What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-18 compared with 2023-03-10 · 83 added, 82 removed, 290 unchanged (36% of the section changed)

10 unchanged sentences

water, sewer and internal Service Line Protection Plans.

Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under the

symbol “ARTNB.”

Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under

the symbol “ARTNB.”

Artesian Resources is the holding company of five regulated public utilities:

19 unchanged sentences

southern New Castle County, Delaware.

We hold CPCNs for approximately 58 square miles of wastewater service territory located in Sussex County, Delaware.

In January 2022, approximately 23 square miles of wastewater service territory, located in

Sussex County, Delaware, was added upon the closing of the acquisition of TESI.

A significant portion of our exclusive service territory is in Sussex County, Delaware and remains undeveloped, and if and when development occurs and there is population

growth in these areas, we anticipate we will increase our customer base by providing water and/or wastewater service to the newly developed areas and new customers.

We hold CPCNs for approximately 59 square miles of wastewater service territory located in Sussex County, Delaware, of which approximately 23 square miles was added in January 2022 upon the closing of the

acquisition of TESI.

A significant portion of our exclusive service territory is in Sussex County, Delaware and remains undeveloped, and if and when development occurs and there is population growth in these areas, we anticipate we will increase our

customer base by providing water and/or wastewater service to the newly developed areas and new customers.

Artesian Water

7 unchanged sentences

discussed further in the “Strategic Direction and Recent Developments” section.

We derive about 90% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic

Coastal Plain.

We derive about 90% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic Coastal

The remaining 10% of our groundwater supply comes from wells in the Piedmont Province.

We use a variety of treatment methods, including aeration, pH adjustment, chlorination, fluoridation, ultra violet oxidation, arsenic removal,

nitrate removal, radium removal, iron removal, and carbon adsorption to meet federal, state and local water quality standards.

We use a variety of treatment methods, including aeration, pH adjustment, chlorination, fluoridation, ultra violet oxidation, arsenic removal, nitrate

removal, radium removal, iron removal, and carbon adsorption to meet federal, state and local water quality standards.

Additionally, a corrosion inhibitor is added to our self-supplied groundwater and to supply from interconnections.

have 61 different water treatment facilities in our Delaware systems.

different water treatment facilities in our Delaware systems.

All water supplies that we purchase from neighboring utilities are potable.

11 unchanged sentences

Most of our New Castle County, Delaware water system is interconnected.

In the remainder of the State of Delaware, we have several satellite systems

that have not yet been connected by transmission and distribution facilities.

We intend to join these systems into larger integrated regional systems through the construction of a transmission and distribution network as development continues and

our expansion efforts provide us with contiguous exclusive service territories.

In Delaware, we have 21 interconnections with two neighboring water utilities and six municipalities that provide us with the ability to purchase or

An interconnection agreement with Chester Water Authority, that expired December 31, 2021, had a “take or pay” clause requiring us to purchase 3.0 mgd.

The current agreement with Chester Water Authority, which is effective from January

1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022 and now requires us to

purchase a minimum of 0.5 mgd.

In the remainder of the State of Delaware, we have several satellite systems that

have not yet been connected by transmission and distribution facilities.

We intend to join these systems into larger integrated regional systems through the construction of a transmission and distribution network as development continues and our

expansion efforts provide us with contiguous exclusive service territories.

In Delaware, we have 24 interconnections with three neighboring water utilities

and seven municipalities that provide us with the ability to purchase or sell water.

An interconnection agreement with Chester Water Authority, which is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal

terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022 and now requires us to purchase a minimum of 0.5 mgd.

Artesian’s capital investments in

self-sufficiency of water supply facilitated a reduction in the minimum amount of water required to be purchased under the current contract compared to previous contracted requirements.

The reduced purchased water minimum requirement has lowered

purchased water utility operating costs.

As of December 31, 2023, we were serving customers through approximately 1,470 miles of transmission and distribution mains.

Mains range in diameter

from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.

Mains range in diameter from

two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.

We have 36 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 45.0 million gallons.

developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.

Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0

At some locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures.

We have developed and

are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.

Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0 mgd.

locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures.

Where possible, we combine our smaller satellite systems with systems having elevated storage facilities.

8 unchanged sentences

We have ten separate water treatment facilities in our Maryland systems.

We have one water treatment facility that treats surface water through an intake in the Susquehanna River, located in Cecil

County, Maryland, which has the ability to supply up to 1.0 mgd of water.

Our peak water supply capacity currently is approximately 2.0 mgd.

We have 8 storage tanks capable of storing approximately 2.5 million gallons.

