, CWC entered into a note purchase agreement with certain affiliates of New York Life Insurance Company, pursuant to which CWC sold an aggregate principal amount of $ 25,000 of its 4.71 % Senior Notes, Series 2022, due 2052.

The closing of the note purchase agreement occurred on December 14, 2022.

The Series 2022 Notes are unsecured obligations of Connecticut Water.

The Series 2022 Notes are unsecured obligations of CWC.

Interest is payable semi-annually in arrears on June 15th and December 15th of each year.

On October 31, 2022, SJWTX entered into a credit with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued SJWTX a promissory note on the same date with an aggregate principal amount of $ 15,000 at a fixed interest rate of 5.54 % due on May 30, 2052.

The notes are unsecured obligations of SJWTX.

On November 15, 2023, CWC entered into a note purchase agreement with certain affiliates of American United Life Insurance, The State Life Insurance, Mutual of Omaha Insurance, and United of Omaha Life Insurance, pursuant to which the company sold an aggregate principal amount of $ 25,000 of its 6.46 % Senior Notes, Series 2023 (“Series 2023 Notes”).

The Series 2023 Notes are unsecured obligations of CWC and are due on January 1, 2054.

Interest is payable semi-annually in arrears on January 15th and July 15th of each year.

The closing of the notes purchase agreement occurred on January 22, 2024.

On October 31, 2022, TWC entered into a credit with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued TWC a promissory note on the same date with an aggregate principal amount of $ 15,000 at a fixed interest rate of 5.54 % due on May 30, 2052.

The notes are unsecured obligations of TWC.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

On April 6, 2022, Maine Water entered into a credit agreement with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued Maine Water a promissory note on the same date with an aggregate principal amount of $ 15,000 at a fixed interest rate of 4.54 %, due May 31, 2042.

The notes are unsecured obligations of Maine Water.

In August 2023, TWR closed on an asset acquisition that included an obligation for a post-closing production payment of $ 29,000 to the seller over a period of up to 29 years.

The repayment schedule is based on the quantity of groundwater produced from the acquired wells, subject to certain provisions in the purchase agreement.

The difference between the gross obligation of $ 29,000 and the fair value at the date of acquisition is reflected as a debt discount and is being amortized as interest expense using the effective interest method over the life of the obligation.

On April 6, 2022, MWC entered into a credit agreement with a commercial bank, pursuant to an existing master loan agreement under which the commercial bank issued MWC a promissory note on the same date with an aggregate principal amount of $ 15,000 at a fixed interest rate of 4.54 %, due May 31, 2042.

The notes are unsecured obligations of MWC.

Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year.

19 unchanged sentences

Property flow-through ( 9,045 ) ( 13,091 ) ( 8,573 )

Capitalized merger costs — — ( 296 )

Reversal of excess deferred taxes recognized in regulatory liability ( 3,625 ) ( 3,885 ) ( 3,295 )

11 unchanged sentences

Deferred revenue 841 1,444

Tax related regulatory liability

24,358 25,750

Other 7,077 6,627

6 unchanged sentences

Intangibles 2,693 2,943

Deferred revenue — 773

Regulatory asset - income tax temporary differences, net 12,849 6,867

Tax related regulatory asset

44,155 38,599

Section 481(a) adjustments — 1,573

5 unchanged sentences

Based on all available evidence, management believes it is more likely than not that SJW Group will realize the benefits of its deferred tax assets.

Accordingly, the valuation allowance relating to deferred tax assets acquired from CTWS was released in 2020 through purchase accounting adjustments made within the measurement period.

Net operating loss carryforwards expire beginning in 2032 and ending in 2039.

12 unchanged sentences

Balance at end of year $ 4,511 9,004 7,961

The increase in gross unrecognized tax benefits in 2022 was primarily due to the uncertain tax position relating to repairs tax deductions.

The decrease in gross unrecognized tax benefits in 2023 was primarily due to the release of an uncertain tax position reserve relating to repairs tax deductions.

In April 2023, the IRS issued additional tax guidance that has allowed the company to revisit

certain historical income tax reserves.

Pursuant to the issuance of this guidance, which provided additional clarification regarding some of the uncertain tax areas, the company re-evaluated the risk relating to repair deductions.

The result of the analysis led to a release of an uncertain tax position reserve.

The release relates to repairs expenditures which are more likely than not to be sustained on audit.

The release due to re-evaluation of the reserve was $ 3,125 .

SJW Group’s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense.

1 unchanged sentence

SJW Group has not accrued any penalties for unrecognized tax benefits.

The amount of interest recognized in 2022 was an increase to expense of $ 230 .

