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Item 7. Management’s Discussion and Analysis

2025-02-28 compared with 2024-02-23 · 213 added, 141 removed, 376 unchanged (48% of the section changed)

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The following sections include a discussion of results for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The comparative results for the year ended December 31, 2022 with for the year ended December 31, 2021 generally have not been included in this Form 10-K but may be found in “Part II - Item 7.

Unless otherwise provided herein, the comparative results for the year ended December 31, 2023 with for the year ended December 31, 2022 may be found in “Part II - Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Business Strategy for Water Utility Services

Business Strategy

SJW Group focuses its business initiatives in three strategic areas:

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Regional Non-tariffed Activities

SJWC provides non-tariffed services, such as water system operations, maintenance agreements and antenna site leases under agreements with municipalities and other utilities.

TWC provides non-tariffed wholesale water service to adjacent utilities and non-tariffed wastewater services.

CTWS provides non-tariffed services, such as water system operations and maintenance under agreements with municipalities and other utilities.

Additionally, CTWS offers Linebacker © , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.

Non-tariffed services provided by SJW Group’s subsidiaries include water system operations, maintenance agreements, antenna site leases under agreements with municipalities and other utilities, wholesale water service to adjacent utilities, wastewater services, and Linebacker © , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.

SJW Group also seeks appropriate non-tariffed business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations.

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SJW Group cannot be certain that any transaction will be successful or that it will not materially harm operating results or our financial condition.

Real Estate Services

SJW Group’s real estate investment activity is conducted through SJW Land Company and Chester Realty, Inc.

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

Chester Realty, Inc.

owns and operates land and commercial buildings in the State of Connecticut.

SJW Land Company and Chester Realty, Inc.

manage its acquired income producing and other properties until such time a determination is made to reinvest proceeds from sale of such properties.

Critical Accounting Policies

SJW Group has identified accounting policies delineated below as the policies critical to its business operations and the understanding of the results of operations.

Reportable Segment

Together, SJWC, excluding the Cupertino service concession arrangement operations, CWC, MWC and TWC are referred to as “Water Utility Services,” which is our single reportable segment.

Other business activities that are not separately reportable segments are SJWC’s Cupertino service concession arrangement operations, TWOS, TWR, NEWUS, SJW Land Company and Chester Realty, Inc.

and are collectively referred to as “Other Services.”

Critical Accounting Estimates

SJW Group has identified accounting estimates delineated below as estimates critical to its business operations and the understanding of the results of operations.

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period.

SJW Group bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.

For a detailed discussion on the application of these and other accounting policies, see Note 2 of “Notes to Consolidated Financial Statements.” SJW Group’s critical accounting policies are as follows:

Recognition of Regulatory Assets and Liabilities

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A reserve is recorded for amounts SJW Group estimates will not be collected within the 24-month period.

This reserve is based on an estimate of actual usage over the recovery period, offset by applicable drought surcharges.

This reserve is based on an estimate of actual usage over the recovery period.

The WCMA allows SJWC to track 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, including amounts related to a 20-basis point reduction in the authorized return on equity per the terms of the WCMA.

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

WRA, a decoupling mechanism authorized by PURA for CWC, mitigates 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.

Application of ASC Topic 980, including determining whether recovery is probable, 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 the recovery or refund is probable.

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The disallowance of any asset in future ratemaking, including regulatory assets, would require Water Utility Services to immediately recognize the impact of the costs for financial reporting purposes.

No disallowances were recognized during the years ended December 31, 2023, 2022 and 2021.

There were no material disallowances recognized during the years ended December 31, 2024, 2023 and 2022.

Recognition of Balancing and Memorandum Accounts

Balancing and memorandum accounts are utilized by our California operations.

Balancing and memorandum accounts are primarily utilized by our California operations.

The purpose of a balancing account is to track the under-collection or over-collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes.

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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.

Balancing accounts are currently being maintained for the following items:

purchased water, purchased power, groundwater extraction charges, pensions, and general rate case and cost of capital true-ups.

Balancing accounts are currently being maintained for the following items in California:

purchased water, purchased power, groundwater extraction charges, pensions, group health insurance, and general rate case and cost of capital true-ups.

The amount in the water production balancing accounts varies with the seasonality of the water utility business such that, during the summer months when the demand for water is at its peak, the account tends to reflect an under-collection, while during the winter months when demand for water is relatively lower, the account tends to reflect an over-collection.

The pension balancing account is intended to capture the difference between actual pension expense and the amount approved in rates by the CPUC.

The pension and group health insurance balancing accounts are intended to capture the difference between actual expense and the amount approved in rates by the CPUC.

The general rate case true-up accounts are a result of revenue shortfalls authorized for collection or refund by the CPUC due to delayed rate case and cost of capital decisions.

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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 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.

In assessing the probability criteria for balancing and memorandum accounts between general rate cases, SJWC considers evidence that may exist prior to CPUC authorization that would satisfy ASC Topic 980 subtopic 340-25 recognition criteria.

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When such evidence provides sufficient support, the balances are recorded in SJW Group’s financial statements.

It is typical for the CPUC to incorporate any over-collected and/or under-collected balances in balancing or memorandum accounts into customer rates at the time rate decisions are made as part of SJWC’s general rate case proceedings by assessing temporary sur-credits and/or surcharges.

