H2O AMERICA 10-K

Item 8. Financial Statements and Supplementary Data REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of SJW Group Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of SJW Group and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for the financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 49 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. Impact of Rate Regulation on the Financial Statements — Refer to Note 3 to the financial statements Critical Audit Matter Description The Company is subject to rate regulation by state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s water and wastewater services. Management has determined it meets the requirements under generally accepted accounting principles to prepare its financial statements applying the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as depreciable utility plant; regulatory assets and liabilities; operating revenues; operation and maintenance expense; and depreciation expense. The Commissions establish rates for the purpose of permitting the recovery of the cost of service and a return on investment. The Company’s rates are subject to regulatory ratemaking processes. The Company records deferred costs and credits on the consolidated balance sheets as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the ratemaking process in a period different from when the costs and credits are incurred. Accounting for such costs and credits is based on management’s judgment and prior historical ratemaking practices, and it occurs when management determines that it is probable that these costs and credits will be recognized in the future revenue of the Company through the ratemaking process. We identified the impact of rate regulation as a critical audit matter due to the significant judgments that underlie the Company’s financial statement line items and disclosure impacted by rate regulation and the high degree of subjectivity involved in assessing the impact of regulatory decisions on the financial statements. 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 the uncertain outcomes of future regulatory decisions, auditing these judgements required specialized knowledge of accounting for rate regulation and the rate setting process due to 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 impact 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 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. We reconciled the underlying data or inputs used in the measurement to rate decisions approved by the Commissions and tested the mathematical accuracy of the calculations. • We obtained an analysis from management regarding probability of recovery for regulatory assets or refund or future reduction in rates for regulatory liabilities not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery or a future reduction in rates. 50 Table of Contents • 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. /s/ Deloitte & Touche LLP San Jose, California February 27, 2025 We have served as the Company’s auditor since 2020. 51 Table of Contents SJW Group and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2024 2023 Assets Utility plant: Land $ 44,657 41,415 Depreciable plant and equipment 4,249,314 3,967,911 Construction work in progress 179,486 106,980 Intangible assets 51,604 35,946 Total utility plant 4,525,061 4,152,252 Less accumulated depreciation and amortization 1,036,450 981,598 Net utility plant 3,488,611 3,170,654 Nonutility properties and real estate investments 1,314 13,350 Less accumulated depreciation and amortization 98 194 Net nonutility properties and real estate investments 1,216 13,156 Current assets: Cash and cash equivalents 11,114 9,723 Accounts receivable: Customers, net of allowances for uncollectible accounts of $ 1,172 and $ 6,551 in 2024 and 2023, respectively 68,679 67,870 Income tax 5,953 5,187 Other 7,059 3,684 Accrued unbilled revenue 60,847 49,543 Assets held for sale — 40,850 Prepaid expenses 10,297 11,110 Current regulatory assets 18,172 4,276 Other current assets 8,593 6,146 Total current assets 190,714 198,389 Other assets: Regulatory assets, less current portion 224,055 235,910 Investments 18,087 16,411 Postretirement benefit plans 66,422 33,794 Other intangible asset — 28,386 Goodwill 640,311 640,311 Other 28,893 8,056 Total other assets 977,768 962,868 Total assets $ 4,658,309 4,345,067 See Accompanying Notes to Consolidated Financial Statements. 52 Table of Contents SJW Group and Subsidiaries CONSOLIDATED BALANCE SHEETS (Continued) (in thousands, except share and per share data) December 31, 2024 2023 Capitalization and Liabilities Capitalization: Stockholders’ equity: Common stock, $ 0.001 par value; authorized 70,000,000 shares in 2024 and 2023; issued and outstanding 33,629,169 shares in 2024 and 32,023,004 shares in 2023 $ 34 32 Additional paid-in capital 827,796 736,191 Retained earnings 537,184 495,383 Accumulated other comprehensive income 1,960 1,791 Total stockholders’ equity 1,366,974 1,233,397 Long-term debt, less current portion 1,706,904 1,526,699 Total capitalization 3,073,878 2,760,096 Current liabilities: Lines of credit 119,124 171,500 Current portion of long-term debt 3,648 48,975 Accrued groundwater extraction charges, purchased water and power 25,118 24,479 Accounts payable 56,256 46,121 Accrued interest 17,476 15,816 Accrued payroll 15,193 12,229 Current regulatory liabilities 1,122 3,059 Other current liabilities 23,236 20,795 Total current liabilities 261,173 342,974 Deferred income taxes 276,043 238,528 Advances for construction 155,397 146,582 Contributions in aid of construction 340,738 326,451 Postretirement benefit plans 45,063 46,836 Regulatory liabilities, less current portion 483,719 461,108 Other noncurrent liabilities 22,298 22,492 Commitments and contingencies Total capitalization and liabilities $ 4,658,309 4,345,067 See Accompanying Notes to Consolidated Financial Statements. 53 Table of Contents SJW Group and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31 (in thousands, except share and per share data) 2024 2023 2022 Operating revenue $ 748,439 670,363 620,698 Operating expense: Production Expenses: Purchased water 158,568 135,982 122,334 Power 11,457 9,602 8,889 Groundwater extraction charges 73,146 62,980 56,158 Other production expenses 48,851 47,636 45,409 Total production expenses 292,022 256,200 232,790 Administrative and general 105,830 98,656 95,404 Maintenance 31,301 25,729 30,734 Property taxes and other non-income taxes 35,928 34,475 32,572 Depreciation and amortization 112,855 105,868 104,417 Gain on sale of nonutility properties — — ( 6,197 ) Total operating expense 577,936 520,928 489,720 Operating income 170,503 149,435 130,978 Other (expense) income: Interest on long-term debt and other interest expense ( 71,390 ) ( 66,144 ) ( 58,062 ) Pension non-service credit (cost) 3,769 ( 1,230 ) 5,023 Other, net 55 8,882 4,385 Income before income taxes 102,937 90,943 82,324 Provision for income taxes 8,970 5,956 8,496 Net income 93,967 84,987 73,828 Other comprehensive income: Unrealized (loss) gain on investment, net of taxes of $( 163 ) in 2024, $ 166 in 2023 and $( 188 ) in 2022 ( 442 ) 530 ( 511 ) Adjustment to pension benefit plans, net of taxes of $ 0 in 2024, $ 80 in 2023 and $ 793 in 2022 611 ( 216 ) 2,151 Comprehensive income $ 94,136 85,301 75,468 Earnings per share —Basic $ 2.87 2.69 2.44 —Diluted $ 2.87 2.68 2.43 Weighted average shares outstanding —Basic 32,701,292 31,575,197 30,304,557 —Diluted 32,779,573 31,663,274 30,423,735 See Accompanying Notes to Consolidated Financial Statements. 54 Table of Contents SJW Group and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share and per share data) Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Number of Shares Amount Balances, December 31, 2021 30,181,348 $ 30 606,392 428,260 ( 163 ) 1,034,519 Net income — — — 73,828 — 73,828 Unrealized loss on investment, net of tax effect of $( 188 ) — — — — ( 511 ) ( 511 ) Adjustment to pension benefit plans, net of taxes of $ 793 — — — — 2,151 2,151 Share-based compensation — — 4,791 ( 150 ) — 4,641 Issuance of restricted and deferred stock units 54,243 — ( 1,354 ) — — ( 1,354 ) Employee stock purchase plan 36,585 — 2,091 — — 2,091 Common stock issuance, net of costs 529,736 1 39,084 39,085 Dividends paid ($ 1.44 per share) — — — ( 43,582 ) — ( 43,582 ) Balances, December 31, 2022 30,801,912 31 651,004 458,356 1,477 1,110,868 Net income — — — 84,987 — 84,987 Unrealized gain on investment, net of tax effect of $ 166 — — — — 530 530 Adjustment to pension benefit plans, net of taxes of $ 80 — — — — ( 216 ) ( 216 ) Share-based compensation — — 4,647 ( 55 ) — 4,592 Issuance of restricted and deferred stock units 67,164 — ( 2,259 ) — — ( 2,259 ) Employee stock purchase plan 34,122 — 2,141 — — 2,141 Common stock issuance, net of costs 1,119,806 1 80,658 — — 80,659 Dividends paid ($ 1.52 per share) — — — ( 47,905 ) — ( 47,905 ) Balances, December 31, 2023 32,023,004 32 736,191 495,383 1,791 1,233,397 Net income — — — 93,967 — 93,967 Unrealized loss on investment, net of tax effect of $( 163 ) — — — — ( 442 ) ( 442 ) Adjustment to pension benefit plans, net of taxes of $ 0 — — — — 611 611 Share-based compensation — — 5,623 ( 34 ) — 5,589 Issuance of restricted and deferred stock units 41,023 — ( 1,212 ) — — ( 1,212 ) Employee stock purchase plan 42,853 — 2,188 — — 2,188 Common stock issuance, net of costs 1,522,289 2 85,006 — — 85,008 Dividends paid ($ 1.60 per share) — — — ( 52,132 ) — ( 52,132 ) Balances, December 31, 2024 33,629,169 $ 34 827,796 537,184 1,960 1,366,974 See Accompanying Notes to Consolidated Financial Statements. 