MIDDLESEX WATER CO
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
MSEX$59.87+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001174947-24-000934
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001174947-24-001201
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 78 previous paragraphs and 78 current paragraphs.
49 unchanged; 24 reworded; 5 added; 5 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Middlesex Purchase Water Adjustment Clause (PWAC)- In October 2024, Middlesex filed a petition with the NJBPU seeking approval to set a PWAC tariff rate to recover additional costs of $0.6 million for the purchase of treated water from a non-affiliated water utility regulated by the NJBPU.
Current report
**Tidewater Base Water Rate Increase Application -**In August 2024, Tidewater filed an application with the DEPSC to increase its general rates for water service. In the application, Tidewater seeks an overall increase in annual operating revenue of $10.3 million or 25.66% over current revenue. The request for rate increases will allow Tidewater to recover prudently incurred investments made in the last ten years to support continued regulatory compliance, enhance water quality, service reliability, security and resiliency of the water utility infrastructure assets. Effective October 30, 2024, Tidewater received approval of the DEPSC to suspend its DSIC rate and implement an interim rate increase, which is expected to result in approximately $2.5 million of annual revenues, subject to refund pending the outcome of the rate case application.
Current report
Operations and Maintenance Expense for the three months ended September 30, 2024 increased $2.8 million from the same period in 2023 due to increased legal, financial and regulatory matter costs, an enhanced water treatment process at Middlesex’s Park Avenue Plant, increased labor costs due to annual wage increases and higher energy and chemical costs due to increased water demand.
Current report
Results of Operations – Nine Months Ended September 30, 2024
Current report
Operations and Maintenance Expense for the nine months ended September 30, 2024 increased $3.6 million from the same period in 2023 due to increased legal, financial and regulatory matter costs, an enhanced water treatment process at Middlesex’s Park Avenue Plant, increased labor costs due to annual wage increases and higher energy costs due to increased water demand.
Removed paragraphs (5)
Previous report
Middlesex Chief Financial Officer Retirement and Succession Announcement** –**On June 10, 2024, the Company named Mohammed G. Zerhouni as its new Senior Vice President, Chief Financial Officer and Treasurer effective June 24, 2024. Mr. Zerhouni joined Middlesex following a comprehensive search for a successor to former Senior Vice President, Treasurer and Chief Financial Officer, A. Bruce O’Connor.
Previous report
**Tidewater DSIC -**Effective July 1, 2024, Tidewater increased its Delaware Public Service Commission (DEPSC)-approved DSIC rate, which is expected to generate revenue of approximately $1.6 million annually.
Previous report
Operations and Maintenance Expense for the three months ended June 30, 2024 increased $0.6 million from the same period in 2023 due to the following factors:
Previous report
Results of Operations – Six Months Ended June 30, 2024
Previous report
Operations and Maintenance Expense for the six months ended June 30, 2024 increased $0.8 million from the same period in 2023 due to the following factors:
Reworded paragraphs (24)
Previous wording
Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC, provide water services to approximately 60,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately 4,300 households in Kent and Sussex Counties through various operations and maintenance contracts.
Current wording
Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC, provide water services to approximately 61,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately 4,300 households in Kent and Sussex Counties through various operations and maintenance contracts.
Previous wording
Middlesex Base Water Rate Increase Approval - The approval by the New Jersey Board of Public Utilities (NJBPU) in February 2024 of the negotiated settlement of the Middlesex 2023 base rate case is expected to increase annual operating revenues by $15.4 million effective March 1, 2024. The approved tariff rates were designed to recover increased operating costs as well as a return on invested capital of $563.1 million, based on an authorized return on common equity of 9.6%. Middlesex has made capital infrastructure investments to ensure prudent upgrade and replacement of its utility assets to support continued regulatory compliance, resilience and overall quality of service.
Current wording
Middlesex Base Rate Increase Approval - In February 2024, the New Jersey Board of Public Utilities (NJBPU) approved the negotiated settlement which is expected to increase annual operating revenues by $15.4 million effective March 1, 2024. The approved tariff rates were designed to recover increased operating costs as well as a return on invested capital of $563.1 million, based on an authorized return on common equity of 9.6%. Middlesex has made capital infrastructure investments to ensure prudent upgrade and replacement of its utility assets to support continued regulatory compliance, resilience and overall quality of service.
