CALIFORNIA WATER SERVICE GROUP

Previous wording

This quarterly report, including all documents incorporated by reference, contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (the PSLRA). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the PSLRA. Forward-looking statements in this quarterly report are based on currently available information, expectations, estimates, assumptions and projections, and our management’s beliefs, assumptions, judgments and expectations about us, the water utility industry and general economic conditions. These statements are not statements of historical fact. When used in our documents, statements that are not historical in nature, including words like “will,” “would,” “expects,” “intends,” “plans,” “believes,” “may,” “could,” “estimates,” “assumes,” “anticipates,” “projects,” “progress,” “predicts,” “hopes,” “targets,” “forecasts,” “should,” “seeks,” “indicates,” or variations of these words or similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements in this quarterly report include, but are not limited to, statements describing our intention, indication or expectation regarding our financial performance, dividends or targeted payout ratio, our expectations, anticipations or beliefs regarding governmental, legislative, judicial, administrative or regulatory timelines, regulatory compliance, decisions, approvals, authorizations, requirements or other actions, including plans and proposals pursuant to and timing of the California Water Service Company (Cal Water)’s general rate case (GRC) filed on July 8, 2024 (2024 CA GRC), rate amounts, cost recovery or refunds, certain per- and polyfluoroalkyl substances (PFAS) regulations, and associated impacts, such as our expected or estimated revenue, our intentions regarding recovery billing, our expectations regarding regulatory asset and operating revenue recognition, sources of funding or capital requirements, estimates of, or expectations regarding, capital expenditures, funding needs or other capital requirements, obligations, contingencies or commitments, our expectations regarding water sources, our beliefs regarding adequacy of water supplies, estimates and assumptions relating to our significant accounting policies, such as deferred revenue or assets or refund of advances, our expectations or assumptions regarding employee benefit plans and stock-based compensation and estimated contributions to our pension plans and other postretirement benefit plans, our estimated annual effective tax rate and expectations regarding tax benefits, our intentions regarding use of net proceeds from any future equity or debt issuances or borrowings, our expectations, intentions or anticipations regarding our sources of funding, capital structure, including authorized return on equity, cost of debt and rate of retur…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This quarterly report, including all documents incorporated by reference, contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (the PSLRA). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the PSLRA. Forward-looking statements in this quarterly report are based on currently available information, expectations, estimates, assumptions and projections, and our management’s beliefs, assumptions, judgments and expectations about us, the water utility industry and general economic conditions. These statements are not statements of historical fact. When used in our documents, statements that are not historical in nature, including words like “will,” “would,” “expects,” “intends,” “plans,” “believes,” “may,” “could,” “estimates,” “assumes,” “anticipates,” “projects,” “progress,” “predicts,” “hopes,” “targets,” “forecasts,” “should,” “seeks,” “indicates,” or variations of these words or similar expressions are intended to identify forward-looking statements. Examples of forward-looking statements in this quarterly report include, but are not limited to, statements describing our intention, indication or expectation regarding our financial performance, dividends or targeted payout ratio, our expectations, anticipations or beliefs regarding governmental, legislative, judicial, administrative or regulatory timelines, regulatory compliance, decisions, approvals, authorizations, requirements or other actions, including plans and proposals pursuant to and timing of the California Water Service Company (Cal Water)’s general rate case (GRC) filed on July 8, 2024 (2024 CA GRC) and the GRCs filed by our other subsidiaries, rate amounts, cost recovery or refunds, certain per- and polyfluoroalkyl substances (PFAS) regulations, and associated impacts, such as our expected or estimated revenue, our intentions regarding recovery billing, our expectations regarding regulatory asset and operating revenue recognition, sources of funding or capital requirements, estimates of, or expectations regarding, capital expenditures, funding needs or other capital requirements, obligations, contingencies or commitments, our expectations regarding water sources, our beliefs regarding adequacy of water supplies, estimates and assumptions relating to our significant accounting policies, such as deferred revenue or assets or refund of advances, our expectations or assumptions regarding employee benefit plans and stock-based compensation and estimated contributions to our pension plans and other postretirement benefit plans, our estimated annual effective tax rate and expectations regarding tax benefits, our intentions regarding use of net proceeds from any future equity or debt issuances or borrowings, our expectations, intentions or anticipations regarding our sources of funding, capital structure, including authorized ret…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

•the outcome and timeliness of regulatory commissions’ actions concerning rate relief and other matters, including with respect to the 2024 CA GRC;

