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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________ 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission file number 1-8966
SJW GROUP
(Exact name of registrant as specified in its charter)
 
Delaware 77-0066628
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
110 West Taylor Street,San Jose,CA 95110
(Address of principal executive offices) (Zip Code)
(408) 279-7800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareSJWNew York Stock Exchange LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
        Large accelerated filer                  Non-accelerated filer      
        Accelerated filer                  Smaller reporting company  
        Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No  x
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of July 23, 2021, there were 29,804,927 shares of the registrant’s Common Stock outstanding.



FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the federal securities laws relating to future events and future results of SJW Group and its subsidiaries that are based on current expectations, estimates, forecasts, and projections about SJW Group and its subsidiaries and the industries in which SJW Group and its subsidiaries operate and the beliefs and assumptions of the management of SJW Group. Some of these forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “strategy,” or “anticipates,” or the negative of those words or other comparable terminology. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict.
The accuracy of such statements is subject to a number of risks, uncertainties and assumptions including, but not limited to, the following factors:
the effect of water, utility, environmental and other governmental policies and regulations, including actions concerning rates, authorized return on equity, authorized capital structures, capital expenditures and other decisions;
changes in demand for water and other services;
the impact of the Coronavirus (“COVID-19”) pandemic on our business operation and financial results;
unanticipated weather conditions and changes in seasonality including those affecting water supply and customer usage;
climate change and the effects thereof;
unexpected costs, charges or expenses;
our ability to successfully evaluate investments in new business and growth initiatives;
contamination of our water supplies and damage or failure of our water equipment and infrastructure;
the risk of work stoppages, strikes and other labor-related actions;
catastrophic events such as fires, earthquakes, explosions, floods, ice storms, tornadoes, hurricanes, terrorist acts, physical attacks, cyber-attacks, epidemic or other similar occurrences;
changes in general economic, political, business and financial market conditions;
the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, changes in interest rates, compliance with regulatory requirements, compliance with the terms and conditions of our outstanding indebtedness and general market and economic conditions; and
legislative and general market and economic developments.
Results for a quarter are not indicative of results for a full year due to seasonality and other factors. In addition, actual results are subject to other risks and uncertainties that relate more broadly to our overall business, including those more fully described in our filings with the SEC, including our most recent reports on Form 10-K, Form 10-Q and Form 8-K. Forward-looking statements are not guarantees of performance, and speak only as of the date made, and we undertake no obligation to update or revise any forward-looking statements except as required by law.



2


PART I. FINANCIAL INFORMATION
 
ITEM 1.FINANCIAL STATEMENTS

SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share data)
 
 Three months ended June 30,Six months ended June 30,
 2021202020212020
REVENUE$152,241 147,209 $267,026 262,963 
OPERATING EXPENSE:
Production Expenses:
Purchased water27,668 25,889 43,313 41,823 
Power3,391 3,426 6,394 6,151 
Groundwater extraction charges20,138 18,583 35,683 33,611 
Other production expenses9,831 10,280 19,233 20,373 
Total production expenses61,028 58,178 104,623 101,958 
Administrative and general21,326 17,772 42,219 39,388 
Maintenance6,587 5,334 12,852 11,420 
Property taxes and other non-income taxes7,149 7,102 14,664 14,565 
Depreciation and amortization23,512 22,753 46,950 44,135 
Total operating expense119,602 111,139 221,308 211,466 
OPERATING INCOME32,639 36,070 45,718 51,497 
OTHER (EXPENSE) INCOME:
Interest on long-term debt and other interest expense(13,681)(13,180)(27,120)(26,464)
Pension non-service cost339 (7)665 (52)
Gain on sale of Texas Water Alliance3,000  3,000  
Other, net1,784 1,048 3,538 1,805 
Income before income taxes24,081 23,931 25,801 26,786 
Provision for income taxes3,306 4,210 2,410 4,648 
NET INCOME20,775 19,721 23,391 22,138 
Other comprehensive income (loss), net 107 10 145 (125)
COMPREHENSIVE INCOME$20,882 19,731 $23,536 22,013 
EARNINGS PER SHARE
Basic$0.70 0.69 $0.80 0.78 
Diluted$0.69 0.69 $0.79 0.77 
DIVIDENDS PER SHARE$0.34 0.32 $0.68 0.64 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic29,799,499 28,507,940 29,333,776 28,498,649 
Diluted29,924,191 28,683,208 29,459,782 28,678,715 







