10q10k10q10k.net

What changed in H2O AMERICA's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of H2O AMERICA's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+441 added−398 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-28)

Top changes in H2O AMERICA's 2025 10-K

441 paragraphs added · 398 removed · 320 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

110 edited+40 added−39 removed52 unchanged
Biggest changeThis return on equity and capital structure will be used for any future WISC calculations for all divisions until the MPUC has authorized or approved a different return on equity structure in a different proceeding. 8 Table of Contents During the year ended December 31, 2024, MPUC issued orders approving surcharges for the Camden-Rockland, Freeport, Oakland and Millinocket divisions that in aggregate represent annual revenue increases of $0.3 million.
Biggest changeDuring the year ended December 31, 2024, MPUC issued orders approving surcharges for the Camden-Rockland, Freeport, Oakland and Millinocket divisions that in aggregate represent annual revenue increases of $0.3 million. On October 25, 2024, MWC filed an application with MPUC to adjust customer rates in the Camden Rockland division.
California Regulatory Affairs SJWC’s rates, service and other matters affecting its business are subject to regulation by the California Public Utilities Commission (“CPUC”). Generally, there are three types of rate adjustments that affect SJWC’s revenue collection: general rate adjustments, cost of capital adjustments, and offset rate adjustments.
California Regulatory Affairs SJWC’s rates, service and other matters affecting its business are subject to regulation by the California Public Utilities Commission (the “CPUC”). Generally, there are three types of rate adjustments that affect SJWC’s revenue collection: general rate adjustments, cost of capital adjustments, and offset rate adjustments.
SJWC filed Advice Letter No. 609 on May 16, 2024, to increase the authorized revenue requirement by $28.3 million, or 5.3%, to offset the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges from its water wholesalers effective July 1, 2024.
On May 16, 2024, SJWC filed Advice Letter No. 609 to increase the authorized revenue requirement by $28.3 million, or 5.3%, to offset the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges from its water wholesalers effective July 1, 2024.
SJWC filed Advice Letter No. 613 on December 20, 2024, to increase authorized revenue requirement by $21.3 million, or 3.91%, and implement new water rates and recover $15.8 million in memorandum and balancing accounts in accordance with Decision No. 24-12-077. This filing was approved with an effective date of January 1, 2025.
On December 20, 2024, SJWC filed Advice Letter No. 613 to increase authorized revenue requirement by $21.3 million, or 3.91%, and implement new water rates and recover $15.8 million in memorandum and balancing accounts in accordance with Decision No. 24-12-077. This filing was approved with an effective date of January 1, 2025.
On February 28, 2024, CWC filed its 2023 WRA. The mechanism reconciles 2023 revenues as authorized in the CWC’s most recent rate case. The 2023 WRA, as approved by PURA on March 11, 2024 and effective for 12 months beginning on April 1, 2024, imposed a 2.11% sur-credit on customer bills to refund the 2023 revenues over-collection.
On February 28, 2024, CWC filed its 2023 WRA. The mechanism reconciles 2023 revenues as authorized in CWC’s most recent rate case. The 2023 WRA, as approved by PURA on March 11, 2024 and effective for 12 months beginning on April 1, 2024, imposed a 2.11% sur-credit on customer bills to refund the 2023 revenues over-collection.
In addition, CWC has water supply agreements to supplement its water supply with the South Central Connecticut Regional Water Authority (“RWA”) and The Metropolitan District (“MDC”) that expire 2058 and 2053, respectively.
In addition, CWC has water supply agreements to supplement its water supply with the South Central Connecticut Regional Water Authority (“RWA”) and The Metropolitan District (“MDC”) that expire in 2058 and 2053, respectively.
Brown served as counsel and Corporate Secretary of various subsidiaries of the Corporation. Since joining SJWC in 2008, Mr. Brown has held various legal positions of increasing scope and responsibly. Prior to joining SJWC, Mr. Brown was an associate at two Silicon Valley law firms and is a member of the State Bar of California.
Brown served as counsel and Corporate Secretary of various subsidiaries of the Corporation. Since joining SJWC in 2008, Mr. Brown has held various legal positions of increasing scope and responsibly. Prior to joining SJWC, Mr. Brown was an associate at two Silicon Valley law firms and is a member of the State Bar of California. Bruce A.
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 Cupertino subject to an additional term of eight years if agreed to by the parties.
The original agreement commenced in October 1997 and expired on September 30, 2024. Effective October 2024, SJWC entered into a 12-year agreement with Cupertino subject to an additional term of eight years if agreed to by the parties.
CWC’s utility services hold the necessary franchises to provide water in portions of the towns of Ashford, Avon, Beacon Falls, Bethany, Bolton, Brooklyn, Burlington, Canton, Chester, Clinton, Colchester, Columbia, Coventry, Deep River, Durham, East Granby, East Haddam, East Hampton, East Windsor, Ellington, Enfield, Essex, Farmington, Griswold, Guilford, Haddam, Hebron, Killingly, Killingworth, Lebanon, Madison, Manchester, Mansfield, Marlborough, Middlebury, Naugatuck, Old Lyme, Old Saybrook, Oxford, Plainfield, Plymouth, Portland, Prospect, Simsbury, Somers, Southbury, South Windsor, Stafford, Stonington, Suffield, Thomaston, Thompson, Tolland, Vernon, Voluntown, Waterbury, Westbrook, Willington, Windsor Locks and Woodstock.
CWC’s utility services hold the necessary franchises to provide water in portions of the towns of Ashford, Avon, Beacon Falls, Bethany, Bolton, Brooklyn, Burlington, Canton, Chester, Clinton, Colchester, Columbia, Coventry, Deep River, Durham, East Granby, East Haddam, East Hampton, East Windsor, Ellington, Enfield, Essex, Farmington, Griswold, Guilford, Haddam, Hebron, Killingly, Killingworth, Lebanon, Madison, Manchester, Mansfield, Marlborough, Middlebury, Naugatuck, Old Lyme, Old Saybrook, Oxford, Plainfield, Plymouth, Portland, Prospect, Simsbury, Somers, Southbury, South Windsor, Stafford, 11 Table of Contents Stonington, Suffield, Thomaston, Thompson, Tolland, Vernon, Voluntown, Waterbury, Westbrook, Willington, Windsor Locks and Woodstock.
TWC also has raw water supply agreements with the Lower Colorado River Authority (“LCRA”) and West Travis County Public Utility Agency (“WTCPUA”) expiring in 2059 and 2046, respectively, to provide for 350 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.
TWC also has treated water supply agreements with the Lower Colorado River Authority (“LCRA”) and West Travis County Public Utility Agency (“WTCPUA”) expiring in 2059 and 2046, respectively, to provide for 350 acre-feet of water per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.
SJWC actively works with Valley Water to meet the challenges by continuing to educate customers on responsible water use practices and conducting long-range water supply planning. Valley Water's 15% voluntary call for conservation and certain watering and water waste rules established in 2023, are still in place for 2025.
SJWC actively works with Valley Water to meet the challenges by continuing to educate customers on responsible water use practices and conducting long-range water supply planning. Valley Water's 15% voluntary call for conservation and certain watering and water waste rules established in 2023, are still in place for 2026.
MWC has a water supply agreement with the Kennebec Water District expiring in 2040. MWC believes that it will be able to meet customer demand for 2025 with its existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.
MWC has a water supply agreement with the Kennebec Water District expiring in 2040. MWC believes that it will be able to meet customer demand for 2026 with its existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.
The request was conditioned on leaving the current WCCM in place such that any adjustments will be made to the respective utilities cost of capital during the one-year deferment based on the mechanism. The request was approved on February 2, 2024.
The request was conditioned on leaving the current WCCM in place such that any adjustments would be made to the respective utilities cost of capital during the one-year deferment based on the mechanism. The request was approved on February 2, 2024.
Based on the change in the average Moody’s Aa utility bond index rate between the 12 months ended September 30, 2023 and September 30, 2024, there is no adjustment to SJWC’s cost of capital for 2025.
Based on the change in the average Moody’s Aa utility bond index rate between the 12 months ended September 30, 2023 and September 30, 2024, there was no adjustment to SJWC’s cost of capital for 2025.
Linebacker plans cover a limited amount of the cost of repairs to water and wastewater service lines and in-home plumbing. Services provided are dependent on the selected plan. SJW Land Company owns undeveloped real estate property in California. SJW Land Company previously owned commercial and warehouse properties in Tennessee, which were sold in 2024.
Linebacker plans cover a limited amount of the cost of repairs to water and wastewater service lines and in-home plumbing. Services provided are dependent on the selected plan. H2O America Land Company owns undeveloped real estate property in California. H2O America Land Company previously owned commercial and warehouse properties in Tennessee, which were sold in 2024.
Such Public Agencies are empowered, under certain circumstances, to condemn properties, and/or exercise the right of eminent domain on property operated by privately owned public utilities, upon payment of just 11 Table of Contents compensation. Furthermore, under California law, Public Agencies are authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems.
Such Public Agencies are empowered, under certain circumstances, to condemn properties, and/or exercise the right of eminent domain on property operated by privately owned public utilities, upon payment of just compensation. Furthermore, under California law, Public Agencies are authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems.
Advice Letter No. 609 was approved with an effective date of July 1, 2024. 6 Table of Contents SJWC filed Advice Letter No. 610/610A on May 23, 2024, to increase the authorized revenue requirement by $0.8 million, or 0.14%, to recover revenue related to the plant additions for the Advanced Metering Infrastructure project.
Advice Letter No. 609 was approved with an effective date of July 1, 2024. On May 23, 2024, SJWC filed Advice Letter No. 610/610A to increase the authorized revenue requirement by $0.8 million, or 0.14%, to recover revenue related to the plant additions for the Advanced Metering Infrastructure project.
Our human capital measures and objectives focus on providing a safe and productive work environment that has clear positive and ethical values; a culture that encourages high performance, respect for each other, and celebrates diversity; jobs that offer fair wages as benchmarked to the markets that we live and work in; competitive wages and benefits; and training and development opportunities that support our employees to establish and succeed in meaningful careers at SJW Group.
Our human capital measures and objectives focus on providing a safe and productive work environment that has clear positive and ethical values; a culture that encourages high performance, respect for each other, and celebrates diversity; jobs that offer fair wages as benchmarked to the markets that we live and work in; competitive wages and benefits; and training and development opportunities that support our employees to establish and succeed in meaningful careers at H2O America.
The call for continued conservation is due to a major storage reservoir currently offline for seismic retrofits. Connecticut Water Supply CWC’s water sources vary among the individual systems, but overall, approximately 60% of the total dependable yield comes from surface water supplies and 40% from wells.
The call for continued conservation is due to a major storage reservoir currently offline for seismic retrofits. 10 Table of Contents Connecticut Water Supply CWC’s water sources vary among the individual systems, but overall, approximately 60% of the total dependable yield comes from surface water supplies and 40% from wells.
Our compensation and benefits programs include: • Fair employee wages as benchmarked to the markets that our employees live and work in that are consistent with employee roles and responsibilities, skill levels, experience, and knowledge; • Engagement of nationally, recognized outside compensation and benefits consulting firms to independently evaluate the appropriateness and effectiveness of compensation for our executive and other officers and to provide benchmarks for executive compensation as compared to peer companies; • Short-term incentive compensation for management level staff aligning with company financial and operational goals targeted to our stakeholders: customers, communities, employees, and stockholders; • Alignment with stockholder value by utilizing equity awards linked to investment performance over time, as well as certain absolute financial results; • A comprehensive annual employee performance review process pursuant to which we determine and communicate to employees annual merit increases, promotions and other changes to responsibilities and duties; and • Eligibility for all employees to participate in health insurance, dental, vision, cafeteria plans, life and disability/accident coverage, retirement plans and/or salary deferral plans, an employee stock purchase plan, paid and unpaid leaves, a commuter assistance program, professional education and training, and tuition assistance. 14 Table of Contents Executive Officers of the Registrant The following table summarizes the name, age, offices held and business experience for each of our executive officers, as of February 27, 2025: Name Age Offices and Experience Willie Brown 57 SJW Group—Vice President and General Counsel.
Our compensation and benefits programs include: • Fair employee wages as benchmarked to the markets that our employees live and work in that are consistent with employee roles and responsibilities, skill levels, experience, and knowledge; • Engagement of nationally, recognized outside compensation and benefits consulting firms to independently evaluate the appropriateness and effectiveness of compensation for our executive and other officers and to provide benchmarks for executive compensation as compared to peer companies; • Short-term incentive compensation for management level staff aligning with company financial and operational goals targeted to our stakeholders: customers, communities, employees, and stockholders; • Alignment with stockholder value by utilizing equity awards linked to investment performance over time, as well as certain absolute financial results; • A comprehensive annual employee performance review process pursuant to which we determine and communicate to employees annual merit increases, promotions and other changes to responsibilities and duties; and • Eligibility for all full-time employees to participate in health insurance, dental, vision, cafeteria plans, life and disability/accident coverage, retirement plans and/or salary deferral plans, an employee stock purchase plan, paid and unpaid leaves, a commuter assistance program, professional education and training, and tuition assistance. 14 Table of Contents Executive Officers of the Registrant The following table summarizes the name, age, offices held and business experience for each of our executive officers, as of February 26, 2026: Name Age Offices and Experience Willie Brown 58 H2O America—Vice President and General Counsel.
In dry years, the decrease in water from surface run-off and diversion and the corresponding increase in purchased and pumped water increases production expenses substantially. The opposite is also true where water production expenses decrease in wet years.
In dry years, the decrease in availability of water from surface run-off and diversion and the corresponding increase in purchased and pumped water increases production expenses substantially. The opposite is also true where water production expenses decrease in wet years.
On August 25, 2023, the MPUC issued an order granting a temporary rate increase of $1.5 million or 10% while the case and the company’s full request are litigated. The company reached a settlement agreement with MPUC and the Office of the Public Advocate and filed a stipulated settlement agreement with the MPUC on December 22, 2023.
On August 5, 2023 the MPUC issued an order granting a temporary rate increase of $1.5 million or 10% while the case and the company’s full request were litigated. The company reached a settlement agreement with MPUC and the Office of the Public Advocate and filed a stipulated settlement agreement with the MPUC on December 22, 2023.
These wells have been projected to yield an additional 6,000 acre-feet per year or more. Development of the KT Water System continues. The Texas service area is currently experiencing drought conditions that result in water usage restrictions for customers .
These wells have been projected to yield an additional 6,000 acre-feet per year or more. Development of the KT Water System remains ongoing. The Texas service area is currently experiencing drought conditions that result in water usage restrictions for customers .
Significant future capital investment of transmission main and storage facilities in addition to developing additional supply sources is planned for 2025 and beyond. 10 Table of Contents Maine Water Supply Water sources at MWC vary among the individual systems, but overall, approximately 90% of the total dependable yield comes from surface water supplies and 10% from wells.
Significant future capital investment of transmission main and storage facilities in addition to developing additional supply sources is planned for 2026 and beyond. Maine Water Supply Water sources at MWC vary among the individual systems, but overall, approximately 90% of the total dependable yield comes from surface water supplies and 10% from wells.
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 adjustment each year based on a specified construction cost index.
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 adjustment each year based on a 9 Table of Contents specified construction cost index.
TWC provides water service to approximately 29,000 service connections that serve approximately 88,000 people in a service area comprising more than 271 square miles in the region between San Antonio and Austin, Texas and approximately 1,000 wastewater connections. Together, the Water Utility Services distribute water to customers in their respective service areas in accordance with accepted water utility methods.
TWC provides water service to approximately 30,000 service connections that serve approximately 90,000 people in a service area comprising more than 271 square miles in the region between San Antonio and Austin, Texas and approximately 1,000 wastewater connections. Together, the Water Utility Services distribute water to customers in their respective service areas in accordance with accepted water utility methods.
Please also see Item 1A , “Risk Factors,” Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of “Notes to Consolidated Financial Statements.” Description of Business General The principal business of SJW Group consists of the production, purchase, storage, purification, distribution, wholesale and retail sale of water and wastewater services.
Please also see Item 1A , “Risk Factors,” Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 3 of “Notes to Consolidated Financial Statements.” Description of Business General The principal business of H2O America consists of the production, purchase, storage, purification, distribution, wholesale and retail sale of water and wastewater services.
