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The following table sets forth information regarding our DB Plan and our OPEB Plans as of
December 31, 2019 and for the year then ended:

(in thousands) DB Plan OPEB Plans
Projected benefit obligations S 34,158 S 4,586
Employer contribution 1,181 11
Benefits paid, excluding expenses (695) (63)
Fair value of plan assets 21,187 604
Accumulated benefit obligation 30,643 -
Funded status (12,971) (3,982)
Net periodic benefit cost 1,494 279
Amount of the funded status recognized in the

Consolidated Balance Sheet consisted of:

Current liability - -

Non-current liability (12,971) (3,982)

Total $ (12,971) $ (3,982)

The components of net periodic benefit cost other than the service cost component are
included in the line item operations and maintenance in the consolidated statements of
income (loss), as the amounts are immaterial.

Changes in plan assets and benefit obligations recognized in regulatory assets, for the year
ended December 31, 2020, were as follows:

(in thousands) DB Plan OPEB Plans

Regulatory asset balance, beginning of period $ 10,269 S 1,078
Net actuarial gain incurred during the period 2,733 621
Prior service cost incurred during the period - 16
Recognized net actuarial (gain)/loss (477) (43)
Regulatory asset balance, end of period S 12,525 S 1,672

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Changes in plan assets and benefit obligations recognized in regulatory assets, for the year
ended December 31, 2019, were as follows:

(in thousands) DB Plan OPEB Plans

Regulatory asset balance, beginning of period $ 7,632 S 565
Net actuarial gain incurred during the period 2,991 516
Prior service cost incurred during the period - 16
Recognized net actuarial (gain)/loss (354) (19)
Regulatory asset balance, end of period S 10,269 S 1,078

Amounts recognized in regulatory assets for the DB and OPEB Plans that have not yet been
recognized as components of net periodic benefit cost of the following as of December 31,
2020:

(in thousands) DB Plan OPEB Plans

Net actuarial loss S 12,525 S 1,787
Prior service cost - (11S)
Regulatory asset 5 12,525 S 1,672

Amounts recognized in regulatory assets for the DB and OPEB Plans that have not yet been
recognized as components of net periodic benefit cost of the following as of December 31,
2019:

(in thousands) DB Plan OPEB Plans

Net actuarial loss S 10,269 S 1,209
Prior service cost - (131)
Regulatory asset S 10,269 S 1,078

The key assumptions used to value benefit obligations and calculate net periodic benefit cost
for our DB and OPEB Plans include the following:

2020 2019
Discount rate for net periodic benefit cost, beginning of year 3.13% 4.15%
Discount rate for benefit obligations, end of year fa) 2.39% 3.13%
Expected return on plan assets for the period (net of investment expenses) 7.00% 7.00%
Rate of compensation increase, beginning of year 3.00% 3.00%
Healthcare cost trend rate (applicable only to OPEB Plans) 6.00% 6.50%

®) an increase or decrease in the discount rate of 0.5% would result ina change in the funded status as of December
31, 2020, for the DB Plan and the OPEB Plans of approximately $3.4 million and $544 thousand, respectively.

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The estimated net actuarial loss for our DB Plan that will be amortized in 2021 from the
regulatory assets into net periodic benefit costs is $625,000. The estimated net actuarial gain
and prior service cost for our OPEB Plans that will be amortized in 2021 from the regulatory
assets into net periodic benefit costs is $60,200.

In establishing its investment policy, the Company has considered the fact that the DB Plan is
a major retirement vehicle for its employees and the basic goal underlying the establishment
of the policy is to provide that the assets of the DB Plan are invested in accordance with the
asset allocation range targets to achieve our expected return on DB Plan assets. The
Company’s investment strategy applies to its OPEB Plans as well as the DB Plan. The expected
long-term rate of return on DB Plan and OPEB Plan assets is based on the Plans’ expected
asset allocation, expected returns on various classes of Plan assets, as well as historical
returns.

The assets of our Post-65 Plan are held in two separate Voluntary Employee Beneficiary
Association (“VEBA”) trusts. The VEBA plan assets are maintained in directed trust accounts
at a commercial bank.

The investment strategy for the Company’s DB Plan and OPEB Plans utilizes several different
asset classes with varying risk/return characteristics. The following table indicates the asset
allocation percentages of the fair value of the DB Plan and OPEB Plans’ assets for each major
type of plan asset as of December 31, 2020, as well as the targeted allocation range:

DB Plan OPEB Plans
Asset Asset
Allocation Allocation
Range Range
Equities 61% 30% - 100% 69% 30% - 100%
Fixed income 39% 20% - 70% 24% 0% - 50%
Cash and cash equivalents 0% 0% - 15% 7% 0% - 15%
Total 100% 100%

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The following table indicates the asset allocation percentages of the fair value of the DB Plan
and OPEB Plans’ assets for each major type of plan asset as of December 31, 2019, as well as
the targeted allocation range:

DB Plan OPEB Plans
Asset Asset
Allocation Allocation
Range Range
Equities 61% 30% - 100% 69% 30% - 100%
Fixed income 39% 20% - 70% 29% 0% - 50%
Cash and cash equivalents 0% 0% - 15% 2% 0% - 15%
Total 100% 100%

Management uses its best judgment in estimating the fair value of its financial instruments.
However, there are inherent weaknesses in any estimation technique. Therefore, for substan-
tially all financial instruments, the fair value estimates herein are not necessarily indicative of
the amounts that we could realize in a sales transaction for these instruments. The estimated
fair value amounts have been measured as of year-end and have not been reevaluated or
updated for purposes of these consolidated financial statements subsequent to those
respective dates.

