SJW Group (NYSE:SJW) Files An 8-K Other EventsItem 8.01. Other Events
On March 22, 2018, the California Public Utilities Commission (the “Commission”) issued adecision in the proceeding to determine the cost of capital (“COC”) for the period 2018 through 2020 for San Jose Water Company, a wholly-owned subsidiary of SJW Group. The COC is a triannual regulatory process in which the Commission determines a regulated water utility's cost of long-term debt and common stock and the components of the authorized capital structure. The Commission’s decision provides for a reduction to San Jose Water Company's authorized return on equity from 9.43% to 8.90% and its overall return on rate base from 8.09% to 7.64%. The decision is effective retroactively to January 1, 2018, and it allows for the continuation of a Water Cost of Capital Mechanism (“WCCM”). The WCCM is a mechanism that allows for an annual adjustment to authorized return on equity between COC filings. New customer water rates reflecting this updated authorized rate of return will become effective on or about March 27, 2018. The differential in revenue requirement from January 1, 2018 up to the time when the new rates became effective in March 2018 has been tracked in a memorandum account and is subject to customer refund in San Jose Water Company’s next general rate adjustment.The anticipated reduction in authorized revenue requirement for 2018 is approximately $6 million. The decision is subject to appeal within 30 days from the date of issuance.
This report contains certain forward-looking statements including, but not limited to, statements relating to the potential impact of the Commission’s decision on SJW Group’s authorized revenue requirement, which are made to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Group's most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. SJW Group undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
About SJW Group (NYSE:SJW)
SJW Group, formerly SJW Corp., is a holding company. The Company’s subsidiaries include San Jose Water Company, SJWTX, Inc., SJW Land Company and Texas Water Alliance Limited (TWA). SJWTX, Inc. is doing business as Canyon Lake Water Service Company (CLWSC). It operates through the segments, which include Water Utility Services, Real Estate Services and All Other. Its Water Utility Services segment provides water utility and utility-related services to its customers through its subsidiaries, such as San Jose Water Company, CLWSC and TWA. The Real Estate Services segment includes property management and investment activity conducted by SJW Land Company. The Company’s All Other segment includes its other business activities. San Jose Water Company distributes water to customers in accordance with accepted water utility methods. SJW Land Company owns undeveloped land, and owns and operates a portfolio of commercial buildings in the states of California, Texas, Arizona and Tennessee.