SJW Group is a holding company that conducts its business through the following wholly owned subsidiaries: • San Jose Water Company (“SJWC”), with its headquarters located at 110 West Taylor Street in San Jose, California 95110, was originally incorporated under the laws of the State of California in 1866.
H2O America is a holding company that conducts its business through the following wholly owned subsidiaries: • San Jose Water Company (“SJWC”), with its headquarters located at 110 West Taylor Street in San Jose, California 95110, was originally incorporated under the laws of the State of California in 1866.
SJW Group provides various opportunities for our employees to participate in outreach programs from free virtual education programs for adults, employee-led courses for elementary school aged children, winter coat donation drives, environmental cleanups, community events, and grant programs supporting schools and fire departments.
H2O America provides various opportunities for our employees to participate in outreach programs from free virtual education programs for adults, employee-led courses for elementary school aged children, winter coat donation drives, environmental cleanups, community events, and grant programs supporting schools and fire departments.
Surface supply, which during a normal rainfall year satisfies about 6% to 8% of SJWC’s annual 9 Table of Contents water supply needs, provides approximately 1% of its water supply in a dry year and approximately 14% in a wet year.
Surface supply, which during a normal rainfall year satisfies about 6% to 8% of SJWC’s annual water supply needs, provides approximately 1% of its water supply in a dry year and approximately 14% in a wet year.
During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations. Accordingly, SJW Group reclassified $28.4 million related to indefinite-lived water rights from other intangible assets to utility plant intangible assets and $11.7 million from nonutility property to utility plant.
During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations. Accordingly, H2O America reclassified $28.4 million related to indefinite-lived water rights from other intangible assets to utility plant intangible assets and $11.7 million from nonutility property to utility plant.
In April 2024, the EPA issued new national primary drinking water regulations for six PFAS. The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water systems for six PFAS chemicals under the Safe Drinking Water Act.
In April 2024, the EPA issued new national primary drinking water regulations for six PFAS. The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water systems for six PFAS chemicals under the SDWA.
As reported by Valley Water at the end of 2024, the groundwater level in the Santa Clara Plain was eight feet lower compared to the same time in 2023. The total groundwater storage at the end of 2024 was within Stage 1 (Normal) of the Valley Water’s Water Shortage Contingency Plan.
As reported by Valley Water at the end of 2025, the groundwater level in the Santa Clara Plain was six feet lower compared to the same time in 2024. The total groundwater storage at the end of 2025 was within Stage 1 (Normal) of the Valley Water’s Water Shortage Contingency Plan.
The CTWS companies provide water service to approximately 142,000 service connections that serve a population of approximately 463,000 people in 81 municipalities with a service area of approximately 275 square miles throughout Connecticut and Maine and approximately 3,000 wastewater connections in Southbury, Connecticut.
The CTWS companies provide water service to approximately 143,000 service connections that serve a population of approximately 465,000 people in 81 municipalities with a service area of approximately 275 square miles throughout Connecticut and Maine and approximately 3,000 wastewater connections in Southbury, Connecticut.
TWC expects to meet customer demand for 2025 with TWC’s water supply which consists of groundwater from wells, surface water and purchased treated and raw water from the GBRA, based on current conditions. In August 2023, SJWTX Holdings Inc.’s unregulated subsidiary, TWR, acquired eight wells and the associated water rights of KT Water Resources LLC (“KTR”).
TWC expects to meet customer demand for 2026 with TWC’s water supply which consists of groundwater from wells, surface water and purchased treated and raw water from the GBRA, based on current conditions. In August 2023, H2O America TX Holdings Inc.’s unregulated subsidiary, TWR, acquired eight wells and the associated water rights of KT Water Resources LLC (“KTR”).
On January 2, 2024, SJWC filed General Rate Case Application No. 24-01-001 with the CPUC to increase rates charged for water service by $55.2 million or 11.11% in 2025, by $22 million or 3.99% in 2026, and by $25.8 million or 4.49% in 2027.
On January 2, 2024, SJWC filed a general rate case application with the CPUC to increase rates charged for water service by $55.2 million or 11.11% in 2025, by $22 million or 3.99% in 2026, and by $25.8 million or 4.49% in 2027.
Prior to joining NextEra, Mr. Hauk served in several roles at American Water Works Company, Inc. from May 2011 to March 2021, lastly serving as President of Regulated Operations and Military Services Group and then as Deputy Chief Operating Officer. Previously, Mr.
Prior to joining the Company, Mr. Hauk was the President of NextEra Water from May 2021 to August 2022. Prior to joining NextEra, Mr. Hauk served in several roles at American Water Works Company, Inc. from May 2011 to March 2021, lastly serving as President of Regulated Operations and Military Services Group and then as Deputy Chief Operating Officer.
The content of SJW Group’s website is not incorporated by reference to or part of this report. You may obtain electronic copies of our reports filed with the SEC on the SEC website at http://www.sec.gov .
The content of H2O America’s website is not incorporated by reference to or part of this report. You may obtain electronic copies of our reports filed with the SEC on the SEC website at http://www.sec.gov .
TWC has long-term agreements with the GBRA, which expire in 2037, 2040, 2044 and 2050, respectively. The agreements, which are take-or-pay contracts, provide TWC with an aggregate of 7,602 acre-feet of water per year from Canyon Lake at prices that may be adjusted periodically by GBRA.
TWC has long-term agreements with the Guadalupe-Blanco River Authority (“GBRA”), which expire in 2037, 2040, 2044 and 2050. The agreements, which are take-or-pay contracts, provide TWC with an aggregate of 7,602 acre-feet of water per year from Canyon Lake at prices that may be adjusted periodically by GBRA.
SJWC has installed standby power generators at 38 of its strategic water production sites and manages a fleet of 22 portable generators deployed throughout the distribution system for power outages at remaining pumping facilities.
SJWC has installed standby power generators at 39 of its strategic water production sites and manages a fleet of 21 portable generators deployed throughout the distribution system for power outages at remaining pumping facilities.
(“NEWUS”), which provides contract water and sewer operations and other water-related services. • SJWTX Holdings, Inc., a Texas corporation, formed in 2021, is the holding company for SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”).
(“NEWUS”), which provides contract water and sewer operations and other water-related services. • H2O America TX Holdings, Inc. (previously known as SJWTX Holdings, Inc.), a Texas corporation, formed in 2021, is the holding company for SJWTX, Inc., doing business as The Texas Water Company (“TWC”), Texas Water Operation Services, LLC (“TWOS”) and Texas Water Resources, LLC (“TWR”).
On June 29, 2023, the CPUC approved Decision No. 23-06-025 authorized a rate of return of 7.28% based on a return on equity of 8.80%, cost of debt of 5.46%, and a capital structure of approximately 45% debt and 55% equity. The CPUC also authorized continuation of the WCCM in the same decision.
On June 29, 2023, the CPUC approved an authorized rate of return of 7.28% based on a return on equity of 8.80%, cost of debt of 5.46%, and a capital structure of approximately 45% debt and 55% equity. The CPUC also authorized continuation of the WCCM in the same decision.
Postponing the filing a year alleviates administrative processing costs on the utilities as well as the CPUC staff and provides relief for both CPUC and utility resources already strained by numerous other proceedings.
Postponing the filing a year alleviated administrative processing costs on the utilities as well as the CPUC staff and provided relief for both CPUC and utility resources already strained by numerous other proceedings.
Mr. Brown serves as Vice President and General Counsel of SJW Group and SJWC since June 2021. Mr. Brown served as Corporate Secretary of SJW Group and SJWC from January 2020 to October 2023. Mr. Brown served as Assistant General Counsel of SJW Group and SJWC from January 2020 to June 2021. From April 2018 to October 2023, Mr.
Mr. Brown serves as Vice President and General Counsel of H2O America and SJWC since June 2021. Mr. Brown served as Corporate Secretary of H2O America and SJWC from January 2020 to October 2023. Mr. Brown served as Assistant General Counsel of H2O America and SJWC from January 2020 to June 2021. From April 2018 to October 2023, Mr.
In 2024, the level of water in the Santa Clara Valley groundwater basin, which is managed by Valley Water, experienced a decrease in most areas due to a decrease in managed recharge operations and a decline in natural recharge associated with less rainfall compared to 2023.
In 2025, the level of water in the Santa Clara Valley groundwater basin, which is managed by Valley Water, experienced a decrease in most areas due to a decrease in managed recharge operations, a decline in natural recharge associated with less rainfall compared to 2024, and an increase in groundwater pumping.
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 with a focus on the communities served. SJWC and CWC also have matching donations for certain programs to further promote our employees’ involvement in their communities.
The Force for Good Foundation, established in 2024, is a non-consolidated not-for-profit corporation funded by H2O America that is making contributions to selected charitable organizations with a focus on the communities served. SJWC and CWC also have matching donations for certain programs to further promote our employees’ involvement in their communities.
In both instances, the impacts of surface water, purchased water, groundwater extraction, and purchased power expenses are tracked in SJWC’s Full Cost Balancing Account (“FCBA”) authorized by the CPUC for cost recovery. The pumps and motors at SJWC’s groundwater production facilities are propelled by electric power.
In both instances, the impacts of surface water, purchased water, groundwater extraction, and purchased power expenses are tracked in SJWC’s Full Cost Balancing Account (“FCBA”) authorized by the CPUC for cost recovery limiting the impact on operating expenses in the current period. The pumps and motors at SJWC’s groundwater production facilities are propelled by electric power.
The cumulative WICA surcharge as of April 1, 2024 was 7.41%, collecting $7.8 million on an annual basis. In connection with the general rate case decision noted above, as of July 1, 2024, the base WICA surcharge was reset to zero; however, the credit of 0.13% for 2023 reconciliation will continue to apply into 2025.
The cumulative WICA surcharge as of April 1, 2024 was 7.41%, collecting $7.8 million on an annual basis. In connection with CWC’s most recent general rate case decision, as of July 1, 2024, the base WICA surcharge was reset to zero; however, the credit of 0.13% for 2023 reconciliation continued to apply into 2025.
Available Information SJW Group’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, are made available free of charge through SJW Group’s website at http://www.sjwgroup.com , as soon as reasonably practicable, after SJW Group electronically files such material with, or furnishes such materials to, the SEC.
Available Information H2O America’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports, are made available free of charge through H2O America’s website at www.h2o-america.com, as soon as reasonably practicable, after H2O America electronically files such material with, or furnishes such materials to, the SEC.
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 non-administrative employees at SJWC covering the period from January 1, 2023 12 Table of Contents through December 31, 2025.
In the final quarter of 2025, 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 non-administrative employees at SJWC covering the period from January 1, 2026 through December 31, 2028.
General rate adjustments are authorized in general rate case decisions, which usually authorize an initial rate adjustment followed by two annual escalation adjustments.
General rate adjustments are authorized in general rate case decisions, which usually authorize an initial 5 Table of Contents rate adjustment followed by two annual escalation adjustments.
As part of the merger transaction between SJW Group and Connecticut Water Service, Inc. in 2019, Connecticut Water Service, Inc. and its subsidiaries (“CTWS”) became a wholly owned subsidiary of SJWNE LLC. Connecticut Water Service, Inc. is a holding company with four wholly owned subsidiaries.
As part of the merger transaction between H2O America and Connecticut Water Service, Inc. in 2019, Connecticut Water Service, Inc. and its subsidiaries (“CTWS”) became a wholly owned subsidiary of H2O America NE LLC. Connecticut Water Service, Inc. is a holding company with four wholly owned subsidiaries.
The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029. SJW Group estimates capital expenditures of approximately $300 million for PFAS treatment based on finalized maximum contaminant levels.
The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029. H2O America estimates aggregate capital expenditures of approximately $400 million for PFAS treatment based on finalized maximum contaminant levels.
A decision from PURA approving the application was received on January 10, 2024. On February 26, 2024, CWC filed its 2023 WICA reconciliation with PURA. The reconciliation, approved by PURA on March 27, 2024 and effective for 12 months beginning April 1, 2024, replaced the expiring 2022 reconciliation credit of 0.16% with a credit of 0.13%.
On February 26, 2024, CWC filed its 2023 WICA reconciliation with PURA. The reconciliation, approved by PURA on March 27, 2024 and effective for 12 months beginning April 1, 2024, replaced the expiring 2022 reconciliation credit of 0.16% with a credit of 0.13%.
The filing requested an increase in revenue requirement of $2.9 million or 19.9% and requested that the increase be implemented over two years with a 12% increase effective July 1, 2023 followed by a 9% increase effective July 1, 2024 with a slight decrease in year three to reach the overall 19.9% requested.
The filing sought a $2.9 million, or 19.9%, increase in revenue requirement, proposed to be phased in over two years with a 12% increase effective July 1, 2023 followed by a 9% increase effective July 1, 2024, with a slight decrease in year three to reach the overall 19.9% requested.
In 2016, SJWC began performing hazardous materials site assessments and remediation prior to the construction phase of capital projects. The site assessments are performed to remove any legacy materials and to obtain site closures from the Santa Clara County Department of Environmental Health under its Voluntary Cleanup Program.
In 2016, SJWC began performing hazardous materials site assessments and remediation prior to the construction phase of capital projects. The site assessments are performed to identify any legacy materials and determine the need for remediation, which is then completed to obtain site closures from the Santa Clara County Department of Environmental Health under its Voluntary Cleanup Program.
The agreements include a 6% wage increase provided in 2023, 3.5% in 2024 and 5.5% in 2025 for the union employees. Employee Safety Aiming for a “zero-harm” culture, our vision is to manage health and safety performance to become a leader in the water services industry. Protecting the health and safety of our employees is a top priority.
The agreements include a 3% wage increase provided in 2026, 3% in 2027, and 4% in 2028 for the union employees. Employee Safety Aiming for a “zero-harm” culture, our vision is to manage health and safety performance to become a leader in the water services industry. Protecting the health and safety of our employees is a top priority.
SJWNE LLC is a special purpose entity established to hold SJW Group’s investment in Connecticut Water Service, Inc. Connecticut Water Service, Inc. with its headquarters located in Clinton, Connecticut, was incorporated in 1974 in the State of Connecticut.
H2O America NE LLC is a special purpose entity established to hold H2O America’s investment in Connecticut Water Service, Inc. Connecticut Water Service, Inc. with its headquarters located in Clinton, Connecticut, was incorporated in 1974 in the State of Connecticut.
The settlement agreement provides for rate increases of $21.3 million or 3.91% in 2025, $14.4 million or 2.55% in 2026, and $17.4 million or 2.98% in 2027. The settlement agreement also provides a three-year capital budget of $450 million and recovery of $15.8 million in memorandum and balancing accounts.
On December 19, 2024, the CPUC approved a final decision for rate increases of $21.3 million or 3.91% in 2025, $14.4 million or 2.55% in 2026, and $17.4 million or 2.98% in 2027. The decision also provides a three-year capital budget of $450 million and recovery of $15.8 million in memorandum and balancing accounts.
CWC believes that it will be able to meet customer demand for 2025 with its existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities. Texas Water Supply TWC’s water supply consists of groundwater from wells and purchased treated and raw water from the Guadalupe-Blanco River Authority (“GBRA”).
CWC believes that it will be able to meet customer demand for 2026 with its existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities. Texas Water Supply TWC’s water supply consists of groundwater from wells and purchased treated and raw water from local water agencies.
Advice Letter No. 610/610A was approved with an effective date of July 1, 2024. On December 18, 2024, SJWC, along with three other California water utilities, filed a joint request for a one-year deferment on the cost of capital filings which would otherwise be due on May 1, 2025.
Advice Letter No. 620 was approved with an effective date of November 14, 2025. On November 10, 2025, SJWC, along with three other California water utilities, filed a joint request for a third one-year deferment on the cost of capital filings which would otherwise be due on May 1, 2026.
The following summarizes each state’s authorized rates and capital structure as of December 31, 2024: California Connecticut Texas (a) Maine (b) Authorized capital structure (debt/equity) 45% / 55% 47% / 53% 42% / 58% 49% / 51% Authorized return on equity (c) 9.81% 9.30% 10.88% 9.50% Authorized rate base (in millions) $1,203.0 $744.1 $57.6 $139.7 Estimated rate base at year-end (in millions) (d) $1,288.5 $791.6 $169.8 $187.1 ___________________________________ (a) Estimated by management.