Previous wording
Middlesex Distribution System Improvement Charge (DSIC)- In May 2024, the NJBPU approved a DSIC rate, effective May 26, 2024, that is expected to result in $0.5 million of annual revenues. A DSIC is a rate-mechanism that allows water utilities to recover investments in, and generate a return on, qualifying capital improvements made between general rate case proceedings.
Current wording
Middlesex Distribution System Improvement Charge (DSIC)- In October 2024, Middlesex filed a second DSIC rate application that is expected to result in $1.1 million of annual revenues. A DSIC is a rate-mechanism that allows water utilities to recover investments in, and generate a return on, qualifying capital improvements made between general rate case proceedings.
Previous wording
Tidewater Deferred Accounting Treatment Petition for Lead Service Line Inventory Costs - In July 2024, Tidewater filed a petition seeking DEPSC approval of deferred accounting treatment for costs associated with Tidewater’s obligation to identify and inventory lead service lines throughout Tidewater’s service area, as required by federal law and Delaware regulations. Through June 30, 2024, Tidewater has spent $0.3 million, included in Operations and Maintenance Expense, and expects to spend approximately $2.1 million through September 30, 2024.
Current wording
Tidewater Lead Service Line Inventory Costs Recovery - In September 2024, the Delaware Public Service Commission (DEPSC) approved Tidewater’s petition to recover up to $2.1 million of costs associated with Tidewater’s obligation to identify and inventory lead service lines throughout Tidewater’s service area, as required by federal law and Delaware regulations. Through September 30, 2024, Tidewater has spent $1.7 million, which is included in Regulatory Assets and will be recovered through a surcharge mechanism.
Previous wording
We continue to make investments in system infrastructure and our operating costs continue to increase in 2024 in a variety of categories. These factors, among others, will require a base rate increase request filing for Tidewater in the third quarter of 2024 and may require base rate increase request filings for Pinelands Water and Pinelands Wastewater in the near term.
Current wording
We continue to make investments in system infrastructure and our operating costs continue to increase in 2024 in a variety of categories. These factors, among others, required a base rate increase request filing for Tidewater in the third quarter of 2024 and will likely require a base rate increase request filing for Middlesex in 2025.
Previous wording
Operating revenues for the three months ended June 30, 2024 increased $6.3 million from the same period in 2023 due to the following factors:
Current wording
Operating revenues for the three months ended September 30, 2024 increased $8.4 million from the same period in 2023 due to the following factors:
Previous wording
Depreciation expense for the three months ended June 30, 2024 increased $0.1 million from the same period in 2023 due to additional utility plant in service.
Current wording
Depreciation expense for the three months ended September 30, 2024 decreased $0.1 million from the same period in 2023 due to less average utility plant in service during the quarter. The conclusion of Middlesex’s 2023 base rate increase request allowed proceeds from the 3M Settlement Agreement to reimburse Middlesex for previously incurred costs for the construction of the Park Avenue Plant PFAS treatment upgrades. See Note 2 for additional details.
Previous wording
Other Taxes for the three months ended June 30, 2024 increased $1.0 million from the same period in 2023 primarily due to higher gross receipts taxes on higher revenues in our Middlesex System and higher payroll related taxes on increased labor costs in our Middlesex System.
Current wording
Other Taxes for the three months ended September 30, 2024 increased $1.0 million from the same period in 2023 primarily due to higher gross receipts taxes on higher revenues in our Middlesex System and higher payroll related taxes on increased labor costs.
Previous wording
Other Income, net for the three months ended June 30, 2024 increased $0.5 million from the same period in 2023 due primarily to the recovery of carrying costs on the PFAS treatment at Middlesex’s Park Avenue Plant and higher actuarially-determined retirement benefit plans non-service benefit. Lower Allowance for Funds Used During Construction resulting from a lower level of capital projects in progress partially offset these increases. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including carrying costs, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Current wording
Other Income, net for the three months ended September 30, 2024 increased $0.5 million from the same period in 2023 due primarily to higher actuarially-determined retirement benefit plans non-service benefit. Lower Allowance for Funds Used During Construction resulting from a lower level of capital projects in progress partially offset these increases. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including carrying costs, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Previous wording
Interest Charges for the six months ended June 30, 2024 increased $1.5 million from the same period in 2023 due to higher average debt outstanding and an increase in average borrowing rates.