See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
3


SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
 
June 30,
2021
December 31,
2020
ASSETS
Utility plant:
Land$38,352 36,845 
Depreciable plant and equipment3,269,984 3,198,060 
Construction in progress145,039 109,976 
Intangible assets35,357 35,167 
3,488,732 3,380,048 
Less accumulated depreciation and amortization1,092,337 1,045,136 
2,396,395 2,334,912 
Real estate investments58,389 58,129 
Less accumulated depreciation and amortization15,363 14,783 
43,026 43,346 
CURRENT ASSETS:
Cash and cash equivalents:
Cash25,442 5,269 
Restricted cash2,659 4,000 
Accounts receivable:
Customers, net of allowances for uncollectible accounts of $3,866 and $3,891 on June 30, 2021 and December 31, 2020, respectively
50,825 46,832 
Income tax 7,041 
Other4,054 4,269 
Accrued unbilled utility revenue48,984 44,950 
Prepaid expenses8,471 8,097 
Current regulatory assets, net1,075 1,748 
Other current assets5,348 5,125 
146,858 127,331 
OTHER ASSETS:
Net regulatory assets, less current portion172,312 156,482 
Investments15,163 14,367 
Goodwill628,144 628,144 
Other7,624 6,883 
823,243 805,876 
$3,409,522 3,311,465 








See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
4


SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share data)
 
June 30,
2021
December 31,
2020
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Stockholders’ equity:
Common stock, $0.001 par value; authorized 70,000,000 shares; issued and outstanding shares 29,804,927 on June 30, 2021 and 28,556,605 on December 31, 2020
$30 29 
Additional paid-in capital579,057 510,158 
Retained earnings411,511 408,037 
Accumulated other comprehensive income(919)(1,064)
Total stockholders’ equity989,679 917,160 
Long-term debt, less current portion1,372,126 1,287,580 
2,361,805 2,204,740 
CURRENT LIABILITIES:
Line of credit138,541 175,094 
Current portion of long-term debt26,270 76,241 
Accrued groundwater extraction charges, purchased water and power26,290 19,184 
Accounts payable39,546 34,200 
Accrued interest13,035 12,861 
Accrued payroll13,895 14,012 
Income tax payable246  
Other current liabilities16,608 19,203 
274,431 350,795 
DEFERRED INCOME TAXES191,376 191,415 
ADVANCES FOR CONSTRUCTION128,855 125,027 
CONTRIBUTIONS IN AID OF CONSTRUCTION302,503 296,105 
POSTRETIREMENT BENEFIT PLANS125,594 121,597 
REGULATORY LIABILITIES  
OTHER NONCURRENT LIABILITIES24,958 21,786 
COMMITMENTS AND CONTINGENCIES (See Note 12)
$3,409,522 3,311,465 








See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
5


SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share and per share data)
 
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
Number of
Shares
Amount
BALANCES, December 31, 202028,556,605 $29 $510,158 $408,037 $(1,064)$917,160 
Net income— — — 2,616 — 2,616 
Unrealized gain on investment, net of tax of $14
— — — — 38 38 
Share-based compensation— — 1,280 (32)— 1,248 
Issuance of restricted and deferred stock units30,547 — (964)— — (964)
Employee stock purchase plan18,235 — 1,026 — — 1,026 
Common stock issuance, net of costs1,184,500 1 66,895 — — 66,896 
Dividends paid ($0.34 per share)
— — — (9,724)— (9,724)
BALANCES, March 31, 202129,789,887 30 578,395 400,897 (1,026)978,296 
Net income— — — 20,775 — 20,775 
Unrealized gain on investment, net of tax of $39
— — — — 107 107 
Share-based compensation— — 791 (28)— 763 
Issuance of restricted and deferred stock units15,040 — (9)— — (9)
Common stock issuance, net of costs— — (120)— — (120)
Dividends paid ($0.34 per share)
— — — (10,133)— (10,133)
BALANCES, June 30, 202129,804,927 $30 $579,057 $411,511 $(919)$989,679 