The following summarizes each state’s authorized rates and capital structure as of December 31, 2025: California Connecticut Texas (a) Maine (b) Authorized capital structure (debt/equity) 45% / 55% 47% / 53% 42% / 58% 49% / 51% Authorized return on equity (c) 9.81% 9.30% 10.88% 9.50% Authorized rate base (in millions) $1,308.0 $784.1 $96.2 $148.7 Estimated rate base at year-end (in millions) (d) $1,460.8 $878.2 $211.7 $203.5 ___________________________________ (a) Estimated by management.
In addition, the rainfall at SJWC’s Lake Elsman was measured at 15.11 inches for the period from July 1, 2024 through December 31, 2024, which is 79.2% of the five-year average. SJWC’s Montevina Water Treatment Plant treated 3.3 billion gallons of water in 2024, which is 132.2% of the five-year average.
In addition, the rainfall at SJWC’s Lake Elsman was measured at 22.12 inches for the period from July 1, 2025 through December 31, 2025, which is 116.6% of the five-year average. SJWC’s Montevina Water Treatment Plant treated 2.3 billion gallons of water in 2025, which is 104.7% of the five-year average.
As part of a reorganization in 1985, SJWC became a wholly owned subsidiary of SJW Group. SJWC is a public utility in the business of providing water service in the metropolitan San Jose, California area. • SJWNE LLC, a Delaware limited liability company, was formed in 2019, and is a wholly owned subsidiary of SJW Group.
SJWC is a public utility in the business of providing water service in the metropolitan San Jose, California area. • H2O America NE LLC (previously known as SJWNE LLC), a Delaware limited liability company, was formed in 2019, and is a wholly owned subsidiary of H2O America.
SJWC’s Saratoga Water Treatment Plant remained offline in 2024 for regulatory improvements. SJWC believes that its various sources of water supply will be sufficient to meet customer demand in 2025. California faces long-term water supply challenges.
SJWC’s Saratoga Water Treatment Plant treated 40 million gallons of water in 2025. SJWC believes that its various sources of water supply will be sufficient to meet customer demand in 2026. California faces long-term water supply challenges.
On January 1, 2025, Valley Water’s 10 reservoirs were 51% of restricted capacity with 10.4 billion gallons of water in storage. As of December 31, 2024, SJWC’s Lake Elsman was 54.2% of capacity with 1.1 billion gallons of water, approximately 145.6% of the five-year seasonal average.
On January 1, 2026, Valley Water’s 10 reservoirs were 49% of restricted capacity with 10.1 billion gallons of water in storage. As of December 31, 2025, SJWC’s Lake Elsman was 62.5% of capacity with 1.3 billion gallons of water, approximately 141.3% of the five-year seasonal average.
Walters also served as the Vice President of Business Planning of CWC and CTWS from November 2019 until January 2022. Prior to joining SJWC in 2014, Mr. Walters was a managing director and a senior acquisitions officer in the Infrastructure Investments Group of JP Morgan Asset Management from January 2009 to June 2013. Prior to this, Mr.
Prior to joining SJWC in 2014, Mr. Walters was a managing director and a senior acquisitions officer in the Infrastructure Investments Group of JP Morgan Asset Management from January 2009 to June 2013. Prior to this, Mr.
On January 28, 2025, CWC filed for a WICA increase of $1.6 million in annualized revenues for $15.7 million in completed projects. If approved, the cumulative WICA surcharge as of April 1, 2025, will be 4.90%, collecting $6.0 million on an annual basis. On February 24, 2025, CWC filed its 2024 WRA.
In addition, on January 26, 2026, CWC filed for a WICA increase of $2.7 million in annualized revenues for $25.7 million in completed projects. If approved, the cumulative WICA surcharge as of April 1, 2026, will be 9.90%, collecting $12.1 million on an annual basis. On February 25, 2026, CWC filed its 2025 WRA mechanism.
Please also see Part II, Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Human Capital Resources In order to continue to achieve SJW Group’s mission of delivering life sustaining, high-quality water and exceptional service to families, businesses and communities, we are committed to attract, retain and develop the highest quality talent.
Please also see Part II, Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” 12 Table of Contents Human Capital Resources In order to continue to achieve H2O America’s mission of providing high-quality water and exceptional service while investing in the health and vitality of the communities we serve, we are committed to attract, retain and develop the highest quality talent.
The index rate difference between those periods increased 103 basis points, thereby triggering the WCCM. Accordingly, SJWC filed Advice Letter No. 601 on October 13, 2023, to inform the CPUC that the WCCM authorized in Decision No. 23-06-025 required an update to SJWC’s authorized rate of return effective January 1, 2024.
The index rate difference between those periods increased 103 basis points, thereby triggering the WCCM. Accordingly, on June 30, 2023, SJWC filed Advice Letter No. 598 to inform the CPUC that the authorized rate of return required an update in accordance with the WCCM.
SJWC filed Advice Letter No. 596 on May 31, 2023, to increase the authorized revenue requirement by $27.6 million to offset the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges from its water wholesalers effective July 1, 2023. Advice Letter No. 596 was approved with an effective date of July 1, 2023.
On May 27, 2025, SJWC filed Advice Letter No. 616 to increase the authorized revenue requirement by $22.5 million, or 4.00%, to offset the increases to purchased potable water charges, the groundwater extraction fee, and purchased recycled water charges from its water wholesalers effective July 1, 2025.
Hauk served as Deputy Mayor/Chief Administrative Officer for the City of Westfield, Indiana and as Town Manager/Director of Public Works for the City of Westfield, Indiana. Kristen A. Johnson 58 SJW Group—Senior Vice President and Chief Administrative Officer. Ms. Johnson serves as Senior Vice President since November 2022 and Chief Administrative Officer of SJW Group, since April 2020. Ms.
Previously, Mr. Hauk served as Deputy Mayor/Chief Administrative Officer for the City of Westfield, Indiana and as Town Manager/Director of Public Works for the City of Westfield, Indiana. Kristen A. Johnson 59 H2O America—Senior Vice President and Chief Administrative Officer. Ms.
Johnson also serves as Senior Vice President of Administration for CTWS and certain of its subsidiaries since November 2019. Ms. Johnson also serves as Senior Vice President and Chief Administrative Officer of SJWC and TWC, and as Senior Vice President of Administration for CWC and MWC, since April 2023. Previously, Ms.
Johnson serves as President of Shared Services, Senior Vice President since November 2022 and Chief Administrative Officer of H2O America, since April 2020. Ms. Johnson also serves as Senior Vice President of Administration for CTWS and certain of its subsidiaries since November 2019. Ms.
Item 1. Business General Development of Business SJW Group, a Delaware corporation, was initially incorporated as SJW Corp. in the state of California in 1985.
Item 1. Business General Development of Business H2O America, a Delaware corporation, was initially incorporated as SJW Corp. in the state of California in 1985. In May 2025, the company changed its corporate name from SJW Group to H2O America.
Hauk serves as the Chief Operating Officer of SJW Group, SJWC, CTWS, and TWC since January 2023 and was the Chief Corporate Development and Strategy Officer of SJW Group, SJWC, CTWS, and TWC from August 2022 to December 2022. Prior to joining the Company, Mr. Hauk was the President of NextEra Water from May 2021 to August 2022.
Hauk 55 H2O America—President and Chief Operating Officer. Mr. Hauk serves as President of H2O America since July 2025, and Chief Operating Officer of H2O America, SJWC, CTWS, and TWC since January 2023. Mr. Hauk was the Chief Corporate Development and Strategy Officer of H2O America, SJWC, CTWS, and TWC from August 2022 to December 2022.
Our leadership employs a servant leadership model where all leaders are encouraged and expected to provide service to their people ensuring that they continue to grow and thrive in their profession, knowledge, and general well-being. Regular “Straight Talk” meetings, employee town halls and quarterly “Leadership on Tap” gatherings are held to continue to build and support our culture and values.
Our leadership employs a servant leadership model where all leaders are encouraged and expected to provide service to their people ensuring that they continue to grow and thrive in their profession, knowledge, and general well-being.
However, it filed its application to establish a System Improvement Charge (“SIC”) with PUCT under Docket No. 54430 on December 30, 2022. SIC filings are used to include certain utility plant additions made from 2020 to present in its rate base, thereby increasing revenue and avoiding the immediate need for a general rate case.
SIC filings are used to include certain utility plant additions made from 2020 to present in its rate base, thereby increasing revenue and avoiding the immediate need for a general rate case. On September 12, 2024, TWC filed its application to amend its original SIC with the PUCT.
Basic Workforce Data As of December 31, 2024, SJW Group had 822 full-time employees, of whom 395 were SJWC employees, 244 were CWC employees, 99 were TWC employees, and 84 were MWC employees. At SJWC, 241 employees are members of unions. Employees working for CWC, MWC and TWC are not represented by unions.
Basic Workforce Data As of December 31, 2025, H2O America had 837 full-time employees, of whom 396 were SJWC employees, 248 were CWC employees, 109 were TWC employees, and 84 were MWC employees. At SJWC, 242 employees are members of unions. Employees working for CWC, MWC and TWC are not represented by unions.
The purpose of an offset rate adjustment is to compensate utilities for changes in specific pre-authorized offsettable capital investments or expenses, primarily for purchased water, groundwater extraction, purchased power, pensions, and group health insurance.
The purpose of an offset rate adjustment is to compensate utilities for changes in specific pre-authorized offsettable capital investments or expenses, primarily for purchased water, groundwater extraction, purchased power, pensions, and group health insurance. Pursuant to the California Public Utilities Code, a balancing account must be maintained for each expense item for which such revenue offsets have been authorized.
Kelly serves as Chief Accounting Officer and Principal Accounting Officer of SJW Group, and Chief Accounting Officer of SJWC, CTWS, TWC, CWC, and MWC since November 2024. Prior to joining SJW Group, Ms.
Mattern serves as Chief Accounting Officer, Principal Accounting Officer, and Controller of H2O America, and Chief Accounting Officer of SJWC, CTWS, TWC, CWC, and MWC since July 2025. Prior to joining H2O America, Ms.

… 109 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

67 edited+32 added−3 removed140 unchanged
Biggest changeWhile SJW Group operates in multiple states, a significant majority of our revenues and earnings are generated by our California and Connecticut operations. As a result, our financial results are largely subject to political, regulatory, economic, water supply, weather, labor, and energy cost risks affecting California and Connecticut.
Biggest changeAs a result, our financial results are largely subject to political, regulatory, economic, water supply, weather, labor, and energy cost risks affecting California and Connecticut and, following the consummation of the transactions with Quadvest, Texas. We face competition from other utilities and service providers which might hinder our growth opportunities and mitigate our future profitability.
Generally accepted accounting principles for water utilities include the recognition of regulatory assets and liabilities to reflect the actions of regulators as permitted by Financial Accounting Standards Board (“FASB”) ASC Topic 980—“Regulated Operations.” These actions may result in the recognition of revenues and expenses in time periods that are different from non-rate-regulated enterprises.
Generally accepted accounting principles (“GAAP”) for water utilities include the recognition of regulatory assets and liabilities to reflect the actions of regulators as permitted by Financial Accounting Standards Board (“FASB”) ASC Topic 980—“Regulated Operations.” These actions may result in the recognition of revenues and expenses in time periods that are different from non-rate-regulated enterprises.
Under the federal Safe Drinking Water Act, Water Utility Services is subject to regulation by the EPA relating to the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates, from time to time, nationally applicable standards, including maximum contaminant levels for drinking water.
Under the federal Safe Drinking Water Act (“SDWA”), Water Utility Services is subject to regulation by the EPA relating to the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates, from time to time, nationally applicable standards, including maximum contaminant levels for drinking water.
Factors that could cause fluctuations in the trading price of our common stock include volatility of the general stock market or the utility index, regulatory developments, public announcement or market assumptions of material developments in strategic transactions, general economic conditions and trends, actual or anticipated changes or fluctuations in our results of operations, actual or anticipated changes in the expectations of investors or securities 27 Table of Contents analysts, actual or anticipated developments in our competitors’ businesses or the competitive landscape generally, litigation involving us or our industry, and major catastrophic event(s) or sales of large blocks of our stock.
Factors that could cause fluctuations in the trading price of our common stock include volatility of the general stock market or the utility index, regulatory developments, public announcement or market assumptions of material developments in strategic transactions, general economic conditions and trends, actual or anticipated changes or fluctuations in our results of operations, actual or anticipated changes in the expectations of investors or securities 29 Table of Contents analysts, actual or anticipated developments in our competitors’ businesses or the competitive landscape generally, litigation involving us or our industry, and major catastrophic event(s) or sales of large blocks of our stock.
We can give no assurance, as to whether we may be able to recover certain of these costs from third parties that may be responsible, or potentially responsible, for any groundwater contamination. The concentration of our business in California and Connecticut makes us susceptible to adverse developments affecting these two states.
We can give no assurance, as to whether we may be able to recover certain of these costs from third parties that may be responsible, or potentially responsible, for any groundwater contamination. The concentration of our business in California, Texas and Connecticut makes us susceptible to adverse developments affecting these states.
There can be no assurance that we can secure all necessary or appropriate insurance in the future, or that such insurance can be obtained at reasonable cost, or at all. 26 Table of Contents General Risk Factors We operate in areas subject to natural disasters, and we may be the target of terrorist activities and other physical threats.
There can be no assurance that we can secure all necessary or appropriate insurance in the future, or that such insurance can be obtained at reasonable cost, or at all. 28 Table of Contents General Risk Factors We operate in areas subject to natural disasters, and we may be the target of terrorist activities and other physical threats.
There are currently limited regulatory mechanisms and procedures available to us for the recovery of such costs and there can be no assurance that such costs will be fully recovered and failure to do so may adversely affect our operating results.
There are currently regulatory mechanisms and procedures available to us for the recovery of such costs, however, there can be no assurance that such costs will be fully recovered and failure to do so may adversely affect our operating results.
In December 2011, regulations concerning the flow of water in Connecticut’s rivers and streams were adopted. As promulgated, the regulations require that certain downstream releases be made from seven of CWC’s eighteen active reservoirs no later than ten years following the adoption of stream classifications by the Department of Energy and Environmental Protection 17 Table of Contents (“DEEP”).
In December 2011, regulations concerning the flow of water in Connecticut’s rivers and streams were adopted. As promulgated, the regulations require that certain downstream releases be made from seven of CWC’s eighteen active reservoirs no later than ten years following the adoption of stream classifications by the Department of Energy and Environmental Protection (“DEEP”).
Based upon existing California case law, SJWC could be sued under the doctrine of inverse condemnation and held liable if its facilities, operations or property, such as mains, fire hydrants, power lines and other equipment, or wildfires in our Santa Cruz Mountain watershed result in damage to private property.
Based upon existing California case law, SJWC could be 20 Table of Contents sued under the doctrine of inverse condemnation and held liable if its facilities, operations or property, such as mains, fire hydrants, power lines and other equipment, or wildfires in our Santa Cruz Mountain watershed result in damage to private property.
Currently, downstream releases are made at four locations. The next streamflow releases will be initiated by February 2028 and will affect two additional reservoirs. No groundwater supply wells are affected by the regulations. DEEP has finalized stream classifications in all areas of Connecticut where CWC maintains and operates sources of supply.
Currently, downstream releases are made at four locations. The next streamflow releases will be initiated by February 2028 and will affect two additional reservoirs. No groundwater supply wells are affected by the regulations. 19 Table of Contents DEEP has finalized stream classifications in all areas of Connecticut where CWC maintains and operates sources of supply.
Furthermore, SJW Group’s Certificate of Incorporation provides, unless the company consents in writing to the selection of an alternate forum, (a) a state or federal court located within the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of SJW Group, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of SJW Group to the company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine; and (b) the U.S. federal district courts is the sole and exclusive forum for any claim arising under the Securities Act of 1933 (unless such provision is deemed illegal, invalid or unenforceable, in which case the sole exclusive state court forum for any claim arising under the Securities Act of 1933 will be the Court of Chancery in the State of Delaware).