Investments in common stock and mutual funds are stated at fair value by reference to
quoted market prices. Money market funds are valued utilizing the net asset value per unit
based on the fair value of the underlying assets as determined by the directed trustee.

The DB Plan also holds assets under an immediate participation guarantee group annuity
contract with a life insurance company. The assets under the contract are invested in pooled
separate accounts and in a general investment account. The pooled separate accounts are
valued based on net asset value (NAV) per unit of participation in the fund. The NAV is used
as a practical expedient to estimate fair values. This practical expedient is not used when it is
determined to be probable that the fund will sell the investment for an amount different than
that reported at NAV. These accounts have no unfunded commitments or significant
redemption restrictions at year-end. The value of these units is determined by the trustee
based on the current market values of the underlying assets of the pooled separate accounts.
Therefore, the value of the pooled separate accounts is deemed to be at estimated fair value.

The general investment account is not actively traded, and significant other observable inputs

are not available. The fair value of the general investment account is calculated by discounting
the related cash flows based on current yields of similar instruments with comparable durations.

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The methods described above may produce a fair value calculation that may not be indicative of
net realizable value or reflective of future fair values. Furthermore, while the Plan’s management
believes the valuation methodologies are appropriate and consistent with other market
participants, the use of different methodologies or assumptions to determine the fair value of
certain investments could result in a different fair value measurement at the reporting date.

A fair value hierarchy which prioritizes the inputs to valuation methods is used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements).

The fair value of DB Plan and OPEB Plan assets by levels within the fair value hierarchy used
as of December 31, 2020 was as follows:

(in thousands) Fair Value Level 1 Level 2 Level 3
DB Plan:
Guaranteed Interest Accounts S 5,731 S - S - S 5,731
Total Assets in the Fair Value Hierarchy 5,731 - - 5,731
Investments measured at net asset value®) 17,895 - - -
DB Plan Investments, at Fair Value 23,626 - - 5,731
OPEB Plans:
Common stocks 349 349 - -
Mutual funds 124 124 - -
Fixed income funds 143 143 - -
Money market funds 23 - 23 -
Total Assets in the Fair Value Hierarchy 639 616 23 -
investments measured at net asset value®) - - - -
OPEB Plans Investments, at Fair Value 639 616 23 -
Totals S 24,265 S 616 S 23 S 5,731

(a) In accordance with Subtopic 820-10, certain investments that were measured at fair value using the net asset vatue
per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts
presented in the statements of assets available for benefits of the Plans.

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The fair value of DB Plan and OPEB Plan assets by levels within the fair value hierarchy used
as of December 31, 2019 was as follows:

(in thousands) Fair Value Level 1 Level 2 Level 3
DB Plan:
Guaranteed Interest Accounts S$ 5,155 S - S - S 5,155
Total Assets in the Fair Value Hierarchy 5,155 - - 5,155
Investments measured at net asset value”) 16,032 - - -
DB Plan Investments, at Fair Value 21,187 - - 5,155
OPEB Plans:
Common stocks 311 311 - -
Mutual funds 109 109 - -
Fixed income funds 170 170 - -
Money market funds 14 - 14 -
Total Assets in the Fair Value Hierarchy 604 590 14 -
Investments measured at net asset value”! - - - -
OPEB Plans Investments, at Fair Value 604 590 14 -
Totals S$ 21,791 S 590 S 14 S 5,155

{a) In accordance with Subtopic 820-10, certain investments that were measured at fair value using the net asset value
per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts
presented in the statements of assets available for benefits of the Plans.

Level 1: Based on quoted prices in active markets for identical assets.
Level 2: Based on significant observable inputs.
Level 3: Based on significant unobservable inputs.

The following table summarizes investments at fair value based on NAV per share as of
December 31, 2020 and 2019, respectively:

(in thousands) Fair Value
December 31, 2020
Pooled Separate Accounts:
Equities S$ 14,391
Fixed Income 3,504

Total Pooled Separate Accounts $ 17,895

December 31, 2019
Pooled Separate Accounts:
Equities S 12,870
Fixed Income 3,162

Total Pooled Separate Accounts $ 16,032

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The following table presents a period-end reconciliation of DB Plan assets measured and
recorded at fair value on a recurring basis, using significant unobservable inputs (Level 3):

(in thousands) 2020 2019

Balance, beginning of year S 5,155 S 4,414
Plan transfers 1,941 1,079
Contributions 373 249
Benefits paid (1,844) (691)
Return on plan assets (net of investment expenses) 106 104
Balance, end of year S 5,731 S 5,155

In order to satisfy the minimum funding requirements of the Employee Retirement Income
Security Act of 1974, applicable to defined benefit pension plans, the Company anticipates it
will contribute approximately $1.4 million to the DB Plan in 2021.