 
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Stockholders’
Equity
Number of
Shares
Amount
BALANCES, December 31, 201928,456,508 $28 $506,639 $383,191 $126 $889,984 
Net income — — — 2,417 — 2,417 
Unrealized loss on investment, net of tax of $(50)
— — — — (135)(135)
Share-based compensation— — 251 (43)— 208 
Issuance of restricted and deferred stock units25,781 — (785)— — (785)
Employee stock purchase plan15,552 — 970 — — 970 
Dividends paid ($0.32 per share)
— — — (9,118)— (9,118)
BALANCES, March 31, 202028,497,841 28 507,075 376,447 (9)883,541 
Net income— — — 19,721 — 19,721 
Unrealized gain on investment, net of tax of $4
— — — — 10 10 
Share-based compensation— — 1,009 (43)— 966 
Issuance of restricted and deferred stock units18,864 1 14 — — 15 
Dividends paid ($0.32 per share)
— — — (9,122)— (9,122)
BALANCES, June 30, 202028,516,705 $29 $508,098 $387,003 $1 $895,131 



See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6


SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Six months ended June 30,
 20212020
OPERATING ACTIVITIES:
Net income $23,391 22,138 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization48,406 45,608 
Deferred income taxes903 (977)
Stock-based compensation2,071 1,260 
Allowance for equity funds used during construction(916) 
Gain on sale of Texas Water Alliance(3,000) 
Changes in operating assets and liabilities:
Accounts receivable and accrued unbilled utility revenue(7,812)(23,081)
Accounts payable and other current liabilities553 (9,012)
Accrued groundwater extraction charges, purchased water and power7,106 9,403 
Tax receivable and payable, and other accrued taxes2,647 5,734 
Postretirement benefits1,955 4,295 
Regulatory assets and liabilities excluding income tax temporary differences, net and postretirement benefits.(8,231)(13,903)
Up-front service concession payment (5,000)
Other changes, net23 (4,125)
NET CASH PROVIDED BY OPERATING ACTIVITIES67,096 32,340 
INVESTING ACTIVITIES:
Additions to utility plant:
Company-funded(100,057)(74,081)
Contributions in aid of construction(7,357)(5,044)
Additions to real estate investments(230)(324)
Payments to retire utility plant, net of salvage(909)(1,649)
Proceeds from sale of Texas Water Alliance3,000  
Payment for asset acquisition(1,452) 
NET CASH USED IN INVESTING ACTIVITIES(107,005)(81,098)
FINANCING ACTIVITIES:
Borrowings on line of credit45,669 89,196 
Repayments on line of credit(82,222)(59,734)
Long-term borrowings87,000 35,000 
Repayments of long-term borrowings(51,617)(1,706)
Issuance of common stock, net of issuance costs66,775  
Debt issuance costs(296)(214)
Dividends paid(19,857)(18,240)
Receipts of advances and contributions in aid of construction14,673 11,064 
Refunds of advances for construction(1,363)(1,326)
Other changes, net(21)91 
NET CASH PROVIDED BY FINANCING ACTIVITIES58,741 54,131 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH18,832 5,373 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD9,269 17,944 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD28,101 23,317 
LESS RESTRICTED CASH, END OF PERIOD2,659  
CASH AND CASH EQUIVALENTS, END OF PERIOD$25,442 23,317 
Cash paid during the period for:
Interest$29,266 30,030 
Income taxes1,020 5 
Supplemental disclosure of non-cash activities:
Accrued payables for additions to utility plant$29,123 18,006 
Change in accrued payables for construction costs capitalized3,391 (4,166)
Utility property installed by developers1,230 3,154 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
7


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(in thousands, except share and per share data)