55 Table of Contents SJW Group and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31 (in thousands) 2024 2023 2022 Operating activities: Net income $ 93,967 84,987 73,828 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 115,050 108,138 106,439 Deferred income taxes 10,355 ( 8,510 ) ( 3,244 ) Stock-based compensation 5,623 4,647 4,791 Allowance for equity funds used during construction ( 2,362 ) ( 2,114 ) ( 1,551 ) Loss (gain) on sale of nonutility properties and other assets 572 — ( 6,197 ) Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts receivable and accrued unbilled revenue ( 12,663 ) ( 10,869 ) ( 8,222 ) Accounts payable and other current liabilities 4,241 492 ( 1,388 ) Accrued groundwater extraction charges, purchased water and power 639 4,772 2,507 Tax receivable and payable, and other accrued taxes ( 18,355 ) ( 22,415 ) ( 11,954 ) Postretirement benefits ( 4,400 ) ( 1,549 ) ( 7,108 ) Regulatory assets and liabilities excluding income tax temporary differences and postretirement benefits ( 1,812 ) 12,278 1,714 Up-front service concession payments ( 23,900 ) — — Other noncurrent assets and liabilities 21,042 20,756 17,923 Other changes, net 7,529 218 ( 1,339 ) Net cash provided by operating activities 195,526 190,831 166,199 Investing activities: Additions to utility plant: Company-funded ( 353,029 ) ( 271,772 ) ( 218,784 ) Contributions in aid of construction ( 24,179 ) ( 16,855 ) ( 22,935 ) Additions to nonutility assets and real estate investments ( 29 ) ( 24,244 ) ( 631 ) Payments for business acquisitions — ( 7,537 ) ( 433 ) Cost to retire utility plant, net of salvage ( 3,430 ) ( 2,097 ) ( 2,520 ) Proceeds from sale of assets 40,572 233 975 Net cash used in investing activities ( 340,095 ) ( 322,272 ) ( 244,328 ) Financing activities: Borrowings from lines of credit 242,000 146,415 158,779 Repayments of lines of credit ( 295,260 ) ( 134,493 ) ( 62,197 ) Long-term borrowings 185,329 70,000 55,000 Repayments of long-term borrowings ( 48,975 ) ( 4,347 ) ( 89,177 ) Dividends paid ( 52,132 ) ( 47,905 ) ( 43,582 ) Receipts of advances and contributions in aid of construction 33,070 22,425 23,820 Refunds of advances for construction ( 2,963 ) ( 2,763 ) ( 2,859 ) Issuance of common stock, net of issuance costs 85,008 80,659 39,085 Other changes, net ( 117 ) ( 1,171 ) ( 515 ) Net cash provided by financing activities 145,960 128,820 78,354 Net change in cash and cash equivalents 1,391 ( 2,621 ) 225 Cash and cash equivalents, beginning of year 9,723 12,344 12,119 Cash and cash equivalents, end of year $ 11,114 9,723 12,344 Cash paid (refunded) during the year for: Interest $ 73,268 67,508 63,677 Interest, net of amounts capitalized $ 69,744 64,608 58,974 Income taxes $ ( 598 ) 23,020 6,853 Supplemental disclosure of non-cash activities: Accrued payables for additions to utility plant $ 41,692 35,904 22,561 Utility property installed by developers $ 2,465 3,341 2,433 Proceeds receivable from sale of real estate investments $ 2,801 — — Accrued selling expenses on sale of real estate investments $ 2,177 — — Seller financing in asset acquisition, net of discount $ — 15,400 — See Accompanying Notes to Consolidated Financial Statements. 56 Table of Contents SJW GROUP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 2024, 2023 and 2022 (Dollars in thousands, except share and per share data and where otherwise noted) Note 1. 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 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 that conducts its business through the following wholly owned subsidiaries: San Jose Water Company (“SJWC”), SJWTX Holdings, Inc., SJW Land Company, SJWNE LLC, and National Water Utility Service, LLC (“NWU”). SJWTX Holdings, Inc. is a holding company for its wholly owned subsidiaries, SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”). SJWNE LLC is the holding company for Connecticut Water Service, Inc. (“CTWS”) whose wholly owned subsidiaries are The Connecticut Water Company (“CWC”), The Maine Water Company (“MWC”), New England Water Utility Services, Inc. (“NEWUS”), and Chester Realty, Inc. NWU is the contracting entity for shared services among the SJW Group affiliates formed in October 2024. 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. 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. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. Revenue is generally higher in the warm, dry summer months when water usage and sales are greater and lower in the winter months when cooler temperatures and increased rainfall curtail water usage and sales. Note 2. Summary of Significant Accounting Policies Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Depreciable Utility Plant and Equipment The major components of depreciable plant and equipment as of December 31, 2024 and 2023 are as follows: 2024 2023 Source of supply $ 228,621 207,537 Pumping plant 301,280 284,308 Water treatment plant 367,836 354,617 Transmission and distribution plant 3,015,978 2,820,358 General plant 335,599 301,091 Total depreciable plant and equipment $ 4,249,314 3,967,911 57 Table of Contents Depreciation is computed using the straight-line method over the estimated remaining service lives of groups of assets. The estimated service lives of depreciable plant and equipment are as follows: Useful Lives Source of supply 20 to 100 years Pumping plant 5 to 70 years Water treatment plant 5 to 62 years Transmission and distribution plant 10 to 100 years General plant 5 to 68 years For the years 2024, 2023 and 2022, depreciation expense as a percentage of the beginning of the year balance of depreciable plant was 2.9 %, 2.9 % and 3.3 %, respectively. Depreciation expense for utility plant for the years ended December 31, 2024, 2023 and 2022 was $ 111,575 , $ 104,325 and $ 99,413 , respectively. 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”) AFUDC represents the capitalized costs of borrowed funds or a return on equity funds used to finance utility plant under construction and is capitalized as part of construction work in progress. 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 AFUDC debt capitalized in 2024, 2023 and 2022 was $ 3,524 , $ 2,900 and $ 4,703 , respectively. Interest on long-term debt is presented net of AFUDC debt capitalized on the Consolidated Statements of Comprehensive Income. The amount of AFUDC equity capitalized in 2024, 2023 and 2022 was $ 2,362 , $ 2,114 and $ 1,551 , respectively, reflected in “Other, net” on the Consolidated Statements of Comprehensive Income. Intangible Assets 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 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 nonutility properties and real estate investments are as follows as of December 31: 2024 2023 Land $ 915 4,137 Wholesale water supply assets — 8,465 Buildings and improvements 399 748 Subtotal 1,314 13,350 Less: accumulated depreciation and amortization 98 194 Total $ 1,216 13,156 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. 58 Table of Contents 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 recorded 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 provided the estimated fair value of the Tennessee properties. No impairment was recorded as the estimated fair value less cost to sell exceeded carrying value. In 2024, in two separate transactions, SJW Land Company completed the sale of the Tennessee properties for an aggregate of $ 44,000 . The net pre-tax loss associated with these transactions for the year ended December 31, 2024 was $ 969 and is included in the “Other, net” line on the consolidated statements of comprehensive income. A portion of the proceeds from these sales totaling $ 2,801 is being held in escrow pending completion of certain post-closing obligations. Following these two transactions, SJW Group does not have any other assets classified as held for sale. 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: 2023 Land $ 13,170 Buildings and improvements 44,950 Subtotal 58,120 Less: 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 . For the year ended December 31, 2022, SJW Group recognized the pre-tax gain on the sale of nonutility properties of $ 7,230 , after selling expenses of $ 277 for one of the properties sold, and a gain of $ 5,442 which was deferred in 2021 pending the CPUC review. On February 15, 2022, the CPUC review was complete and SJWC recognized the deferred gain on sale of nonutility property in 2022. In August 2023, a non-regulated subsidiary, TWR, acquired eight wells and the associated water rights of KT Water Resources, LLC, as discussed in Note 14 , “Acquisitions.” In connection with a transaction in 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. 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. 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 the 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. Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to: future expected cash flows from services; historical and expected customer attrition rates and anticipated growth in revenue from acquired 59 Table of Contents customers; the expected use of the acquired assets; and discount rates. 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 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. No impairments occurred during 2024 and 2023. 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: change in industry and competitive environment, financial performance, macroeconomic conditions, 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. As of October 1, 2024, 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 2024, 2023 or 2022. Cash and Cash Equivalents 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. 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. During the second quarter of 2024, SJW Group recorded a reduction to its allowance for credit losses of $ 7,822 , of which $ 3,960 resulted in a reduction to regulatory assets and $ 3,862 was recorded through administrative and general expense ($ 2,782 net of tax or $ 0.08 per diluted share). 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, 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 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. The fair value of long-term debt is discussed in Note 6 , “Long-Term Debt” and pension plan assets in Note 11 , “Benefit Plans.” 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 “Investments” on SJW Group’s Consolidated Balance Sheets. As of December 31, 2024 and 2023, the value of the company owned life insurance was $ 8,944 and $ 8,220 , respectively, of which $ 4,294 and $ 3,937 , respectively, was related to assets to fund CTWS’ supplemental retirement plan agreements. See discussion on pension plans in Note 11 , “Benefit Plans.” 60 Table of Contents Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the effect of temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using current tax rates in effect. 