10-Q 1 sjw-20220930.htm 10-Q sjw-20220930
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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 September 30, 2022
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 October 24, 2022, there were 30,319,317 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 September 30,Nine months ended September 30,
 2022202120222021
REVENUE$175,981 166,923 $449,324 433,949 
OPERATING EXPENSE:
Production Expenses:
Purchased water38,744 33,121 84,313 76,434 
Power3,913 4,179 10,387 10,573 
Groundwater extraction charges19,059 23,736 51,347 59,419 
Other production expenses11,888 11,069 33,607 30,302 
Total production expenses73,604 72,105 179,654 176,728 
Administrative and general23,909 22,713 71,374 64,932 
Maintenance7,065 6,369 20,651 19,221 
Property taxes and other non-income taxes8,354 8,125 24,242 22,789 
Depreciation and amortization25,529 23,837 78,342 70,787 
Gain on sale of nonutility properties(82) (5,532) 
Total operating expense138,379 133,149 368,731 354,457 
OPERATING INCOME37,602 33,774 80,593 79,492 
OTHER (EXPENSE) INCOME:
Interest on long-term debt and other interest expense(14,190)(13,535)(42,160)(40,655)
Pension non-service cost970 334 2,860 999 
Gain on sale of Texas Water Alliance   3,000 
Other, net875 1,244 2,694 4,782 
Income before income taxes25,257 21,817 43,987 47,618 
Provision for income taxes223 2,749 3,658 5,159 
NET INCOME25,034 19,068 40,329 42,459 
Other comprehensive (loss) income, net (173)(12)(602)133 
COMPREHENSIVE INCOME$24,861 19,056 $39,727 42,592 
EARNINGS PER SHARE
Basic$0.83 0.64 $1.33 1.44 
Diluted$0.82 0.64 $1.33 1.43 
DIVIDENDS PER SHARE$0.36 0.34 $1.08 1.02 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic30,269,462 29,816,736 30,246,201 29,496,533 
Diluted30,392,295 29,952,477 30,358,268 29,625,784 






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)
 
September 30,
2022
December 31,
2021
ASSETS
Utility plant:
Land$39,885 39,004 
Depreciable plant and equipment3,596,198 3,381,908 
Construction in progress127,528 176,427 
Intangible assets35,960 36,276 
3,799,571 3,633,615 
Less accumulated depreciation and amortization1,206,690 1,136,116 
2,592,881 2,497,499 
Real estate investments and nonutility properties58,012 57,632 
Less accumulated depreciation and amortization16,855 15,951 
41,157 41,681 
CURRENT ASSETS:
Cash and cash equivalents:
Cash13,190 10,908 
Restricted cash 1,211 
Accounts receivable:
Customers, net of allowances for uncollectible accounts of $5,665 and $4,600 on September 30, 2022 and December 31, 2021, respectively
63,760 53,699 
Income tax 2,308 
Other7,300 4,735 
Accrued unbilled utility revenue53,682 44,026 
Prepaid expenses12,964 9,667 
Current regulatory assets, net738 2,629 
Other current assets6,266 4,902 
157,900 134,085 
OTHER ASSETS:
Net regulatory assets, less current portion145,945 151,992 
Investments14,438 15,784 
Goodwill640,311 640,471 
Other12,072 10,883 
812,766 819,130 
$3,604,704 3,492,395 








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)
 
September 30,
2022
December 31,
2021
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Stockholders’ equity:
Common stock, $0.001 par value; authorized 70,000,000 shares; issued and outstanding shares 30,315,265 on September 30, 2022 and 30,181,348 on December 31, 2021
$30 30 
Additional paid-in capital614,226 606,392 
Retained earnings435,856 428,260 
Accumulated other comprehensive income(765)(163)
Total stockholders’ equity1,049,347 1,034,519 
Long-term debt, less current portion1,453,748 1,492,935 
2,503,095 2,527,454 
CURRENT LIABILITIES:
Line of credit199,170 62,996 
Current portion of long-term debt4,340 39,106 
Accrued groundwater extraction charges, purchased water and power27,694 17,200 
Accounts payable29,765 30,391 
Accrued interest17,905 14,174 
Accrued payroll11,524 11,583 
Income tax payable3,859  
Other current liabilities24,453 27,821 
318,710 203,271 
DEFERRED INCOME TAXES208,130 200,451 
ADVANCES FOR CONSTRUCTION140,842 130,693 
CONTRIBUTIONS IN AID OF CONSTRUCTION319,866 316,479 
POSTRETIREMENT BENEFIT PLANS89,610 89,998 
OTHER NONCURRENT LIABILITIES24,451 24,049 
COMMITMENTS AND CONTINGENCIES
$3,604,704 3,492,395 