Note 1.General
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of the results for the interim periods.
The unaudited interim financial information has been prepared in accordance with accounting principles generally accepted in the United States of America and in accordance with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission. The Notes to Consolidated Financial Statements in SJW Group’s 2020 Annual Report on Form 10-K should be read with the accompanying unaudited condensed consolidated financial statements.
Recently Adopted Accounting Principles
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, “Simplifying the Accounting for Income Taxes”, which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes”, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 was effective for SJW Group in the first quarter of fiscal 2021. The adoption of ASU 2019-12 did not have a material impact on the consolidated financial statements.
Revenue
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. Due to the seasonal nature of the water business, the operating results for interim periods are not indicative of the operating results for a 12-month period. 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 precipitation curtail water usage resulting in lower sales.
The major streams of revenue for SJW Group are as follows:
 Three months ended June 30,Six months ended June 30,
 2021202020212020
Revenue from contracts with customers$147,204 142,163 $259,442 247,299 
Alternative revenue programs, net2,656 3,049 2,768 3,553 
Other balancing and memorandum accounts, net1,477 1,629 2,998 10,211 
Other regulatory mechanisms, net(416)(1,076)(846)(914)
Rental income1,320 1,444 2,664 2,814 
$152,241 147,209 $267,026 262,963 
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 Plan (as amended, the “Incentive Plan”), shares potentially issuable under the performance stock plans assumed through the business combination with Connecticut Water Service, Inc. (“CTWS”), and shares potentially issuable under the Employee Stock Purchase Plan (“ESPP”). For the three months ended June 30, 2021 and 2020, 4,304 and 9,397 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively. For the six months ended June 30, 2021 and 2020, 12,883 and 19,191 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.
Utility Plant Depreciation
A portion of depreciation expense is allocated to administrative and general expense. For the three months ended June 30, 2021 and 2020, the amounts allocated to administrative and general expense were $120 and $370, respectively. For the six months
8


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
June 30, 2021
(in thousands, except share and per share data)

ended June 30, 2021, and 2020, the amounts allocated to administrative and general expense were $1,456 and $1,469, respectively.
Real Estate Investments
The major components of real estate investments as of June 30, 2021, and December 31, 2020, are as follows: 
June 30,
2021
December 31,
2020
Land$14,198 14,168 
Buildings and improvements44,191 43,961 
Subtotal58,389 58,129 
Less: accumulated depreciation and amortization15,363 14,783 
Total$43,026 43,346 
A former wholly owned subsidiary of SJW Group, Texas Water Alliance Limited was sold to Guadalupe-Blanco River Authority (“GBRA”) in 2017. The sales agreement with GBRA included a holdback amount of $3,000 to be paid to SJW Group on June 30, 2021, subject to reduction under certain conditions. SJW Group received the holdback amount without reduction from the GBRA on June 29, 2021 and recognized a pre-tax gain on sale of $3,000.

Note 2.Regulatory Rate Filings
California Regulatory Affairs
On March 17, 2020, the California Public Utilities Commission (“CPUC”) ordered its regulated water utilities to halt customer disconnection activities in connection with the COVID-19 pandemic. On April 2, 2020, California Governor Gavin Newsom issued Executive Order N-42-20 suspending customer disconnection activities until further notice. On April 16, 2020, the CPUC issued Resolution M-4842 directing utilities to implement emergency customer protections to assist customers such as waiving reconnection deposits, offering payment arrangements, and suspending disconnections for nonpayment. This resolution was effective for up to one year, or April 15, 2021, with the option to extend. On February 11, 2021, the CPUC approved Resolution M-4849 extending customer protections required in Resolution M-4842 through June 30, 2021. The resolution also requires water utilities to develop a transition plan regarding shutoffs and terminations with customers once the moratorium ends. On April 1, 2021, San Jose Water Company (“SJWC”) filed Advice Letter 560 which includes such plan and the filing was approved on June 16, 2021. On June 11, 2021, Governor Newsom issued Executive Order N-08-21 which ends the suspension on customer disconnection activities on September 30, 2021. On June 16, 2021, the CPUC directed its regulated water utilities to extend the suspension on customer disconnection activities through September 30, 2021, in response to the Governor’s order. On June 23, 2021, SJWC filed Advice Letter 565 to extend Resolution M-4849’s emergency customer protections through September 30, 2021. This advice was approved on July 1, 2021.
SJWC filed Advice Letter 556 on November 16, 2020, with the CPUC requesting authorization to increase its revenue requirement by 11,750 or 3.04% in 2021 for the final escalation year authorized in our 2018 General Rate Case Decision 18-011-025 which established rates for 2019, 2020, and 2021. This advice letter was approved on December 17, 2020, and new rates became effective January 1, 2021.
On January 4, 2021, SJWC filed General Rate Case Application No. 21-01-003 requesting authority for an increase of revenue of $51,585 or 13.35% in 2022, $16,932 or 3.88% in 2023, and $19,195 or 4.24% in 2024. The application also includes requests to recover $18,499 from balancing and memorandum accounts, authorization for a $435,000 capital budget, further alignment between actual and authorized usage, and a shift to greater revenue collection in the service charge. The application will undergo a year-long review process and new rates, if approved, are expected to be effective in the second quarter of 2022.
On May 3, 2021, SJWC filed Application No. 21-05-004 requesting authority to adjust its cost of capital for the period from January 1, 2022 through December 31, 2024. The request seeks a revenue increase of $6,418 or 1.61% in 2022. The application also proposes a rate of return of 8.11% from the current rate of 7.64%, a decrease in the average cost of debt rate from 6.20% to 5.48%, and a return of equity of 10.30% from the current rate of 8.90%. In addition, the request seeks to adjust SJWC’s currently authorized capital structure of approximately 47% debt and 53% equity to approximately 45% debt and 55% equity. If approved, rates are expected to be effective on January 1, 2022.
9