In the case where SJWC’s balancing or memorandum-type accounts that have been authorized by the CPUC reach certain thresholds or have termination dates, SJWC can request the CPUC to recognize the amounts in customer rates prior to the next regular general rate case proceeding by filing an advice letter.

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SJW Group performed an impairment analysis as of October 1, 2024.

The qualitative assessment found no indicators of impairment and therefore did not perform the quantitative impairment test.

The qualitative assessment found no indicators of impairment and therefore SJW Group did not perform the quantitative impairment test.

No impairments occurred during the years ended December 31, 2024, 2023 or 2022.

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Rate recovery for the balances in these memorandum accounts is generally allowed in a subsequent general rate case.

SJWC also maintains balancing accounts to track changes in purchased water, purchased power, groundwater extraction charges and pension costs for later rate recovery.

SJWC also maintains balancing accounts to track changes in purchased water, purchased power, groundwater extraction charges, pension costs, and group health insurance expenses for later rate recovery.

Regulatory risk in California is mitigated by use of a forward-looking test year which allows the return on and return of utility plant on a forecasted basis as it is placed in service, and in some cases interim rate relief is allowed in the event of regulatory lag.

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Additionally, to mitigate regulatory lag for pipeline replacement and conservation related projects, the Connecticut State Legislature has approved WICA that allows for a surcharge to be added to customer bills semi-annually for certain eligible pre-approved projects.

Further, to mitigate risks from variations in revenues from changes in customer usage, the Connecticut State Legislature has approved a WRA to provide for recovery of the company’s authorized revenues.

The intended purpose of WICA is to enable the acceleration of the rate of replacement and/or rehabilitation of existing water system infrastructure to mitigate the effect of decay of aging water systems and promote conservation measures.

In order to incentivize water utilities to conserve water, the Connecticut State Legislature created WRA in Connecticut in 2013.

With the passage, CWC is no longer incentivized to sell more water and can encourage conservation of precious resources, removing financial disincentives to pursue water conservation.

Pursuant to Texas regulation, TWC employs a historical test year.

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

Additionally, to mitigate regulatory lag for capital improvements, Texas seeks to implement its first SIC.

The SIC will allow TWC to earn a return on some of its capital improvements made after 2020 through a surcharge to its customers.

The SIC is a cost recovery mechanism recently adopted in Texas that avoids the immediate need for a general rate case.

Additionally, to mitigate regulatory lag for capital improvements, Texas has implemented its first SIC.

The SIC allows TWC to earn a return on some of its capital improvements made after 2020 through a surcharge to its customers.

The SIC is a cost recovery mechanism that was adopted by the PUCT in 2021 and avoids the immediate need for a general rate case.

The PUCT permits the acquisition of utilities using a process termed the Fair Market Value.

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In 2024 and 2023, company-funded capital improvements were $353,029 and $271,772, respectively, for additions to, or replacements of, property, plant and equipment for our Water Utility Services.

We plan to spend approximately $332,000 in 2024 and $1,621,000 over five years for capital improvements.

We plan to spend approximately $451,000 in 2025 and $1,900,000 over the next five years for capital improvements.

SJW Group funds these expenditures through a variety of sources, including earnings received from operations, debt and equity financing, and other borrowings.

SJW Group relies upon lines of credit to fund capital expenditures in the short term and has historically issued long-term debt to refinance our short-term debt.

While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2023 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future.

While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2024 activities, we will have access to the external funding sources necessary to implement

our ongoing capital investment programs in the future.

See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.

Compliance with Environmental, Health and Safety Standards

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The EPA promulgates nationally applicable standards, including maximum contaminant levels for drinking water.

Water Utility Services has implemented monitoring activities and installed specific water

treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations.

Water Utility Services has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations.

However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the Safe Drinking Water Act.

Water Utility Services incur substantial costs associated with compliance with environmental, health and safety and water quality regulation to which our water services are subject.

In April 2024, the EPA issued new national primary drinking water regulations for six PFAS substances.

The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the Safe Drinking Water Act.

The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029.

SJW Group estimates capital expenditures of approximately $300,000 for PFAS treatment based on finalized maximum contaminant levels.

See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.

Environmental, health and safety, and water quality regulations are complex and change frequently, and the overall trend has been that they have become more stringent over time.

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Price increases associated with these production inputs would adversely impact our results of operations until rate relief is granted.

However, for SJWC, the FCBA mitigates the cost of the water supply from changes and variations in quantities from each of these sources which affect the overall mix of the water supply.

Customer Growth

Customer growth in our Water Utility Services’ is driven by:

Customer growth in Water Utility Services is driven by:

(i) organic population growth within our authorized service areas and (ii) the addition of new customers to our regulated customer base by acquiring regulated water systems adjacent to or near our existing service territories.

During 2023, we had cash outflows of $7,537 for business acquisitions which we believe will allow SJW Group to expand our regulated customer base.

We did not have any cash outflows for business acquisitions in 2024.

During 2023 and 2022, we had cash outflows of 7,537 and $433, respectively, for business acquisitions which we believe will allow SJW Group to expand our regulated customer base.

Before entering new regulated markets, we evaluate the regulatory environment to ensure that we will have the opportunity to achieve an appropriate rate of return on our investment while maintaining our high standards for quality, reliability and compliance with environmental, health and safety, and water quality standards.

Water Usage Per Customer

Fluctuations in customer demand for water could be due to seasonality, restrictions of use, weather or lifestyle choices, all of which could affect Water Utility Services’ results of operations.