Current wording
Interest Charges for the three months ended September 30, 2024 decreased $0.1 million from the same period in 2023 due to lower average debt outstanding.
Previous wording
Income Taxes for the three months ended June 30, 2024 increased by $3.7 million from the same period in 2023, primarily due to higher pre-tax income and lower income tax benefits associated with decreased repair expenditures on tangible property in the Middlesex System offset by the recovery of income taxes on the taxable portion of the proceeds from the 3M Settlement Agreement recognized in the current period. See Note 2 for additional details.
Current wording
Income Taxes for the three months ended September 30, 2024 increased by $1.0 million from the same period in 2023, primarily due to higher pre-tax income and lower income tax benefits associated with decreased repair expenditures on tangible property in the Middlesex System offset by the recovery of income taxes on the taxable portion of the proceeds from the 3M Settlement Agreement recognized in the current period. See Note 2 for additional details.
Previous wording
Operating Revenues for the six months ended June 30, 2024 increased $8.7 million from the same period in 2023 due to the following factors:
Current wording
Operating Revenues for the nine months ended September 30, 2024 increased $17.1 million from the same period in 2023 due to the following factors:
Previous wording
Depreciation for the six months ended June 30 decreased $0.5 million from the same period in 2023 due to the recovery of prior year depreciation related to upgrades at Middlesex’s Park Avenue Plant partially offset by additional utility plant in service. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including deprecation, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Current wording
Depreciation for the nine months ended September 30, 2024 decreased $0.5 million from the same period in 2023 due to the recovery of prior year depreciation related to upgrades at Middlesex’s Park Avenue Plant partially offset by additional utility plant in service. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including depreciation, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Previous wording
Other Taxes for the six months ended June 30, 2024 increased $1.3 million from the same period in 2023 primarily due to higher gross receipts taxes on higher revenues in our Middlesex System and higher payroll related taxes on increased labor costs in our Middlesex System.
Current wording
Other Taxes for the nine months ended September 30, 2024 increased $2.3 million from the same period in 2023 primarily due to higher gross receipts taxes on higher revenues in Middlesex and higher payroll related taxes on increased labor costs.
Previous wording
Other Income, net for the six months ended June 30, 2024 increased $4.2 million from the same period in 2023 due primarily to the recovery of carrying costs on the PFAS treatment upgrades at Middlesex’s Park Avenue Plant and higher actuarially-determined retirement benefit plans non-service benefit. Lower Allowance for Funds Used During Construction resulting from a lower level of capital projects in progress partially offset these increases. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including carrying costs, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Current wording
Other Income, net for the nine months ended September 30, 2024 increased $4.7 million from the same period in 2023 due primarily to the recovery of carrying costs on the PFAS treatment upgrades at Middlesex’s Park Avenue Plant and higher actuarially-determined retirement benefit plans non-service benefit. Lower Allowance for Funds Used During Construction resulting from a lower level of capital projects in progress partially offset these increases. The conclusion of Middlesex’s 2023 base rate increase request allowed Middlesex to recover costs, including carrying costs, from the proceeds from the 3M Settlement Agreement. See Note 2 for additional details.
Previous wording
Interest Charges for the three months ended June 30, 2024 increased $0.8 million from the same period in 2023 due to higher average debt outstanding and an increase in average borrowing rates.
Current wording
Interest Charges for the nine months ended September 30, 2024 increased $1.4 million from the same period in 2023 due to higher average debt outstanding and an increase in average borrowing rates.
Previous wording
Income Taxes for the six months ended June 30, 2024 increased by $4.3 million from the same period in 2023, primarily due to higher pre-tax income and lower income tax benefits associated with decreased repair expenditures on tangible property in the Middlesex System offset by the recovery of income taxes on the taxable portion of the proceeds from the 3M Settlement Agreement recognized in the current period. See Note 2 for additional details.
Current wording
Income Taxes for the nine months ended September 30, 2024 increased by $5.3 million from the same period in 2023, primarily due to higher pre-tax income and lower income tax benefits associated with decreased repair expenditures on tangible property in the Middlesex System offset by the recovery of income taxes on the taxable portion of the proceeds from the 3M Settlement Agreement recognized in the current period. See Note 2 for additional details.
Previous wording
For the six months ended June 30, 2024, cash flows from operating activities decreased $11.4 million to $17.9 million. The decrease in cash flows from operating activities primarily resulted from accrued recovered costs from Middlesex’s 3M Settlement, timing of vendor payments and higher interest payments partially offset by the impact of Middlesex’s approved base rate increase effective March 1, 2024.