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, 202130,181,348 $30 $606,392 $428,260 $(163)$1,034,519 
Net income— — — 3,737 — 3,737 
Unrealized loss on investment, net of tax benefit of $67
— — — — (181)(181)
Stock-based compensation— — 1,552 (20)— 1,532 
Issuance of restricted and deferred stock units37,879 — (1,269)— — (1,269)
Employee stock purchase plan17,918 — 1,049 — — 1,049 
Common stock issuance costs— — (87)— — (87)
Dividends paid ($0.36 per share)
— — — (10,882)— (10,882)
BALANCES, March 31, 202230,237,145 30 607,637 421,095 (344)1,028,418 
Net income— — — 11,558 — 11,558 
Unrealized loss on investment, net of tax of $0
— — — — (248)(248)
Stock-based compensation— — 1,041 (23)1,018 
Issuance of restricted and deferred stock units10,529 — (6)— — (6)
Common stock issuance costs— — (6)— — (6)
Dividends paid ($0.36 per share)
— — — (10,889)— (10,889)
BALANCES, June 30, 202230,247,674 30 608,666 421,741 (592)1,029,845 
Net income — — — 25,034 — 25,034 
Unrealized loss on investment, net of tax benefit of $154
— — — — (173)(173)
Stock-based compensation— — 1,398 (23)— 1,375 
Issuance of restricted and deferred stock units1,316 — 13 — — 13 
Employee stock purchase plan18,667 — 1,042 — — 1,042 
Common stock issuance, net of costs47,608 — 3,107 — — 3,107 
Dividends paid ($0.36 per share)
— — — (10,896)— (10,896)
BALANCES, September 30, 202230,315,265 $30 $614,226 $435,856 $(765)$1,049,347 












See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
6


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 income on investment, net of taxes of $14
— — — — 38 38 
Stock-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 
Stock-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 
Net income— — — 19,068 — 19,068 
Unrealized loss on investment, net of tax benefit of $4
— — — — (12)(12)
Stock-based compensation— — 1,130 (29)— 1,101 
Issuance of restricted and deferred stock units186 — 14 — — 14 
Employee stock purchase plan17,069 — 1,000 — — 1,000 
Dividends paid ($0.34 per share)
— — — (10,139)— (10,139)
BALANCES, September 30, 202129,822,182 $30 $581,201 $420,411 $(931)$1,000,711 


















See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
7


SJW GROUP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
 Nine months ended September 30,
 20222021
OPERATING ACTIVITIES:
Net income $40,329 42,459 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization79,862 71,912 
Deferred income taxes7,135 4,140 
Stock-based compensation3,991 3,201 
Allowance for equity funds used during construction(1,324)(1,490)
Gain on sale of nonutility properties and Texas Water Alliance(5,532)(3,000)
Changes in operating assets and liabilities:
Accounts receivable and accrued unbilled utility revenue(22,511)(19,647)
Accounts payable and other current liabilities(1,475)3,697 
Accrued groundwater extraction charges, purchased water and power10,494 9,846 
Tax receivable and payable, and other accrued taxes(1,851)832 
Postretirement benefits(2,719)265 
Regulatory assets and liabilities excluding income tax temporary differences, net and postretirement benefits21,776 (12,418)
Up-front service concession payment(1,600) 
Other changes, net2,774 458 
NET CASH PROVIDED BY OPERATING ACTIVITIES129,349 100,255 
INVESTING ACTIVITIES:
Additions to utility plant:
Company-funded(160,515)(169,238)
Contributions in aid of construction(17,773)(12,520)
Additions to real estate investments(610)(606)
Payments to retire utility plant, net of salvage(2,432)(3,535)
Proceeds from sale of nonutility properties and Texas Water Alliance310 3,000 
Payments for business acquisitions(433) 
NET CASH USED IN INVESTING ACTIVITIES(181,453)(182,899)
FINANCING ACTIVITIES:
Borrowings on line of credit152,655 67,099 
Repayments on line of credit(16,481)(120,120)
Long-term borrowings15,000 137,000 
Repayments of long-term borrowings(87,757)(52,700)
Issuance of common stock, net of issuance costs3,107 66,775 
Dividends paid(32,667)(29,996)
Receipts of advances and contributions in aid of construction21,593 23,585 
Refunds of advances for construction(2,177)(2,179)
Other changes, net(98)132 
NET CASH PROVIDED BY FINANCING ACTIVITIES53,175 89,596 
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH1,071 6,952 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD12,119 9,269 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD13,190 16,221 
LESS RESTRICTED CASH, END OF PERIOD 2,202 
CASH AND CASH EQUIVALENTS, END OF PERIOD$13,190 14,019 
Cash paid during the period for:
Interest$42,473 39,533 
Income taxes572 7,643 
Supplemental disclosure of non-cash activities:
Accrued payables for additions to utility plant$22,044 26,628 
Utility property installed by developers976 1,527 