Fluctuations in customer demand for water could be due to seasonality, restrictions of use, weather or lifestyle choices, all of which could affect our results of operations.

The following is the change in customer usage in 2024 compared to 2023:

• SJWC residential usage decreased 2.9% and business usage decreased 0.8%.

• SJWC residential usage increased 6.7% and business usage increased 5.8%.

• TWC residential and business usage decreased 13.0%.

• CWC residential usage decreased 7.9% and business usage decreased 3.3%.

• MWC residential usage decreased 7.3% and business usage decreased 14.3%.

For the year ended December 31, 2023, SJWC’s residential and business usage was lower by 15.0% and 3.2%, respectively, than the amount authorized in our 2022-2024 general rate case.

SJWC’s service area is currently under voluntary 15% reduction of water consumption.

To address the difference between conservation usage and authorized usage in the rate case, the CPUC has approved the activation of the WCMA which tracks the divergence between authorized versus actual consumption in a balancing account for future recovery.

• CWC residential usage increased 1.1% and business usage increased 2.9%.

• MWC residential usage increased 3.4% and business usage increased 14.6%.

For the year ended December 31, 2024, SJWC’s residential usage was lower by 9.3% and business usage was higher by 2.6%, respectively, than the amount authorized in our 2022-2024 general rate case.

SJWC’s service area is currently under a voluntary 15% reduction of water consumption from its water wholesaler.

To address the difference between conservation usage and authorized usage in the rate case, the CPUC has approved the activation of the WCMA.

The WCMA is a temporary revenue protection mechanism, due to the voluntary 15% water reduction request, which tracks the divergence between authorized versus actual consumption in a balancing account for future recovery.

With the availability of the WRA in Connecticut, which allows for recovery of authorized revenues, decreases in consumption year to year do not present the same financial risk as in our other water utility services utilities.

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In periods of drought, if customers are encouraged or required to conserve water due to a shortage of supply or restriction of use, revenue tends to be lower.

Water use restrictions may be imposed at a regional or state level and may affect our service areas regardless of our readiness to meet

unrestricted customer demands.

Water use restrictions may be imposed at a regional or state level and may affect our service areas regardless of our readiness to meet unrestricted customer demands.

Similarly, in unusually wet periods, water supply tends to be higher and customer demand tends to be lower, again resulting in lower revenues.

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In addition, SJWC actively works with Valley Water to address California’s long-term water supply challenges by continuing to educate customers on responsible water use practices and to conduct long-range water supply planning.

CWC and MWC believes that they will be able to meet customer demand for 2024 with their existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.

TWC believes that it will be able to meet customer demand for 2024 with their water supply which consists of groundwater from wells and purchased treated and raw water from the GBRA.

CWC and MWC believe that they will be able to meet customer demand for 2025 with their existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.

TWC expects to meet customer demand for 2025 with TWC’s water supply which consists of groundwater from wells, surface water and purchased treated and raw water from the GBRA.

Results of Operations

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This represents an increase of $8,980 or 11%, from 2023.

The increase in net income was primarily driven by rate filings in California and Maine, lower maintenance costs due in part to prior year incurred costs related to the Order of Instituting Investigation settlement agreement, and a decrease in income taxes due to the partial release of an uncertain tax position reserve, partially offset by higher water production expenses, higher debt interest expenses, increased allowances for credit losses, higher depreciation and amortization expense related to new utility plant additions, and a gain on sale of nonutility properties of $6,197 in 2022 that did not recur in 2023.

The increase in net income was primarily driven by rate increases in California and Connecticut, higher customer usage, decreases in the allowance for credit losses, lower income tax expense attributable to a tax accounting method change, partially offset by higher water production expenses, higher administrative and general expenses, and higher depreciation and amortization expense primarily related to new utility plant additions.

Operating Revenue

Operating revenue by segment was as follows:

SJW Group has a single reportable segment, Water Utility Services.

All other business activities not separately reportable are included in “Other Services.” Effective in the fourth quarter of 2024, management updated its segment presentation and no longer presents a separate reportable segment for Real Estate Services.

Prior period information has been recast to conform to the current period presentation.

Operating revenue for the Water Utility Services reportable segment and Other Services was as follows:

Operating Revenue

2024 2023 2022

Water Utility Services $ 732,580 652,045 603,000

Real Estate Services 5,684 5,605

Other Services

15,859 18,318 17,698

Total operating revenue

$ 748,439 670,363 620,698

The change in consolidated operating revenues was due to the following factors:

The change in consolidated operating revenue was due to the following factors:

Increase/(decrease)

Water Utility Services:

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Increase in customers 2,532 — % 3,929 — %

Rate increases 46,592 8 %

Balancing and memorandum accounts:

Other regulatory mechanisms 1,875 — %

Other 154 — %

Real Estate Services 79 — %

Rate increases for:

Pass-through water costs 1

26,057 4 % 22,320 4 %

All other increases 2

36,076 5 % 23,045 4 %

Regulatory mechanisms 3

(6,633) (1) % 5,684 1 %

Service and other revenue

7,642 2 % — — %

Other Services

(2,459) — % 620 — %

Total change in operating revenue $ 78,076 12 % $ 49,665 8 %

The revenue increase consists of $49,586 from Water Utility Services and $79 from Real Estate Services.