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 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 In California, advances for construction received after 1981 are primarily refunded ratably over 40 years. In Connecticut and Maine, advances for construction are refunded as services are connected to the main over periods not exceeding 15 years and in Texas advances for construction are non-refundable. Estimated refunds for the next five years and thereafter are shown below: Estimated Refunds 2025 $ 2,997 2026 2,898 2027 2,808 2028 2,741 2029 2,645 Thereafter 44,406 As of December 31, 2024, advances for construction totaled $ 155,397 including $ 64,920 in non-refundable advances and $ 31,983 in advances that will be refunded based on service connections made, though the timing of these refunds cannot be estimated. As of December 31, 2024 and 2023, the fair value of the advances for construction refunded ratably over 40 years is $ 43,718 and $ 40,915 , 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. Asset Retirement Obligation SJW Group’s asset retirement obligation is recorded as a liability included in other non-current liabilities. It reflects principally the retirement costs of wells and other anticipated clean-up costs, which by law, must be remediated upon retirement. As of December 31, 2024 and 2023, the asset retirement obligation is as follows: 2024 2023 Estimated future retirement costs $ 4,303 4,198 Discount rate 6 % 6 % Retirement obligation, present value $ 887 862 Revenue 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 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. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. As the company has the right to bill for services that it has provided, SJW Group estimates the dollar value of deliveries during the unbilled period and recognizes the associated revenue. Actual results could differ from those estimates, which may result in an adjustment to revenue when billed in a subsequent period. 61 Table of Contents 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 CWC’s Water Rate Adjustment mechanism (“WRA”). 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. Detail of SJW Group’s revenue components are as follows for the years ended December 31: 2024 2023 2022 Revenue from contracts with customers $ 736,326 678,168 586,918 Alternative revenue programs, net 6,181 3,634 ( 1,312 ) Other balancing and memorandum accounts and regulatory mechanisms, net ( 153 ) ( 17,123 ) 29,487 Rental income 6,085 5,684 5,605 $ 748,439 670,363 620,698 Revenue also includes a surcharge collected from regulated customers that is paid to the CPUC. This surcharge is recorded both in operating revenue and administrative and general expenses. For the years ended December 31, 2024, 2023 and 2022, the surcharge was $ 3,668 , $ 4,085 and $ 6,121 , respectively. Share-Based Compensation SJW Group calculates the fair value of service-based and performance-based restricted stock awards based on the grant date fair value of the company’s stock price reduced by the present value of the dividends expected to be declared on outstanding shares. SJW Group utilizes the Monte Carlo valuation model, which requires the use of subjective assumptions, to compute the fair value of market-vesting restricted stock units. The compensation cost for service-based restricted stock awards is charged to income on a straight-line basis over the requisite service period, which is the vesting period. For performance-based stock awards, compensation expense is charged to income on a straight-line basis over the requisite service period based on expected attainment of performance targets. Changes in the estimates of the expected attainment of performance targets will result in a change in the number of shares that are expected to vest which may cause a cumulative catch up for the amount of share-based compensation expense during each reporting period in which such estimates are altered. Forfeitures are accounted for as they occur. 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 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 8,075 , 14,193 and 25,127 as of December 31, 2024, 2023 and 2022, respectively, were excluded from the diluted earnings per share calculation as their effect would have been antidilutive. Related-Party Transaction The Force for Good Foundation, established in 2024, is a non-consolidated not-for-profit corporation funded by SJW Group that plans to make contributions to selected charitable organizations. For the year ended December 31, 2024, SJW Group made 62 Table of Contents contributions of $ 3,000 , which are included as an expense in the “Other, net” line of the Consolidated Statements of Comprehensive Income. New Accounting Standards Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements Accounting Standards Update (“ASU”) 2023-07 “Improvements to Reportable Segment Disclosures” The ASU requires disclosure of significant segment expenses, extends certain annual disclosures to interim periods, and requires additional qualitative disclosures regarding the chief operating decision maker. The ASU is effective for SJW Group beginning with its annual financial statements for the year ending December 31, 2024. Early adoption is permitted. Retrospective During the year ended December 31, 2024, SJW Group adopted ASU 2023-07, “Improvements to Reportable Segment Disclosures,” retrospectively. Refer to Note 13. Segment Reporting for the required disclosures. 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. Prospective, with retrospective application also permitted. SJW Group is currently evaluating the requirements of ASU 2023-09. ASU 2024-03 “Disaggregation of Income Statement Expenses” The ASU requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses. The ASU requires disclosure of purchases of inventory, employee compensation, depreciation, and intangible asset amortization in interim and annual reporting periods. Further, other amounts already required to be disclosed in accordance with current U.S. GAAP would be included in the same disclosure as the other disaggregation requirements. Additionally, the ASU requires qualitative descriptions of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclosure of selling expenses in annual periods and an entity’s definition of selling expenses. The ASU is effective for SJW Group for its annual financial statements for the year ending December 31, 2027 and for interim reporting periods for the year ending December 31, 2028. Early adoption is permitted. Prospective, with retrospective application also permitted. SJW Group is currently evaluating the requirements of ASU 2024-03. Note 3. Regulatory Matters Regulation 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- 63 Table of Contents 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. SJWC’s Full Cost Balancing Account (“FCBA”) tracks 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, both mandatory and voluntary. 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. 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. On December 19, 2024, the CPUC issued General Rate Case Decision No. 24-12-077, which approved a recovery of $ 15,792 in balancing and memorandum accounts from customers through a 12-month surcharge effective January 1, 2025. 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. 64 Table of Contents Regulatory Assets and Liabilities Regulatory assets and liabilities are comprised of the following as of December 31: 2024 2023 Regulatory assets: Income tax temporary differences (a) (q) $ 180,103 157,669 Unrecognized pensions and other postretirement benefits (b) (q) 3,177 24,593 Business combinations debt premium (c) (q) 12,313 14,855 Employee benefit costs (d) (q) 6,370 9,815 MWRAM (e) 9,985 9,361 Customer Assistance Program (“CAP”) balancing account (f) 6,599 5,457 Catastrophic event memorandum accounts (“CEMA”) (g) 986 4,819 2022 general rate case interim memorandum account (h) 3,392 4,571 Revenue adjustment mechanisms (n) (q) 5,024 — Water supply costs (i) — 583 Other (j) 14,278 8,463 Total regulatory assets 242,227 240,186 Less: current regulatory asset (k) 18,172 4,276 Total regulatory assets, less current portion $ 224,055 235,910 Regulatory liabilities: Cost of removal (l) $ 364,398 346,418 Future income tax benefits due to customers (m) 84,128 88,610 Unrecognized pensions and other postretirement benefits (b) 27,872 20,196 Employee benefit costs (d) 1,137 — Revenue adjustment mechanisms (n) 1,122 5,536 Water supply costs (i) 3,386 — Other (o) 2,798 3,407 Total regulatory liabilities 484,841 464,167 Less: current regulatory liabilities (p) 1,122 3,059 Total regulatory liabilities, less current portion $ 483,719 461,108 ___________________________________ (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 5 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, cost of accrued benefits for vacation, and group health insurance. (e) MWRAM is described in the previous section. (f) Represents costs associated with SJWC’s CAP. (g) 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. The balances primarily relate to expenses associated with SJWC’s response to COVID-19, including bad debt. (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 primarily SJWC’s FCBA which tracks differences in actual water supply costs compared to amounts assumed in base 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, tank painting, well reconditioning and rate case expenses. (k) As of December 31, 2024, primarily relates to SJWC’s balancing and memorandum account surcharge in accordance with Decision No. 24-12-077 and the current portion of CWC’s deferred well redevelopment and rate case costs. As of December 31, 2023, primarily relates to the current portion of MWRAM. (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. 65 Table of Contents (m) On December 22, 2017, the Tax Cuts and Jobs Act of 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) Primarily relates to the current portion of WRA. (q) Generally not earning a return either by interest on the regulatory asset or as a component of rate base at the allowed rate of return. Note 4. Capitalization SJW Group is authorized to issue 70,000,000 shares of common stock of $ 0.001 par value per share. At December 31, 2024 and 2023, 33,629,169 and 32,023,004 , respectively, shares of common stock were issued and outstanding. As of December 31, 2024 and 2023, 1,000,000 shares of preferred stock of $ 0.001 par value per share were authorized for SJW Group. At December 31, 2024 and 2023, no shares of preferred stock were issued or outstanding. 