The amount of interest recognized in 2023 was a decrease to expense of $ 151 .

SJW Group currently does not expect uncertain tax positions to change significantly over the next 12 months, except in the case of lapse of the statute of limitations.

1 unchanged sentence

federal income tax returns and income tax returns in various states and is subject to ordinary statute of limitation of three years for federal and three or four years for different state returns.

However, due to tax attribute carryforwards, SJW Group is subject to examination for tax years 2009 forward for federal and 2012 forward for state returns of CTWS and its subsidiaries.

However, due to tax attribute carryforwards, SJW Group is subject to examination for tax years 2012 forward for federal and state returns of CTWS and its subsidiaries.

The statute of limitation for SJW Group returns is closed for these extended years and remains open for 2020 and forward for federal and 2019 or 2020 and forward for different states.

Utility Plant Intangible Assets

Intangible assets consist of a concession fee paid to the City of Cupertino of $ 6,800 for operating the City of Cupertino municipal water system, $ 13,400 related to the purchase premium for customer relationships and other intangibles of $ 15,759 as of December 31, 2022.

Other intangibles primarily consist of $ 4,304 which was paid for service area and water rights by SJWTX, $ 5,984 for infrastructure related to the Cupertino service concession arrangement, $ 1,400 for customer relationships and $ 1,040 incurred in conjunction with Valley Water water contracts related to the operation of SJWC.

All intangible assets are recorded at cost and are primarily being amortized using the straight-line method over the legal or estimated economic life of the assets ranging from 5 to 70 years.

Intangible Assets

Utility plant intangible assets consist of a concession fee paid to the City of Cupertino of $ 6,800 for operating the City of Cupertino municipal water system, $ 13,400 related to the purchase premium for customer relationships and other intangibles of $ 15,746 as of December 31, 2023.

Other intangibles primarily consist of $ 5,984 for infrastructure related to the Cupertino service concession arrangement, $ 4,292 which was paid for service area and water rights by TWC, $ 1,400 for customer relationships and $ 1,040 incurred in conjunction with Valley Water water contracts related to the operation of SJWC.

The nonutility other intangible asset represents water rights with an indefinite life.

Amortization expense for the intangible assets was $ 1,310 , $ 3,869 and $ 1,553 for the years ended December 31, 2023, 2022 and 2021, respectively.

Amortization expense for 2023 through 2027 and thereafter is anticipated to be $ 1,518 per year.

Amortization expense for 2024 through 2028 and thereafter is anticipated to be approximately $ 1,310 per year.

The costs of intangible assets as of December 31, 2023 and 2022 are as follows:

Utility Plant Intangible Assets:

Concession fees $ 6,800 6,800

1 unchanged sentence

Other intangibles 15,746 15,759

Intangible assets 35,959 36,276

Utility plant intangible assets 35,946 35,959

Accumulated amortization

2 unchanged sentences

Other intangibles 10,361 10,018

Net intangible assets $ 16,367 20,650

Utility plant net intangible assets $ 15,057 16,367

Other Intangible Asset:

Water rights $ 28,386 —

SJWC purchases water from Valley Water under terms of a master contract expiring in 2051.

Delivery schedules for purchased water are based on a contract year beginning July 1, and are negotiated every three years under terms of the master contract with Valley Water.

For the years ended December 31, 2022, 2021 and 2020, SJWC purchased from Valley Water 18,183 million gallons ($ 96,793 ), 19,365 million gallons ($ 91,938 ) and 21,269 million gallons ($ 96,212 ), respectively, of contract water.

For the years ended December 31, 2023, 2022 and 2021, SJWC purchased from Valley Water 18.3 billion gallons ($ 111,173 ), 18.2 billion gallons ($ 96,793 ) and 19.4 billion gallons ($ 91,938 ), respectively, of contract water.

On June 16, 2022, the Valley Water Board of Directors approved treated water deliveries reflecting the contractual delivery schedule reduced by 23 % through June 30, 2024.

Effective February 1, 2022, the treated water contract delivery schedule increased by 10 %.

Based on current prices and estimated deliveries, SJWC is committed to purchase from Valley Water a minimum of 90 % of the reduced delivery schedule, or 18,864 million gallons ($ 106,463 ) of water at the current contract water rate of $ 5.6 per million gallons for the year ending December 31, 2023.

Based on current prices and estimated deliveries, SJWC is committed to purchase from Valley Water a minimum of 90 % of the reduced delivery schedule, or 18.9 billion gallons ($ 121,182 ) of water at the current

contract water rate of $ 6.411 million per billion gallons for the year ending December 31, 2024.

Additionally, SJWC purchases non-contract water from Valley Water on an “as needed” basis if the water supply is available.