Furthermore, H2O America’s Certificate of Incorporation provides, unless the company consents in writing to the selection of an alternate forum, (a) a state or federal court located within the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of H2O America, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of H2O America to the company or its stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine; and (b) the U.S. federal district courts is the sole and exclusive forum for any claim arising under the Securities Act of 1933 (unless such provision is deemed illegal, invalid or unenforceable, in which case the sole exclusive state court forum for any claim arising under the Securities Act of 1933 will be the Court of Chancery in the State of Delaware).
Consequently, our revenue and operating results depend substantially upon the rates the Regulators authorize. In our applications for rate approvals, we rely upon estimates and forecasts to propose rates for approval by the Regulators.
Consequently, our revenue and operating results depend substantially upon the rates the Regulators authorize. In some of our applications for rate approvals, we rely upon estimates and forecasts to propose rates for approval by the Regulators.
From time to time, we enter into water supply agreements with third parties and our business is dependent upon such agreements in order to meet regional demand. The parties from whom we purchase water maintain significant infrastructure and systems to deliver water to us. The maintenance of these facilities is beyond our control.
From time to time, we enter into water supply agreements with third parties and our business is dependent upon such agreements in order to meet regional demand. 21 Table of Contents The parties from whom we purchase water maintain significant infrastructure and systems to deliver water to us. The maintenance of these facilities is beyond our control.
Pursuant to the agreements related to the acquisition of CTWS and commitments made by SJW Group as part of the application for PURA and MPUC approval of the acquisition of CTWS, SJW Group has instituted certain “ring-fencing” measures to enhance CTWS’s separateness from SJW Group and to mitigate the risk that CTWS would be negatively impacted in the event of a bankruptcy or other adverse financial developments affecting SJW Group or its non-ring-fenced affiliates.
Pursuant to the agreements related to the acquisition of CTWS and commitments made by H2O America as part of the application for PURA and MPUC approval of the acquisition of CTWS, H2O America has instituted certain “ring-fencing” measures to enhance CTWS’s separateness from H2O America and to mitigate the risk that CTWS would be negatively impacted in the event of a bankruptcy or other adverse financial developments affecting H2O America or its non-ring-fenced affiliates.
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred. Work stoppages and other labor relations matters could adversely affect our business and operating results.
Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred. 24 Table of Contents Work stoppages and other labor relations matters could adversely affect our business and operating results.
To the extent they take actions that are not in SJW Group’s interests, our financial condition, results of operations and prospects may be materially adversely affected. Our business strategy, which includes acquiring water systems and expanding non-tariffed services, will expose us to new risks which could have a material adverse effect on our business.
To the extent they take actions that are not in H2O America’s interests, our financial condition, results of operations and prospects may be materially adversely affected. Our business strategy, which includes acquiring water systems and expanding non-tariffed services, will expose us to new risks which could have a material adverse effect on our business.
The use of artificial intelligence by cybercriminals may increase the frequency and severity of cybersecurity attacks, including against us or our third-party vendors. Accordingly, we may be unable to anticipate these techniques or to entirely eliminate this risk.
The use of artificial intelligence by cybercriminals may increase the frequency and severity of cybersecurity attacks, including against us or our third-party 23 Table of Contents vendors. Accordingly, we may be unable to anticipate these techniques or to entirely eliminate this risk.
Item 1A. Risk Factors Investors should carefully consider the following risk factors and warnings before making an investment decision. The risks described below are not the only ones facing SJW Group and its subsidiaries. Additional risks that SJW Group and its subsidiaries does not yet know of or that it currently thinks are immaterial may also impair its business operations.
Item 1A. Risk Factors Investors should carefully consider the following risk factors and warnings before making an investment decision. The risks described below are not the only ones facing H2O America and its subsidiaries. Additional risks that H2O America and its subsidiaries does not yet know of or that it currently thinks are immaterial may also impair its business operations.
Expenditure levels for renewal and modernization of the system will grow at an increasing rate as components reach the end of their useful lives. In addition, EPA regulations impose maximum contaminant levels and monitoring requirements for the nation’s water systems for six PFAS chemicals under the Safe Drinking Water Act and will require an increase in capital expenditures.
Expenditure levels for renewal and modernization of the system will grow at an increasing rate as components reach the end of their useful lives. In addition, EPA regulations impose maximum contaminant levels and monitoring requirements for the nation’s water systems for six PFAS chemicals under the SDWA and will require an increase in capital expenditures.
Any difficulties we encounter in the integration process, including the integration of controls necessary for internal control and financial reporting, could interfere with our operations, reduce our operating margins and adversely affect our internal controls. SJW Group cannot be certain that any transaction will be successful or that it will not materially harm operating results or our financial condition.
Any difficulties we encounter in the integration process, including the integration of controls necessary for internal control and financial reporting, could interfere with our operations, reduce our operating margins and adversely affect our internal controls. H2O America cannot be certain that any transaction will be successful or that it will not materially harm operating results or our financial condition.
In addition, the provisions of Section 203 of the Delaware General Corporate Law (“DGCL”) govern SJW Group. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of the Board of Directors.
In addition, the provisions of Section 203 of the Delaware General Corporate Law (“DGCL”) govern H2O America. These provisions may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of the Board of Directors.
Further, ransomware and other forms of disruptive or disabling cyber-attacks targeting utility systems and other infrastructure are continuously increasing in sophistication, 21 Table of Contents magnitude and frequency, and may not be recognized until launched against a target.
Further, ransomware and other forms of disruptive or disabling cyber-attacks targeting utility systems and other infrastructure are continuously increasing in sophistication, magnitude and frequency, and may not be recognized until launched against a target.
We have incurred substantial indebtedness resulting in a higher debt-to-equity ratio, which may have the effect, among other things, of: • reducing our flexibility to respond to changing business, industry and economic conditions; • increasing borrowing costs; • limiting growth through capital expenditures and acquisitions; • placing us at a competitive disadvantage relative to other companies in our industry with less debt; • potentially having an adverse effect on our issuer and issue ratings; • requiring additional cash flow to be used to service debt instead of for other purposes; and • potentially impairing our ability to obtain other financing.
We have incurred substantial indebtedness and plan to incur substantial indebtedness in the future, including to complete the transactions with Quadvest, resulting in a higher debt-to-equity ratio, which may have the effect, among other things, of: • reducing our flexibility to respond to changing business, industry and economic conditions; • increasing borrowing costs; • limiting growth through capital expenditures and acquisitions; • placing us at a competitive disadvantage relative to other companies in our industry with less debt; • potentially having an adverse effect on our issuer and issue ratings; • requiring additional cash flow to be used to service debt instead of for other purposes; and • potentially impairing our ability to obtain other financing.
Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of 22 Table of Contents operations and liquidity could be materially adversely affected.
Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected.
Water Utility Services is subject to litigation risks concerning water quality and contamination. In October 2023, CWC, a subsidiary of SJW Group in our Water Utility Services segment, was named as a defendant in a class action lawsuit alleging that the water provided by CWC contained contaminants. CWC is vigorously defending itself in this lawsuit.
Water Utility Services is subject to litigation risks concerning water quality and contamination. In October 2023, CWC, a subsidiary of H2O America in our Water Utility Services segment, was named as a defendant in a class action lawsuit alleging that the water provided by CWC contained contaminants. CWC is vigorously defending itself in this lawsuit.
Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also make it more difficult for stockholders to influence our policies or may reduce the rights of stockholders. SJW Group ’s Certificate of Incorporation and Bylaws contain provisions that could delay or prevent a change in control of SJW Group.
Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also make it more difficult for stockholders to influence our policies or may reduce the rights of stockholders. H2O America ’s Certificate of Incorporation and Bylaws contain provisions that could delay or prevent a change in control of H2O America.
We expect to incur costs in connection with the execution of this strategy and any integration of an acquired business could involve significant costs, the assumption of certain known and unknown liabilities related to the acquired assets, the diversion of management’s time and resources, the potential for a negative impact on SJW Group’s financial position and operating results, entering markets in which SJW Group has no or limited direct prior experience and the potential loss of key employees of any acquired company.
We expect to incur costs in connection with the execution of this strategy and any integration of an acquired business could involve significant costs, the assumption of certain known and unknown liabilities related to the acquired assets, the diversion of management’s time and resources, the potential for a negative impact on H2O America’s financial position and operating results, entering markets in which H2O America has no or limited direct prior experience and the potential loss of key employees of any acquired company.
As a holding company, we conduct substantially all of our operations through subsidiaries and our only significant assets are investments in those subsidiaries. This means that we are dependent on distributions of funds from our subsidiaries to meet SJW Group’s debt service obligations and to pay dividends on our common stock.
As a holding company, we conduct substantially all of our operations through subsidiaries and our only significant assets are investments in those subsidiaries. This means that we are dependent on distributions of funds from our subsidiaries to meet H2O America’s debt service obligations and to pay dividends on our common stock.
Our ability to raise capital through equity or debt may be affected by the economy and condition of the debt and equity markets. Disruptions in the capital and credit markets or deterioration in the strength of financial institutions could adversely affect SJW Group’s ability to draw on its lines of credit, issue long-term debt or sell its equity.
Our ability to raise capital through equity or debt may be affected by the economy and condition of the debt and equity markets. Disruptions in the capital and credit markets or deterioration in the strength of financial institutions could adversely affect H2O America’s ability to draw on its lines of credit, issue long-term debt or sell its equity.
For example, in April 2024, the EPA issued new national primary drinking water regulations for PFAS. The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the Safe Drinking Water Act.
For example, in April 2024, the EPA issued new national primary drinking water regulations for PFAS. The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the SDWA.
We purchase our water supply from various governmental agencies and others. Water supply availability may be affected by weather conditions, funding and other political and environmental considerations. In addition, our ability to use surface water is 19 Table of Contents subject to regulations regarding water quality and volume limitations.
We purchase our water supply from various governmental agencies and others. Water supply availability may be affected by weather conditions, funding and other political and environmental considerations. In addition, our ability to use surface water is subject to regulations regarding water quality and volume limitations.
As a result of these ring-fencing measures, in certain situations, SJW Group will be restricted in its ability to access assets of the CTWS Entities as dividends or intercompany loans to satisfy the debt or contractual obligations of any Non-CTWS Entity, including any indebtedness or other contractual obligations of SJW Group.
As a result of these ring-fencing measures, in certain situations, H2O America will be restricted in its ability to access assets of the CTWS Entities as dividends or intercompany loans to satisfy the debt or contractual obligations of any Non-CTWS Entity, including any indebtedness or other contractual obligations of H2O America.
An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and financial condition. We have significant amounts of goodwill resulting from the acquisition of businesses. As of December 31, 2024, consolidated goodwill totaled $640.3 million, or 14% of our total assets.
An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and financial condition. We have significant amounts of goodwill resulting from the acquisition of businesses. As of December 31, 2025, consolidated goodwill totaled $640.3 million, or 12% of our total assets.
Although Water Utility Services has liability insurance coverage for bodily injury and property damage, pollution liability is excluded from this coverage and our excess liability coverage. Pollution liability coverage is in place for the majority of the SJW Group locations and operations but is subject to exclusions and limitations.
Although Water Utility Services has liability insurance coverage for bodily injury and property damage, pollution liability is excluded from this coverage and our excess liability coverage. Pollution liability coverage is in place for the majority of the H2O America locations and operations but is subject to exclusions and limitations.
In addition, the ring-fencing structure may negatively impact SJW Group’s ability to achieve certain benefits, including synergies and economies of scale to reduce operating costs of the combined entity, that it anticipates will result from the merger.
In addition, the ring-fencing structure may negatively impact H2O America’s ability to achieve certain benefits, including synergies and economies of scale to reduce operating costs of the combined entity, that it anticipates will result from the merger.
Accordingly, SJW Group may be restricted in its ability to direct the management, policies and operations of the CTWS Entities, including the deployment or disposition of their respective assets, declarations of dividends, strategic planning and other important corporate issues.
Accordingly, H2O America may be restricted in its ability to direct the management, policies and operations of the CTWS Entities, including the deployment or disposition of their respective assets, declarations of dividends, strategic planning and other important corporate issues.
The SPE, CTWS and its subsidiaries (collectively, the “CTWS Entities”) adopted certain measures designed to enhance their separateness from SJW Group, with the intention of mitigating the effects on the CTWS Entities of any bankruptcy of SJW Group and its affiliates other than the CTWS Entities (collectively, the “Non-CTWS Entities”).
The SPE, CTWS and its subsidiaries (collectively, the “CTWS Entities”) adopted certain measures designed to enhance their separateness from H2O America, with the intention of mitigating the effects on the CTWS Entities of any bankruptcy of H2O America and its affiliates other than the CTWS Entities (collectively, the “Non-CTWS Entities”).
Such “exclusive forum” provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with SJW Group or its directors, officers or other employees, which may discourage such lawsuits.
Such “exclusive forum” provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with H2O America or its directors, officers or other employees, which may discourage such lawsuits.
Furthermore, the CTWS Entities’ directors have considerable autonomy and, as described in our commitments, have a duty to act in the best interest of the CTWS Entities consistent with the ring-fencing structure and applicable law, which may be contrary to SJW Group’s best interests or be in opposition to SJW Group’s preferred strategic 24 Table of Contents direction for the CTWS Entities.
Furthermore, the CTWS Entities’ directors have considerable autonomy and, as described in our commitments, have a duty to act in the best interest of the CTWS Entities consistent with the ring-fencing structure and applicable law, which may be contrary to H2O America’s best interests or be in 26 Table of Contents opposition to H2O America’s preferred strategic direction for the CTWS Entities.
The board of directors of SJW Group may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. 25 Table of Contents SJW Group is a holding company that depends on cash flow from its subsidiaries to meet its financial obligations and pay dividends on its common stock.
The board of directors of H2O America may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. 27 Table of Contents H2O America is a holding company that depends on cash flow from its subsidiaries to meet its financial obligations and pay dividends on its common stock.
Furthermore, equity financings may result in dilution to our existing stockholders and debt financings may contain covenants that restrict the actions of SJW Group and its subsidiaries. 23 Table of Contents We have incurred substantial additional indebtedness that may reduce our business and operational flexibility and increase our borrowing costs.
Furthermore, equity financings may result in dilution to our existing stockholders and debt financings may contain covenants that restrict the actions of H2O America and its subsidiaries. 25 Table of Contents We have incurred substantial additional indebtedness that may reduce our business and operational flexibility and increase our borrowing costs.
If any of the following risks actually occur, SJW Group and its subsidiaries’ business, operating results or financial condition could be materially affected. In such case, the trading price of SJW Group’s common stock could decline and you may lose part or all of your investment.
If any of the following risks actually occur, H2O America and its subsidiaries’ business, operating results or financial condition could be materially affected. In such case, the trading price of H2O America’s common stock could decline and you may lose part or all of your investment.
Our subsidiaries are separate and distinct legal entities and generally have no obligation to pay any amounts due on SJW Group’s debt or to provide SJW Group with funds for dividends. Our subsidiaries only pay dividends if and when declared by their respective boards of directors.
Our subsidiaries are separate and distinct legal entities and generally have no obligation to pay any amounts due on H2O America’s debt or to provide H2O America with funds for dividends. Our subsidiaries only pay dividends if and when declared by their respective boards of directors.
In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase SJW Group’s cost of capital.
In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase H2O America’s cost of capital.
SJW Group has committed to certain “ring-fencing” measures which will enhance CTWS’s separateness from SJW Group, which may limit SJW Group’s ability to influence the management and policies of CTWS (beyond the limitations included in other existing governance mechanisms).
H2O America has committed to certain “ring-fencing” measures which will enhance CTWS’s separateness from H2O America, which may limit H2O America’s ability to influence the management and policies of CTWS (beyond the limitations included in other existing governance mechanisms).
This ring-fencing structure also subjects SJW Group and the CTWS Entities to certain governance, operational and financial restrictions since the closing of the merger.
This ring-fencing structure also subjects H2O America and the CTWS Entities to certain governance, operational and financial restrictions since the closing of the merger.
SJW Group’s subsidiaries fund capital expenditures through a variety of sources, including cash received from operations, funds received from developers as contributions or advances, borrowings through lines of credit and debt financings, as well as equity financings by SJW Group.
H2O America’s subsidiaries fund capital expenditures through a variety of sources, including cash received from operations, funds received from developers as contributions or advances, borrowings through lines of credit and debt financings, as well as equity financings by H2O America.