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 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. Note 5. Lines of Credit SJW Group and its subsidiaries have unsecured line of credit agreements where borrowings are used to refinance existing debt, for working capital, and for general corporate purposes. A summary of the line of credit agreements as of December 31, 2024 and 2023 are as follows: 2024 2023 Maturity Date Line Limit Amounts Outstanding Unused Portion Amounts Outstanding Syndicated credit agreement: August 2, 2029 SJW Group $ 50,000 3,000 47,000 10,000 SJWC 140,000 44,000 96,000 56,000 CTWS 90,000 30,000 60,000 53,000 TWC 20,000 — 20,000 2,500 Total syndicated credit agreement 300,000 77,000 223,000 121,500 CTWS credit agreement August 2, 2028 10,000 2,124 7,876 10,000 CTWS credit agreement May 15, 2025 40,000 40,000 — 40,000 $ 350,000 119,124 230,876 171,500 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 had a maturity date of August 66 Table of Contents 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. On August 2, 2024, SJW Group, SJWC, TWC, and CTWS entered into the Second Amendment to the Credit Agreement with JPMorgan Chase Bank which provided for, among other matters, an extension of the maturity date from August 2, 2028 to August 2, 2029. 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. The initial sublimit of each borrower is as presented in the table above. Borrowings under the Credit Agreement bear interest at either the Alternative Base Rate (as defined in the Credit Agreement and hereinafter referred to as “ABR”) or the Adjusted Term Secured Overnight Financing Rate (as defined in the Credit Agreement and hereinafter referred to as “SOFR”). ABR borrowings (which are borrowings bearing interest at a rate determined by reference to ABR) will bear interest at a rate per annum equal to ABR plus the applicable rate. SOFR borrowings (which are borrowings bearing interest at a rate determined by reference to SOFR) will bear interest at a rate per annum equal to SOFR plus the applicable rate. The applicable rate and pricing is variable depending on credit ratings of the borrower. 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. 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. The weighted-average interest rate on short-term borrowings outstanding at December 31, 2024 was 6.08 % compared to 6.48 % at December 31, 2023. 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. The lines of credit also include certain customary financial covenants such as a funded debt to capitalization ratio and a minimum interest coverage ratio. As of December 31, 2024, SJW Group and its subsidiaries were in compliance with all covenants on the lines of credit. 67 Table of Contents Note 6. Long-Term Debt Long-term debt as of December 31 was as follows: Description Rate Maturity 2024 2023 SJW Group Senior notes (a) 2.47 % - 3.53 % 2029 - 2039 $ 560,000 560,000 SJWC: Senior notes (a) 3.00 % - 7.20 % 2026 - 2054 505,000 470,000 California Pollution Control Financing Authority Revenue Bond 4.75 % 2046 70,000 70,000 Total SJWC 575,000 540,000 CTWS bank term loans 4.09 %, 4.15 % 2027, 2037 14,389 16,457 CWC: Connecticut Innovations Revenue Bonds, variable rate 2028 - 2029 22,050 22,050 Senior notes (a) 3.07 % - 6.46 % 2037 - 2054 270,000 195,000 State revolving fund loans 2.00 % 2044 327 — Bank term loans 4.04 % - 4.75 % 2028 - 2036 96,295 96,295 Total CWC 388,672 313,345 TWC: Senior note (a) 6.27 % 2036 15,000 15,000 Bank term loans 4.01 % - 6.47 % 2041 - 2054 65,000 45,000 Seller financing debt (b) 2053 29,000 — Total TWC 109,000 60,000 TWR seller financing debt (b) 2053 — 29,000 MWC: State revolving fund loans 0.00 % - 2.23 % 2025 - 2048 12,763 14,239 Other First Mortgage Bond 8.95 % 2024 — 900 Bank term loans 3.89 % - 6.47 % 2026 - 2054 60,000 49,500 Total MWC 72,763 64,639 Total debt 1,719,824 1,583,441 Unamortized debt premium and discount, net ( 56 ) 1,583 Unamortized debt issuance costs ( 9,216 ) ( 9,350 ) Current portion ( 3,648 ) ( 48,975 ) Total long-term debt, less current portion $ 1,706,904 1,526,699 ___________________________________ (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) Debt does not contain a stated interest rate but is discounted using an effective rate of 5.61 %. The following is a table of the consolidated company’s schedule of principal payments: Year 2025 $ 3,664 2026 23,757 2027 3,011 2028 44,502 2029 325,425 Thereafter 1,319,465 The estimated fair value of long-term debt as of December 31, 2024 and 2023 was $ 1,490,024 and $ 1,394,412 , respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the 68 Table of Contents same duration and creditworthiness of the company. As of December 31, 2024, $ 1,473,393 of the total fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy, and $ 16,631 would be categorized as Level 3. As of December 31, 2023, $ 1,378,683 of the total fair value of long-term debt was categorized as Level 2 in the fair value hierarchy, and $ 15,729 was categorized as Level 3. SJWC 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. Interest is payable semi-annually in arrears on February 1st and August 1st of each year. The closing of the note purchase agreement occurred on January 25, 2023. 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. CWC 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 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, 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. TWC and TWR 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. During the third quarter of 2024, TWC assumed the obligation in connection with an asset purchase agreement pursuant to which TWC acquired all of the net assets of TWR. 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 %. This 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. MWC 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 %. This 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. CTWS On February 6, 2023, CTWS entered into a third amendment to the amended and restated promissory note and supplement with CoBank to update the one of the stated terms regarding one of interest rate options from LIBOR plus the applicable rate to SOFR plus the applicable rate. CTWS previously locked the interest rate under this agreement to 4.09 %, such that this amendment has no impact. Financial Covenants 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 subject to customary events of default, which may result in 69 Table of Contents outstanding notes 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. Note 7. Income Taxes The components of income tax expense were: 2024 2023 2022 Current: Federal $ ( 1,828 ) 10,185 8,570 State 443 4,281 3,170 Deferred: Federal 11,063 ( 8,871 ) ( 3,223 ) State ( 708 ) 361 ( 21 ) $ 8,970 5,956 8,496 The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes of $ 102,937 , $ 90,943 and $ 82,324 in 2024, 2023 and 2022, respectively: 2024 2023 2022 Income tax at federal statutory rate $ 21,617 19,098 17,288 Increase (decrease) in taxes attributable to: State taxes, net of federal income tax benefit 6,488 6,001 5,328 Uncertain tax positions ( 1,053 ) ( 4,330 ) 1,483 Property flow-through ( 14,793 ) ( 9,045 ) ( 13,091 ) Reversal of excess deferred taxes recognized in regulatory liability ( 3,227 ) ( 3,625 ) ( 3,885 ) Pension flow-through ( 530 ) ( 597 ) 27 Stock-based compensation 192 ( 491 ) ( 297 ) Other items, net 276 ( 1,055 ) 1,643 $ 8,970 5,956 8,496 70 Table of Contents The components of the net deferred tax liability as of December 31 was as follows: 2024 2023 Deferred tax assets: Advances and contributions $ 26,744 25,714 Unamortized investment tax credit 1,061 517 Pensions, postretirement benefits and stock-based compensation 12,529 17,844 Debt premium, net 3,446 4,157 California franchise tax 503 713 Deferred revenue — 841 Tax related regulatory liability 23,112 24,358 Other 6,337 7,077 Total deferred tax assets 73,732 81,221 Deferred tax liabilities: Utility plant 277,085 243,786 Pension and postretirement 9,068 13,247 Deferred gain and other-property 608 6,456 Regulatory asset - business combinations debt premium, net 3,446 4,157 Intangibles 2,443 2,693 Deferred revenue 1,418 — Tax related regulatory asset 50,728 44,155 Other 4,979 5,255 Total deferred tax liabilities 349,775 319,749 Net deferred tax liabilities $ 276,043 238,528 Management evaluates the realizability of deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods in which the deferred tax assets are expected to reverse. 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. Net operating loss carryforwards expire beginning in 2032 and ending in 2043. As of December 31, 2024, the estimated amount of net operating loss carryforwards available to offset future taxable income for Connecticut purposes is $ 21,692 . The estimated state tax credit carryforwards are $ 970 , which will expire beginning in 2025 and ending in 2048. The change in the net deferred tax liabilities of $ 37,515 in 2024 resulted from other non-cash items primarily consisting of regulatory assets and liabilities relating to income tax temporary differences. The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $ 3,707 and $ 4,511 as of December 31, 2024 and 2023, respectively. The amount of tax benefits, net of any federal benefits for state taxes that would impact the effective rate, if recognized, is approximately $ 3,150 and $ 4,048 as of December 31, 2024 and 2023, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2024 2023 2022 Balance at beginning of year $ 4,511 9,004 7,961 Increase related to tax positions taken during the current year 658 231 1,549 Increase related to tax positions taken during a prior year 380 364 — Reductions related to statute expiration ( 1,701 ) ( 1,191 ) ( 284 ) Reductions related to tax positions taken in a prior year ( 141 ) ( 3,897 ) ( 222 ) Balance at end of year $ 3,707 4,511 9,004 The decrease in gross unrecognized tax benefits in 2024 was primarily due to expiry of statute of limitations. 71 Table of Contents The decrease in gross unrecognized tax benefits in 2023 was primarily due to the release of uncertain tax position reserve relating to repairs tax deductions. In April 2023, the IRS issued additional tax guidance that has allowed SJW Group 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 uncertain tax position reserve. The release relates to repairs expenditures which are more likely than not to be sustained on audit. The net 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. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $ 316 as of December 31, 2024. SJW Group has not accrued any penalties for unrecognized tax benefits. The amount of interest recognized in 2024 was a decrease to expense of $ 139 . SJW Group currently does not expect uncertain tax positions to change significantly over the next 12 months. SJW Group files U.S. 