4 unchanged sentences

The total fees paid for the agreement is being amortized over the contract term including the extension period.

Connecticut Water has an agreement with the South Central Connecticut Regional Water Authority (“RWA”) to purchase water from RWA.

The agreement was signed in April 2006 and became effective upon the receipt of all regulatory approvals in 2008 and will remain in effect for a minimum of fifty years upon becoming effective.

Connecticut Water will pay RWA $ 75 per year as part of a capacity agreement, for a total of 14 years, starting on the effective date of the agreement, which ended in 2022.

In addition, Connecticut Water is able, but under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement, $ 2.6 per million gallons as of December 31, 2021.

Connecticut Water has an agreement with The Metropolitan District (“MDC”) to purchase water from MDC to serve the Unionville system.

CWC is able, but under no obligation, to purchase up to one million gallons of water per day, from the South Central Connecticut Regional Water Authority (“RWA”), at the then current wholesale rates per the agreement, $ 3.1 million per billion gallons as of December 31, 2023.

CWC has an agreement with The Metropolitan District (“MDC”) to purchase water from MDC to serve the Unionville system.

The agreement became effective on October 6, 2000 and has a term of fifty years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.

Connecticut Water agrees to purchase 283 million gallons of water annually from MDC.

The rate charged by the MDC at December 31, 2022 was $ 4.09 per hundred cubic feet.

SJWTX has long-term contracts with the GBRA.

CWC agrees to purchase 0.28 billion gallons of water annually from MDC.

The rate charged by the MDC at December 31, 2023 was three dollars and eighty cents per hundred cubic feet.

TWC has long-term contracts with the GBRA.

The terms of the agreements expire in 2037, 2040, 2044 and 2050, respectively.

The agreements, which are take-or-pay contracts, provide SJWTX with 7,650 acre-feet per year of water supply from Canyon Lake.

The water rate may be adjusted by GBRA at any time, provided they give SJWTX a 60-day written notice on the proposed adjustment.

SJWTX also has raw water supply agreements with the Lower Colorado River Authority and West Travis Public Utility Agency expiring in 2059 and 2046, respectively, to provide for 350 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 has an agreement with the Kennebec Water District for potable water service.

The agreements, which are take-or-pay contracts, provide TWC with 7,650 acre-feet per year of water supply from Canyon Lake.

The water rate may be adjusted by GBRA at any time, provided they give TWC a 60-day written notice on the proposed adjustment.

TWC also has raw water supply agreements with the Lower Colorado River Authority and West Travis Public Utility Agency expiring in 2059 and 2046, respectively, to provide for 350 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

MWC has an agreement with the Kennebec Water District for potable water service.

The agreement has been in place for 20 years and was extended on November 7, 2020 for a new term of up to 20 years.

Maine Water guarantees a minimum consumption of 50 million gallons of water annually.

Water sales to Maine Water are billed at a wholesale discount of $ 0.20 per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate wa s $ 1.51 per hundred cubic feet as of December 31, 2022.

MWC guarantees a minimum consumption of 0.05 billion gallons of water annually.

Water sales to MWC are billed at a wholesale discount of twenty cents per hundred cubic feet of water below Kennebec Water District's tariffed rates.

The current tariff rate wa s one dollar and fifty-one cents per hundred cubic feet as of December 31, 2023 .

As of December 31, 2023, SJWC had 387 employees, of whom 240 were members of unions.

In December of 2022, SJWC proposed a tentative three-year bargaining agreements with the International Union of Operating Engineers (“OE”), representing certain employees in the engineering department, and the Utility Workers of America (“OWUA”), representing the majority of all nonadministrative employees at SJWC covering January 1, 2023 through December 31, 2025.

The agreements include a 6 % wage increase in 2023, 3.5 % in 2024 and 5.5 % in 2025 for members of both unions.

Acceptance of the OE and the OWUA bargaining agreements are anticipated in the first quarter of 2023.

In the first quarter of 2023, SJWC executed three-year bargaining agreements with the International Union of Operating Engineers (“OE”), representing certain employees in the engineering department, and the Utility Workers of America (“UWUA”), representing the majority of all nonadministrative employees at SJWC covering the period from January 1, 2023 through December 31, 2025.

The agreements include a 6 % wage increase provided in 2023, 3.5 % in 2024 and 5.5 % in 2025 for union employees.

Contingencies

4 unchanged sentences

SJW Group maintains noncontributory defined benefit pension plans for its eligible employees.

SJWC and CTWS employees hired before March 31, 2008 and January 1, 2009, respectively, are entitled to benefits under the pension plans based on the employee’s years of service and compensation.