SJW Group’s dividend policy is subject to the discretion of our board of directors and may be limited by legal and contractual requirements.
H2O America’s dividend policy is subject to the discretion of our board of directors and may be limited by legal and contractual requirements.
These commitments became effective upon the closing of the acquisition. In order to satisfy the ring-fencing commitments, SJW Group formed SJWNE LLC a wholly owned special purpose entity (“SPE”), to own the capital stock of CTWS.
These commitments became effective upon the closing of the acquisition. In order to satisfy the ring-fencing commitments, H2O America formed H2O America NE LLC a wholly owned special purpose entity (“SPE”), to own the capital stock of CTWS.
As part of our pursuit of the above three strategic areas, we consider from time-to-time opportunities to acquire businesses and assets. However, we cannot be certain we will be successful in identifying and consummating any strategic business combination or acquisitions relating to such opportunities.
As part of our pursuit of the above three strategic areas, we consider from time-to-time opportunities to acquire businesses and assets. The proposed transactions with Quadvest are an example of this strategy. However, we cannot be certain we will be successful in identifying and consummating any strategic business combination or acquisitions relating to such opportunities.
Fluctuations in customer demand for water due to seasonality, restrictions of use, weather, and lifestyle can adversely affect operating results. Water Utility Services is seasonal, thus quarterly fluctuation in results of operations may be significant. Rainfall and other weather conditions also affect Water Utility Services.
Competing entities have challenged, and may challenge in the future, our applications for new franchises. Fluctuations in customer demand for water due to seasonality, restrictions of use, weather, and lifestyle can adversely affect operating results. Water Utility Services is seasonal, thus quarterly fluctuation in results of operations may be significant. Rainfall and other weather conditions also affect Water Utility Services.
In addition, policies and regulations promulgated by the Regulators govern the recovery of capital expenditures, the treatment of gains from the sale of real utility property, the offset of production and operating costs, the recovery of the cost of debt, the optimal equity structure, and the financial and operational flexibility to engage in non-tariffed operations.
In addition, delays in approving rate increases may negatively affect our operating results and operating cash flows. 18 Table of Contents In addition, policies and regulations promulgated by the Regulators govern the recovery of capital expenditures, the treatment of gains from the sale of real utility property, the offset of production and operating costs, the recovery of the cost of debt, the optimal equity structure, and the financial and operational flexibility to engage in non-tariffed operations.
As of December 31, 2024, 241 of our 822 total employees were union members. Most of our unionized employees are represented by the UWUA, except certain employees in the engineering department who are represented by the OE. Only employees at SJWC are union members. The current three-year bargaining agreements will expire on December 31, 2025.
As of December 31, 2025, 242 of our 837 total employees were union members. Most of our unionized employees are represented by the UWUA, except certain employees in the engineering department who are represented by the OE. Only employees at SJWC are union members.
Our Water Utility Services primarily represent the tariffed operations of our regulated utilities. Our operating revenue is generated primarily from the sale of water at rates authorized by applicable state public utility commissions (the “Regulators”).
Risks Relating To Regulatory and Legal Matters Our business is regulated and may be adversely affected by changes to the regulatory environment. Our Water Utility Services primarily represent the tariffed operations of our regulated utilities. Our operating revenue is generated primarily from the sale of water at rates authorized by applicable state public utility commissions (the “Regulators”).
Labor actions, work stoppages or the threat of work stoppages, and our failure to obtain favorable labor contract terms during future negotiations may adversely affect our business, financial condition, results of operations, cash flows and liquidity.
In addition, changes in applicable law and regulations could have an adverse effect on management’s negotiating position with the unions. Labor actions, work stoppages or the threat of work stoppages, and our failure to obtain favorable labor contract terms during future negotiations may adversely affect our business, financial condition, results of operations, cash flows and liquidity.
The Water Utility Services’ distribution systems were constructed during the period from the early 1900’s through today. A failure of major mains, reservoirs, or tanks could result in injuries and damage to residential and/or commercial property for which we may be responsible, in whole or in part.
A failure of major mains, reservoirs, or tanks could result in injuries and damage to residential and/or commercial property for which we may be responsible, in whole or in part.
Such changes could lead to changes in policies and regulations and there can be no assurance that the resulting changes in policies and regulation, if any, will not adversely affect our operating results or financial condition. We have various regulatory mechanisms such as balancing and memorandum accounts and rate adjustment mechanisms for infrastructure replacement, to recover certain costs and expenses.
Such changes could lead to changes in policies and regulations and there can be no assurance that the resulting changes in policies and regulation, if any, will not adversely affect our operating results or financial condition.
While the impacts of conservation and drought may be mitigated by certain regulatory mechanisms that may apply, such regulatory mechanisms are subject to review and change by the Regulators.
In addition, in time of drought, mandatory water conservation may become a requirement that impacts the water usage of our customers. While the impacts of conservation and drought may be mitigated by certain regulatory mechanisms that may apply, such regulatory mechanisms are subject to review and change by 22 Table of Contents the Regulators.
Investors should also refer to the other information set forth in this Annual Report on Form 10-K, including the consolidated financial statements and the notes thereto. Risks Relating To Regulatory and Legal Matters Our business is regulated and may be adversely affected by changes to the regulatory environment.
Investors should also refer to the other information set forth in this Annual Report on Form 10-K, including the consolidated financial statements and the notes thereto.
If the Regulators disagree with our calculations of our balancing and memorandum accounts, we may be required to make adjustments that could adversely affect our results of operations.
We have various regulatory mechanisms such as balancing and memorandum accounts and rate adjustment mechanisms for infrastructure replacements and/or improvements, to recover certain costs and expenses. If the Regulators disagree with our calculations of our balancing and memorandum accounts, we may be required to make adjustments that could adversely affect our results of operations.
For example, severity of drought conditions may impact the availability of water to all Water Utility Services and rising sea levels and their effect on contributing tributary’s water quality may impact the availability of groundwater to Water Utility Services. 18 Table of Contents We may be at risk for litigation under the principle of inverse condemnation for activities in the normal course of business that have a damaging effect on private property.
For example, severity of drought conditions may impact the availability of water to all Water Utility Services and rising sea levels and their effect on contributing tributary’s water quality may impact the availability of groundwater to Water Utility Services.
The final regulation requires water systems to comply with PFAS monitoring requirements by 2027, and to comply with the maximum contaminant levels by 2029. Additional or more stringent requirements may be adopted by each state. There can be no assurance that Water Utility Services will be able to continue to comply with all water quality requirements.
The final regulation requires water systems to comply with PFAS monitoring requirements by 2027, and to comply with the maximum contaminant levels by 2029. H2O America estimates capital expenditures of approximately $400 million for PFAS treatment based on finalized maximum contaminant levels. Additional or more stringent requirements may be adopted by each state.
We face competition from other utilities and service providers which might hinder our growth opportunities and mitigate our future profitability. We face competition from other utilities and service providers which might hinder our growth opportunities and mitigate our future profitability.
We face competition from other utilities and service providers which might hinder our growth opportunities and mitigate our future profitability. We face risks of competition from other utilities or other entities authorized by federal, state or local agencies to expand rate-regulated or contracted utility services.
Water Utility Services has implemented monitoring activities and installed specific water treatment improvements in order to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations. However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the Safe Drinking Water Act.
There can be no assurance that Water Utility Services will be able to continue to comply with all water quality requirements. Water Utility Services has implemented monitoring activities and installed specific water treatment improvements in order to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations.
We may experience difficulties and delays in the collective bargaining process to reach suitable agreements with union employees, particularly in light of increasing healthcare and pension costs. In addition, changes in applicable law and regulations could have an adverse effect on management’s negotiating position with the unions.
Both of the 3-year union contracts were signed on December 31, 2025 and will expire December 31, 2028. We may experience difficulties and delays in the collective bargaining process to reach suitable agreements with union employees, particularly in light of increasing healthcare and pension costs.
No assurance can be given that our estimates and forecasts will be accurate or that the Regulators will agree with our estimates and forecasts and approve our proposed rates.
No assurance can be given that our estimates and forecasts will be accurate or that the Regulators will agree with our estimates and forecasts and approve our proposed rates. To the extent our authorized rates may be too low, revenues may be insufficient to cover Water Utility Services’ operating expenses, capital requirements and H2O America’s historical dividend rate.
Although a new franchise offers some protection against competitors, the pursuit of franchises is often competitive, where new franchises may be awarded to utilities based upon competitive negotiation. Competing entities have challenged, and may challenge in the future, our applications for new franchises.
Once a state utility regulator grants a franchise to a public utility to serve a specific territory, that utility effectively has an exclusive right to service that territory. Although a new franchise offers some protection against competitors, the pursuit of franchises is often competitive, where new franchises may be awarded to utilities based upon competitive negotiation.
Removed
To the extent our authorized rates may be too low, revenues may be insufficient to 16 Table of Contents cover Water Utility Services’ operating expenses, capital requirements and SJW Group’s historical dividend rate. In addition, delays in approving rate increases may negatively affect our operating results and operating cash flows.
Added
Risks Relating To Quadvest Acquisition The following discusses certain risk factors relating to the proposed transactions with Quadvest, and does not include all of the risk factors associated with the proposed transactions and H2O America after the proposed transactions.
Removed
We face risks of competition from other utilities or other entities authorized by federal, state or local agencies to expand rate-regulated or contracted utility services. Once a state utility regulator grants a franchise to a public utility to serve a specific territory, that utility effectively has an exclusive right to service that territory.
Added
Our proposed transactions with Quadvest are subject to the receipt of consents and clearances from regulatory authorities that may impose conditions that could have an adverse effect on H2O America or, if not obtained, could prevent completion of the proposed transactions.
Removed
In addition, in time of drought, such as in the drought experienced in California in 2021 to early 2023, mandatory water conservation may become a regulatory requirement that impacts the water 20 Table of Contents usage of our customers.
Added
Completion of the proposed transactions is contingent upon, among other things, the receipt of all required regulatory approvals, which consist of compliance with and filings and the applicable waiting period under the Hart Scott-Rodino Antitrust Improvements Act, compliance with and applications for permits with state and municipal agencies and consent required by the PUCT for the transfer of Quadvest’s water and sewer utility business (the “Regulated Business”). 16 Table of Contents The terms and conditions of the approvals that are granted by such governmental entities and regulatory authorities may impose requirements, limitations, costs, or place restrictions on the conduct of H2O America’s business.
Added
The asset purchase agreements may require H2O America to comply with conditions imposed by regulatory entities and, in certain circumstances, either company may refuse to close the proposed transactions on the basis of regulatory conditions imposed.
Added
There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions or that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the proposed transactions or imposing additional material costs on or materially limiting the revenues of H2O America following the proposed transactions.
Added
Additionally, H2O America cannot provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the proposed transactions, or the consummation of the proposed transactions on terms different than those contemplated by the asset purchase agreements.
Added
The length of the regulatory approval process required by the PUCT, which may be extended beyond its current estimates, may reduce or eliminate the benefits to be achieved under the proposed transactions. As a condition to the consummation of the proposed transactions, the sale of the Regulated Business must be approved by the PUCT.
Added
While we expect the transaction to receive PUCT approval by mid-2026, the exact timeline for this approval process is unknown and may not occur until later, if at all.
Added
In addition to the required regulatory clearances, the proposed transactions are subject to a number of other conditions beyond H2O America’s control that may prevent, delay or otherwise materially adversely affect its completion. We cannot predict whether and when these other conditions will be satisfied.
Added
Furthermore, the requirements for obtaining the required clearances and approvals could delay the completion of the proposed transactions for a significant period of time or prevent them from occurring.

… 22 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−0 removed8 unchanged
Biggest changeThe measures undertaken include, but are not limited to, monthly cybersecurity training for all employees and frequent communication to all employees on the importance of cybersecurity measures. We have engaged third-party experts to assist us in monitoring and managing our cybersecurity process. Furthermore, we monitor cybersecurity threats at certain of our third-party vendors on a regular basis.
Biggest changeThese efforts include strengthening our risk assessment processes, control environment, and incident‑response capabilities. We have engaged third-party experts to assist us in monitoring and managing our cybersecurity process. Furthermore, we monitor cybersecurity threats at certain of our third-party vendors on a regular basis.
Our Vice President, Information Security Officer, and his team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes, with the support of third-party experts.
Our Vice President, Information Security Officer, and his team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes, with the support of 30 Table of Contents third-party experts.
The Vice President, Information Security Officer has over 30 years of experience in information technology of which over 20 years is in cybersecurity, with industry experience in utilities, banking and e-commerce. 28 Table of Contents
The Vice President, Information Security Officer has over 30 years of experience in information technology of which over 20 years is in cybersecurity, with industry experience in utilities, banking and e-commerce.
Added
The measures undertaken include, but are not limited to, monthly cybersecurity training for all employees and frequent communication to all employees on the importance of cybersecurity measures. We continue to advance our cybersecurity governance program and are evolving key practices to align with the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.

Item 2. Properties

Properties — owned and leased real estate

14 edited+0 added−0 removed2 unchanged
Biggest changeTWC has contracts for 2 billion gallons of untreated surface water and 0.48 billion gallons of treated surface water from the GBRA annually, and 0.11 billion gallons of treated surface water from LCRA. TWC owns and operates three surface water treatment plants with a combined production capacity of 9 million gallons per day.
Biggest changeTWC production wells and all sources of supply have the ability to pump a combined 5,400 million gallons annually. TWC has contracts for 2,000 million gallons of untreated surface water and 480 million gallons of treated surface water from the GBRA annually, and 114 million gallons of treated surface water from LCRA.
Water Utility Services hold all of its principal properties in fee simple, subject to current tax and assessment liens, rights-of-way, easements, and certain minor defects in title which do not materially affect their use. A substantial portion of treatment, storage and distribution properties owned by MWC are subject to indentures that secure bonds, notes and other evidence of long-term indebtedness.
Water Utility Services holds all of its principal properties in fee simple, subject to current tax and assessment liens, rights-of-way, easements, and certain minor defects in title which do not materially affect their use. A substantial portion of treatment, storage and distribution properties owned by MWC are subject to indentures that secure bonds, notes and other evidence of long-term indebtedness.
The properties of TWC consist of land, easements, rights (including water rights), buildings, reservoirs, standpipes, wells, supply lines, water treatment plants, pumping plants, 826 miles of transmission and distribution mains and other facilities and equipment used for the collection, purification, storage and distribution of water throughout its service area.
The properties of TWC consist of land, easements, rights (including water rights), buildings, reservoirs, standpipes, wells, supply lines, water treatment plants, pumping plants, 844 miles of transmission and distribution mains and other facilities and equipment used for the collection, purification, storage and distribution of water throughout its service area.
CTWS also owns, maintains and operates 50 small, non-interconnected satellite and consecutive water systems, that combined, have the ability to deliver about 3.5 million gallons of additional water per day to their respective systems. CTWS’s 30 water treatment plants have a combined treatment capacity of approximately 0.05 billion gallons per day.
CTWS also owns, maintains and operates 50 small, non-interconnected satellite and consecutive water systems, that combined, have the ability to deliver approximately 3.5 million gallons of additional water per day to their respective systems. CTWS’s 30 water treatment plants have a combined treatment capacity of approximately 50 million gallons per day.
The properties of CTWS consist of land, easements, rights (including water rights), buildings, reservoirs with a capacity of approximately 9.4 billion gallons, standpipes, dams, wells, supply lines, water treatment plants, pumping plants, 2,331 miles of transmission and distribution mains and other facilities and equipment used for the collection, purification, storage and distribution of water throughout Connecticut and Maine.
The properties of CTWS consist of land, easements, rights (including water rights), buildings, reservoirs with a capacity of approximately 9,400 million gallons, standpipes, dams, wells, supply lines, water treatment plants, pumping plants, 2,340 miles of transmission and distribution mains and other facilities and equipment used for the collection, purification, storage and distribution of water throughout Connecticut and Maine.
In addition, CWC and MWC have agreements with various neighboring water utilities to provide water, at negotiated rates, to our water systems. Collectively, these sources have the capacity to deliver approximately 0.08 billion gallons of potable water daily to the 27 major operating systems.