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 2012 forward for state returns of CTWS and its subsidiaries. The statute of limitations for SJW Group returns is closed for these extended years and remains open for 2021 and forward for federal and 2020 or 2021 and forward for different states. Note 8. Intangible Assets Utility plant intangible assets consist of $ 28,386 of indefinite-lived water rights, $ 13,400 related to the purchase premium for customer relationships, and other intangibles of $ 9,818 as of December 31, 2024. Other intangibles primarily consist of $ 4,292 for service area expansions and other by TWC, $ 1,400 for customer relationships and $ 1,040 incurred in conjunction with Valley Water water contracts related to the operation of SJWC. In connection with a transaction in the third quarter of 2024, TWC purchased all assets from TWR for use in utility operations. Accordingly, SJW Group reclassified $ 28,386 related to indefinite life water rights from other intangible assets to utility plant intangible assets. Amortization expense for the intangible assets was $ 1,429 , $ 1,310 and $ 3,869 for the years ended December 31, 2024, 2023 and 2022, respectively. Amortization expense for 2025 through 2029 and thereafter is anticipated to be approximately $ 1,395 per year. The components of intangible assets as of December 31, 2024 and 2023 are as follows: 2024 2023 Utility Plant Intangible Assets: Indefinite-lived water rights $ 28,386 — Purchase premium customer relationships 13,400 13,400 Concession fees — 6,800 Other intangibles 9,818 15,746 Utility plant intangible assets 51,604 35,946 Less: Accumulated amortization Purchase premium customer relationships 4,667 3,774 Concession fees — 6,754 Other intangibles 4,858 10,361 Utility plant net intangible assets $ 42,079 15,057 Other Intangible Asset: Indefinite-lived water rights $ — $ 28,386 Note 9. Commitments 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, 2024, 2023 and 2022, SJWC purchased from Valley Water 17.0 billion gallons ($ 117,698 ), 18.3 billion gallons ($ 111,173 ) and 18.2 billion gallons ($ 96,793 ), respectively, of contract water. On June 12, 2024, the Valley Water Board of Directors approved treated water deliveries reflecting the contractual delivery schedule reduced by 23 % through June 30, 2025. Based on current prices and estimated deliveries, SJWC is committed to purchase from 72 Table of Contents Valley Water a minimum of 90 % of the reduced delivery schedule, or 18.9 billion gallons ($ 135,975 ) of water at the current contract water rate of $ 7.194 million per billion gallons for the year ending December 31, 2025. Additionally, SJWC purchases non-contract water from Valley Water on an “as needed” basis if the water supply is available. SJWC operates the Cupertino municipal water system under a service concession arrangement. The system is adjacent to the SJWC service area and has approximately 4,700 service connections. The original agreement commenced in October 1997 and expired on September 30, 2024. Effective October 2024, SJWC entered into a new 12-year agreement with the City of Cupertino subject to an additional term of eight years if agreed to by the parties. SJWC paid an upfront concession fee of $ 22.1 million in 2024 and agreed to pay, beginning in 2024, an annual investment rent of $ 1.8 million, subject to annual adjustment based on a specified construction cost index. The concession fees are amortized as reductions to operating revenue over the applicable contract term and the annual investment rent payments are amortized as reductions to operating revenue over the annual period to which they relate. Under the terms of the agreement, SJWC assumes responsibility for all maintenance and operating costs of the system, while receiving all payments for water service. 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, 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 agrees to purchase 0.28 billion gallons of water annually from MDC. The rate charged by the MDC at December 31, 2024 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 TWC with 7,602 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 County 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. 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 was one dollar and fifty-one cents per hundred cubic feet as of December 31, 2024 . As of December 31, 2024, SJWC had 395 employees, of whom 241 were members of unions. 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. Note 10. Contingencies SJW Group and its subsidiaries are subject to ordinary routine litigation incidental to its business. In October 2023, CWC, a subsidiary of SJW Group, was named as a defendant in a putative class action lawsuit alleging that the water provided by CWC contained contaminants. The case is currently pending in the State of Connecticut Superior Court. CWC is vigorously defending itself in this lawsuit. At this time, SJW Group is unable to provide a reasonable estimate of any loss. SJWC and CWC are plaintiffs in a lawsuit against manufacturers of certain PFAS compounds for damages, contribution and reimbursement of costs incurred and continuing to be incurred to address the presence of such PFAS compounds in public water supply systems owned and operated by these utility subsidiaries and throughout their respective service areas. The lawsuit is part of Multi-District Litigation (“MDL”), that commenced on December 7, 2018, in the United States District Court for the District of South Carolina. MWC has submitted timely claims as a settlement class member. On February 8, 2024, the MDL court approved settlements involving defendants The Chemours Company, Corteva, Inc., and DuPont de Nemours, Inc. to resolve claims brought in the MDL against them by public water systems, including SJWC and CWC. On March 29, 2024, the MDL court approved a similar settlement involving defendant 3M. On November 22, 2024, the MDL court approved settlements involving defendants Tyco Fire Products LP, Chemgaurd, Inc., and BASF Corporation. SJW Group is monitoring and evaluating the ongoing litigation and settlement activity with the PFAS manufacturers for potential impacts to the various claims that these utility subsidiaries have asserted. 73 Table of Contents Note 11. Benefit Plans Pension Plans SJW Group maintains noncontributory defined benefit pension plans for its eligible employees. 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, 2024, the interest credits assumption was 4.00%. 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 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. Investment managers are not permitted to invest outside of the asset class or strategy under the pension plans’ investment guidelines. The committees ensure that the plans establish a target mix that is expected to achieve its investment objectives by assuring a broad diversification of investment assets among investment types, while minimizing volatility of the target asset mix, unless market conditions make such a change appropriate to reduce risk. The pension plans require a minimum portion of plan assets to be allocated to fixed income securities and provide guidelines and restrictions on equity investments for the assets. Plan assets are marked to market at each measurement date, resulting in unrealized actuarial gains or losses. Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes. 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. These standards include specific absolute and risk-adjusted performance standards over a three -to- five-year period and/or full market cycle. The expected long-term rate of return on the pension plan assets is between 6.25 % and 6.75 % for the year ended December 31, 2024. SJW Group calculates the market-related value of defined benefit pension plan assets, which is defined under FASB ASC Topic 715—“Compensation—Retirement Benefits,” as a balance used to calculate the expected return on plan assets, using fair value. The fair value is based on quoted prices in active markets for identical assets and significant observable inputs. 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”). 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 $ 40,328 and $ 43,001 as of December 31, 2024 and 2023, respectively, and net periodic pension cost of $ 3,879 , $ 3,257 and $ 4,400 for 2024, 2023 and 2022, respectively. For the years ended December 31, 2024, 2023 and 2022, the amounts not recognized as a component of net periodic benefit cost was $ 169 , $ 314 , and $ 1,640 , respectively, recorded as other comprehensive income on the consolidated financial statements. SJWC’s non-qualified plans are unfunded while CWC’s SERP is funded through investments consisting primarily of life insurance contracts and assets in a Rabbi Trust. As of December 31, 2024 and 2023, total investments made to fund CWC’s SERP were $ 7,336 and $ 6,843 , 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, 2024 and 2023, the value of the life insurance contracts was $ 4,294 and $ 3,937 , respectively. 74 Table of Contents 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, 2024 and 2023: Fair Value Measurements at December 31, 2024 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds $ 28 28 — — Mutual funds 2,062 2,062 — — Fixed income 722 722 — — Total $ 2,812 2,812 — — Fair Value Measurements at December 31, 2023 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Money market funds $ 71 71 — — Mutual funds 2,053 2,053 — — Fixed income 709 709 — — Total $ 2,833 2,833 — — Other Postretirement Benefits In addition to providing pension and savings benefits, the company also provides health care and life insurance benefits for eligible retired employees under the respective employer-sponsored postretirement benefits other than pension plans. The benefits are paid by the company and not from plan assets due to limitations imposed by Internal Revenue Service. Flexible Spending Plan SJW Group sponsors flexible spending account plans for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plans. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $ 3.2 and $ 5 , respectively. Savings Plans for Employees SJW Group also sponsors salary deferral plans which are defined contribution plans that allow employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. SJW Group contributions were $ 4,221 , $ 3,902 and $ 3,003 in 2024, 2023 and 2022, respectively. All of the company’s contributions are invested at the direction of the employees in funds offered under the plans. Special Deferral Election Plans and Deferral Election Program SJW Group maintains a special deferral election plan and a deferred compensation plan and agreements for senior management and a deferral election program for non-employee directors allowing for the deferral of a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Senior management and non-employee directors have to make an election on the deferral and distribution method of the deferrals before services are rendered. CWC’s deferred compensation plan allows the company to make discretionary contributions. Senior management and non-employee directors had deferred $ 8,216 and $ 8,148 under the plans as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, $ 6,276 and $ 6,223 , respectively, of the total amount deferred is related to CWC agreements. 75 Table of Contents Assumptions Utilized on Actuarial Calculations Net periodic cost for the defined benefit plans and other postretirement benefits was calculated using the following assumptions: Pension Benefits Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 % % % % % % Discount rate 4.99 - 5.03 4.95 - 5.24 2.65 - 2.82 4.95 - 5.01 4.96 - 5.21 2.61 - 2.76 Expected return on plan assets 6.25 , 6.75 6.00 , 6.75 6.50 , 6.75 4.20 , 6.25 4.20 , 6.00 4.20 , 6.00 Rate of compensation increase 4.50 , 5.00 4.50 , 5.00 4.00 , 4.50 N/A N/A N/A The expected rate of return on plan assets was determined based on a review of historical returns, for the pension plans and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class. These expected future returns were then blended based on the pension plans’ target asset allocations. Benefit obligations for the defined benefit plans and other postretirement benefits were calculated using the following assumptions as of December 31: Pension Benefits Other Postretirement Benefits 2024 2023 2024 2023 % % % % Discount rate 5.55 - 5.63 4.99 - 5.03 5.48 - 5.58 4.95 - 5.01 Rate of compensation increase 4.50 - 5.00 4.50 - 5.00 N/A N/A SJW Group utilized each plan’s projected benefit stream in conjunction with the FTSE Pension Discount Curve in determining the discount rate used in calculating the pension and other postretirement benefits liabilities at the measurement date. SJW Group has adopted MP-2021, Mortality Improvement Scales to determine mortality assumptions. The tables and scales reflect increasing life expectancies of participants in the United States. See also “Reconciliation of Funded Status” below. For other postretirement benefits, the assumed healthcare cost trend rate for 2025 is 8.00 %, grading down gradually to 4.50 % by 2032. Net Periodic Pension Costs Net periodic costs for the defined benefit plans and other postretirement benefits for the years ended December 31 was as follows: Pension Benefits Other Postretirement Benefits 2024 2023 2022 2024 2023 2022 Components of net periodic benefit cost Service cost $ 6,662 7,569 9,359 $ 665 638 1,032 Interest cost 14,451 14,234 10,708 1,181 1,268 883 Expected return on assets ( 17,852 ) ( 15,440 ) ( 18,841 ) ( 1,068 ) ( 860 ) ( 1,047 ) Amortization of prior service cost 15 15 17 — — — Amortization of actuarial (gain) loss ( 71 ) 2,210 4,620 ( 643 ) ( 350 ) ( 115 ) Recognition of significant event — — ( 1,595 ) — — — Net periodic benefit cost $ 3,205 8,588 4,268 $ 135 696 753 76 Table of Contents Reconciliation of Funded Status For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The projected benefit obligations and the funded status of the defined benefit pension and other postretirement plans as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2024 2023 2024 2023 Change in benefit obligation Benefit obligation at beginning of year $ 297,834 289,123 $ 24,264 25,830 Service cost 6,662 7,569 665 638 Interest cost 14,451 14,234 1,181 1,268 Actuarial loss (gain) ( 14,816 ) 5,794 ( 146 ) ( 2,645 ) Implicit rate subsidy — — ( 336 ) ( 237 ) Plan participants contributions — — 183 179 Administrative expenses paid ( 146 ) ( 137 ) — — Benefits paid and settlements ( 16,941 ) ( 18,749 ) ( 731 ) ( 769 ) Benefit obligation at end of year $ 287,044 297,834 $ 25,080 24,264 Change in plan assets Fair value of assets at beginning of year $ 285,504 251,960 $ 21,207 17,952 Actual return on plan assets 31,523 41,285 2,879 3,136 Employer contributions 8,007 11,145 7 920 Plan participants contributions — — 183 179 Administrative expenses paid ( 146 ) ( 137 ) ( 71 ) ( 67 ) Benefits paid and settlements ( 16,941 ) ( 18,749 ) ( 980 ) ( 913 ) Fair value of plan assets at end of year 307,947 285,504 23,225 21,207 Funded status at end of year $ 20,903 ( 12,330 ) $ ( 1,855 ) ( 3,057 ) For the year ended December 31, 2024, the net actuarial gain on the benefit obligation was related primarily to a gain from changes in the discount rate of $ 21,129 and a $ 6,005 loss from pension data changes. For the year ended December 31, 2023, the net actuarial gain of the benefit obligation was related primarily to a gain from changes of discount rate of $ 1,188 and a $ 1,993 loss from pension data changes. The amounts recognized on the balance sheet as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2024 2023 2024 2023 Noncurrent assets $ 61,231 30,671 $ 5,191 3,123 Current liabilities ( 2,308 ) ( 2,365 ) ( 146 ) ( 113 ) Noncurrent liabilities ( 38,020 ) ( 40,636 ) ( 6,900 ) ( 6,067 ) $ 20,903 ( 12,330 ) $ ( 1,855 ) ( 3,057 ) As of December 31, 2024 and 2023, the accumulated benefit obligation of the defined benefit pension plans was $ 263,607 and $ 270,209 , respectively. 77 Table of Contents The following table provides selected information about plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets as of December 31: 2024 2023 Pension Benefits: Plans with projected benefit obligation in excess of plan assets: Projected benefit obligation $ 40,328 $ 43,001 Fair value of plan assets — — Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation 38,053 39,652 Fair value of plan assets — — Other Postretirement Benefits: Plans with accumulated benefit obligation in excess of plan assets: Accumulated benefit obligation 16,891 15,580 Fair value of plan assets 9,844 9,401 SJW Group recognizes regulatory assets and liabilities that represent actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain of its pension and other postretirement benefit plans, in accordance with ASC Topic 980. SJW Group recorded regulatory assets of $ 3,177 and $ 24,593 as of December 31, 2024 and 2023, respectively, and regulatory liabilities of $ 27,872 and $ 20,196 as of December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the amounts deferred in regulatory assets that have not yet been recognized as components of net periodic benefit cost include net loss of $ 3,150 and $ 24,552 , respectively, and prior service cost of $ 27 and $ 41 , respectively. As of December 31, 2024 and 2023, the amounts deferred in regulatory liabilities that have not yet been recognized as components of net periodic benefit cost include net gain of $ 27,872 and $ 20,196 , respectively. Plan Assets Plan assets as of December 31 were as follows: Pension Benefits Other Postretirement Benefits 2024 2023 2024 2023 Fair value of assets at end of year: Debt securities $ 116,987 101,498 $ 5,368 5,596 38 % 36 % 23 % 26 % Equity securities 179,103 174,155 16,737 14,424 58 % 61 % 72 % 68 % Cash and equivalents 11,857 9,851 1,120 1,187 4 % 3 % 5 % 6 % Total $ 307,947 285,504 $ 23,225 21,207 78 Table of Contents The following tables summarize the fair values of plan assets by major categories as of December 31, 2024 and 2023: Fair Value Measurements at December 31, 2024 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 12,977 12,977 — — Equity securities (a) 195,840 195,840 — — Fixed Income (b) 122,355 46,549 75,806 — Total $ 331,172 255,366 75,806 — ___________________________________ (a) Actively managed portfolio of equity securities with the goal to exceed the benchmark performance. (b) Actively managed portfolio of fixed income securities with the goal to exceed the benchmark performance Fair Value Measurements at December 31, 2023 Asset Category Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 11,038 11,038 — — Equity securities 188,579 188,579 — — Fixed Income 107,094 39,048 68,046 — Total $ 306,711 238,665 68,046 — In 2025, SJW Group expects to make required and discretionary cash contributions of up to $ 6,680 to the pension plans and other postretirement benefit plans. Benefits expected to be paid in the next five years and in the aggregate for the five years thereafter are: Pension Plans Other Postretirement Benefit Plans 2025 $ 17,730 $ 1,765 2026 23,536 1,840 2027 19,615 1,910 2028 19,526 1,874 2029 20,233 1,841 2030 - 2034 109,784 9,656 Note 12. Equity Plans Common Stock SJW Group’s long-term incentive plans provide employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or subsidiary the opportunity to acquire an equity interest in SJW Group. SJW Group also maintains stock plans in connection with its acquisition of CTWS which are no longer granting new stock awards. In addition, shares are issued to employees under SJW Group’s employee stock purchase plan. On April 26, 2023, SJW Group adopted the successor plans, the 2023 Long-Term Incentive Plan and the 2023 Employee Stock Purchase Plan, to replace the Amended and Restated Long-Term Incentive Plan (the “Predecessor Incentive Plan”) and the 2014 Employee Stock Purchase Plan (the “Predecessor ESPP”), respectively. The Predecessor Incentive Plan terminated on April 23, 2023 and the Predecessor ESPP terminated on July 31, 2023. Each outstanding award under the Predecessor Incentive Plan will remain outstanding under the Predecessor Incentive Plan and shall be governed solely by the terms of the documents evidencing such awards. The 2023 Long-Term Incentive Plan reserves a total of 1,142,000 shares of SJW Group’s common 79 Table of Contents stock for issuance to employees, non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the SJW Group and its subsidiaries. The 2023 Employee Stock Purchase Plan reserves for a total of 500,000 shares of SJW Group’s common stock for issuance for eligible employees to purchase common stock at a discount through accumulated payroll deductions. Remaining reserves for both of the predecessor plans were