Current wording

•the outcome and timeliness of regulatory commissions’ actions concerning rate relief and other matters, including with respect to the 2024 CA GRC and the GRCs of our other subsidiaries;

Previous wording

•the impact of stagnating or worsening business and economic conditions, including inflationary pressures, general economic slowdown or a recession, changes in tariff policy and uncertainty regarding tariffs and other retaliatory trade measures, the interest rate environment, changes in monetary policy, adverse capital markets activity or macroeconomic conditions as a result of geopolitical conflicts;

Current wording

•the impact of stagnating or worsening business and economic conditions, including inflationary pressures, general economic slowdown or a recession, changes in tariff policy and uncertainty regarding tariffs and other retaliatory trade measures, the interest rate environment, changes in monetary policy, adverse capital markets activity or macroeconomic conditions as a result of geopolitical conflicts, and the shutdown of the U.S. federal government;

Previous wording

•the risks set forth in “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

•the risks set forth in “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report on Form 10-K).

Previous wording

We maintain our accounting records in accordance with GAAP and as directed by the Commissions to which our operations are subject. The process of preparing financial statements in accordance with GAAP requires the use of estimates on the part of management. The estimates used by management are based on historic experience and an understanding of current facts and circumstances. Management believes that the following accounting policies are critical because they involve a higher degree of complexity and judgment, and can have a material impact on our results of operations, financial condition, and cash flows of the business. These policies and their key characteristics are discussed in detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report on Form 10-K). They include:

Current wording

We maintain our accounting records in accordance with GAAP and as directed by the Commissions to which our operations are subject. The process of preparing financial statements in accordance with GAAP requires the use of estimates on the part of management. The estimates used by management are based on historic experience and an understanding of current facts and circumstances. Management believes that the following accounting policies are critical because they involve a higher degree of complexity and judgment, and can have a material impact on our results of operations, financial condition, and cash flows of the business. These policies and their key characteristics are discussed in detail in the 2024 Annual Report on Form 10-K. They include:

Previous wording

For the six months ended June 30, 2025, there were no material changes in the methodology for computing critical accounting estimates, no additional accounting estimates met the standards for critical accounting policies, and there were no material changes to the important assumptions underlying the critical accounting estimates.

Current wording

For the nine months ended September 30, 2025, there were no material changes in the methodology for computing critical accounting estimates, no additional accounting estimates met the standards for critical accounting policies, and there were no material changes to the important assumptions underlying the critical accounting estimates.

Previous wording

On July 4, 2025, the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (the Act) was signed into law. Aspects of the Act contain technical matters that require management to interpret the legislation and make judgments until further guidance becomes available. We are currently evaluating the impact of the Act, changes in interpretations, and guidance on legislative intent to our consolidated financial statements.

Current wording

On July 4, 2025, the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (the Act) was signed into law. Aspects of the Act contain technical matters that require management to interpret the legislation and make judgments until further guidance becomes available. The legislation did not have a material impact on our income tax expense for the three months ended September 30, 2025, and we do not expect it to materially affect our effective income tax rate for 2025.

Previous wording

Net income attributable to California Water Service Group for the three months ended June 30, 2025 was $42.2 million or $0.71 earnings per diluted common share, compared to net income of $40.6 million or $0.70 earnings per diluted common share for the three months ended June 30, 2024. The $1.6 million increase in net income was primarily the result of an increase in operating revenue of $20.7 million primarily due to rate increases and an increase in customer usage. This was partially offset by an increase in total operating expenses of $17.0 million. The total operating expenses increase was primarily due to an increase in water production costs of $7.9 million, an increase in other operations expense of $6.1 million, and an increase in depreciation and amortization expenses of $3.1 million.

Current wording

Net income attributable to California Water Service Group for the three months ended September 30, 2025 was $61.2 million or $1.03 earnings per diluted common share, compared to net income of $60.7 million or $1.03 earnings per diluted common share for the three months ended September 30, 2024. The $0.5 million increase in net income was primarily the result of an increase in operating revenue of $11.6 million primarily due to rate increases. This was partially offset by an increase in total operating expenses of $7.8 million and a $3.5 million increase in net interest expense. The total operating expenses increase was primarily due to an increase in water production costs of $7.6 million and an increase in depreciation and amortization expenses of $3.1 million. The increases were partially offset by a decrease in operating income tax expense of $4.8 million primarily due to a decrease in the effective tax rate.