The following maximum benefit payments, which reflect expected future service, as appro-
priate, are expected to be paid in the years indicated:

(in thousands) DB Plan OPEB Plans
2021 S 1,135 5 99
2022 1,300 115
2023 1,350 120
2024 1,480 136
2025 1,592 144
2026 and thereafter 9,522 943
Total S 16,379 S 1,557

Because the Company is subject to regulation in the state in which it operates, we are
required to maintain our accounts in accordance with the regulatory authority’s rules and
regulations. In those instances, we follow the guidance of ASC Topic 980 (“Regulated
Operations”). Based on prior regulatory practice, we recorded underfunded DB Plan and
OPEB Plan obligations as a regulatory asset, and we expect to recover those costs in rates
charged to customers.

Defined Contribution Plan

In addition to the defined benefit plan, the Company provides and maintains a defined
contribution plan covering substantially all employees. Under this plan, the Company
matches 100% of the first 3% of each participating employee’s salary contributed to the plan.
The matching employer’s contributions, recorded as operating expenses, were approximately
$272,000 and $278,000 for the years ended December 31, 2020 and 2019, respectively.

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Commitments and Contingencies

Operating Leases

The Company’s corporate office space, as well as certain office equipment, is leased under
operating lease agreements. Total rent expense was approximately $389,800 and $385,400
for the years ended December 31, 2020 and 2019, respectively.

The remaining non-cancelable lease commitments for the corporate office space and leased
equipment as of December 31, 2020 were as follows:

{in thousands) Amount
2021 S 379
2022 364
2023 348
2024 347
2025 330
Thereafter 3,677
Total S 5,445

Financial Measurement and Fair Value of Financial Instruments

Management uses its best judgment in estimating the fair value of its financial instruments.
However, there are inherent weaknesses in any estimation technique. Therefore, for substan-
tially all financial instruments, the fair value estimates herein are not necessarily indicative of
the amounts that we could realize in a sales transaction for these instruments. The estimated
fair value amounts have been measured as of the period end and have not been reevaluated
or updated for purposes of these consolidated financial statements subsequent to those
respective dates.

A fair value hierarchy is used, which prioritizes the inputs to valuation methods used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows:

Level 1: Based on quoted prices in active markets for identical assets.
Level 2: Based on significant observable inputs.

Level 3: Based on significant unobservable inputs.

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input
that is significant to the fair value measurement.

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For assets and liabilities measured at fair value on a recurring basis, the fair value measure-
ment by levels within the fair value hierarchy used as of December 31, 2020 and 2019 were
as follows:

December 31, 2020

(in thousands) Total Level 1 Level 2 Level 3
Liabilities:
Interest rate swap S (460) S$ - § (460) S$ -

December 31, 2019

(in thousands) Total Level 1 Level 2 Level 3
Liabilities:
Interest rate swap S (353) S$ - S (353) S$ -

The carrying value of certain financial instruments included in the accompanying Consoli-
dated Balance Sheets, along with the related fair value, as of December 31, 2020 and 2019
was as follows:
2020 2019
Carrying Fair Carrying Fair
{in thousands) Value Value Value Value

Liabilities:
interest rate swap liability $ (460) $ (460) $ (353) $ (353)

The fair market value of the interest rate swap represents the estimated cost to terminate
this agreement as of December 31, 2020 and 2019 based upon the then-current interest rates
and the related credit risk.

The carrying values of our cash and cash equivalents, restricted cash, accounts receivable and
accounts payable approximate their fair values because of their short-term maturity dates.
The carrying value of CIAC approximates its fair value because it is expected that this is the
amount that will be recovered in future rates. The carrying values of lines of credit and long-
term debt approximate fair value, as interest rates approximate market rates.

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10.

Revenue from Contracts with Customers — Non-Regulated Entities

Revenue is recognized when control of the promised goods or services is transferred to
customers, in an amount that reflects the consideration we expect to be entitled to in
exchange for those goods or services.

Disaggregation of Revenue
For the years ended December 31, 2020 and 2019, revenue recognized for goods transferred
over time totaled $2,777,693 and $2,892,868, respectively.

For the year ended December 31, 2020, approximately 62% of revenues were from large-
contract customers, 21% of revenues were from small contract customers (con-ops), and 17%
revenues were from residential maintenance and other customers. For the year ended
December 31, 2019, approximately 59% of revenues were from large-contract customers,
20% of revenues were from small contract customers (con-ops), and 21% revenues were from
residential maintenance and other customers. In addition, substantially all of the Company's
contracts were service-related type contracts.

Income Taxes

The components of the federal and state income tax provision (benefit) as of December 31,
2020 and 2019 were as follows:

(in thousands) 2020 2019
Federal $ 656 $ 144
State (116) 203
Amortization of investment tax credits (33) (33)
Total $ 507 S 314
Current S 33 S -
Deferred 474 314
Total S 507 S 314

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