terminated with the adoption of the successor plans. A participant in the plans generally may not receive plan awards covering an aggregate of more than 600,000 shares of common stock in any calendar year. Additionally, awards granted under the plans may be conditioned upon the attainment of specified Company performance goals. The types of awards included in the plans are restricted stock awards, restricted stock units, performance shares, or other share-based awards. In addition, shares are issued to employees under the employee stock purchase plan (“ESPP”) that was approved by SJW Group stockholders. As of December 31, 2024, 2023 and 2022, 1,142,770 , 1,080,759 and 1,013,782 shares have been issued pursuant to the plans, and 191,177 , 150,704 and 162,502 shares are issuable upon the vesting of outstanding restricted stock units, performance-based stock units, and deferred restricted stock units for the years ended 2024, 2023 and 2022, respectively. The remaining shares available for issuance under the plans are 1,030,998 as of December 31, 2024. The compensation costs charged to income is recognized on a straight-line basis over the requisite service period. A summary of compensation costs charged to income and proceeds from share-based compensation, which are recorded to additional paid-in capital and common stock, by award type, are presented below for the years ended December 31: 2024 2023 2022 Compensation costs charged to income: ESPP $ 557 378 369 Restricted stock and deferred restricted stock 5,066 4,269 4,422 Total compensation costs charged to income $ 5,623 4,647 4,791 ESPP proceeds $ 2,188 2,141 2,091 Restricted Stock and Deferred Restricted Stock A summary of SJW Group’s outstanding restricted and deferred restricted stock awards under the Plan as of December 31, 2024, and changes during the year ended December 31, 2024, are presented below: Units Weighted- Average Grant- Date Fair Value Outstanding as of January 1, 2024 150,704 $ 72.65 Granted 116,598 $ 56.18 Issued ( 62,011 ) $ 66.00 Forfeited ( 14,114 ) $ 64.60 Outstanding as of December 31, 2024 191,177 $ 65.36 Shares vested as of December 31, 2024 32,021 $ 70.59 A summary of the status of SJW Group’s nonvested restricted and deferred restricted stock awards under the plans as of December 31, 2024, and changes during the year ended December 31, 2024, are presented below: Units Weighted- Average Grant- Date Fair Value Nonvested as of January 1, 2024 123,545 $ 73.93 Granted 116,598 $ 56.18 Vested ( 70,366 ) $ 67.56 Forfeited ( 10,621 ) $ 65.54 Nonvested as of December 31, 2024 159,156 $ 64.30 Total fair value of restricted stock awards for all plans that were vested for the years ended 2024, 2023 and 2022 were $ 4,788 , $ 4,170 and $ 4,369 , respectively. As of December 31, 2024, the total unrecognized compensation costs related to restricted and 80 Table of Contents deferred restricted stock plans amounted to $ 5,485 . This cost is expected to be recognized over a weighted-average period of 1.72 years. For the years ended December 31, 2024, 2023 and 2022, 33,670 , 15,955 and 11,551 , respectively, of performance-based and market-based restricted stock awards were issued upon the attainment of certain performance metrics and service-based vesting under the Plan. Based upon actual attainment relative to the target performance metric, the number of shares issuable can range between 0 % to 150 % of the target number of shares for performance-based restricted stock awards, or between 0 % and 200 % of the target number of shares for market-based restricted stock awards. As of December 31, 2024, 30,770 performance-based and market-based restricted stock awards vested and 29,199 remained outstanding. Employee Stock Purchase Plan The ESPP allows eligible employees to purchase shares of SJW Group’s common stock at 85 % of the fair value of shares on the purchase date. Under the ESPP, employees can designate up to a maximum of 10 % of their base compensation for the purchase of shares of common stock, subject to certain restrictions. A total of 500,000 shares of SJW Group’s common stock have been reserved for issuance under the ESPP. The remaining shares available for issuance under the ESPP are 457,147 as of December 31, 2024. For the year ended December 31, 2024, 2023 and 2022, a total of 42,853 , 34,122 and 36,585 shares, respectively, were issued under the ESPP. The plan has no look-back provisions. Note 13. Segment Reporting SJW Group’s single reportable segment provides water utility and utility-related services to its customers through SJW Group’s subsidiaries, SJWC, CWC, TWC, MWC, and Acequia, which are aggregated and referred to as “Water Utility Services.” Water Utility Services’ activities are water utility operations with both regulated and non-tariffed businesses. Other business activities that do not comprise separately reportable segments primarily include SJWC’s City of Cupertino service concession arrangement operations, property management and investment activity conducted by SJW Land Company and Chester Realty, Inc., contract water and sewer operations and other water-related services provided by NEWUS and are referred to as “Other Services.” SJW Group’s operating segments have been determined based on information used by the chief operating decision maker. SJW Group’s chief operating decision maker (“CODM”) includes the Chairman, President, and Chief Executive Officer; the Chief Financial Officer and Treasurer; the Chief Operating Officer; the Senior Vice President and Chief Administrative Officer; and the Vice President and General Counsel. However, ultimate decision-making authority rests with the Chairman, President, and Chief Executive Officer. The CODM reviews financial information presented on a consolidated basis that is accompanied by certain disaggregated information about operating revenue, expenses, net income, and total assets. The CODM uses the net income to assess the financial performance of the segments and allocate resources (including employees, financial, or capital resources) in the budgeting and forecasting process. Previously, SJW Group presented a separate reportable segment for Real Estate Services and also presented a disaggregation of regulated and non-tariffed activities within the Water Utility Services reportable segment. Considering the sale of the Tennessee properties, as discussed in Note 2, which were part of the Real Estate Services segment, management has updated its segment presentation and has recast the prior periods presented to conform with the current period presentation. Under the current presentation, the activities of Water Utility Services previously presented as “non-tariffed” are generally presented as “Other Services” along with the real estate activity. Certain allocated assets, such as goodwill, revenue and expenses have been included in the reportable segment amounts. Certain corporate costs and expenses are not allocated to Water Utility Services or Other Services and are shown separately to reconcile to the applicable consolidated amounts. 81 Table of Contents For the year ended December 31, 2024 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 732,580 15,859 — 748,439 Less: Production expenses 286,763 5,259 — 292,022 Administrative and general 97,420 2,632 5,778 105,830 Maintenance 29,249 2,052 — 31,301 Property taxes and other non-income taxes 35,223 317 388 35,928 Depreciation and amortization 111,709 253 893 112,855 Interest on long-term debt and other interest expense 47,485 521 23,384 71,390 Provision (benefit) for income taxes 17,134 1,569 ( 9,733 ) 8,970 Other (3) ( 920 ) 191 ( 3,095 ) ( 3,824 ) Net income (loss) $ 108,517 3,065 ( 17,615 ) 93,967 Capital expenditures $ 377,208 29 — 377,237 For the year ended December 31, 2023 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 652,045 18,318 — 670,363 Less: Production expenses 251,898 4,302 — 256,200 Administrative and general 93,255 2,777 2,624 98,656 Maintenance 23,972 1,757 — 25,729 Property taxes and other non-income taxes 33,469 926 80 34,475 Depreciation and amortization 104,329 646 893 105,868 Interest on long-term debt and other interest expense 42,743 329 23,072 66,144 Provision (benefit) for income taxes 11,293 2,213 ( 7,550 ) 5,956 Other (3) ( 4,279 ) ( 121 ) ( 3,252 ) ( 7,652 ) Net income (loss) $ 95,365 5,489 ( 15,867 ) 84,987 Capital expenditures $ 288,627 24,244 — 312,871 82 Table of Contents For the year ended December 31, 2022 Reportable Segment Water Utility Services Other Services (1) Unallocated Corporate (2) Consolidated Operating revenue $ 603,000 17,698 — 620,698 Less: Production expenses 228,806 3,984 — 232,790 Administrative and general 90,874 2,565 1,965 95,404 Maintenance 29,063 1,671 — 30,734 Property taxes and other non-income taxes 31,184 923 465 32,572 Depreciation and amortization 99,412 4,112 893 104,417 Interest on long-term debt and other interest expense 37,958 — 20,104 58,062 (Gain) loss on sale of nonutility property ( 6,197 ) — — ( 6,197 ) Provision (benefit) for income taxes 12,756 1,161 ( 5,421 ) 8,496 Other (3) ( 6,524 ) ( 52 ) ( 2,832 ) ( 9,408 ) Net income (loss) $ 85,668 3,334 ( 15,174 ) 73,828 Capital expenditures $ 241,719 631 — 242,350 ___________________________________ (1) The “Other Services” category includes the accounts of SJW Land Co, Chester Reality, Inc., SJWC’s Cupertino service concession arrangement operations, TWOS, TWR, and NEWUS, on a stand-alone basis. (2) The “Unallocated Corporate” category includes the accounts of SJW Group, SJWNE LLC, SJWTX Holdings, Inc., CTWS, NWU on a stand-alone basis. (3) Primarily comprised of pension non-service credit (cost) and items of miscellaneous non-operating income (expense). SJW Group’s assets for the Water Utility Services reportable segment and all other are as follows as of December 31: 2024 2023 Water Utility Services (reportable segment) $ 4,567,182 4,199,610 Other Services 25,053 87,316 Unallocated Corporate 66,074 58,141 Total assets $ 4,658,309 4,345,067 Note 14. Acquisitions KT Water On January 13, 2023, TWC reached an agreement to acquire KT Water Development Ltd. (“KT Water Development”) and SJWTX Holdings, Inc. reached an agreement to acquire KT Water Resources L.P. (“KT Water Resources”). The agreement between SJWTX Holdings, Inc. and KT Water Resources, LP, was assigned to TWR prior to closing. KT Water Development was an investor-owned water utility providing water to approximately 1,725 people through over 570 service connections in the Rockwall Ranch subdivision in southern Comal County, Texas. KT Water Resources was a wholesale groundwater resource supplier to KT Water Development formed to develop wholesale water supplies for the fast-growing utilities of Comal County, Texas. The Public Utility Commission of Texas (“PUCT”) approved the proposed KT Water Development acquisition on July 24, 2023. The acquisition of KT Water Resources did not require PUCT approval. Both transactions closed on August 14, 2023. Further information regarding each of the acquisitions is set forth below. KT Water Development The purchase price of KT Water Development was $ 7,338 , all of which was cash, and was determined in accordance with a fair market value process defined under the Texas Water Code. The transaction was accounted for as a business combination in accordance with ASC Topic 805. The transaction consideration was allocated to utility plant. The final purchase price allocation was completed during the quarter ended March 31, 2024, with no change from the preliminary purchase price allocation. 