Current wording
For the nine months ended September 30, 2024, cash flows from operating activities decreased $2.7 million to $37.3 million. The decrease in cash flows from operating activities primarily resulted from accrued recovered costs from Middlesex’s 3M Settlement, increases in customer receivables and unbilled revenues and higher interest payments partially offset by the impact of Middlesex’s approved base rate increase effective March 1, 2024.
Previous wording
For the six months ended June 30, 2024, cash flows used in investing activities decreased $21.9 million to $28.7 million due to decreased utility plant expenditures in 2024.
Current wording
For the nine months ended September 30, 2024, cash flows used in investing activities decreased $23.6 million to $49.5 million due to decreased utility plant expenditures in 2024.
Previous wording
For the three months ended June 30 , 2024, cash flows from financing activities decreased $5.4 million to $16.5 million. The decrease in cash flows provided by financing activities is due to lower proceeds from the issuance of common stock under the Middlesex Water Company Investment Plan (Investment Plan) and lower net borrowings.
Current wording
For the nine months ended September 30, 2024, cash flows from financing activities decreased $16.1 million to $16.1 million. The decrease in cash flows provided by financing activities is due to lower proceeds from the issuance of common stock under the Middlesex Water Company Investment Plan (Investment Plan) and long-term debt offset by proceeds received from a litigation settlement.
Previous wording
To fund our capital program, we use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the Investment Plan and proceeds from sales offerings to the public of our common stock. In addition, in July 2024, we received proceeds of $63.6 million from the 3M Settlement Agreement, which were used to pay down our lines of credit outstanding balance to further support the funding of our capital program.
Current wording
To fund our capital program, we use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the Investment Plan and proceeds from sales offerings to the public of our common stock. In addition, in July 2024, we received net proceeds of $63.6 million from the 3M Settlement Agreement, which were used to pay down our lines of credit outstanding balance to further support the funding of our capital program.
Previous wording
Middlesex has received approval from the NJBPU to borrow up to $300.0 million from the New Jersey SRF Program, the New Jersey Economic Development Authority, private placement and other financial institutions as needed through December 31, 2025. The Company expects to issue debt securities in a series of one or more transaction offerings over a multi-year period to help fund Middlesex’s multi-year capital construction program.
Current wording
Middlesex has received approval from the NJBPU to borrow up to $300.0 million from the New Jersey State Revolving Fund (SRF) Program, the New Jersey Economic Development Authority, private placement and other financial institutions as needed through December 31, 2025. The Company expects to issue debt securities in a series of one or more transaction offerings over a multi-year period to help fund Middlesex’s multi-year capital construction program.
Previous wording
In July 2024, Tidewater received a commitment for a $2.2 million Delaware SRF loan with a 0.0% interest rate. This loan is for costs associated with Tidewater’s obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines throughout Tidewater’s service area. After approval is received from the DEPSC, Tidewater expects to close on this loan in September 2024 and draw down the full amount in the fourth quarter of 2024.
Current wording
In September 2024, Tidewater closed on a $2.2 million Delaware SRF loan with a 0.0% interest rate. This loan is for costs associated with Tidewater’s obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines throughout Tidewater’s service area. Tidewater expects to draw down on this loan in the fourth quarter of 2024.
Previous wording
In order to fully fund the ongoing investment program in our utility plant infrastructure and maintain a balanced capital structure consistent with regulators’ expectations for a regulated water utility, Middlesex may offer for sale additional shares of its common stock. The amount, the timing and the sales method of the common stock is dependent on the timing of the construction expenditures, the level of additional debt financing and financial market conditions. As approved by the NJBPU, the Company is authorized to issue and sell up to 1.0 million shares of its common stock in one or more transactions through December 31, 2025.
Current wording
In order to fully fund the ongoing investment program in our utility plant infrastructure and maintain a balanced capital structure consistent with regulators’ expectations for a regulated water utility, Middlesex may offer for sale additional shares of its common stock. The amount, timing and method of sale of common stock is dependent on the timing of construction expenditures, the level of additional debt financing and financial market conditions. As approved by the NJBPU, the Company is authorized to issue and sell up to 1.0 million shares of its common stock in one or more transactions through December 31, 2025.