The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Maine which resulted in $46,592 of additional revenue, an increase of $3,780 from new customers, balancing and memorandum accounts increases were primarily due to WCMA for $1,994 and $1,187 for all other balancing and memorandum accounts, and increases in other regulatory mechanisms by $1,875, partially offset by decreases of $6,624 due to lower usage.

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(1) Consists of rate increases specifically associated with changes in the water supply costs that are passed through to customers.

(2) Primarily associated with general rate cases and related annual escalation adjustments, infrastructure surcharges, and cost of capital adjustments.

(3) Excludes portion attributable to rate increases, which are shown in the rate increase lines above.

The revenue increase consists of $80,535 from Water Utility Services offset by a decrease of $2,459 from Other Services.

The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Connecticut, which resulted in an additional $36,076 in revenue, an increase in rates of $26,057 attributable to water supply costs that are passed through to customers, an increase of $14,861 due to higher usage, an increase of $2,532 from new customers, and increases in services and other revenue of $7,642, partially offset by decreases of $6,633 in other regulatory mechanisms and a decrease of $2,459 in Other Services.

The decrease in Other Services is primarily attributable to lower real estate activity.

The revenue increase consists of $49,045 from Water Utility Services and $620 from Other Services.

The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Maine which resulted in $23,045 of additional revenue, an increase in rates of $22,320 attributable to water supply costs that are passed through to customers, an increase of $3,929 from new customers, and regulatory mechanisms of $5,684, partially offset by decreases of $5,933 due to lower usage.

Water Utility Services’ Operating Revenue and Customer Counts

The following tables present operating revenues and number of customers by customer group of Water Utility Services:

The following tables present operating revenues and the number of customers by customer group of Water Utility Services:

Operating Revenue by Customer Group

2024 2023 2022

Residential and business $ 625,080 557,659 501,111

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Balancing and memorandum accounts and other regulatory mechanisms 11,819 11,772 26,736

Service and other revenue 7,642 — —

$ 732,580 652,045 602,999

Number of Customers

2024 2023 2022

Residential and business 384,619 383,126 379,781

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Operating Expense

Operating expense by segment was as follows:

Operating expense is summarized below:

Operating Expense

2024 2023 2022

Water Utility Services $ 560,364 506,923 473,142

Real Estate Services 2,956 3,719

All Other 3,597 3,322

Other Services

10,513 10,408 13,255

Unallocated Corporate

7,059 3,597 3,323

$ 577,936 520,928 489,720

The change in consolidated operating expenses was due to the following factors:

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Change in surface water use

$ (11,510) (2) %

Change in usage and new customers (9,716) (2) %

Change in usage

Change in new customers

Purchased water and groundwater extraction charge, energy price change and other production expenses, net

Balancing and memorandum account cost recovery

(4,492) (1) %

Total water production expenses 35,822 7 %

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Depreciation and amortization 6,987 1 %

Gain on sale of nonutility property

$ 57,008 11 %

Sources of Water Supply

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Surface water is sourced from SJWC’s 6,400 acres of watershed in the Santa Cruz mountains.

In 2022, SJWC’s general rate case decision approved the use of the Full Cost Balancing Account which mitigates the cost of the water supply from changes and variations in quantities from each of these sources which affect the overall mix of the water supply.

SJWC’s FCBA mitigates the cost of the water supply from changes and variations in quantities from each of these sources which affect the overall mix of the water supply.

The water rates for purchased water and the groundwater extraction charge may be increased by Valley Water at any time.

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CWC’s water sources vary among the individual systems, but overall, approximately 60% of the total dependable yield comes from surface water supplies and 40% from wells.

In addition, CWC has water supply agreements to supplement its water supply with the South Central Connecticut Regional Water Authority and The Metropolitan District that expire in 2058 and 2053, respectively.

In addition, CWC has water supply agreements to supplement its water supply with RWA and MDC that expire in 2058 and 2053, respectively.

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

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The agreements, which are take-or-pay contracts, provide TWC with an aggregate of 7,602 acre-feet of water per year from Canyon Lake at prices that may be adjusted periodically by GBRA.

TWC also has raw water supply agreements with the LCRA and WTPUA 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.

TWC also has raw water supply agreements with the LCRA and WTCPUA 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.

Forty active production wells located in a Comal Trinity Groundwater Conservation District, a regulated portion of the Trinity aquifer, are charged a groundwater pump tax based upon usage.

In August 2023, SJWTX Holdings Inc.’s unregulated subsidiary, TWR acquired eight wells and the water rights of KTR.

In August 2023, SJWTX Holdings Inc.’s unregulated subsidiary, TWR, acquired eight wells and the water rights of KTR, for a total cost of $40,061.

During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations.

Accordingly, SJW Group reclassified $28,386 related to indefinite lived water rights from other intangible assets to utility plant intangible assets and $11,684 from nonutility property to utility plant.

These wells have been projected to yield an additional 6,000 acre-feet per year or more.

TWC staff is currently working on acquiring easements and routing of the waterline and infrastructure needed to get this water into our Triple Peak water system to serve existing customers and planned new developments.

The Texas service area is currently experiencing drought conditions that result in water usage restrictions for customers.

Significant future capital investment of transmission main and storage facilities in addition to developing additional supply sources is planned for 2025 and beyond.

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

MWC has a water supply agreement with the Kennebec Water District expiring in 2040.

The following table presents the sources of water supply for water utility services:

The following table presents the sources of water supply:

Source of Water Supply

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Texas 13 % 17 % 37 % 34 % 50 % 49 %

Water production in 2023 for Water Utility Services decreased 2.0 billion gallons from 2022.