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
June 30, 2021
(in thousands, except share and per share data)

On May 27, 2021, SJWC filed Advice Letter No. 561/561A with the CPUC requesting authorization to increase revenue by $17,262 or 4.34% to recover the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges implemented by Santa Clara Valley Water District (“Valley Water”) and South Bay Water Recycling effective July 1, 2021. This advice letter was approved with an effective date of July 1, 2021.
On June 9, 2021, Valley Water declared a water shortage emergency and asked its retailers to reduce consumption by 15% based on 2019’s volume. On June 18, 2021, SJWC filed Advice Letter 563 with the CPUC to activate Stage 3 of its Rule 14.1, Water Shortage Contingency Plan, in response to Valley Water’s declaration of drought emergency and call for 15% mandatory conservation. Advice Letter 564 was also filed on June 9, 2021, to establish a Water Conservation Memorandum Account to track the revenue impact of authorized vs actual water consumption and the incremental expenses required to implement our mandatory water conservation plan. Similar memorandum accounts were authorized during the previous drought. On July 20, 2021, Advice Letter 564 was approved. Advice Letter 563 is pending with the CPUC.
Connecticut Regulatory Affairs
On October 28, 2020, The Connecticut Water Company (“Connecticut Water”) filed a Water Infrastructure Conservation Adjustment (“WICA”) application representing an additional 1.11% surcharge or approximately $956 increase in revenues, for a cumulative WICA surcharge of 6.94%. The Public Utilities Regulatory Authority of Connecticut (“PURA”) approved the requested increase with an April 1, 2021 effective date. Additionally, on February 1, 2021, Connecticut Water filed its annual WICA reconciliation which called for a 0.09% increase of the WICA surcharge. On March 3, 2021, PURA approved the reconciliation, resulting in a net cumulative 7.03% surcharge for Connecticut Water which became effective on customers’ bills on April 1, 2021. As of June 30, 2021, WICA surcharges for Connecticut Water and its Avon Water division were 7.03% and 8.51%, respectively.  The Heritage Village Water division does not have an approved WICA surcharge. 
On January 15, 2021, Connecticut Water filed an application with PURA to amend rates for its customers, including the divisions of Avon and Heritage Village. The filing requests an increase of $20,206 in annual revenues that includes more than $265,514 in completed infrastructure investments that are not currently in approved rates and surcharges. The filing proposes a new rate that would provide a 15% reduction in water bills for income-eligible customers, which would be the first low-income rate for a Connecticut water utility, if approved. The filing also includes a tiered block rate structure for residential water customers to promote water conservation. The proposed increase will be applied across the company but may differ by rate divisions, meter size and between customer rate categories. The application also reflects the costs of operating and maintaining the utility, including expenditures on power and treatment additives that have increased since the company’s last general rate case decision in 2010. PURA has 200 days from the filing date to review the application, and the approved rates will go into effect soon thereafter. On July 28, 2021, Connecticut Water received the final decision approving an increase of $5,208 in annual revenues, a return on equity of 9.0%, with new rates effective July 28, 2021. The final decision also approved the low-income rate, tiered block rate structure for residential water customers and the cost of debt and equity percentage as requested. The final decision did not include all of the requested proforma plant in service due to the timing of its completion. However, no plant was disallowed. Connecticut Water will seek recovery for the projects in the future, including a portion of plant which is eligible for recovery through WICA. In addition, the final decision reset WICA, which was approaching its statutory cap to zero.
Long-term debt issuances for Connecticut Water require regulatory authorization which is typically obtained for a specified amount of debt to be issued during a specified period of time. On March 16, 2021, Connecticut Water filed for PURA approval for the issuance of up to $100,000 of long-term borrowings in 2021. Connecticut Water anticipates to use the proceeds to pay down line of credit borrowings and payoff maturing debt, as well as general working capital needs. Connecticut Water received approval of the financings from PURA on June 9, 2021.
Texas Regulatory Affairs
On January 29, 2021, SJWTX, Inc., doing business as Canyon Lake Water Service Company (“CLWSC”) submitted its Water Pass-Through Charge (“WPC”) true-up report for the Canyon Lake area water systems’ 2020 purchased water costs. The WPC is the annual filing to change the monthly per thousand gallons charge for changes in purchased water costs since the last annual true-up report. The 2020 WPC true-up report resulted in a reduction of the WPC usage rate from $0.95 dollars to $0.7 dollars per thousand gallons which became effective on March 1, 2021. The Deer Creek Ranch water system has a separate WPC. A WPC filing for Deer Creek Ranch is required only when there is a change in purchased water costs. The WPC true-up report for this system was submitted December 1, 2020, which resulted in a decrease in the usage charge from $2.02 to $1.84
10