83 Table of Contents Transaction costs were not material. The results of KT Water Development have been included in SJW Group’s consolidated statements of comprehensive income since the acquisition date and were not material. Pro forma financial information has not been presented because the acquisition was not material to SJW Group’s consolidated financial statements. KT Water Resources The total purchase price of KT Water Resources was $ 39,891 , consisting of a $ 24,491 up-front cash payment and an obligation for a post-closing production payment with an acquisition date fair value of $ 15,400 . Considering transaction costs of $ 170 , the total cost of the acquisition was $ 40,061 . The KT Water Resources acquisition was accounted for as an asset acquisition in accordance with ASC Topic 805. The total cost was allocated as follows based on the fair values of the assets acquired: $ 28,386 to other intangible asset, $ 11,684 to nonutility property, and $ 9 to other current liabilities. The other intangible asset represents indefinite-lived water rights. The nonutility property consists of wells, land, easements, and construction work in progress. The post-closing production payment represents an 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. The fair value of the post-closing payment as of the acquisition date was determined by discounting forecasted repayments based on management’s estimates of future groundwater production. The difference between the fair value of $ 15,400 and the gross obligation of $ 29,000 was recorded as a debt discount and is being amortized as interest expense using the effective interest method over the life of the obligation. The post-closing production payment obligation is classified as long-term debt in the Consolidated Balance Sheets. In connection with a transaction in the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations and assumed the post-closing payment obligation. 84 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I SJW Group (Parent Only) CONDENSED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2024 2023 Assets Investments in subsidiaries $ 1,877,922 1,753,250 Current assets: Cash and cash equivalents 1,306 868 Intercompany receivables 1,473 2,239 Intercompany notes receivable 74,119 69,746 Other current assets 1,177 243 Total current assets 78,075 73,096 Other assets Other 222 193 Total other assets 222 193 Total assets $ 1,956,219 1,826,539 Capitalization and Liabilities Capitalization: Stockholders’ equity: Common stock, $ 0.001 par value; authorized 70,000,000 shares in 2024 and 2023; issued and outstanding 33,629,169 shares in 2024 and 32,023,004 shares in 2023 $ 34 32 Additional paid-in capital 827,796 736,191 Retained earnings 537,184 495,383 Accumulated other comprehensive income 1,960 1,791 Total stockholders’ equity 1,366,974 1,233,397 Long-term debt, less current portion 557,430 557,028 Total capitalization 1,924,404 1,790,425 Current liabilities: Line of credit 3,000 10,000 Intercompany payables 2,210 — Intercompany notes payable — 1,726 Accounts payable 1,588 — Accrued interest 3,224 3,255 Income tax payable 16,871 16,427 Other current liabilities 765 629 Total current liabilities 27,658 32,037 Deferred income taxes 2,488 3,099 Other noncurrent liabilities 1,669 978 Total capitalization and liabilities $ 1,956,219 1,826,539 See Accompanying Notes to Schedule I 85 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I SJW Group (Parent Only) CONDENSED STATEMENTS OF COMPREHENSIVE INCOME Years ended December 31 (in thousands) 2024 2023 2022 Operating revenue $ — — — Operating expense: Administrative and general 5,568 2,239 1,977 Property taxes and other non-income taxes 388 80 93 Total operating expense 5,956 2,319 2,070 Operating loss ( 5,956 ) ( 2,319 ) ( 2,070 ) Other (expense) income: Interest on long-term debt and other interest expense ( 18,022 ) ( 17,692 ) ( 17,795 ) Interest income on intercompany notes receivable 6,756 3,862 81 Other, net ( 3,456 ) 1,034 ( 421 ) Loss before income taxes and equity earnings from subsidiaries ( 20,678 ) ( 15,115 ) ( 20,205 ) Income tax benefit ( 5,727 ) ( 4,294 ) ( 5,523 ) Equity earnings from subsidiaries, net of taxes 108,918 95,808 88,510 SJW Group net income 93,967 84,987 73,828 Other comprehensive income, net 169 314 1,640 SJW Group comprehensive income $ 94,136 85,301 75,468 See Accompanying Notes to Schedule I 86 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I SJW Group (Parent Only) CONDENSED STATEMENTS OF CASH FLOWS Years ended December 31 (in thousands) 2024 2023 2022 Operating activities: Net income $ 93,967 84,987 73,828 Adjustments to reconcile net income to net cash used in operating activities: Earnings from investment in subsidiaries ( 108,918 ) ( 95,808 ) ( 88,510 ) Deferred income taxes ( 618 ) 718 ( 163 ) Stock-based compensation 687 696 779 Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts payable and other current liabilities 1,724 281 185 Intercompany receivables ( 652 ) ( 6,018 ) ( 3,916 ) Tax payable and other accrued taxes 452 1,550 6,883 Accrued interest ( 31 ) 47 ( 15 ) Return on capital from investments in subsidiaries 90,600 50,550 55,950 Other changes, net 532 607 500 Net cash provided by operating activities 77,743 37,610 45,521 Investing activities: Proceeds to subsidiaries for notes receivable ( 173,374 ) ( 148,392 ) ( 27,713 ) Repayments from subsidiaries for notes receivable 169,001 91,740 20,634 Investments in subsidiaries ( 97,000 ) ( 25,500 ) ( 25,892 ) Net cash used in investing activities ( 101,373 ) ( 82,152 ) ( 32,971 ) Financing activities: Borrowings from subsidiaries for notes payable 27,098 700 15,355 Repayments to subsidiaries for notes payable ( 28,824 ) ( 3,140 ) ( 20,901 ) Borrowings from lines of credit 35,000 10,000 — Repayments of lines of credit ( 42,000 ) — — Issuance of common stock, net of issuance costs 85,008 80,659 39,085 Debt issuance costs ( 82 ) ( 46 ) ( 224 ) Dividends paid ( 52,132 ) ( 47,905 ) ( 43,582 ) Net cash provided (used in) by financing activities 24,068 40,268 ( 10,267 ) Net change in cash and cash equivalents 438 ( 4,274 ) 2,283 Cash and cash equivalents, beginning of year 868 5,142 2,859 Cash and cash equivalents, end of year $ 1,306 868 5,142 Cash paid (refunded) during the year for: Interest $ 17,919 17,465 17,512 Income taxes $ — ( 4,870 ) ( 5,483 ) Supplemental disclosure of non-cash activities: Share-based compensation from investment in subsidiaries $ 5,879 3,778 4,656 See Accompanying Notes to Schedule I 87 Table of Contents FINANCIAL STATEMENT SCHEDULE Schedule I SJW Group (Parent Only) NOTES TO CONDENSED FINANCIAL STATEMENTS Years ended December 31, 2024, 2023 and 2022 (Dollars in thousands, except share and per share data) Financing Activities See Note 5 , “Lines of Credit” and Note 6 , “Long-term Debt” for additional information on SJW Group’s revolving credit facility and outstanding debt. The following is a table of the SJW Group’s schedule of principal payments on long-term debt: Year 2025 $ — 2026 — 2027 — 2028 — 2029 310,000 Thereafter 250,000 Restrictions on Dividends and Other Distributions SJW Group is a legal entity separate and distinct from its various subsidiaries. As a holding company with no significant operations of its own, SJW Group’s principal sources of funds are dividends or other distributions from its operating subsidiaries, borrowings and the issuance of equity. The rights of SJW Group and, consequently, its creditors and shareholders, to participate in any distribution of assets of any of its subsidiaries are subject to certain prior claims of creditors of such subsidiary. The abilities of certain of SJW Group’s subsidiaries to transfer funds to SJW Group in the form of cash dividends, loans or advances are subject to certain contractual and regulatory restrictions. SJW Group and its subsidiaries are subject to debt covenants that could limit their respective abilities to pay dividends. For a discussion on these covenants, see Note 6 , “Long-term Debt” to SJW Group and Subsidiaries Notes to Consolidated Financial Statements. In addition, CTWS and its regulated subsidiaries are prohibited from paying dividends if not in compliance with minimum equity requirements under commitments made by SJW Group as part of the approval granted by the PURA and the Maine Public Utilities Commission in connection with the acquisition of CTWS. As of December 31, 2024, the restricted net assets of SJW Group’s subsidiaries were approximately $ 494,699 or 36 % of consolidated net assets of SJW Group. 88 Table of Contents SJW Group and Subsidiaries FINANCIAL STATEMENT SCHEDULE Schedule II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES Years ended December 31, 2024, 2023 and 2022 (in thousands) Description 2024 2023 2022 Allowance for doubtful accounts: Balance, beginning of period $ 6,551 5,753 4,600 (Credited) charged to expense ( 1,338 ) 3,594 1,195 (Credited) charged to regulatory asset ( 3,960 ) 1,628 265 Accounts written off ( 3,874 ) ( 5,479 ) ( 2,248 ) Recoveries of accounts written off 3,793 1,055 1,941 Balance, end of period $ 1,172 6,551 5,753 Reserve for litigation and claims: Balance, beginning of period $ 1,888 1,768 607 Charged to expense 206 971 1,583 Revision to accrual, due to settlements ( 39 ) ( 166 ) ( 62 ) Payments ( 1,440 ) ( 685 ) ( 360 ) Balance, end of period $ 615 1,888 1,768 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.