The changes are primarily attributable to changes in consumption by customers driven primarily by weather conditions in California, Maine and Texas.

Water production in 2024 increased by 1.7 billion gallons from 2023.

The changes are primarily attributable to changes in consumption by customers driven primarily by weather conditions in our service areas.

The contract water rates for SJWC are determined by Valley Water.

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The contractual cost of the groundwater extraction charge for water pumped from the ground basin was $6.840 million, $6.058 million, and $5.290 million per billion gallons for Valley Water’s fiscal years 2025, 2024 and 2023, respectively.

SJWC’s unaccounted-for water for 2023 and 2022 approximated 8.4% and 8.9%, respectively, as a percentage of production.

The unaccounted-for water estimate is based on the results of past experience and the impact of flows through the system, partially offset by SJWC’s main replacements and water loss reduction programs.

CWC 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.

CWC has an agreement with 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 50 years upon becoming effective.

In addition, CWC 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, $3.1 million per billion gallons as of December 31, 2024.

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.

CWC has an agreement with MDC to purchase water from MDC to serve the Unionville system.

The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.

CWC has agreed to purchase 0.28 billion gallons of water annually from MDC at the published retail rate, three dollars and eighty cents per hundred cubic feet as of December 31, 2024.

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The current tariff rate was one dollar and fifty-one cents per hundred cubic feet as of December 31, 2024.

CTWS’s unaccounted-for water for 2023 and 2022 approximated 13.1% and 14.2%, respectively, as a percentage of production.

The unaccounted-for water estimate is based on the results of past experience and the impact of flows through CTWS’s systems, unadjusted for any required system flushing, partially offset by WICA and WISC main replacement programs and lost water reduction initiatives.

The various components of operating expenses are discussed below.

Water production expenses

Water production expenses increased $31,767 in higher per unit costs paid for purchased water, groundwater extraction, energy price charges and other production expenses and increased $12,869 in water production balancing and memorandum accounts for the Full Cost Balancing Account, offset by decreases of $11,510 as a result of increased availability of California surface water in 2023 compared to 2022 and $9,716 due to lower customer usage.

Water production expenses increased $25,035 due to higher per unit costs paid for purchased water, groundwater extraction, energy price charges and other production expenses, $10,254 due to higher customer usage, and an increase of $5,181 as a result of decreased availability of California surface water in 2024 compared to 2023, offset by a decrease of $4,492 in water production balancing and memorandum accounts for the FCBA.

Administrative and General Expense

Administrative and general expenses include payroll related to administrative and general functions, all employee benefits charged to expense accounts, insurance expenses, legal fees, regulatory utility commissions’ expenses, expenses associated with being a public company, and general corporate expenses.

Administrative and general expense increased $3,252 in 2023, or 1% of the total operating expenses in 2022 primarily due to an increase in allowances for customer credit losses.

Administrative and general expense increased $7,174 in 2024, or 2% of total operating expenses from 2023, primarily due to expenses associated with certain acquisition evaluation and due diligence activities of $3,393, and an increase for pension expense, contracted work, and inflationary increases, offset by decreases in the allowance for credit losses of $6,082 and higher allocations to construction activities.

Maintenance Expense

Maintenance expenses decreased $5,005 or 1%, primarily due to prior year incurred costs related to the Order of Instituting Investigation settlement agreement.

In addition, proactive asset management and advanced leak detection reducing emergency projects and replacing them with scheduled improvements that are no longer temporary in nature reduced maintenance expenses for the year.

Maintenance expenses increased $5,572 in 2024 or 1% of total operating expenses from 2023, primarily due to higher maintenance expenses related to contracted work for others, security expenses, and adjustments to certain regulatory assets as a result of the final decision in the Connecticut general rate case.

Property Taxes and Other Non-income Taxes

Property taxes and other non-income taxes for 2024 increased $1,453 from 2023.

The increase was primarily the result of increased property taxes due to utility plant additions, and an increase in payroll taxes due to increases in wages.

The increase was primarily the result of an increase in property taxes due to utility plant additions and payroll taxes due to increases in wages and headcount.

Depreciation and Amortization

Depreciation and amortization expense increased $1,451 in 2023.

Depreciation and amortization expense increased $6,987 in 2024 from 2023.

The increases were primarily due to increases in depreciation related to new utility plant additions.

partially offset by a $2,400 one-time impact related to amortization on certain Cupertino concession assets in 2022.

Sale of nonutility properties

Gain on sale of nonutility properties decreased $6,197 in 2023 primarily due to the recording of a non-recurring sale of non-utility properties in 2022, and no recorded gain on the sale of nonutility properties in 2023.

Other Income and Expense

The change in other (expense) income in 2023 compared to 2022 was primarily due to an increase in interest expense due to an increase in long-term debt balances, higher interest rates on lines of credit borrowings and an increase in pension non-service cost, offset by the changes in the Rabbi Trust and life insurance policy values and a true-up on prior real estate sale transactions.

The change in other (expense) income in 2024 compared to 2023 was primarily due to lower income from certain service and other activities, an increase in interest expense due to higher average balances and interest rates, and higher charitable contributions, offset by higher benefits from the non-service component of pension cost.

SJW Group’s consolidated weighted-average cost of long-term debt, including the amortization of debt issuance costs, was 4.12% and 3.97% for the years ended December 31, 2024 and 2023.