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
June 30, 2021
(in thousands, except share and per share data)

dollars per thousand gallons, and an increase in the monthly base charge of $0.51 dollars per residential account. The Deer Creek Ranch WPC rate changes became effective February 25, 2021.
A disaster declaration was declared on February 12, 2021 by the Public Utilities Commission of Texas (“PUCT”) because of severe winter weather. The PUCT issued orders under Docket No. 51812-6 which prohibited disconnections for non-payment, suspended the rules for late fees and interest, and allowed for estimated billing for the duration of the disaster declaration. On March 5, 2021, the PUCT reinstituted the utilities’ ability to resume charging late fees, and on June 15, 2021, removed the prohibition on disconnections for non-payment.
On June 28, 2021, CLWSC announced that it reached an agreement to acquire the Kendall West and Bandera East utilities in Bandera and Medina counties in Texas and that change in ownership applications had been filed with the PUCT. The acquisition, pending approval by the PUCT, would grow CLWSC by 1,400 service connections that serve an estimated 4,000 county residences. A decision by the PUCT is expected in the fourth quarter of 2021.
Maine Regulatory Affairs
On June 17, 2020, the Maine Public Utilities Commission (“MPUC”) approved a general rate increase for Skowhegan Division customers allowing $198 in additional revenue.  Per the MPUC decision, the increase will be implemented in two steps: an initial 9.80% rate increase effective June 15, 2020, and a 3.51% rate increase effective July 1, 2021. The combined rate increase is 13.31%.
On November 23, 2020, The Maine Water Company (“Maine Water”) filed Water Infrastructure Surcharge (“WISC”) applications with the MPUC in five divisions requesting an increase between 1.1% and 5%, representing approximately $304 in additional revenues. The WISC applications were approved on December 15, 2020, and December 22, 2020 and the surcharges became effective January 1, 2021.
On March 10, 2021, Maine Water filed a general rate increase application for the Biddeford Saco Division seeking approximately $6,659, or 77.5%, in additional revenue. The application has proposed a multi-year rate plan that is designed to ease the transition to higher water bills over the period from July 2021 to July 2023. The primary driver for the increase in rates is the support for a new drinking water treatment facility on the Saco River, a $60,000 project to replace the existing facility that is expected to be in service in the second quarter of 2022. On June 23, 2021, the MPUC approved the first step in the plan adopting the proposed rate smoothing mechanism and implementing a temporary 22.65% surcharge on all customer bills. The surcharge will be in effect for one year while the MPUC reviews and acts on the requested increase in base rates. A decision on the requested revenue increase is expected in the second quarter of 2022, in alignment with the completion of the new water treatment facility.