In addition, CWC and MWC have agreements with various neighboring water utilities to provide water, at negotiated rates, to our water systems. Collectively, these sources have the capacity to deliver approximately 80 million gallons of potable water daily to the 27 major operating systems.
In general, the property is comprised of franchise rights, water rights, necessary rights-of-way, approximately 6,400 acres of land held in fee (which is primarily non-developable watershed), impounding reservoirs with a capacity of approximately 2.3 billion gallons, 2,487 miles of transmission and distribution mains, distribution storage of approximately 0.20 billion gallons, wells, boosting facilities, diversions, surface water treatment plants, equipment, office buildings and other property necessary to provide water service to its customers.
In general, the property is comprised of franchise rights, water rights, necessary rights-of-way, approximately 6,400 acres of land held in fee (which is primarily non-developable watershed), impounding reservoirs with a capacity of approximately 2,256 million gallons, 2,481 miles of transmission and distribution mains, distribution storage of approximately 192 million gallons, wells, boosting facilities, diversions, surface water treatment plants, equipment, office buildings and other property necessary to provide water service to its customers.
As of December 31, 2024, SJW Land Company and Chester Realty, Inc. own approximately 101 acres of property in the State of California and 23 acres of property in State of Connecticut.
As of December 31, 2025, H2O America Land Company and Chester Realty, Inc. own approximately 101 acres of property in the State of California and 23 acres of property in State of Connecticut.
During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations. These wells have been projected to yield an additional 6,000 acre-feet per year or more.
In August 2023, TWR acquired eight wells and the water rights of KTR. During the third quarter of 2024, TWC purchased these assets from TWR for use in utility operations. These wells have been projected to yield an additional 6,000 acre-feet per year or more.
TWC maintains a service area that covers approximately 271 square miles located in the southern region of the Texas hill country in Bandera, Blanco, Comal, Hays, Kendall, Medina and Travis counties. The majority of the service area surrounds an 8,200-surface acre reservoir, Canyon Lake. TWC production wells have the ability to pump a combined 5.8 billion gallons annually.
TWC maintains a service area that covers approximately 271 square miles located in the southern region of the Texas hill country in Bandera, Blanco, Comal, Hays, Kendall, Medina and Travis counties. The majority of the service area surrounds an 8,200-surface acre reservoir, Canyon Lake.
In addition, CTWS owns and operates one wastewater treatment plant with a capacity of 780,000 gallons per day.
In addition, CTWS owns and operates one wastewater treatment plant with a capacity of 0.78 million gallons per day.
SJWC maintains all of its properties in good operating condition in accordance with customary practice for a water utility. SJWC’s groundwater pumping stations have a production capacity of approximately 0.26 billion gallons per day and the present capacity for taking purchased water is approximately 0.08 billion gallons per day.
SJWC maintains all of its properties in proper operating condition in accordance with customary practices for water utilities. SJWC’s groundwater pumping stations have a production capacity of approximately 261 million gallons per day and the present capacity for taking purchased water is approximately 84 million gallons per day.
The surface water collection system has a physical delivery capacity of approximately 0.04 billion gallons per day. During 2024, a maximum and average of 0.13 billion gallons and 0.09 billion gallons of water per day, respectively, were delivered to the system.
The surface water collection system has a physical delivery capacity of approximately 35 million gallons per day. During 2025, a maximum and average of 128 million gallons and 91 million gallons of water per day, respectively, were delivered to the system.
TWC maintains 89 storage tanks with a total storage capacity of 0.02 billion gallons. TWC owns and operates four wastewater treatment plants with a combined capacity of 337,000 gallons per day. In August 2023, TWR acquired eight wells and the water rights of KTR.
TWC owns and operates three surface water treatment plants with a combined production capacity of 9 million gallons per day. TWC maintains 90 storage tanks with a total storage capacity of 17 million gallons. TWC owns and operates four wastewater treatment plants with a combined capacity of 337,000 gallons per day.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+4 added−0 removed1 unchanged
Biggest changeThe case is currently pending in the State of Connecticut Superior Court. CWC is vigorously defending itself in this lawsuit.
Biggest changeThe case is currently pending in the State of Connecticut Superior Court. 31 Table of Contents CWC is vigorously defending itself in this lawsuit. H2O America is unable to provide a reasonable estimate of loss, if any, at this time.
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 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 Company.
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.
SJWC and CWC are plaintiffs in a lawsuit for the benefit of our customers against manufacturers and/or sellers of 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.
Item 3. Legal Proceedings 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 29 Table of Contents contained contaminants.
Item 3. Legal Proceedings H2O America and its subsidiaries are subject to ordinary routine litigation incidental to its business. In October 2023, CWC, a subsidiary of H2O America, was named as a defendant in a putative class action lawsuit alleging that the water provided by CWC contained contaminants.
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.
On November 22, 2024, the MDL court approved settlements involving defendants Tyco Fire Products LP, and BASF Corporation. H2O America is entitled to a portion of the settlements and is monitoring and evaluating the ongoing litigation and settlement activity with the PFAS defendants for potential impacts to the various claims that these utility subsidiaries have asserted.
Added
For the year ended December 31, 2025, the Company received cash proceeds of $25.1 million, in connection with legal settlements with 3M Company and DuPont de Nemours, Inc. related to PFAS contamination. The proceeds were allocated as follows: SJWC received $17.0 million; CWC received $7.6 million; and MWC received $0.5 million, which includes $0.3 million payable to contract operators.
Added
The proceeds are compensatory in nature and are intended to compensate the Company for costs incurred, or to be incurred, to address the presence of PFAS compounds in public water supply systems and have been recorded in accordance with applicable regulatory accounting treatment, subject to regulatory approval.
Added
H2O America is entitled to receive additional cash proceeds from 3M Company over the subsequent eight years, pursuant to the terms of the settlement agreement. In addition, the Company is party to class action settlements with Tyco Fire Products LP and BASF Corporation.
Added
H2O America is monitoring and evaluating the ongoing litigation and settlement activity with the PFAS defendants for potential impacts to the various claims that these utility subsidiaries have asserted. However, the amount of any additional proceeds is not estimable as of the date of this filing.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed1 unchanged
Biggest changeCOMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Among SJW Group, a Water Utility Index and the S&P 500 Index The following descriptive data of the performance graph is supplied in accordance with Rule 304(d) of Regulation S-T (numbers represent U.S. dollars ($)): 2019 2020 2021 2022 2023 2024 SJW Group 100 100 107 122 100 77 Water Utility Index 100 115 144 123 111 106 S&P 500 Index 100 118 152 125 158 197 The Water Utility Index is the eight water company Water Utility Index prepared by Wells Fargo Securities, LLC.
Biggest changeCOMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN Among H2O America, a Water Utility Index and the S&P 500 Index The following descriptive data of the performance graph is supplied in accordance with Rule 304(d) of Regulation S-T (numbers represent U.S. dollars ($)): 2020 2021 2022 2023 2024 2025 H2O America 100 108 122 100 78 80 Water Utility Index 100 128 120 101 89 91 S&P 500 Index 100 129 105 133 166 196 The Water Utility Index is an equal-weight index comprised of eight U.S.-based water utilities.
Five-Year Performance Graph The following performance graph compares the changes in the cumulative stockholder return on SJW Group’s common stock with the cumulative total return on a Water Utility Index and the Standard & Poor’s 500 Index during the last five years ended December 31, 2024.
Five-Year Performance Graph The following performance graph compares the changes in the cumulative stockholder return on H2O America’s common stock with the cumulative total return on a Water Utility Index and the Standard & Poor’s 500 Index during the last five years ended December 31, 2025.
The comparison assumes $100 was invested on December 31, 2019 in SJW Group’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.
The comparison assumes $100 was invested on December 31, 2020 in H2O America’s common stock and in each of the foregoing indices and assumes reinvestment of dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Since November 8, 2024, SJW Group’s common stock has been trading on the Nasdaq Global Select Market under the symbol “SJW.” Prior to November 8, 2024, SJW Group’s common stock was traded on the New York Stock Exchange.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Since November 8, 2024, H2O America’s common stock has been trading on the Nasdaq Global Select Market under the symbol “SJW”.
As of February 20, 2025, there were 255 record holders of SJW Group’s common stock, excluding those shares held in street or nominee name.
As of February 19, 2026, there were 242 record holders of H2O America’s common stock, excluding those shares held in street or nominee name.
Added
Effective May 5, 2025 as a result of a change in the Company’s corporate name the ticker symbol was changed to “HTO.” Prior to November 8, 2024, H2O America’s common stock was traded on the New York Stock Exchange.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

113 edited+43 added−36 removed53 unchanged
Biggest changeThe revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Maine which resulted in $23,045 of additional revenue, an increase in rates of $22,320 attributable to water supply costs that are passed through to customers, an increase of $3,929 from new customers, and regulatory mechanisms of $5,684, partially offset by decreases of $5,933 due to lower usage. 38 Table of Contents Water Utility Services’ Operating Revenue and Customer Counts The following tables present operating revenues and the number of customers by customer group of Water Utility Services: Operating Revenue by Customer Group 2024 2023 2022 Residential and business $ 625,080 557,659 501,111 Industrial 5,099 4,693 5,229 Public authorities 27,446 23,755 22,027 Others 55,494 54,166 47,896 Balancing and memorandum accounts and other regulatory mechanisms 11,819 11,772 26,736 Service and other revenue 7,642 — — $ 732,580 652,045 602,999 Number of Customers 2024 2023 2022 Residential and business 384,619 383,126 379,781 Industrial 592 591 586 Public authorities 2,370 2,387 2,351 Others 11,060 10,983 10,910 398,641 397,087 393,628 Operating Expense Operating expense is summarized below: Operating Expense 2024 2023 2022 Water Utility Services $ 560,364 506,923 473,142 Other Services 10,513 10,408 13,255 Unallocated Corporate 7,059 3,597 3,323 $ 577,936 520,928 489,720 39 Table of Contents The change in consolidated operating expenses was due to the following factors: 2024 vs. 2023 Increase/(decrease) Water production expenses: Change in surface water use $ 5,181 1 % Change in usage 10,254 2 % Change in new customers (156) — % Purchased water and groundwater extraction charge, energy price change and other production expenses, net 25,035 5 % Balancing and memorandum account cost recovery (4,492) (1) % Total water production expenses 35,822 7 % Administrative and general 7,174 2 % Maintenance 5,572 1 % Property taxes and other non-income taxes 1,453 — % Depreciation and amortization 6,987 1 % $ 57,008 11 % Sources of Water Supply SJWC’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and imported water purchased from Valley Water under the terms of a master contract with Valley Water expiring in 2051.
Biggest changeWater Utility Services’ Operating Revenue and Customer Counts The following tables present operating revenues and the number of customers by customer group of Water Utility Services: Operating Revenue by Customer Group 2025 2024 2023 Residential and business $ 676,065 625,080 557,659 Industrial 5,869 5,099 4,693 Public authorities 28,527 27,446 23,755 Others 59,197 55,494 54,166 Balancing and memorandum accounts and other regulatory mechanisms 9,141 11,819 11,772 Service and other revenue 8,300 7,642 — $ 787,099 732,580 652,045 Number of Customers 2025 2024 2023 Residential and business 386,035 384,619 383,126 Industrial 604 592 591 Public authorities 2,345 2,370 2,387 Others 11,144 11,060 10,983 400,128 398,641 397,087 Operating Expense Operating expense is summarized below: 2025 2024 2023 Water Utility Services $ 607,056 560,364 506,923 Other Services 9,946 10,513 10,408 Unallocated Corporate 6,061 7,059 3,597 $ 623,063 577,936 520,928 41 Table of Contents The change in consolidated operating expenses was due to the following factors: 2025 vs. 2024 Increase/(decrease) 2024 vs. 2023 Increase/(decrease) Water production expenses: Change in surface water use $ 6,852 1 % $ 5,181 1 % Change in usage (3,336) (1) % 10,254 2 % Change in new customers 429 — % (156) — % Purchased water and groundwater extraction charge, energy price change and other production expenses, net 24,064 4 % 25,035 5 % Balancing and memorandum account cost recovery (8,870) (2) % (4,492) (1) % Total water production expenses 19,139 2 % 35,822 7 % Administrative and general 20,168 3 % 7,174 2 % Maintenance 1,594 — % 5,572 1 % Property taxes and other non-income taxes 1,758 1 % 1,453 — % Depreciation and amortization 2,468 1 % 6,987 1 % $ 45,127 7 % $ 57,008 11 % The following table presents the sources of water supply: Source of Water Supply 2025 2024 (billion gallons) Purchased water 17.0 17.8 Groundwater 20.5 18.6 Surface water 10.9 11.8 Reclaimed water 0.8 0.8 49.2 49.0 Average water production expense per billion gallons $6.247 million $5.956 million The percentages of water supply by source excluding reclaimed water by state is presented below: Purchased Water Groundwater Surface Water 2025 2024 2025 2024 2025 2024 California 46 % 48 % 45 % 41 % 7 % 9 % Connecticut 9 % 6 % 41 % 39 % 50 % 55 % Maine 2 % 2 % 7 % 6 % 91 % 91 % Texas 12 % 13 % 36 % 37 % 52 % 50 % Water production in 2025 increased by 0.2 billion gallons from 2024.
Customer Growth Customer growth in Water Utility Services is driven by: (i) organic population growth within our authorized service areas and (ii) the addition of new customers to our regulated customer base by acquiring regulated water systems adjacent to or near our existing service territories. We did not have any cash outflows for business acquisitions in 2024.
Customer Growth Customer growth in Water Utility Services is driven by: (i) organic population growth within our authorized service areas and (ii) the addition of new customers to our regulated customer base by acquiring regulated water systems adjacent to or near our existing service territories. We did not have any cash outflows for business acquisitions in 2025 or 2024.
TWC expects to meet customer demand for 2025 with TWC’s water supply which consists of groundwater from wells, surface water and purchased treated and raw water from the GBRA. Results of Operations 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.
TWC expects to meet customer demand for 2026 with TWC’s water supply which consists of groundwater from wells, surface water and purchased treated and raw water from the GBRA. Results of Operations 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.
Similarly, in unusually wet periods, water supply tends to be higher and customer demand tends to be lower, again resulting in lower revenues. SJWC believes that its various sources of water supply, which consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and purchased imported water, will be sufficient to meet customer demand for 2025.
Similarly, in unusually wet periods, water supply tends to be higher and customer demand tends to be lower, again resulting in lower revenues. SJWC believes that its various sources of water supply, which consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water, and purchased imported water, will be sufficient to meet customer demand for 2026.
In addition, CWC is able, but under no obligation, to purchase up to one million gallons of water per day at the then-current wholesale rates per the agreement, $3.1 million per billion gallons as of December 31, 2024. CWC has an agreement with MDC to purchase water from MDC to serve the Unionville system.
In addition, CWC is able, but under no obligation, to purchase up to one million gallons of water per day at the then-current wholesale rates per the agreement, $3.1 million per billion gallons as of December 31, 2025. CWC has an agreement with MDC to purchase water from MDC to serve the Unionville system.
TWC also has raw water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.
TWC also has treated water supply agreements with the LCRA and WTCPUA expiring in 2059 and 2046, respectively, for 350 acre-feet of water per each agreement per year from Lake Austin and the Colorado River, respectively, at prices that may be adjusted periodically by the agencies.
Future payments may fluctuate depending on the contribution rates of employees into the deferred compensation plan and the life span of the retirees and as current officers and executives retire. Under these benefit plans, CWC is committed to pay approximately $1,332, annually to former officers and directors.
Future payments may fluctuate depending on the contribution rates of employees into the deferred compensation plan and the life span of the retirees and as current officers and executives retire. Under these benefit plans, CWC is committed to pay approximately $1,382, annually to former officers and directors.
CWC and MWC believe that they will be able to meet customer demand for 2025 with their existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.
CWC and MWC believe that they will be able to meet customer demand for 2026 with their existing water supply which consists of groundwater from wells, surface water in reservoirs and purchased water treated by neighboring water utilities.
The following sections include a discussion of results for the year ended December 31, 2024 compared to the year ended December 31, 2023. Unless otherwise provided herein, the comparative results for the year ended December 31, 2023 with for the year ended December 31, 2022 may be found in “Part II - Item 7.