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The effective consolidated income tax rate was 9% for 2024 and 7% for 2023.

The decrease in income tax expense and the effective income tax rate was primarily due to the partial release of an uncertain tax position reserve.

The increase in the effective income tax rate was primarily due to the year-over-year effect of the higher uncertain tax position reserve release in 2023 and tax deficiencies related to share-based payments in 2024, partially offset by the benefit of a tax accounting method change in 2024.

Please refer to Note 7 , “Income Taxes,” of Notes to Consolidated Financial Statements for a reconciliation of income tax computed at the federal statutory rate to actual income tax expense.

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Water Utility Services’ business derives the majority of its revenue directly from residential and business customers.

Water Utility Services bills the majority of its customers on a bi-monthly basis.

Management believes that the collection rate for its accounts receivables will increase as service disconnections gradually return to normal operations following the expiration of remaining state orders to suspend water service disconnections in 2022 that were instituted as a result of the COVID-19 pandemic.

On December 28, 2023, SJWC submitted the application to receive $10,237 through the State of California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts greater than 60-days past due as of December 31, 2022.

We anticipate the funds to be received in the first quarter of 2024 after the State of California Water and Wastewater Arrearages Payment Program completes the review of this application.

Management believes that the collection rate for its accounts receivables will continue to improve as service disconnections return to normal.

On December 28, 2023, SJWC submitted the application through the State of California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts greater than 60-days past due as of December 31, 2022.

We received $9,130 in the second quarter of 2024 under the State of California Water and Wastewater Arrearages Payment Program.

Funds collected from Water Utility Services’ customers are used to pay for water production expenses, in addition to costs associated with general operations.

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In 2024, SJW Group and its subsidiaries obtained $185,329 in funds from new long-term debt and $85,008 in funds from equity issuances.

From these amounts, SJW Group funded its 2023 capital expenditure programs, refinanced certain short and long-term borrowings, and funded working capital.

From these amounts, SJW Group funded its 2024 capital expenditure programs, refinanced certain short and long-term borrowings, and funded working

See Note 4 and Note 6 of “Notes to Consolidated Financial Statements” for discussion on the equity and debt financing activities of SJW Group.

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Cash Flow from Operations

In 2023, SJW Group generated cash flow from operations of approximately $190,800 compared to $166,200 in 2022.

In 2024, SJW Group generated cash flow from operations of $195,526 compared to $190,831 in 2023.

Cash flow from operations is primarily generated by net income from revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes, share-based compensation, allowance for equity funds used during construction, gains on the sale of assets, and other changes in working capital items.

Cash flow from operations increased in 2023 by approximately $24,600.

Cash flow from operations increased in 2024 by $4,695.

The increase was primarily due to a combination of the following factors:

(1) an increase of $16,100 due to higher net income adjusted for non-cash items and general working capital changes, (2) an increase in collections against our regulatory assets and liabilities which generated an increase of $10,600, (3) an increase from postretirement benefits assets and obligations of $5,600, and (4) an increase from other noncurrent assets and noncurrent liabilities of $2,800, offset by (5) a decrease of $10,500 attributable to tax accruals compared to the prior period.

(1) an increase of $36,057 due to higher net income adjusted for non-cash items, (2) an increase of $4,060 attributable to tax accruals, and (3) an increase of $2,568 for other assets and liabilities, offset by (4) an up-front service concession fee payments related to Cupertino for $23,900, and (5) a decrease in collections against our regulatory assets and liabilities, which generated a decrease of $14,090.

Cash Flow from Investing Activities

In 2023, SJW Group used approximately $271,800 of cash for Company funded capital expenditures, $16,900 for developer funded capital expenditures, $24,200 and $7,537 for nonutility assets and business acquisitions, respectively, primarily for ongoing business and asset acquisition activities in Texas, and $2,100 in utility plant retirement costs.

In 2022, SJW Group used approximately $218,800 of cash for Company funded capital expenditures, $22,900 for developer funded capital expenditures, $2,500 in utility plant retirement costs, $600 for real estate investments related to leasehold improvement additions for the properties located in Knoxville, Tennessee, and $400 for ongoing business and asset acquisition activities in Texas.

These uses were offset by cash proceeds of $1,000 from the sale of various nonutility properties during the year.

Net cash used in investing activities for the year ended December 31, 2024, increased by $17,823 from the same period in the prior year, primarily as a result of an increase in company-funded capital expenditures of $81,257, an increase for developer-funded capital expenditures of $7,324, and an increase of $1,333 in utility plant retirement costs, offset by higher proceeds from sales of assets of $40,339 (primarily from the sale of SJW Land Company’s Tennessee real estate assets), lower additions to nonutility assets of $24,215, and a decrease of $7,537 in business acquisitions year over year.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024, increased by $17,140 from the same period in the prior year, primarily as a result of increase in cash proceeds from long-term debt, an increase in cash receipts of advances and contributions in aid of construction and issuances of common stock, partially offset by an increase in the amount of net repayments on our lines of credit, and an increase in payments of dividends.

SJW Group’s cash management policy includes the issuance of long-term debt to pay down borrowings on our lines of credit.

As such, during years when long-term borrowings are high, borrowings on our line of credit tend to be low and when long-term borrowings are low, borrowings on our line of credit tend to be high.

SJW Group and its subsidiaries have unsecured bank lines of credit totaling $350,000 as of December 31, 2024.