SJWC employees hired before March 31, 2008 and CWC and MWC employees hired before January 1, 2009 are entitled to benefits under the pension plans based on the employee’s years of service and compensation.

For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee.

Effective January 1, 2023, TWC employees became eligible to participate under SJWC’s cash balance plan.

Interest is credited based on the annual yield on 30-year Treasury bonds as of October for the preceding plan year with a minimum annual rate of 3.25% and a maximum annual rate of 6.00%.

For the year ended December 31, 2023, interest credits assumption was 4.00%.

Certain employees hired before March 1, 2012, and covered by a plan merged into the CTWS plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation.

Certain employees hired before March 1, 2012, and covered by a plan merged into the CWC plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation.

CTWS employees hired on or after January 1, 2009 are entitled to an additional 1.5 % of eligible compensation to their company sponsored savings plan.

SJW Group does not have multi-employer plans.

The pension plans are administered by their respective committees where the investment strategy of the investments of the various pension and post-retirement benefit plans are reviewed and approved to achieve the goals of income generation and long-term capital preservation.

SJW Group engages third-party investment managers to assist with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence.

The pension plans are administered by their respective committees where the investment strategy of the investments of the various pension and postretirement benefit plans are reviewed and approved to achieve the goals of income generation and long-term capital preservation.

SJW Group engages third-party investment consultants and managers to assist with, among

other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence.

Individual investment decisions have been delegated by the pension plan committees to the investment managers who are also monitored by an investment consultant.

4 unchanged sentences

Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes.

Market gains in 2021 decreased pension expense by approximately $ 2,979 in 2022 and market gains in 2020 decreased pension expense by approximately $ 2,442 in 2021.

For the year ended December 31, 2022, the net actuarial gain of the benefit obligation was related primarily a gain from changes of discount rate of $ 116,372 , a $ 12,422 loss from pension data changes, and a gain from mortality changes of $ 4 .

Generally, it is expected of the investment managers that the performance of the assets held in the pension plans, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three -to- five-year period and/or full market cycle.

3 unchanged sentences

The fair value is based on quoted prices in active markets for identical assets and significant observable inputs.

Senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CTWS are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (collectively, “SERP”).

Certain senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CWC are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (collectively, “SERP”).

SJWC’s senior management hired on or after March 31, 2008 are eligible to receive additional retirement benefits under SJWC’s Cash Balance Executive Supplemental Retirement Plan (“Cash Balance Executive Supplemental Retirement Plan”).

plans are non-qualified plans in which only senior management and other designated members of management may participate.

Both of the plans are non-qualified plans in which only senior management and other designated members of management may participate.

The annual cost of the plans has been included in the determination of the net periodic benefit cost shown below.

The SERP and Cash Balance Executive Supplemental Retirement Plan had a projected benefit obligation of $ 43,001 and $ 39,455 as of December 31, 2023 and 2022, respectively, and net periodic pension cost of $ 3,257 , $ 4,400 and $ 4,456 for 2023, 2022 and 2021, respectively.

For the year ended December 31, 2022, 2021 and 2020, the amounts not recognized as a component of net periodic benefit cost was $ 1,640 , $ 901 , and $( 1,190 ), respectively, recorded as other comprehensive income on the consolidated financial statements.

For the years ended December 31, 2023, 2022 and 2021, the amounts not recognized as a component of net periodic benefit cost was $ 314 , $ 1,640 , and $ 901 , respectively, recorded as other comprehensive income on the consolidated financial statements.

SJWC’s non-qualified plans are unfunded while CTWS’s SERP is funded through investments consisting primarily of life insurance contracts and assets in a Rabbi Trust.

As of December 31, 2022 and 2021, total investments made to fund CTWS’s SERP was $ 6,395 and $ 8,147 , respectively, which is included in “Investments” in SJW Group’s Consolidated Balance Sheets.

As of December 31, 2023 and 2022, total investments made to fund CWC’s SERP was $ 6,843 and $ 6,395 , respectively, which is included in “Investments” in SJW Group’s Consolidated Balance Sheets.

The life insurance contracts are valued at cash surrender value of the policies as reported by the insurer.

As of December 31, 2023 and 2022, the value of the life insurance contracts was $ 3,937 and $ 3,420 , respectively.

The following tables summarize the fair values of the Rabbi Trust investment assets to fund CTWS’s SERP by major categories as of December 31, 2022 and 2021 :

The following tables summarize the fair values of the Rabbi Trust investment assets to fund CWC’s SERP by major categories as of December 31, 2023 and 2022:

Fair Value Measurements at December 31, 2023

15 unchanged sentences

What changed 10-K

Item 8. Financial Statements and Supplementary Data