We believe that we have in

place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

We have one surface water treatment facility located in Cecil County, Maryland, with the current ability to treat up to 1.0

mgd from an intake in the Susquehanna River that is permitted a withdrawal of a maximum of 5.0 mgd and a daily average of 3.5 mgd.

Our total peak water supply capacity in Cecil County, Maryland currently is approximately 2.0 mgd.

We have 9 storage

tanks capable of storing approximately 2.5 million gallons.

We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.

In Maryland, we have one interconnection with the Artesian Water system in

9 unchanged sentences

wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company.

Artesian Wastewater owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3 mgd.

Artesian Wastewater owns and operates three wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3

Artesian Wastewater and Sussex County, a political subdivision of Delaware, provide reciprocal services to address the need of each for additional wastewater treatment and disposal capacity in certain service areas within Sussex County.

Artesian Wastewater received an operations permit in March 2020 for a disposal facility that includes a 90-million gallon storage lagoon and spray irrigation to agricultural

This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd.

We began operating this facility in late June 2021, shortly after the industrial customer received its process wastewater

treatment operating permit.

Wastewater also owns and operates a disposal facility that includes a 90-million gallon storage lagoon and spray irrigation to agricultural land.

This facility provides treated process wastewater disposal services for an industrial customer at a rate

up to 1.5 mgd.

We began operating this facility in June 2021.

In January 2022, Artesian Wastewater acquired Tidewater Environmental Services, Inc.

Artesian Wastewater operates as the parent holding company of

Tidewater Environmental Services, Inc.

Artesian Wastewater operates as the parent holding company of Tidewater

Environmental Services, Inc.

dba Artesian Wastewater, or TESI.

TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex

County, Delaware as a regulated public wastewater service company.

Artesian Wastewater purchased all of the stock of TESI from Middlesex Water Company, or Middlesex, for $6.4 million in cash and other consideration, including forgiveness of a $2.1

million note due from Middlesex.

TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex County,

Delaware as a regulated public wastewater service company.

Artesian Wastewater purchased all of the stock of TESI from Middlesex Water Company, or Middlesex, for $6.4 million in cash and other consideration, including forgiveness of a $2.1 million

note due from Middlesex.

This acquisition more than doubled the number of wastewater customers served by Artesian’s Delaware wastewater subsidiaries in Sussex County, Delaware and included all residents within the Town of Milton, Delaware.

26 unchanged sentences

wastewater facility, as well as property for current operations, including an office facility in Sussex County, Delaware.

The office facility consists of approximately 10,000 square feet of office space along with nearly 10,000 square feet of

The office facility consists of approximately 10,000 square feet of office space along with approximately 7,000 square feet of

warehouse space.

2 unchanged sentences

storm water management systems in Delaware and the surrounding areas.

The ability to offer storm water services will complement the primary water and wastewater services that we provide.

Artesian Storm Water is not actively seeking new

opportunities.

In May 2023, the Board of Directors of Artesian Storm Water unanimously approved its dissolution.

Also, in May 2023, the Board of Directors of Artesian Resources Corporation, the

sole shareholder of Artesian Storm Water, unanimously approved the dissolution of Artesian Storm Water.

The Company filed a Certificate of Dissolution with the Delaware Secretary of State, which became effective on June 20, 2023.

Government Regulations

7 unchanged sentences

utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate.

See Note 13 to our Consolidated

Financial Statements for a full description of recent regulatory proceedings.

See Notes to Consolidated Financial

Statements – Note 13 – Regulatory Proceedings for a full description of recent regulatory proceedings.

Service Territory Expansion

27 unchanged sentences

The Chester Water Authority, which supplies water to Artesian Water through an interconnection in

northern New Castle County, is regulated by the Pennsylvania Department of Environmental Protection, as well as the EPA.

We believe that we are in material compliance with all current federal, state and local water quality standards, including

regulations under the federal Safe Drinking Water Act.

However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition, results of operations

and planned capital investments.

northern New Castle County, and Artesian Water Pennsylvania, which also supplies water to Artesian Water, are regulated by the Pennsylvania Department of Environmental Protection, or PADEP, as well as the EPA.

We believe that we are in material

compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act.

However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it

could have a material adverse effect on our financial condition, results of operations and planned capital investments.

The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all

14 unchanged sentences

most widely used PFAS as hazardous substances.

The EPA has also declared drinking water health advisories levels for PFAS.

The Lead and Copper Rule, or LCR, is a United States federal regulation that limits the concentration of lead and copper allowed in public drinking water at

the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.

The EPA has also declared drinking water health advisory levels for PFAS.

The Lead and Copper Rule, or LCR, is a United States federal regulation that limits the concentration of lead and

copper allowed in public drinking water at the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.