Drawdowns on our lines of credit are restricted by our funded debt not exceeding a percentage of total capitalization as defined in our debt covenants.

SJW Group expects to periodically draw down on its lines of credit as dictated by our funding needs and subsequently repay such borrowings with cash from operations and issuance of long-term debt or equity.

See also “Sources of Capital” below.

Budgeted Capital Expenditures

Water Utility Services has budgeted 2025 capital expenditures of approximately $451,000, excluding capital expenditures financed by customer contributions and advances.

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Water Utility Services’ capital expenditures are incurred in connection with normal upgrading and expansion of existing facilities and to comply with environmental regulations.

Over the next five years, Water Utility Services expects to incur approximately $1,621,000 in capital expenditures.

A significant portion of this amount is subject to future approval from the Regulators.

Capital expenditures have the effect of

increasing utility plant rate base on which Water Utility Services earns a return.

Over the next five years, Water Utility Services expects to incur approximately $1,900,000 in capital expenditures, which includes replacement of pipes and mains, maintaining water systems, and installing approximately $300,000 in PFAS treatment.

A significant portion of this amount is subject to future respective state regulatory utility commissions’ approval.

Capital expenditures have the effect of increasing utility plant rate base on which Water Utility Services earns a return.

Water Utility Services’ actual capital expenditures may vary from projections due to changes in the expected demand for services, weather patterns, actions by governmental agencies and general economic conditions.

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In most cases, replacement cost will significantly exceed the original installation cost of the retired assets due to increases in the costs of goods and services and increased regulation.

Cash Flow from Financing Activities

Net cash provided by financing activities for the year ended December 31, 2023, increased by approximately $50,500 from the same period in the prior year, primarily as a result of increase in cash proceeds from long-term debt and issuances of common stock, partially offset by an increase in the amount of net borrowings on our lines of credit, and an increase in payments of dividends.

SJW Group’s cash management policy includes the issuance of long-term debt to pay down borrowings on our lines of credit.

As such, during years when long-term borrowings are high, borrowings on our line of credit tend to be low and when long-term borrowings are low, borrowings on our line of credit tend to be high.

SJW Group and its subsidiaries have unsecured bank lines of credit totaling $350,000 as of December 31, 2023.

Drawdowns on our lines of credit are restricted by our funded debt not exceeding a percent of total capitalization as defined in our debt covenants.

See also “Sources of Capital” below.

In addition to these capital expenditures, Water Utility Services expects to incur approximately $105,000 over the next five years, including $22,000 in 2025, in capitalizable costs associated with cloud-based computing arrangements.

Sources of Capital

SJW Group’s regulated operations’ ability to finance future construction programs and sustain dividend payments depends on its ability to maintain or increase internally generated funds and obtain external financing through the issuance of new long-term debt or issuance of equity.

The level of future earnings and the related cash flow from operations is dependent, in large part, on the timing and outcome of regulatory proceedings.

SJW Group’s ability to finance future construction programs and sustain dividend payments depends on its ability to maintain or increase internally generated funds and attract external financing.

The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.

SJW Group’s regulated operations’ financing activity is designed to achieve capital structures consistent with regulatory guidelines in the locations where the companies operate.

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$ 350,000 119,124 230,876 171,500

In August 2024, SJW Group, SJWC, TWC, and CTWS entered into an amendment to its $300,000 credit agreement with JPMorgan Chase Bank and a syndicate of banks, which provided, among other matters, for an extension of the maturity date from August 2, 2028 to August 2, 2029.

CTWS does not intend to renew its $40,000 credit agreement following repayment at maturity in 2025.

Cost of borrowing on the lines of credit averaged 6.44% and 6.29% for the years ended of December 31, 2024 and 2023, respectively.

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.

All of the lines of credit also include certain customary financial covenants such as a funded debt to capitalization ratio and a minimum interest coverage ratio.

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Issuance (Repayment) Activity Date Maturity Date

Senior note, Series P, 4.85%

$ 70,000 Jan 2023

Senior note, Series B, 7.37%

$ (30,000) January 2024

Senior note, Series J, 6.54%

(10,000) February 2024

February 2024

Senior note, Series Q, 5.63%

75,000 July 2024

Bank term loan, 4.09% (1,434) 2024

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Bank term loan, 4.15% (635) 2024

Senior Note, Series G, 8.95% (900) Nov 2023

Senior note, Series 2023, 6.46%

25,000 January 2024

Senior note, Series 2024, 5.78%

50,000 August 2024

State revolving fund loan, 2.00%

327 October 2024

First Mortgage Bond, Series G, 8.95%

December 2024

State revolving fund loans, various series, 0.00%-2.58% (1,504) 2024

Additionally, on August 14, 2023, in connection with the KT Water Resources acquisition, TWR entered into a post-closing production payment obligation to pay a total amount of $29,000 to the seller over a period 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.

On January 22, 2024, CWC sold an aggregate principal amount of $25,000,000 of its 6.46% Senior Notes, Series 2023 due January 1, 2054.

Bank term loan, 4.24%

(4,500) December 2024

December 2024

Bank term loan, 6.473%

15,000 December 2024

November 2054

Bank term loan, 6.473%

20,000 December 2024

November 2054

On November 15, 2023, CWC entered into a note purchase agreement with certain institutional investors, 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 15, 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 July 31, 2024, SJWC entered into and closed a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $75,000 of its 5.63% Senior Notes, Series Q (“Series Q Notes”).