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.
8


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022
(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 2021 Annual Report on Form 10-K should be read with the accompanying unaudited condensed consolidated financial statements.
SJW Group is a holding company with five wholly-owned subsidiaries: San Jose Water Company (“SJWC”), SJWNE LLC, SJWTX, Inc., SJW Land Company, and SJWTX Holdings, Inc. SJWNE LLC is the holding company for Connecticut Water Service, Inc. (“CTWS”) whose wholly-subsidiaries are The Connecticut Water Company (“Connecticut Water”), The Maine Water Company (“Maine Water”), New England Water Utility Services, Inc. (“NEWUS”), and Chester Realty, Inc. SJWC, Connecticut Water, SJWTX, Inc. doing business as Canyon Lake Water Service Company (“CLWSC”), Maine Water and NEWUS are referred to as “Water Utility Services.” SJW Land Company and Chester Realty, Inc. are collectively referred to as “Real Estate Services.”
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 September 30,Nine months ended September 30,
 2022202120222021
Revenue from contracts with customers$169,972 163,103 $440,406 422,545 
Alternative revenue programs, net3,172 2,216 (1,737)4,984 
Other balancing and memorandum accounts, net1,857 639 6,719 3,637 
Other regulatory mechanisms, net(494)(438)(260)(1,284)
Rental income1,474 1,403 4,196 4,067 
$175,981 166,923 $449,324 433,949 
Real Estate Investments and Nonutility Properties
The major components of real estate investments and nonutility properties as of September 30, 2022, and December 31, 2021, are as follows: 
September 30,
2022
December 31,
2021
Land$12,615 12,615 
Buildings and improvements45,397 45,017 
Subtotal58,012 57,632 
Less: accumulated depreciation and amortization16,855 15,951 
Total$41,157 41,681 
On October 29, 2021, SJWC sold two nonutility properties located in San Jose, California for $13,150. SJW Group recognized a 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, after selling expenses of $178, was deferred on the other nonutility property pending California Public Utilities
9


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2022
(in thousands, except share and per share data)

Commission (“CPUC”) review for the year ended December 31, 2021. On February 15, 2022, the CPUC review was completed and $5,442 was recognized as gain on sale of the second nonutility property.
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.
Fair Value Measurement
The following instruments are not measured at fair value on SJW Group’s condensed consolidated balance sheets as of September 30, 2022, but require disclosure of their fair values: cash and cash equivalents, accounts receivable and accounts payable. The estimated fair value of such instruments as of September 30, 2022, approximates their carrying value as reported on the condensed consolidated balance sheets. The estimated fair value of such financial instruments were determined using the income approach based on the present value of estimated future cash flows. There have been no changes in valuation techniques during the three and nine months ended September 30, 2022. 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 SJW Group’s long-term debt was approximately $1,247,530 and $1,651,825 as of September 30, 2022, and December 31, 2021, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the company. The book value of long-term debt was $1,458,088 and $1,532,041 as of September 30, 2022, and December 31, 2021, respectively. The fair value of long-term debt would be categorized as Level 2 in the fair value hierarchy.
CTWS’s additional retirement benefits under the supplemental executive retirement plans and retirement contracts are funded by investment assets held by a Rabbi Trust. The fair value of the money market funds, mutual funds and fixed income investments in the Rabbi Trust was $2,790 and $3,797 as of September 30, 2022, and December 31, 2021, respectively, and are categorized as Level 1 in the fair value hierarchy.
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 CTWS, and shares potentially issuable under the Employee Stock Purchase Plan (“ESPP”). For the three months ended September 30, 2022 and 2021, 2,416 and 1,558 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively. For the nine months ended September 30, 2022 and 2021, 18,240 and 14,441 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively.