Previous wording

Net income attributable to California Water Service Group for the six months ended June 30, 2025 was $55.5 million or $0.93 earnings per diluted common share, compared to net income of $110.5 million or $1.90 earnings per diluted common share for the six months ended June 30, 2024. The $55.0 million decrease in net income was primarily due to a decrease in operating revenue of $46.1 million primarily as a result of the cumulative adjustment in the first six months of 2024 for the impacts of the 2021 CA GRC delayed approval, partially offset by rate increases and an increase in customer usage. Additionally, total operating expenses increased $5.8 million. The total operating expense increase was primarily due to increases in other operations expense of $8.0 million, water production costs of $6.7 million, and depreciation and amortization expenses of $6.2 million. The increases were partially offset by a decrease in income tax expense of $16.3 million primarily due to lower pre-tax income.

Current wording

Net income attributable to California Water Service Group for the nine months ended September 30, 2025 was $116.7 million or $1.96 earnings per diluted common share, compared to net income of $171.1 million or $2.93 earnings per diluted common share for the nine months ended September 30, 2024. The $54.4 million decrease in net income was primarily due to a decrease in operating revenue of $34.4 million primarily as a result of the cumulative adjustment in the nine months of 2024 for the impacts of the 2021 CA GRC delayed approval, partially offset by rate increases and an increase in customer usage. Additionally, total operating expenses increased $13.6 million and net interest expense increased $6.6 million. The total operating expense increase was primarily due to increases in water production costs of $14.3 million, other operations expense of $7.8 million, depreciation and amortization expenses of $9.2 million, and property and other taxes of $2.3 million. The increases were partially offset by a decrease in operating income tax expense of $21.1 million primarily due to lower pre-tax operating income.

Previous wording

For the three months ended June 30, 2025, operating revenue increased $20.7 million, or 8.5%, to $265.0 million as compared to $244.3 million for the three months ended June 30, 2024.

Current wording

For the three months ended September 30, 2025, operating revenue increased $11.6 million, or 3.9%, to $311.2 million as compared to $299.6 million for the three months ended September 30, 2024.

Previous wording

For the six months ended June 30, 2025, operating revenue decreased $46.1 million, or 9.0%, to $468.9 million as compared to $515.0 million for the six months ended June 30, 2024.

Current wording

For the nine months ended September 30, 2025, operating revenue decreased $34.4 million, or 4.2%, to $780.2 million as compared to $814.6 million for the nine months ended September 30, 2024.

Previous wording

The net change due to rate changes, usage, and other for the three months ended June 30, 2025 was primarily due to rate increases of $23.9 million and an increase in customer usage of $7.0 million. For the six months ended June 30, 2025, the net change was due to rate changes, usage, and other was primarily driven by rate increases of $45.5 million, an increase in customer usage of $8.7 million, the recognition of Palos Verdes Pipeline Memorandum Account related revenue of $3.8 million (see “Palos Verdes Peninsula Water Reliability Project” in Regulatory Matters below for more details), and an increase in accrued and unbilled revenue of $1.3 million due to an increase in rates. This was partially offset by $2.4 million of other 2023 revenue recorded in the first six months of 2024 as a result of the resolution of the 2021 CA GRC that did not recur in the first six months of 2025.

Current wording

The net change due to rate changes, usage, and other for the three months ended September 30, 2025 was primarily due to rate increases of $12.7 million and an increase in accrued and unbilled revenue of $2.0 million. This was partially offset by a decrease in customer usage of $8.1 million. For the nine months ended September 30, 2025, the net change due to rate changes, usage, and other was primarily driven by rate increases of $57.5 million, the recognition of Palos Verdes Pipeline Memorandum Account related revenue of $3.8 million (see “Palos Verdes Peninsula Water Reliability Project” in Regulatory Matters below for more details), an increase in accrued and unbilled revenue of $3.2 million and an increase in customer usage of $2.0 million. This was partially offset by $2.4 million of other 2023 revenue recorded in the first nine months of 2024 as a result of the resolution of the 2021 CA GRC that did not recur in the first nine months of 2025.

Previous wording

Due to the delay in the resolution of the 2021 CA GRC, the CPUC authorized Cal Water to track in an IRMA the variances between actual customer billings and those that would have been billed assuming the 2021 CA GRC had been effective January 1, 2023. Such variances were recorded as regulatory balancing account revenue. The 2021 CA GRC was approved in March of 2024 and final rates for the 2021 CA GRC were implemented on May 31, 2024. As a result, Cal Water recorded IRMA revenue of $7.9 million for the three months ended June 30, 2024. For the six months ended June 30, 2024, Cal Water recorded IRMA revenue of $88.6 million of which $67.6 million is attributable to 2023, including $17.3 million and $28.4 million that was attributable to the three and six months ended June 30, 2023.