Note 3.Regulatory Assets, Net
Regulatory assets, net are comprised of the following as of June 30, 2021, and December 31, 2020:
June 30, 2021December 31, 2020
Regulatory assets:
Income tax temporary differences, net$11,880 6,230 
Postretirement pensions and other medical benefits98,009 95,559 
Business combinations debt premium, net21,208 22,479 
Balancing and memorandum accounts, net31,317 25,463 
Water Rate Adjustment3,033 323 
Other, net7,940 8,176 
Total regulatory assets, net in Condensed Consolidated Balance Sheets173,387 158,230 
Less: current regulatory assets, net1,075 1,748 
Total regulatory assets, net, less current portion$172,312 156,482 
11


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
June 30, 2021
(in thousands, except share and per share data)

At June 30, 2021 and December 31, 2020, SJW Group’s regulatory assets, net not earning a return primarily included the postretirement pensions and other medical benefits unfunded amount, and the business combinations debt premium, net. The total amount of regulatory assets, net not earning a return at June 30, 2021, and December 31, 2020, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $120,482 and $119,236, respectively.

Note 4.Balancing and Memorandum Accounts
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 also maintains memorandum accounts to track revenue impacts due to catastrophic events, certain unforeseen water quality expenses related to new federal and state water quality standards, energy efficiency, water conservation, water tariffs, and other approved activities or as directed by the CPUC. The Monterey Water Revenue Adjustment Mechanism (“WRAM”) 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.
Balancing and memorandum accounts recorded to regulatory assets, net for the three and six months ended June 30, 2021 and 2020 as follows:
 Three months ended June 30, 2021Three months ended June 30, 2020
Beginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding BalanceBeginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding Balance
Revenue accounts:
Monterey WRAM$13,853 1,424 1 15,278 $8,958 1,591  10,549 
Cost of capital memorandum account(1,561)(1) (1,562)(1,558)(2) (1,560)
Tax memorandum account333   333 332   332 
All others(980)147 4 (829)(1,074)40  (1,034)
Total revenue accounts$11,645 1,570 5 13,220 $6,658 1,629  8,287 
Cost-recovery accounts:
Water supply costs8,910 984 1 9,895 5,061 838  5,899 
Pension3,844 366  4,210 2,886 99  2,985 
Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)
1,027  (99)928     
COVID-19 Catastrophic Event Memorandum Account (“CEMA”)2,266 352  2,618     
All others445 1  446 443 1  444 
Total cost-recovery accounts$16,492 1,703 (98)18,097 $8,390 938  9,328 
Total$28,137 3,273 (93)31,317 $15,048 2,567  17,615 

12


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
June 30, 2021
(in thousands, except share and per share data)

 Six months ended June 30, 2021Six months ended June 30, 2020
Beginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding BalanceBeginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding Balance
Revenue accounts:
Monterey WRAM$12,077 3,200 1 15,278 $7,015 3,561 (27)10,549 
Cost of capital memorandum account(1,561)(1) (1,562)(1,553)(7) (1,560)
Tax memorandum account333   333 (6,643)(3)6,978 332 
All others(806)(28)5 (829)(759)(165)(110)(1,034)
Total revenue accounts$10,043 3,171 6 13,220 $(1,940)3,386 6,841 8,287 
Cost-recovery accounts:
Water supply costs8,123 1,771 1 9,895 4,328 1,605 (34)5,899 
Pension3,478 732  4,210 2,449 514 22 2,985 
PRVMA
1,108  (180)928     
CEMA2,266 352  2,618     
All others445 1  446 446 2 (4)444 
Total cost-recovery accounts$15,420 2,856 (179)18,097 $7,223 2,121 (16)9,328 
Total$25,463 6,027 (173)31,317 $5,283 5,507 6,825 17,615 
All balancing accounts and memorandum-type accounts not included for recovery or refund in the current general rate case will be reviewed by the CPUC in SJWC’s next general rate case or at the time an individual account balance reaches a threshold of