The following sections include a discussion of results for the year ended December 31, 2025 compared to the year ended December 31, 2024. Unless otherwise provided herein, the comparative results for the year ended December 31, 2024 with for the year ended December 31, 2023 may be found in “Part II - Item 7.
Regional Non-tariffed Activities Non-tariffed services provided by SJW Group’s subsidiaries include water system operations, maintenance agreements, antenna site leases under agreements with municipalities and other utilities, wholesale water service to adjacent utilities, wastewater services, and Linebacker © , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.
Regional Non-tariffed Activities Non-tariffed services provided by H2O America’s subsidiaries include water system operations, maintenance agreements, antenna site leases under agreements with municipalities and other utilities, wholesale water service to adjacent utilities, wastewater services, and Linebacker ® , an optional service line protection program covering a limited amount of the cost of repairs for leaking or broken water and wastewater service lines and in-home plumbing to eligible residential customers in Connecticut and water service lines to eligible residential customers in Maine.
In accordance with ASC Topic 980, Water Utility Services, to the extent applicable, records 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.
In accordance with ASC Topic 980, Water Utility Services, to the extent applicable, records 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 ratemaking process and for amounts collected in advance of the related expenditures.
Water Utility Services has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations. However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the Safe Drinking Water Act.
Water Utility Services has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing maximum contaminant levels and plan for compliance with future drinking water regulations. However, the EPA and the respective state agencies have continuing authority to issue additional regulations under the SDWA.
Before entering new regulated markets, we evaluate the regulatory environment to ensure that we will have the opportunity to achieve an appropriate rate of return on our investment while maintaining our high standards for quality, reliability and compliance with environmental, health and safety, and water quality standards.
Before entering new regulated markets, we 38 Table of Contents evaluate the regulatory environment to ensure that we will have the opportunity to achieve an appropriate rate of return on our investment while maintaining our high standards for quality, reliability and compliance with environmental, health and safety, and water quality standards.
The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the 47 Table of Contents agreement were placed in service. CWC has agreed to purchase 0.28 billion gallons of water annually from MDC.
The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service. CWC has agreed to purchase 0.28 billion gallons of water annually from MDC.
SJWC’s other benefit obligations include employees’ and directors’ postretirement benefits, an Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan, Special Deferral Election Plan and Deferral Election Program for non-employee directors. Under these benefit plans, SJWC is committed to pay approximately $2,176 annually to former officers and directors.
SJWC’s other benefit obligations include employees’ postretirement benefits, an Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan, Special Deferral Election Plan and Deferral Election Program for non-employee directors. Under these benefit plans, SJWC is committed to pay approximately $2,299 annually to former officers and directors.
When such evidence provides sufficient support, the balances are recorded in SJW Group’s financial statements. It is typical for the CPUC to incorporate any over-collected and/or under-collected balances in balancing or memorandum accounts into customer rates at the time rate decisions are made as part of SJWC’s general rate case proceedings by assessing temporary surcredits and/or surcharges.
When such evidence provides sufficient support, the balances are recorded in H2O America’s financial statements. It is typical for the CPUC to incorporate any over-collected and/or under-collected balances in balancing or memorandum accounts into customer rates at the time rate decisions are made as part of SJWC’s general rate case proceedings by assessing temporary surcredits and/or surcharges.
Goodwill is not amortized but is tested for impairment annually on October 1st or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. SJW Group first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.
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. H2O America first performs a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test.
On December 6, 2024, MWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $15,000 at a fixed interest rate of 6.47%. The note is an unsecured obligation of MWC due on November 20, 2054.
On December 6, 2024, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $20,000 at a fixed interest rate of 6.47%. The note is an unsecured obligation of TWC due on November 20, 2054.
A reserve is recorded for amounts SJW Group estimates will not be collected within the 24-month period. This reserve is based on an estimate of actual usage over the recovery period. The WCMA allows SJWC to track revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reduction.
A reserve is recorded for amounts H2O America estimates will not be collected within the 24-month period. This reserve is based on an estimate of actual usage over the recovery period. The WCMA allows SJWC to track revenue, net of related water costs, associated with reduced sales due to water conservation and associated calls for water use reduction.
Business Strategy SJW Group focuses its business initiatives in three strategic areas: (1) Investing in regional regulated water utility operations to support the health, safety and quality of life of our customers; (2) Regional non-tariffed water utility related services provided in accordance with the guidelines established by the applicable state public utility commissions; and (3) Out-of-region water and utility related services.
Business Strategy H2O America focuses its business initiatives in three strategic areas: (1) Investing in regional regulated water utility operations to support the health, safety and quality of life of our customers; (2) Regional non-tariffed water utility related services provided in accordance with the guidelines established by the applicable state public utility commissions; and (3) Out-of-region water and utility related services.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The contractual cost of the groundwater extraction charge for water pumped from the ground basin was $6.840 million, $6.058 million, and $5.290 million per billion gallons for Valley Water’s fiscal years 2025, 2024 and 2023, respectively. SJWC also pumps water from the local groundwater basin. There are no delivery schedules or contractual obligations associated with the purchase of groundwater.
The contractual cost of the groundwater extraction charge for water pumped from the ground basin was $7.519 million, $6.840 million, and $6.058 million per billion gallons for Valley Water’s fiscal years 2025, 2024 and 2023, respectively. SJWC also pumps water from the local groundwater basin. There are no delivery schedules or contractual obligations associated with the purchase of groundwater.
Under the federal Safe Drinking Water Act, Water Utility Services is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates nationally applicable standards, including maximum contaminant levels for drinking water.
Under the federal SDWA, Water Utility Services is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates nationally applicable standards, including maximum contaminant levels for drinking water.
A significant portion of this amount is subject to future respective state regulatory utility commissions’ approval. 43 Table of Contents Capital expenditures have the effect of increasing utility plant rate base on which Water Utility Services earns a return.
A significant portion of this amount is subject to future respective state regulatory utility commissions’ approval. Capital expenditures have the effect of increasing utility plant rate base on which Water Utility Services earns a return.
With the availability of the WRA in Connecticut, which allows for recovery of authorized revenues, decreases in consumption year to year do not present the same financial risk as in our other water utility services utilities.
With the availability of the WCMA in California and the WRA in Connecticut, which allows for recovery of authorized revenues, decreases in consumption year to year do not present the same financial risk as in our other water utility services utilities.
These expenses include power, which is used to operate pumps and other equipment, purchased water and groundwater extraction charges. For 2024, production expenses accounted for 51% of our total operating expenses. Price increases associated with these production inputs would adversely impact our results of operations until rate relief is granted.
These expenses include power, which is used to operate pumps and other equipment, purchased water and groundwater extraction charges. For 2025, production expenses accounted for 50% of our total operating expenses. Price increases associated with these production inputs would adversely impact our results of operations until rate relief is granted.
See current authorized capital structures in Item 1 , “Business” under “Regulation and Rates.” Short-term Financing Arrangements 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.
See current authorized capital structures in Item 1 , “Business” under “Regulation and Rates.” Short-term Financing Arrangements H2O America 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.
The agreement became effective on October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.
The agreement became effective on 42 Table of Contents October 6, 2000 and has a term of 50 years beginning May 19, 2003, the date the water supply facilities related to the agreement were placed in service.
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. SJW Group bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. H2O America bases its estimates on historical experience and other assumptions that are believed to be reasonable under the circumstances.
The contractual cost of the groundwater extraction charge for water pumped from the ground basin was $6.840 million, $6.058 million, and $5.290 million per billion gallons for Valley Water’s fiscal years 2025, 2024 and 2023, respectively. CWC has an agreement with RWA to purchase water from RWA.
The contractual cost of the groundwater extraction charge for water pumped from the ground basin was $7.519 million, $6.840 million, and $6.058 million per billion gallons for Valley Water’s fiscal years 2025, 2024 and 2023, respectively. CWC has an agreement with RWA to purchase water from RWA.
SJW Group also seeks appropriate non-tariffed business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations. SJW Group seeks opportunities to fully utilize its capabilities and existing capacity by providing services to other regional water systems, which also will benefit its existing regional customers.
H2O America also seeks appropriate non-tariffed business opportunities that complement its existing operations or that allow it to extend its core competencies beyond existing operations. H2O America seeks opportunities to fully utilize its capabilities and existing capacity by providing services to other regional water systems, which also will benefit its existing regional customers.
All of SJW Group’s and subsidiaries’ lines of credit contain customary representations, warranties and events of default, as well as certain restrictive covenants customary for facilities of this type, including restrictions on indebtedness, liens, acquisitions and investments, restricted payments, asset sales, and fundamental changes.
All of H2O America’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 factors SJW Group considers in evaluating such opportunities include: • Potential profitability; • Regulatory environment; • Additional growth opportunities within the region; • Water supply, water quality and environmental issues; • Capital requirements; • General economic conditions; and • Synergy potential. 32 Table of Contents As part of our pursuit of the above three strategic areas, we consider from time-to-time opportunities to acquire businesses and assets.
The factors H2O America considers in evaluating such opportunities include: • Potential profitability; • Regulatory environment; • Additional growth opportunities within the region; • Water supply, water quality and environmental issues; • Capital requirements; • General economic conditions; and • Synergy potential. 34 Table of Contents As part of our pursuit of the above three strategic areas, we consider from time-to-time opportunities to acquire businesses and assets.
Factors Affecting Our Results of Operations SJW Group’s financial condition and results of operations are influenced by a variety of factors including the following: • Economic utility regulation; • Infrastructure investment; • Compliance with environmental, health and safety standards; • Production expenses; • Customer growth; • Water usage per customer; 34 Table of Contents • Weather conditions, seasonality and sources of water supply; and • Merger and acquisition activities, if any.
Factors Affecting Our Results of Operations H2O America’s financial condition and results of operations are influenced by a variety of factors including the following: • Economic utility regulation; • Infrastructure investment; • Compliance with environmental, health and safety standards; • Production expenses; 36 Table of Contents • Customer growth; • Water usage per customer; • Weather conditions, seasonality and sources of water supply; and • Merger and acquisition activities, if any.
SJW Group estimates capital expenditures of approximately $300,000 for PFAS treatment based on finalized maximum contaminant levels. See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures. Environmental, health and safety, and water quality regulations are complex and change frequently, and the overall trend has been that they have become more stringent over time.
H2O America estimates capital expenditures of approximately $400,000 for PFAS treatment based on finalized maximum contaminant levels. See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures. Environmental, health and safety, and water quality regulations are complex and change frequently, and the overall trend has been that they have become more stringent over time.
In most cases, replacement cost will significantly exceed the original installation cost of the retired assets due to increases in the costs of goods and services and increased regulation. In addition to these capital expenditures, Water Utility Services expects to incur approximately $105,000 over the next five years, including $22,000 in 2025, in capitalizable costs associated with cloud-based computing arrangements.
In most cases, replacement cost will significantly exceed the original installation cost of the retired assets due to increases in the costs of goods and services and increased regulation. In addition to these capital expenditures, Water Utility Services expects to incur approximately $100,000 over the next five years, including $25,000 in 2026, in capitalizable costs associated with cloud-based computing arrangements.
In addition, CWC has the option, but is under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement ($3.1 million per billion gallons as of December 31, 2024). CWC has an agreement with the MDC to purchase water from MDC to serve the Unionville system.
CWC has the option, but is under no obligation, to purchase up to one million gallons of water per day at the then current wholesale rates per the agreement ($3.3 million per billion gallons as of December 31, 2025). CWC has an agreement with the MDC to purchase water from MDC to serve the Unionville system.
While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2024 activities, we will have access to the external funding sources necessary to implement 35 Table of Contents our ongoing capital investment programs in the future. See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.
While our ability to obtain financing will continue to be a key risk, we believe that based on our successful 2025 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future. See discussion below under “Liquidity and Capital Resources” for additional information on capital expenditures.
There were no material disallowances recognized during the years ended December 31, 2024, 2023 and 2022. 33 Table of Contents Recognition of Balancing and Memorandum Accounts Balancing and memorandum accounts are primarily utilized by our California operations.
There were no material disallowances recognized during the years ended December 31, 2025, 2024 and 2023. 35 Table of Contents Recognition of Balancing and Memorandum Accounts Balancing and memorandum accounts are primarily utilized by our California operations.
Credit Rating The condition of the capital and credit markets or the strength of financial institutions could impact SJW Group’s ability to draw on its lines of credit, issue long-term debt, sell its equity or earn interest income.
Credit Rating The condition of the capital and credit markets or the strength of financial institutions could impact H2O America’s ability to draw on its lines of credit, issue long-term debt, sell its equity or earn interest income.
Sources of Capital SJW Group’s ability to finance future construction programs and sustain dividend payments depends on its ability to maintain or increase internally generated funds and attract external financing. The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.
Sources of Capital H2O America’s ability to finance future construction programs, execute on acquisitions and sustain dividend payments depends on its ability to maintain or increase internally generated funds and attract external financing. The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.
The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the Safe Drinking Water Act. The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029.
The regulations impose maximum contaminant levels and monitoring requirements for the nation’s water system for six PFAS chemicals under the SDWA. The final regulation requires water systems to comply with PFAS monitoring and reporting requirements by 2027, and to comply with the maximum contaminant levels by 2029.
Cash flow from operations is primarily generated by net income from revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes, share-based compensation, allowance for equity funds used during construction, gains on the sale of assets, and other changes in working capital items. Cash flow from operations increased in 2024 by $4,695.
Cash flow from operations are primarily generated by net income from revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes, share-based compensation, allowance for equity funds used during construction, gains on the sale of assets, and other changes in working capital items.
Water Utility Services’ capital expenditures are incurred in connection with normal upgrading and expansion of existing facilities and to comply with environmental regulations. Over the next five years, Water Utility Services expects to incur approximately $1,900,000 in capital expenditures, which includes replacement of pipes and mains, maintaining water systems, and installing approximately $300,000 in PFAS treatment.
Water Utility Services’ capital expenditures are incurred in connection with normal upgrading and expansion of existing facilities and to comply with environmental regulations. Over the next five years, Water Utility Services expects to incur approximately $2,568,000 in capital expenditures, which includes replacement of pipes and mains, maintaining water systems, and installing approximately $400,000 in PFAS treatment.
Regional Regulated Activities SJW Group’s regulated utility operation is conducted through SJWC, CWC, TWC and MWC. SJW Group plans and applies a diligent and disciplined approach to maintaining and improving its water system infrastructures and also seeks to acquire regulated water systems adjacent to or near its existing service territory. CWC and TWC also provide regulated wastewater services.
Regional Regulated Activities H2O America’s regulated utility operation is conducted through SJWC, CWC, TWC and MWC. H2O America plans and applies a diligent and disciplined approach to maintaining and improving its water system infrastructures and also seeks to acquire regulated water systems adjacent to or near its existing service territory. CWC and TWC also provide regulated wastewater services.
For additional information on SJW Group’s lines of credit, see Note 5 of “Notes to Consolidated Financial Statements.” 44 Table of Contents Long-term Financing Arrangements SJW Group’s and its subsidiaries’ long-term debt activities are for purposes of refinancing short-term borrowings, funding capital expenditures and working capital, and repayments of maturing long-term debt.
For additional information on H2O America’s lines of credit, see Note 5 of “Notes to Consolidated Financial Statements.” 47 Table of Contents Long-term Financing Arrangements H2O America’s and its subsidiaries’ long-term debt activities are for purposes of refinancing short-term borrowings, funding capital expenditures and working capital, and repayments of maturing long-term debt.
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.
In assessing the qualitative factors, H2O America considers the impact of these key factors: change in industry and competitive environment, financial performance, macroeconomic conditions, and other relevant Company-specific events.
All of the lines of credit also include certain customary financial covenants such as a funded debt to capitalization ratio and a minimum interest coverage ratio. As of December 31, 2024, SJW Group and its subsidiaries were in compliance with all covenants on their lines of credit.
All of the lines of credit also include certain customary financial covenants such as a funded debt to capitalization ratio and a minimum interest coverage ratio. As of December 31, 2025, H2O America and its subsidiaries were in compliance with all covenants on their lines of credit.
In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase SJW Group’s cost of capital.
In addition, government policies, the state of the credit markets and other factors could result in increased interest rates, which would increase H2O America’s cost of capital.
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. SJW Group performed an impairment analysis as of October 1, 2024.