Current wording

Due to the delay in the resolution of the 2021 CA GRC, the CPUC authorized Cal Water to track in an IRMA the variances between actual customer billings and those that would have been billed assuming the 2021 CA GRC had been effective January 1, 2023. Such variances were recorded as regulatory balancing account revenue. The 2021 CA GRC was approved in March of 2024 and final rates for the 2021 CA GRC were implemented on May 31, 2024. As a result, Cal Water recorded IRMA revenue of $88.6 million for the nine months ended September 30, 2024, of which $67.6 million is attributable to 2023. No IRMA revenue was recorded for the three and nine months ended September 30, 2025 and the three months ended September 30, 2024.

Previous wording

MWRAM revenue is the variance between actual metered sales billed through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate had been in effect. In March of 2024, Cal Water received approval of the 2021 CA GRC which authorized the use of the MWRAM effective January 1, 2023. For the three months ended June 30, 2025 and 2024, Cal Water recorded MWRAM revenue of $6.7 million and $8.2 million, respectively. For the six months ended June 30, 2025 and 2024, Cal Water recorded MWRAM revenue of $21.5 million and $39.3 million, respectively. Of the $39.3 million recorded MWRAM revenue for the six months ended June 30, 2024, $17.4 million is attributable to 2023, including $7.4 million and $18.0 million that was attributable to the three and six months ended June 30, 2023.

Current wording

MWRAM revenue is the variance between actual metered sales billed through the tiered volumetric rate and the revenue that would have been received with the same actual metered sales if a uniform rate had been in effect. In March of 2024, Cal Water received approval of the 2021 CA GRC which authorized the use of the MWRAM effective January 1, 2023. For the three months ended September 30, 2025 and 2024, Cal Water recorded a reduction to MWRAM revenue of $5.7 million and $9.4 million, respectively. For the nine months ended September 30, 2025 and 2024, Cal Water recorded MWRAM revenue of $16.4 million and $29.8 million, respectively. Of the $29.8 million of MWRAM revenue recorded for the nine months ended September 30, 2024, $17.4 million is attributable to 2023.

Previous wording

Deferred revenue consists of amounts that are expected to be collected from customers beyond 24 months following the end of the accounting period in which the sales transaction occurred. Deferred revenue for the six months ended June 30, 2025 decreased and revenue increased by $1.7 million due to a change in the amount expected to be collected beyond 24 months.

Current wording

Deferred revenue consists of amounts that are expected to be collected from customers beyond 24 months following the end of the accounting period in which the sales transaction occurred. Deferred revenue for the three and nine months ended September 30, 2025 decreased and revenue increased due to a change in the amount expected to be collected beyond 24 months.

Previous wording

For the three months ended June 30, 2025, total operating expenses increased $17.0 million, or 8.7%, to $213.1 million, as compared to $196.1 million for the three months ended June 30, 2024. The increase was primarily due to increases in water production costs, other operations expense, and depreciation and amortization expense, partially offset by lower income tax expense.

Current wording

For the three months ended September 30, 2025, total operating expenses increased $7.8 million, or 3.4%, to $240.6 million, as compared to $232.8 million for the three months ended September 30, 2024. The increase was primarily due to increases in water production costs, and depreciation and amortization expense, partially offset by lower income tax expense.

Previous wording

For the six months ended June 30, 2025, total operating expenses increased $5.8 million, or 1.5%, to $394.8 million, as compared to $389.0 million for the six months ended June 30, 2024. The increase was primarily due to increases in water production costs, other operations expense, and depreciation and amortization expense, partially offset by lower income tax expense.

Current wording

For the nine months ended September 30, 2025, total operating expenses increased $13.6 million, or 2.2%, to $635.4 million, as compared to $621.8 million for the nine months ended September 30, 2024. The increase was primarily due to increases in water production costs, other operations expense, depreciation and amortization expense, and property and other taxes expense, partially offset by lower income tax expense.

Previous wording

Water production costs increased $7.9 million, or 10.1%, for the three months ended June 30, 2025 as compared to the same period in the prior year primarily due to an increase in wholesale rates and higher customer usage.

Current wording

Water production costs increased $14.3 million, or 6.0%, for the nine months ended September 30, 2025 as compared to the same period in 2024 primarily due to an increase in wholesale rates and higher customer usage.

Previous wording

Other operations expenses increased $8.0 million, or 15.2%, for the six months ended June 30, 2025 as compared to the same period in 2024. The increase was primarily due to a $4.2 million increase in bad debt expense, a $1.3 million increase in labor expense, a $0.6 million increase in miscellaneous office expenses, and a $0.6 million increase in software expense. These increases were partially offset by a $0.6 million reduction in conservation program expenses. The increase in bad debt expense was primarily due to lower bad debt expense in 2024 as a result of applying arrearage funds to eligible, previously written-off accounts.

Current wording

Other operations expenses increased $7.8 million for the nine months ended September 30, 2025 as compared to the same period in 2024. The increase was primarily due to a $2.9 million increase in bad debt expense, a $2.2 million increase in labor expense, a $1.2 million increase in miscellaneous office expenses, and a $1.2 million increase in software expense. These increases were partially offset by a $2.1 million reduction in conservation program expenses. The increase in bad debt expense was primarily due to lower bad debt expense in 2024 as a result of applying arrearage funds to eligible, previously written-off accounts.

Previous wording

Depreciation and amortization expense increased $3.1 million and $6.2 million for the three and six months ended June 30, 2025, as compared to the same periods in 2024. These increases were primarily due to utility plant placed in service in 2024.

Current wording

Depreciation and amortization expense increased $3.1 million and $9.2 million for the three and nine months ended September 30, 2025, as compared to the same periods in 2024. These increases were primarily due to utility plant placed in service in 2024.

Previous wording

Income tax expense decreased $1.8 million and $16.3 million for the three and six months ended June 30, 2025, as compared to the same periods in 2024. The decreases in income tax expenses were primarily due to decreases in pre-tax operating income for the three and six months ended June 30, 2025, compared to the same periods in 2024.

Current wording

Income tax expense decreased $21.1 million for the nine months ended September 30, 2025, as compared to the same period in 2024. The decrease in income tax expense is primarily due to a decrease in pre-tax operating income, which resulted from the 2021 CA GRC decision in the first three months of 2024.

Previous wording

The required, triennial filing begins an approximately 18-month review process by the CPUC, which will analyze the Plans, operating budget proposals, and the Low-Use Water Equity Program to establish water rates for 2026 to 2028 that reflect the cost of providing safe, reliable water service. Associated rates set by the CPUC would become effective no sooner than January 2026. Cal Water has concluded an initial pre-hearing conference and an Administrative Law Judge (ALJ) and Commissioner have been assigned to the case. The Commissioner issued the Scoping Memo and Ruling in November 2024 identifying the issues to be addressed and setting the schedule for the proceeding. At the start of 2025, public participation hearings were conducted and Cal Water received California Public Advocate’s testimony responding to the 2024 CA GRC application. Cal Water submitted rebuttal testimony in late March 2025. The Assigned Commissioner also issued an Amended Scoping Memo and Ruling on March 13, 2025 granting in part Cal Water’s request to modify the ex-parte rules, and denying Cal Water’s request to modify the issues within the scope of the proceeding. Settlement discussions took place during April 2025, and hearings before the ALJ occurred in May 2025. After the hearings, the ALJ issued a ruling requesting additional information that parties to the proceeding responded to in June 2025. Briefs were filed on July 7, 2025 and reply briefs were filed on July 28, 2025. A final law and motion hearing is scheduled for August 5, 2025 at which point the case is expected to be submitted to the ALJ to draft a proposed decision.

Current wording

The required, triennial filing begins an approximately 18-month review process by the CPUC, which will analyze the Plans, operating budget proposals, and the Low-Use Water Equity Program to establish water rates for 2026 to 2028 that reflect the cost of providing safe, reliable water service. Associated rates set by the CPUC would become effective no sooner than January 2026. Cal Water has concluded an initial pre-hearing conference and an Administrative Law Judge (ALJ) and Commissioner have been assigned to the case. The Commissioner issued the Scoping Memo and Ruling in November 2024 identifying the issues to be addressed and setting the schedule for the proceeding. At the start of 2025, public participation hearings were conducted and Cal Water received California Public Advocate’s testimony responding to the 2024 CA GRC application. Cal Water submitted rebuttal testimony in late March 2025. The Assigned Commissioner also issued an Amended Scoping Memo and Ruling on March 13, 2025 granting in part Cal Water’s request to modify the ex-parte rules, and denying Cal Water’s request to modify the issues within the scope of the proceeding. Settlement discussions took place during April 2025, and hearings before the ALJ occurred in May 2025. After the hearings, the ALJ issued a ruling requesting additional information that parties to the proceeding responded to in June 2025. Briefs were filed on July 7, 2025 and reply briefs were filed on July 28, 2025. A final law and motion hearing occurred on August 5, 2025. A joint status conference occurred on October 3, 2025 to revisit previously discussed motions. The next step in the process is for the ALJ to issue a proposed decision.

Previous wording

For construction projects authorized in the 2021 CA GRC as advice letter projects, Cal Water is allowed to request rate base offsets to increase revenues after the project goes into service. In October of 2024, Cal Water submitted a $5.7 million rate base offset advice letter to recover $0.9 million of annual revenue increases in 9 of its regulated districts. The new rates were implemented on January 1, 2025.

Current wording

For construction projects authorized in the 2021 CA GRC as advice letter projects, Cal Water is allowed to request rate base offsets to increase revenues after the project goes into service. In October of 2024, Cal Water submitted a $5.7 million rate base offset advice letter to recover $0.9 million of annual revenue increases for 9 of its regulated districts. The new rates were implemented on January 1, 2025.

Previous wording

In May of 2025, Cal Water submitted a $11.4 million rate base offset advice letter to recover $1.6 million of annual revenue increases in all of its regulated districts (excluding Grand Oaks). The new rates were implemented on July 1, 2025.

Current wording

In May of 2025, Cal Water submitted a $11.4 million rate base offset advice letter to recover $1.6 million of annual revenue increases for all of its regulated districts (excluding Grand Oaks). The new rates were implemented on July 1, 2025.

Previous wording

In July of 2025, Cal Water submitted an advice letter to request expense offsets for increases in purchased water costs and pump taxes in 2 of its regulated districts totaling $2.6 million. The new surcharges are expected to be implemented on August 1, 2025.

Current wording

In July of 2025, Cal Water submitted an advice letter to request expense offsets for increases in purchased water costs and pump taxes in 2 of its regulated districts totaling $2.6 million. The new rates were implemented on August 1, 2025.

Previous wording

On January 30, 2025, a final decision was issued that approved Cal Water’s request to recover $1.4 million of incremental costs tracked in the DRMA. New surcharges were implemented on April 1, 2025.

Current wording

On January 30, 2025, a final decision was issued that approved Cal Water’s request to recover $1.4 million of incremental costs incurred from June 2021 to December 2022 tracked in the DRMA. New surcharges were implemented on April 1, 2025.

Previous wording

On March 22, 2025, the Washington Utilities and Transportation Commission approved a tariff update for the Stroh’s water system to increase revenues by $0.2 million. The general rate increase was approved on May 22, 2025, implemented into rates over two years. The first implementation of new rates was effective May 23, 2025, and the second implementation of new rates is effective May 23, 2026.

Current wording

On March 17, 2025, Washington Water filed a tariff update for the Stroh’s water system to increase revenues by $0.2 million with the Washington Utilities and Transportation Commission (UTC). The general rate increase was approved on May 22, 2025, implemented into rates over two years. The first implementation of new rates was effective May 23, 2025, and the second implementation of new rates is effective May 23, 2026.

Previous wording

During the first quarter of 2025, a settlement was reached in the 2024 Ka’anapali GRC between Hawaii Water and the Hawaii Division of Consumer Advocacy. The settlement calls for total test year revenue requirement of $7.5 million, representing an increase over the $6.4 million previously approved, on rate base of $13.4 million. The settlement agreement was filed with the Hawaii Public Utilities Commission and was approved on April 7, 2025. The updated rate tariff was effective on April 18, 2025.

Current wording

During the first quarter of 2025, a settlement was reached in the 2024 Ka’anapali GRC between Hawaii Water and the Hawaii Division of Consumer Advocacy. The settlement calls for a total test year revenue requirement of $7.5 million, representing an increase over the $6.4 million previously approved, on rate base of $13.4 million. The settlement agreement was filed with the Hawaii Public Utilities Commission (HPUC) and was approved on April 7, 2025. The updated rate tariff was effective on April 18, 2025.

Previous wording

In June 2024, BVRT filed a general rate case for 5 utilities with the Public Utility Commission of Texas (PUCT). Consumer advocates reviewed and filed their reports in April and May of 2025, and BVRT filed a rebuttal in June of 2025. A settlement was reached and is pending PUCT approval. The initial phase of the new rates was implemented on July 25, 2025.

Current wording

In June 2024, BVRT filed a general rate case for 5 utilities with the Public Utility Commission of Texas (PUCT). Consumer advocates reviewed and filed their reports in April and May of 2025, and BVRT filed a rebuttal in June of 2025. A comprehensive settlement was reached and is pending PUCT approval. The initial phase of the new rates was implemented on July 25, 2025.

Previous wording

During the six months ended June 30, 2025, we generated cash flow from operations of $87.4 million compared to $120.9 million for the same period in 2024. The decrease in the first six months of 2025 as compared to the same period in 2024 is primarily due to the receipt of $83.0 million from California’s Extended Water and Wastewater Arrearages Payment Program in 2024. This was partially offset by an increase in cash collections in the first six months of 2025 as compared to 2024 due to an increase in customer rates and the recovery of MWRAM and IRMA receivables that were recorded in 2024 due to the resolution of the 2021 CA GRC. Cash generated by operations varies during the year due to customer billings, and timing of collections and contributions to our benefit plans.

Current wording

During the nine months ended September 30, 2025, we generated cash flow from operations of $254.7 million compared to $222.8 million for the same period in 2024. The increase in the first nine months of 2025 as compared to the same period in 2024 was primarily due to an increase in cash collections in the first nine months of 2025 as compared to 2024 due to an increase in customer rates and the recovery of MWRAM and IRMA receivables that were recorded in 2024 due to the resolution of the 2021 CA GRC. This was partially offset by the receipt of $83.0 million from California’s Extended Water and Wastewater Arrearages Payment Program in 2024. Cash generated by operations varies during the year due to customer billings, and timing of collections and contributions to our benefit plans.

Previous wording

During the six months ended June 30, 2025, we made cash contributions of $3.3 million to our employee pension plan and did not make any cash contribution to our other postretirement benefit plans. During the six months ended June 30, 2024, we made cash contributions of $0.2 million to our employee pension plan and did not make any cash contribution to our other postretirement benefit plans. The 2025 estimated cash contribution to the employee pension plan is expected to be approximately $5.2 million and no cash contributions are expected to be made for the other postretirement benefits plans.

Current wording

During the nine months ended September 30, 2025, we made cash contributions of $4.3 million to our employee pension plan and did not make any cash contribution to our other postretirement benefit plans. During the nine months ended September 30, 2024, we made cash contributions of $0.4 million to our employee pension plan and did not make any cash contribution to our other postretirement benefit plans. The 2025 estimated cash contribution to the employee pension plan is expected to be approximately $5.2 million and no cash contributions are expected to be made for the other postretirement benefits plans.

Previous wording

During the six months ended June 30, 2025 and 2024, we used $229.5 million and $214.4 million, respectively, of cash for Company-funded and developer-funded utility capital expenditures. Cash used in investing activities fluctuates each year largely due to the availability of construction resources and our ability to obtain construction permits in a timely manner. For 2025, our utility capital expenditures are estimated to be between $450.0 million and $550.0 million based on the 2024 CA GRC and expected capital needs in the other subsidiaries.

Current wording

During the nine months ended September 30, 2025 and 2024, we used $364.7 million and $332.2 million, respectively, of cash for Company-funded and developer-funded utility capital expenditures. Cash used in investing activities fluctuates each year largely due to the availability of construction resources and our ability to obtain construction permits in a timely manner. For 2025, our utility capital expenditures are estimated to be between $450.0 million and $550.0 million based on the 2024 CA GRC and expected capital needs in the other subsidiaries.

Previous wording

Net cash provided by financing activities for the six months ended June 30, 2025 was $142.4 million compared to $91.1 million for the same period in 2024. For the six months ended June 30, 2025 and 2024, we paid dividends of $38.1 million and $32.3 million, respectively. For the six months ended June 30, 2025, we issued $1.3 million of Company common stock through our employee stock purchase plan. For the six months ended June 30, 2024, we issued $52.0 million of Company common stock through our at-the-market equity program and $1.4 million through our employee stock purchase plan. For the six months ended June 30, 2025, we also received $10.6 million in initial PFAS settlement proceeds.

Current wording

Net cash provided by financing activities for the nine months ended September 30, 2025 was $139.1 million compared to $132.3 million for the same period in 2024. For the nine months ended September 30, 2025 and 2024, we paid dividends of $56.0 million and $48.8 million, respectively. For the nine months ended September 30, 2025, we issued $1.9 million of Company common stock through our employee stock purchase plan. For the nine months ended September 30, 2024, we issued $86.5 million of Company common stock through our at-the-market equity program and $1.9 million through our employee stock purchase plan. For the nine months ended September 30, 2025, we also received $34.8 million after fees and expenses in PFAS settlement proceeds.

Previous wording

For the six months ended June 30, 2025 and 2024, we borrowed $410.0 million and $295.0 million, respectively, on our unsecured revolving credit facilities. We made repayments on our unsecured revolving credit facilities of $255.0 million and $230.0 million during the six months ended June 30, 2025 and 2024, respectively.

Current wording

For the nine months ended September 30, 2025 and 2024, we borrowed $420.0 million and $370.0 million, respectively, on our unsecured revolving credit facilities. We made repayments on our unsecured revolving credit facilities of $280.0 million and $290.0 million during the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The net IRMA, MWRAM, Water Revenue Adjustment Mechanism and Modified Cost Balancing Account receivable balances were $118.4 million and $134.2 million as of June 30, 2025 and 2024, respectively. The receivable balances were primarily financed by Cal Water using short-term financing arrangements to meet operational cash requirements. Interest on the receivable balances, which represents the interest recoverable from customers, is limited to the then-current 90-day commercial paper rates, which typically are significantly lower than Cal Water’s short-term financing rates.

Current wording

The net IRMA, MWRAM, Water Revenue Adjustment Mechanism and Modified Cost Balancing Account receivable balances were $98.0 million and $116.7 million as of September 30, 2025 and 2024, respectively. The receivable balances were primarily financed by Cal Water using short-term financing arrangements to meet operational cash requirements. Interest on the receivable balances, which represents the interest recoverable from customers, is limited to the then-current 90-day commercial paper rates, which typically are significantly lower than Cal Water’s short-term financing rates.

Previous wording

Short-term liquidity is provided by the Company’s revolving credit facility (the Company facility) and the Cal Water revolving credit facility (the Cal Water facility) and internally generated funds. Long-term financing is accomplished through the use of both debt and equity. The Company and subsidiaries that it designates may borrow up to $200.0 million under the Company facility. Cal Water may borrow up to $400.0 million under the Cal Water facility; however, all of Cal Water’s borrowings under the Cal Water facility must be repaid within 24 months as authorized by the CPUC. The proceeds from the Company and Cal Water facilities may be used for working capital or other business purposes.

Current wording

Short-term liquidity is provided by the Company’s unsecured revolving credit facility (the Company facility) and the Cal Water unsecured revolving credit facility (the Cal Water facility) and internally generated funds. Long-term financing is accomplished through the use of both debt and equity. The Company and subsidiaries that it designates may borrow up to $200.0 million under the Company facility. Cal Water may borrow up to $400.0 million under the Cal Water facility; however, all of Cal Water’s borrowings under the Cal Water facility must be repaid within 24 months as authorized by the

Previous wording

As of June 30, 2025 and December 31, 2024, short-term borrowings of $360.0 million and $205.0 million, respectively, were outstanding on the Company and Cal Water facilities.

Current wording

As of September 30, 2025 and December 31, 2024, short-term borrowings of $345.0 million and $205.0 million, respectively, were outstanding on the Company and Cal Water facilities.

Previous wording

During the six months ended June 30, 2025, our quarterly common stock dividend payments were $0.64 per share, which includes a one-time special dividend in the amount of $0.04 per share, compared to $0.56 per share for the six months ended June 30, 2024. For the full year 2024, the payout ratio was 34.3% of net income. On a long-term basis, our goal is to achieve a dividend payout ratio of 60% of net income.

Current wording

During the nine months ended September 30, 2025, our quarterly common stock dividend payments were $0.94 per share, which includes a one-time special dividend in the amount of $0.04 per share, compared to $0.84 per share for the nine months ended September 30, 2024. For the full year 2024, the payout ratio was 34.3% of net income. On a long-term basis, our goal is to achieve a dividend payout ratio of 60% of net income.

Previous wording

At the July 30, 2025 meeting, the Company’s Board of Directors declared the third quarter dividend of $0.30 per share payable on August 22, 2025, to stockholders of record on August 11, 2025. This was our 322nd consecutive quarterly dividend.

Current wording

At the October 29, 2025 meeting, the Company’s Board of Directors declared the third quarter dividend of $0.30 per share payable on November 21, 2025, to stockholders of record on November 10, 2025. This was our 323rd consecutive quarterly dividend.

Previous wording

The Company and Cal Water have a syndicated unsecured revolving line of credit of $200.0 million and $400.0 million, respectively, for short-term borrowings. As of June 30, 2025, the Company’s and Cal Water’s availability on these unsecured revolving lines of credit was $135.0 million and $105.0 million, respectively.

Current wording

The Company and Cal Water have a syndicated unsecured revolving line of credit of $200.0 million and $400.0 million, respectively, for short-term borrowings. As of September 30, 2025, the Company’s and Cal Water’s availability on these unsecured revolving lines of credit was $125.0 million and $130.0 million, respectively.