The EPA first issued the rule in 1991 pursuant to the Safe Drinking Water Act.

The EPA promulgated the regulations following

studies that concluded that copper and lead adversely affect an individual’s physical and mental health.

The LCR sought to therefore limit the levels of these metals in water by improving water treatment centers, determining copper and lead levels for

customers who use lead plumbing parts, and eliminating the water source as a source of lead and copper.

If the lead and copper levels exceed the "action levels", water suppliers are required to educate their consumers on how to reduce exposure to

The EPA published a revised LCR in 2021, with a compliance deadline expected in 2024.

These revised requirements provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water.

Implementation of the revised rule will better identify high levels of lead, improve the reliability of lead tap sampling results, strengthen corrosion control treatment requirements, expand consumer awareness and improve risk communication.

addition, implementation of the revised rule will accelerate lead service line replacements by closing existing regulatory loopholes, propelling early action, and strengthening replacement requirements.

We are fully compliant with the current LCR and

are actively examining the revised LCR to ensure we are fully compliant on or before the compliance deadline date, which is expected to be in October 2024.

promulgated the regulations following studies that concluded that copper and lead adversely affect an individual’s physical and mental health.

The LCR therefore sought to limit the levels of these metals in water by improving water treatment centers,

determining copper and lead levels for customers who use lead plumbing parts, and eliminating the water source as a source of lead and copper.

If the lead and copper levels exceed the "action levels," water suppliers are required to educate their

consumers on how to reduce exposure to lead.

The EPA published a revision to the LCR in 2021, with a compliance deadline of October 2024 for developing an inventory of lead service lines within a utility’s water system.

These revised requirements

provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water.

Implementation of the revised rule will identify locations of lead, improve the reliability of lead tap sampling results,

strengthen corrosion control treatment requirements, expand consumer awareness and improve risk communication.

In addition, implementation of the revised rule will accelerate lead service line replacements by implementing timelines and strengthening

replacement requirements.

We are fully compliant with the current LCR and on schedule to be in compliance with the revised LCR ahead of the October 2024 compliance date.

The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.

13 unchanged sentences

We have 142 operating and 62 observation and monitoring wells in our Delaware systems.

At December 31, 2022, we had allocation permits for 115 wells, and 23 wells

that did not require a permit.

At December 31, 2023, we had allocation permits for 116 wells and 25 wells that

did not require a permit.

Our access to aquifers within our service territory is not exclusive.

22 unchanged sentences

We have 14 operating wells and one surface water in-take in our Maryland systems.

The PADEP administers and oversees departmental programs involving surface and groundwater quantity and quality

planning and water conservation in Pennsylvania.

The office also coordinates policies, procedures, and regulations which influence public water supply withdrawals and quality.

The DRBC administers and oversees programs involving water quality

protection, water supply allocation, water conservation initiatives and watershed planning, regulatory review and permitting, and drought management in Pennsylvania.

We have one operating well in Pennsylvania within the DRBC’s jurisdiction.

is treated by a water treatment plant located in Delaware.

The Clean Water Act has established the foundation for wastewater discharge control in the United States.

1 unchanged sentence

for ensuring that communities have clean water by regulating the release of contaminants into waterways.

Permits that limit the amounts of pollutants discharged are required of all wastewater dischargers under the National Pollutant Discharge

Permits that limit the amounts of pollutants discharged are required for all wastewater dischargers under the National Pollutant Discharge

Elimination System, or the NPDES, permit program.

26 unchanged sentences

utilities with whom we compete for such franchises.

Materials and Supplies

We are highly dependent on the availability of essential materials and parts from our suppliers for expansion, construction and maintenance of our services.

The majority of the materials required for our water and wastewater utility business are typically under contract at fixed prices, however, supply chain issues associated with the COVID-19 pandemic, compounded by increasing inflation, resulted in price

increases and delays in procuring certain materials and equipment.

We have been successful in minimizing these delays and cost increases with thorough planning and pre-ordering, however there is no assurance that our future financial results or

business operations will not be negatively affected.

Suppliers and Independent Contractors

3 unchanged sentences

affect construction and maintenance schedules.

The remaining effects of the COVID-19 pandemic have delayed some of our construction projects and our lead time for material deliveries however, those delays have not impacted our ability to maintain our

level of service to customers.

We are also dependent on the availability of electricity and purchased water at affordable prices.

30 unchanged sentences

sessions and other incentives.

The COVID-19 pandemic further emphasized the importance of keeping our employees safe and healthy.

In response to the pandemic, the Company took actions to help protect our employees so that they could continue to

perform their work in a safe and effective manner.

We use outside consultants and independent contractors on an as needed basis for various services.

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business