If H2O America 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. H2O America performed an impairment analysis as of October 1, 2025.
For a detailed discussion on the application of these and other accounting policies, see Note 2 of “Notes to Consolidated Financial Statements.” SJW Group’s critical accounting estimates are as follows: Recognition of Regulatory Assets and Liabilities Generally accepted accounting principles for water utilities include the recognition of regulatory assets and liabilities as permitted by ASC Topic 980.
For a detailed discussion on the application of these and other accounting policies, see Note 2 of “Notes to Consolidated Financial Statements.” H2O America’s critical accounting estimates are as follows: Recognition of Regulatory Assets and Liabilities GAAP for water utilities include the recognition of regulatory assets and liabilities as permitted by ASC Topic 980.
Based on current prices and estimated deliveries, SJWC is committed to purchase from Valley Water a minimum of 90% of the reduced delivery schedule, or 18.9 billion gallons ($135,975) of water at the current contract water rate of $7.19 million per billion gallons in the year ending December 31, 2025.
Based on current prices and estimated deliveries, SJWC is committed to purchase from Valley Water a minimum of 90% of the reduced delivery schedule, or 18.9 billion gallons ($148,795) of water at the current contract water rate of $7.87 million per billion gallons in the year ending December 31, 2026.
Employee Benefit Arrangements SJWC and CTWS sponsor noncontributory defined benefit pension plans and provide health care and life insurance benefits for retired employees. In 2024, SJWC and CTWS contributed $8,007 and $7 to the pension plans and other postretirement benefit plans, respectively.
Employee Benefit Arrangements SJWC and CTWS sponsor noncontributory defined benefit pension plans and provide health care and life insurance benefits for retired employees. In 2025, SJWC and CTWS contributed $5,675 and $7 to the pension plans and other postretirement benefit plans, respectively.
Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year. On December 6, 2024, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $20,000 at a fixed interest rate of 6.47%.
Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year. On September 18, 2025, TWC issued a promissory note to a national cooperative bank under an existing master loan agreement for a principal amount of $40,000 at a fixed interest rate of 6.68%.
Out-of-Region Opportunities SJW Group also from time to time pursues opportunities to participate in out-of-region water and utility related services, particularly regulated water and wastewater businesses. SJW Group evaluates out-of-region and out-of-state opportunities that meet SJW Group’s risk and return profile.
Out-of-Region Opportunities H2O America also from time to time pursues opportunities to participate in out-of-region water and utility related services, particularly regulated water and wastewater businesses. H2O America evaluates out-of-region and out-of-state opportunities that meet H2O America’s risk and return profile.
The note is an unsecured obligation of TWC due on November 20, 2054. Interest is payable quarterly in arrears on the 20th day of January, April, July and October of each year. In January 2025, TWC amended the existing master loan agreement to modify one of the financial covenants. All of the other terms and conditions remain the same.
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.
In 2025, SJWC and CTWS expect to make required and discretionary cash contributions of up to $6,680 to the pension plans and other postretirement benefit plans. The amount of required contributions for years thereafter is not actuarially determinable.
In 2026, SJWC and CTWS expect to make required and discretionary cash contributions of up to $7,682 to the pension plans and other postretirement benefit plans. The amount of required contributions for years thereafter is not actuarially determinable.
The contract water rate for Valley Water’s fiscal years 2025, 2024 and 2023 was $7.194 million, $6.411 million, and $5.644 million per billion gallons, respectively.
The contract water rate for Valley Water’s fiscal years 2026, 2025 and 2024 was $7.872 million, $7.194 million, and $6.411 million per billion gallons, respectively.
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, Valley Water Board of Directors approved treated water deliveries reflecting the contractual delivery schedule reduced by 23% through June 30, 2025.
For the years ended December 31, 2025, 2024 and 2023, SJWC purchased from Valley Water 15.9 billion gallons ($120,322), 17.0 billion gallons ($117,698) and 18.3 billion gallons ($111,173), respectively, of contract water. On June 3, 2025, Valley Water Board of Directors approved treated water deliveries reflecting the contractual delivery schedule reduced by 23% through June 30, 2026.
The contract water rate for Valley Water’s fiscal years 2025, 2024 and 2023 was $7.194 million, $6.411 million, and $5.644 million per billion gallons, respectively.
The contract water rate for Valley Water’s fiscal years 2026, 2025 and 2024 was $7.872 million, $7.194 million, and $6.411 million per billion gallons, respectively.
The revenue increase for Water Utility Services is primarily due to an increase in authorized rates in California and Connecticut, which resulted in an additional $36,076 in revenue, an increase in rates of $26,057 attributable to water supply costs that are passed through to customers, an increase of $14,861 due to higher usage, an increase of $2,532 from new customers, and increases in services and other revenue of $7,642, partially offset by decreases of $6,633 in other regulatory mechanisms and a decrease of $2,459 in Other Services.
The revenue decrease of $2,368 from Other Services is primarily attributable to lower real estate activity. 2024 vs. 2023 The revenue increase consists of $80,535 for Water Utility Services which is primarily due to an increase in authorized rates in California and Connecticut, which resulted in an additional $36,076 in revenue, an increase in rates of $26,057 attributable to water supply costs that are passed through to customers, an increase of $14,861 due to higher usage, an increase of $2,532 from new customers, and increases in services and other revenue of $7,642, partially offset by decreases of $6,633 in other regulatory mechanisms.
Dividends have been paid on SJW Group’s and its predecessor’s common stock for 325 consecutive quarters and the annual dividend amount has increased in each of the last 57 years. While historically SJW Group has generally paid dividends equal to approximately 50% to 60% of its net income, SJW Group cannot guarantee that this trend will continue in the future.
Dividends have been paid on H2O America’s and its predecessor’s common stock for 329 consecutive quarters and the annual dividend amount has increased in each of the last 58 years. While historically H2O America has generally paid dividends equal to approximately 50% to 60% of its net income, H2O America cannot guarantee that this trend will continue in the future.
The qualitative assessment found no indicators of impairment and therefore SJW Group did not perform the quantitative impairment test. No impairments occurred during the years ended December 31, 2024, 2023 or 2022.
The qualitative assessment found no indicators of impairment and therefore H2O America did not perform the quantitative impairment test. No impairments occurred during the years ended December 31, 2025, 2024 or 2023.
The rate charged by the MDC at December 31, 2024 were three dollars and eighty cents per hundred cubic feet. 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.
The rate charged by the MDC at December 31, 2025 were $3.91 per hundred cubic feet. 50 Table of Contents MWC had 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.
Other business activities that are not separately reportable segments are SJWC’s Cupertino service concession arrangement operations, TWOS, TWR, NEWUS, SJW Land Company and Chester Realty, Inc. and are collectively referred to as “Other Services.” Critical Accounting Estimates SJW Group has identified accounting estimates delineated below as estimates critical to its business operations and the understanding of the results of operations.
Other business activities that are not separately reportable segments are SJWC’s City of Cupertino service concession arrangement operations, H2O America Land Company and Chester Realty, Inc, contract water and sewer operations and other water-related services provided by NEWUS and are collectively referred to as “Other Services.” Critical Accounting Estimates H2O America has identified accounting estimates delineated below as estimates critical to its business operations and the understanding of the results of operations.
On December 28, 2023, SJWC submitted the application through the State of California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts greater than 60-days past due as of December 31, 2022. We received $9,130 in the second quarter of 2024 under the State of California Water and Wastewater Arrearages Payment Program.
On December 28, 2023, SJWC submitted the application through the State of California Water and Wastewater Arrearages Payment Program to relieve outstanding payment delinquencies for customer accounts greater than 60- 44 Table of Contents days past due as of December 31, 2022.
While our ability to obtain financing will continue to be a risk, we believe that based on our 2024 and 2023 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future. SJW Group, CTWS and CWC were put on negative watch on September 19, 2023.
While our ability to obtain financing will continue to be a risk, we believe that based on our 2025 and 2024 activities, we will have access to the external funding sources necessary to implement our ongoing capital investment programs in the future.
The changes are primarily attributable to changes in consumption by customers driven primarily by weather conditions in our service areas. The contract water rates for SJWC are determined by Valley Water. These rates are adjusted periodically and coincide with Valley Water’s fiscal year, which ends on June 30.
The changes are primarily attributable to increase in consumption by customers in Connecticut partially offset by decrease in consumption by customers in California. The contract water rates for SJWC are determined by Valley Water. These rates are adjusted periodically and coincide with Valley Water’s fiscal year, which ends on June 30.
Liquidity and Capital Resources Water Utility Services’ business derives the majority of its revenue directly from residential and business customers. Management believes that the collection rate for its accounts receivables will continue to improve as service disconnections return to normal.
Liquidity and Capital Resources Water Utility Services’ business derives the majority of its revenue directly from residential and business customers. Management asserts that the collection rate for its accounts receivables has improved as the ability to use service disconnections have returned to normal.
SJW Group’s regulated operations’ financing activity is designed to achieve capital structures consistent with regulatory guidelines in the locations where the companies operate.
H2O America’s regulated operations’ financing activity is designed to achieve capital structures consistent with regulatory guidelines 46 Table of Contents in the locations where the companies operate.
To address the difference between conservation usage and authorized usage in the rate case, the CPUC has approved the activation of the WCMA. The WCMA is a temporary revenue protection mechanism, due to the voluntary 15% water reduction request, which tracks the divergence between authorized versus actual consumption in a balancing account for future recovery.
The WCMA is a temporary revenue protection mechanism, due to the voluntary 15% water reduction request, which tracks the divergence between authorized versus actual consumption in a balancing account for future recovery.
Operating revenue for the Water Utility Services reportable segment and Other Services was as follows: Operating Revenue 2024 2023 2022 Water Utility Services $ 732,580 652,045 603,000 Other Services 15,859 18,318 17,698 Total operating revenue $ 748,439 670,363 620,698 The change in consolidated operating revenue was due to the following factors: 2024 vs. 2023 Increase/(decrease) 2023 vs. 2022 Increase/(decrease) Water Utility Services: Consumption changes $ 14,861 2 % $ (5,933) (1) % Increase in customers 2,532 — % 3,929 — % Rate increases for: Pass-through water costs 1 26,057 4 % 22,320 4 % All other increases 2 36,076 5 % 23,045 4 % Regulatory mechanisms 3 (6,633) (1) % 5,684 1 % Service and other revenue 7,642 2 % — — % Other Services (2,459) — % 620 — % Total change in operating revenue $ 78,076 12 % $ 49,665 8 % ____________________ (1) Consists of rate increases specifically associated with changes in the water supply costs that are passed through to customers.
Operating Revenue 2025 2024 2023 Water Utility Services $ 787,099 732,580 652,045 Other Services 13,491 15,859 18,318 Total operating revenue $ 800,590 748,439 670,363 The change in consolidated operating revenue was due to the following factors: 2025 vs. 2024 Increase/(decrease) 2024 vs. 2023 Increase/(decrease) Water Utility Services: Consumption changes $ (7,220) (1) % $ 14,861 2 % Increase in customers 1,452 — % 2,532 — % Rate increases for: — % Pass-through water costs 1 23,281 3 % 26,057 4 % All other increases 2 44,134 6 % 36,076 5 % Regulatory mechanisms 3 (7,987) (1) % (6,633) (1) % Service and other revenue 859 — % 7,642 2 % Other Services (2,368) — % (2,459) — % Total change in operating revenue $ 52,151 7 % $ 78,076 12 % ____________________ (1) Consists of rate increases specifically associated with changes in the water supply costs that are passed through to customers.
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. The various components of operating expenses are discussed below.
Through November 2025, water sales to MWC were billed at a wholesale discount of $0.20 per hundred cubic feet of water below Kennebec Water District's tariffed rates. The current tariff rate was $1.51 per hundred cubic feet as of December 31, 2025. The various components of operating expenses are discussed below.
Interest is payable semi-annually in arrears on January 31st and July 31st of each year. On July 31, 2024, CWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $50,000 of its 5.78% Senior Notes, Series 2024 (“Series 2024 Notes”).
Interest is payable semi-annually in arrears on May 1st and November 1st of each year, commencing May 1, 2026. On November 12, 2025, SJWC entered into a note purchase agreement with certain institutional investors, pursuant to which the company sold an aggregate principal amount of $55,000 of its 5.83% Senior Notes, Series R (“Series R Notes”).
The agreement was signed in April 2006 and became effective upon the receipt of all regulatory approvals in 2008 and will remain in effect for a minimum of 50 years upon becoming effective. CWC will pay RWA $75 per year as part of a capacity agreement, for a total of 14 years, starting on the effective date of the agreement.
The agreement was signed in April 2006 and became effective upon the receipt of all regulatory approvals in 2008 and will remain in effect for a minimum of 50 years upon becoming effective.
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.
Since the inception of the New Equity Distribution Agreement, H2O America has issued and sold 2,763,359 shares of common stock at a weighted average price of $52.39 for a total net proceeds of $142,975 and has $55,239 of aggregate gross sales price of shares remaining to issue under the New Equity Distribution Agreement as of December 31, 2025.
To address regulatory risk due to regulatory lag and changing legislation policies and regulations, rate cases may be filed as necessary in Texas, provided there is no current rate case outstanding. Further, rate cases may not be filed more frequently than once every 12 months. Additionally, to mitigate regulatory lag for capital improvements, Texas has implemented its first SIC.
To address regulatory risk due to regulatory lag and changing legislation policies and regulations, rate cases may be filed as necessary in Texas, provided it has been more than 12 months since TWC’s most recent application to change rates was filed. Additionally, to mitigate regulatory lag for capital improvements, Texas implemented its first SIC in 2021.
Property Taxes and Other Non-income Taxes Property taxes and other non-income taxes for 2024 increased $1,453 from 2023. The increase was primarily the result of an increase in property taxes due to utility plant additions and payroll taxes due to increases in wages and headcount. Depreciation and Amortization Depreciation and amortization expense increased $6,987 in 2024 from 2023.
Maintenance Expense Maintenance expenses increased $1,594 in 2025, primarily due to higher contracted work. Property Taxes and Other Non-income Taxes Property taxes and other non-income taxes increased $1,758 in 2025. The increase was primarily the result of an increase in property taxes due to utility plant additions and higher payroll taxes due to increases in wages and headcount.
CWC has agreed to purchase 0.28 billion gallons of water annually from MDC at the published retail rate, three dollars and eighty cents per hundred cubic feet as of December 31, 2024. MWC has an agreement with the Kennebec Water District for potable water service.
CWC has agreed to purchase 0.28 billion gallons of water annually from MDC at the published retail rate, $3.91 per hundred cubic feet as of December 31, 2025. MWC had an agreement with the Kennebec Water District for potable water service. The agreement had previously been in place for 20 years prior to being renewed on November 7, 2020.
MWC guarantees a minimum consumption of 50 million 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.
In November 2025, the agreement was terminated and MWC transitioned from the previously negotiated rate to a standard tariff rate. MWC guarantees a minimum consumption of 50 million gallons of water annually. Water sales to MWC are billed at a wholesale discount of $0.20 per hundred cubic feet of water below Kennebec Water District's tariffed rates.

… 112 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed0 unchanged
Biggest changeSJW Group has no derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk. 48 Table of Contents
Biggest changeH2O America has no derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk. 51 Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk SJW Group is subject to market risks in the normal course of business, including changes in interest rates, pension plan asset values, and equity prices. The exposure to changes in interest rates can result from the issuance of debt and short-term funds obtained through the company’s variable rate lines of credit.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk H2O America is subject to market risks in the normal course of business, including changes in interest rates, pension plan asset values, and equity prices. The exposure to changes in interest rates can result from the issuance of debt and short-term funds obtained through the company’s variable rate lines of credit.
SJW Group’s subsidiaries sponsor noncontributory pension and other postretirement plans for its employees. Pension and other postretirement costs and the funded status of the plans may be affected by a number of factors including the discount rate, mortality rates of plan participants, investment returns on plan assets, and pension reform legislation.
H2O America’s subsidiaries sponsor noncontributory pension and other postretirement plans for its employees. Pension and other postretirement costs and the funded status of the plans may be affected by a number of factors including the discount rate, mortality rates of plan participants, investment returns on plan assets, and pension reform legislation.

Other HTO 10-K year-over-year comparisons