10


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2022
(in thousands, except share and per share data)

Note 2.Regulatory Matters
Regulatory assets, net are comprised of the following as of September 30, 2022, and December 31, 2021:
September 30, 2022December 31, 2021
Regulatory assets:
Income tax temporary differences, net$33,811 22,420 
Postretirement pensions and other postretirement benefits64,934 62,197 
Business combinations debt premium, net18,031 19,937 
Balancing and memorandum accounts, net22,583 38,334 
Water Rate Adjustment(2,800)2,588 
Other, net10,124 9,145 
Total regulatory assets, net in Condensed Consolidated Balance Sheets146,683 154,621 
Less: current regulatory assets, net738 2,629 
Total regulatory assets, net, less current portion$145,945 151,992 
As of September 30, 2022, and December 31, 2021, SJW Group’s regulatory assets, net, not earning a return primarily included postretirement pensions and the unfunded amount of other medical benefits, and business combination debt premiums, net. The total amount of regulatory assets, net not earning a return at September 30, 2022, and December 31, 2021, either by interest on the regulatory asset/liability or as a component of rate base at the allowed rate of return was $86,113 and $84,887, respectively.
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 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 (“MWRAM”) 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. The Water Conservation Memorandum Account (“WCMA”) allows SJWC to track lost revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reductions. SJWC records the lost revenue captured in the WCMA balancing accounts. Drought surcharges collected are used to offset the revenue losses tracked in the WCMA. On October 11, 2022, the CPUC issued General Rate Case Decision No. 22-10-005, which approved a recovery of $18,174 in balancing and memorandum accounts from customers.
11


SJW GROUP AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2022
(in thousands, except share and per share data)

Balancing and memorandum accounts recorded to regulatory assets, net for the three and nine months ended September 30, 2022, and 2021 are as follows:
 Three months ended September 30, 2022Three months ended September 30, 2021
Beginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding BalanceBeginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding Balance
Revenue accounts:
MWRAM$21,096 1,381  22,477 $15,278 363  15,641 
WCMA(14,961)3,868 (8,708)(19,801)668   668 
Cost of capital memorandum account(1,568)(8) (1,576)(1,562)  (1,562)
All others417 590  1,007 (1,164)397  (767)
Total revenue accounts4,984 5,831 (8,708)2,107 13,220 760  13,980 
Cost-recovery accounts:
Water supply costs11,111 391  11,502 9,895 388  10,283 
Pension5,069 59  5,128 4,210 366  4,576 
Hydro Generation Research, Development and Demonstration Memorandum Account (“PRVMA”)
543 3 (106)440 928  (121)807 
COVID-19 Catastrophic Event Memorandum Account (“CEMA”)2,586 420  3,006 2,618 567  3,185 
All others479 (79) 400 446   446 
Total cost-recovery accounts19,788 794 (106)20,476 18,097 1,321 (121)19,297 
Total$24,772 6,625 (8,814)22,583 $31,317 2,081 (121)33,277 
 Nine months ended September 30, 2022Nine months ended September 30, 2021
Beginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding BalanceBeginning BalanceRegulatory Asset Increase (Decrease)Refunds (Collections) AdjustmentsEnding Balance
Revenue accounts:
MWRAM$16,866 5,610 1 22,477 $12,077 3,563 1 15,641 
WCMA3,534 2,768 (26,103)(19,801)666  2 668 
Cost of capital memorandum account(1,563)(13) (1,576)(1,561)(1) (1,562)
All others(386)1,392 1 1,007 (1,139)369 3 (767)
Total revenue accounts18,451 9,757 (26,101)2,107 10,043 3,931 6 13,980 
Cost-recovery accounts:
Water supply costs10,545 957  11,502 8,123 2,159 1 10,283 
Pension4,941 187  5,128 3,478