The Series Q Notes are unsecured obligations of SJWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

On July 31, 2024, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $50,000 of its 5.78% Senior Notes, Series 2024 (“Series 2024 Notes”).

The Series 2024 Notes are unsecured obligations of CWC and are due on July 31, 2054.

Interest is payable semi-annually in arrears on January 31st and July 31st of each year.

The closing of the notes purchase agreement occurred in August 2024.

On December 6, 2024, MWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $15,000 at a fixed interest rate of 6.47%.

The note is an unsecured obligation of MWC due on November 20, 2054.

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

On December 6, 2024, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $20,000 at a fixed interest rate of 6.47%.

The note is an unsecured obligation of TWC due on November 20, 2054.

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

In January 2025, TWC amended the existing master loan agreement to modify one of the financial covenants.

All of the other terms and conditions remain the same.

The debt and credit agreements of SJW Group and its subsidiaries contain various financial and other covenants.

Non-compliance with these covenants could result in accelerated due dates and termination of the agreements.

In addition, the credit agreements contain customary representations and warranties and are subject to customary events of default, which may result in the outstanding debt becoming immediately due and payable.

In addition, the credit agreements contain customary representations and warranties and are subject to customary events of default, which may result

in the outstanding debt becoming immediately due and payable.

As of December 31, 2024, SJW Group and its subsidiaries were in compliance with all covenants related to its long-term debt agreements.

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Equity Financing Arrangements

On March 1, 2023, SJW Group entered into Amendment No.

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 (each a “Sales Agent” and, collectively, the “Sales Agents”), pursuant to which SJW Group increased the aggregate gross sales price of shares of SJW Group’s common stock, $0.001 par value per share, that may be sold under the Equity Distribution Agreement from $100,000 to $240,000.

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.

Morgan Securities LLC, Janney Montgomery Scott LLC, RBC Capital Markets, LLC and Wells Fargo Securities, LLC, pursuant to which the company offered and sold 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.

The Equity Distribution Agreement was replaced by a new equity distribution agreement in October 2024, as discussed below.

Through the Equity Distribution Agreement, SJW Group issued and sold 3,151,433 shares of common stock at a weighted average price of $67.80 for a total net proceeds of $208,838 over the life of the agreement.

On October 29, 2024, SJW Group entered into an equity distribution agreement (the “New Equity Distribution Agreement”) with BofA Securities, Inc., J.P.

Morgan Securities 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 $200,000.

Since the inception of the New Equity Distribution Agreement, SJW Group has issued and sold 375,513 shares of common stock at a weighted average price of $55.46 for a total net proceeds of $20,167 and has $179,175 of aggregate gross sales price of shares remaining to issue under the New Equity Distribution Agreement as of December 31, 2024.

For the year ended December 31, 2024, SJW Group issued and sold a total of 1,522,289 shares of common stock with a weighted average price of $57.15 per share and received $85,008 in net proceeds under the aforementioned equity distribution agreements.

Credit Rating

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22,050 — — 22,050 —

State revolving fund loans, CWC

327 16 33 33 245

State revolving fund loans, MWC

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Bank term loans, CTWS 14,389 2,158 3,368 1,536 7,327

Seller financing debt, TWR (2)

Seller financing debt, TWC (2)

29,000 — 1,133 2,145 25,722

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The actual timing of payments will be based upon the actual quantities of groundwater produced from the acquired wells.

With regard to uncertain tax positions, we are unable to predict the timing of tax settlements as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation.

With regard to uncertain tax positions, no such amounts are reflected in the table above since we are unable to predict the timing of tax settlements as tax audits can involve complex issues and the resolution of those issues may span multiple years, particularly if subject to negotiation or litigation.

For further discussion on uncertain tax positions, please see Note 7 of “Notes to Consolidated Financial Statements.”

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In addition to the Valley Water groundwater extraction charge, SJWC also incurs power costs to pump the groundwater from the basin.

CWC has an agreement with the RWA to purchase water.

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.

CWC has an agreement with RWA to purchase water.

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 50 years upon becoming effective.

CWC 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.

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CWC has an agreement with the 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.

The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the

agreement were placed in service.

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

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

TWC also has raw water supply agreements with the LCRA and WTPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

TWC also has raw water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.

Employee Benefit Arrangements

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Future payments may fluctuate depending on the life span of the retirees and as current officers and executives retire.

CTWS’s other benefit obligations include employees’ postretirement benefits, supplemental executive retirement agreements and deferred compensation agreements and plan.

CWC’s other benefit obligations include employees’ postretirement benefits, supplemental executive retirement agreements and deferred compensation agreements and plan.

Future payments may fluctuate depending on the contribution rates of employees into the deferred compensation plan and the life span of the retirees and as current officers and executives retire.

Under these benefit plans, CTWS is committed to pay approximately $1,678 annually to former officers and directors.

Recently Adopted Accounting Policies and New Accounting Pronouncements

See Note 2 of “Notes to Consolidated Financial Statements” for a discussion of recently adopted accounting policies and new accounting pronouncements for the year ended December 31, 2023.

Under these benefit plans, CWC is committed to pay approximately $1,332, annually to former officers and directors.

Recently Adopted Accounting Pronouncements and New Accounting Pronouncements

See Note 2 of “Notes to Consolidated Financial Statements” for a discussion of recently adopted accounting pronouncements and new accounting pronouncements issued and pending adoption.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis