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December 31, 2005, 2004, and
2003
Amounts in thousands, except per share data and share data |
Note 1.
Organization and Operations |
California Water Service
Group (Company) is a holding company that provides water utility and
other related services in California, Washington, New Mexico, and Hawaii
through its wholly owned subsidiaries. California Water Service Company
(Cal Water), Washington Water Service Company (Washington Water), New
Mexico Water Service Company (New Mexico Water), and Hawaii Water
Service Company, Inc. (Hawaii Water) provide regulated utility services
under the rules and regulations of their respective state’s regulatory
commissions (jointly referred to as the Commissions). CWS Utility
Services (Utility Services) provides non-regulated water utility and
utility-related services. At Cal Water, as of December 31, 2005, there
were 566 union employees covered by two-year agreements with the Utility
Workers Union of America, AFL-CIO, and the International Federation of
Professional and Technical Engineers, AFL-CIO. The agreements include a
3.5% wage increase for 2006, with wage increases for 2007 to be
negotiated in the fall of 2006. The Company believes that it maintains
good relationships with the unions. Employees at Washington Water,
Hawaii Water and New Mexico Water do not belong to Unions.
The Company operates primarily in one business segment, providing water
and related utility services. |
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Note 2.
Summary of Significant Accounting Policies |
Principles of
Consolidation and Accounting Records The consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. Inter-company transactions and balances have been
eliminated. The accounting records of the Company are maintained in
accordance with the uniform system of accounts prescribed by the
Commissions.
Use of Estimates The preparation of consolidated financial
statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Revenue Revenue consists of monthly cycle customer
billings for regulated water and wastewater services at rates authorized
by the Commissions and billings to certain non-regulated customers.
Revenue from metered accounts includes unbilled amounts based on the
estimated usage from the latest meter reading to the end of the
accounting period. Flat-rate accounts, which are billed at the beginning
of the service period, are included in revenue on a pro-rata basis for
the portion applicable to the current accounting period.
The Company provides an allowance for doubtful accounts. The balance of
customer receivables, net of the allowance for doubtful accounts was
$272 and $287 at December 31, 2005 and 2004, respectively. The activity
in the reserve account is as follows: |
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|
2005 |
2004 |
Beginning Balance |
$287 |
$289 |
|
Provision for
uncollectible accounts |
756 |
1,073 |
|
Net write-off of
uncollectible accounts |
(771) |
(1,075) |
Ending balance |
$272 |
$287 |
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Non-Regulated Revenue
Revenues from non-regulated operations and maintenance agreements are
recognized when services have been rendered to companies or
municipalities under such agreements. Expenses are netted against the
revenue billed and are reported in Other Income and Expenses on the
Consolidated Statements of Income. Other non-regulated revenue is
recognized
when title has transferred to the buyer, or ratably over the term of the
lease. For construction and design services, revenue is generally
recognized on the completed contract method, as most projects are
completed in less than three months.
Expense Balancing and Memorandum Accounts Expense
balancing and memorandum accounts are used to track suppliers’ rate
changes for purchased water, purchased power, and pump taxes that are
not included in customer water rates. The cost changes are referred to
as “Offsettable Expenses” because under certain circumstances they are
recoverable from customers (or refunded to customers) in future rates
designed to offset the cost changes from the suppliers. |
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