What changed in this filing

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Item 1. Business

2022-02-25 compared with 2021-02-25 · 99 added, 96 removed, 192 unchanged (50% of the section changed)

9 unchanged sentences

The Company’s other subsidiaries are Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc.

(USA), Utility Service Affiliates (Perth Amboy) Inc., (USA-PA), Tidewater Environmental Services, Inc.

(TESI) and Twin Lakes Utilities, Inc.

(Twin Lakes).

(USA) and Utility Service Affiliates (Perth Amboy) Inc., (USA-PA).

The Company’s principal executive offices are located at 485C Route 1 South, Suite 400, Iselin, New Jersey 08830.

4 unchanged sentences

Middlesex System

The Middlesex System in New Jersey provides water services to approximately 61,000 retail customers, primarily in eastern Middlesex County, New Jersey and provides water under wholesale contracts to the City of Rahway, Townships of Edison and Marlboro, the Borough of Highland Park and the Old Bridge Municipal Utilities Authority.

Located in New Jersey, the Middlesex System provides water services to approximately 61,000 retail customers, primarily in eastern Middlesex County and under wholesale contracts to the City of Rahway, Townships of Edison and Marlboro, the Borough of Highland Park and the Old Bridge Municipal Utilities Authority.

The Middlesex System treats, stores and distributes water for residential, commercial, industrial and fire protection purposes.

25 unchanged sentences

Pinelands Wastewater produced approximately 1% of our 2021 consolidated operating revenues.

USA operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system under a ten-year operations and maintenance contract expiring in 2022.

USA serves approximately 6,400 retail customers in Avalon, most of which are served by both the water system and wastewater collection system.

In addition to performing day-to-day operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon.

USA operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system under a ten-year operations and maintenance contract expiring in June 2022.

USA expects to participate in the public proposal process for a new ten-year contract.

There are approximately 6,400 retail customers in Avalon, most of which are served by both the water system and wastewater collection system.

In addition to performing day-to-day service operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon.

USA operates the Borough of Highland Park, New Jersey’s (Highland Park) water utility and sewer utility under a ten-year operations and maintenance contract expiring in 2030.

USA serves approximately 3,300 mostly retail customers in Highland Park.

There are approximately 3,300 mostly retail customers in Highland Park.

The contract commenced July 1, 2020.

USA also provides unregulated water and wastewater services under contract with several other smaller New Jersey municipalities.

Under a marketing agreement with HomeServe, USA offers residential customers in New Jersey and Delaware various water and wastewater related home maintenance programs.

HomeServe is a leading national provider of such home maintenance service programs.

USA also provides water and wastewater services to several other New Jersey municipalities under contracts that are not regulated by a public utility commission as to rates and service.

Under a marketing agreement with HomeServe USA Corp.

(HomeServe) expiring in 2031, USA offers residential customers in New Jersey and Delaware various water and wastewater related home maintenance programs.

USA receives a service fee for the billing, cash collection and other administrative matters associated with HomeServe’s service contracts.

The agreement expires in July 2021 and renewal discussions are underway.

USA produced approximately 3% of our 2021 consolidated operating revenues.

TESI provides wastewater collection and treatment services to approximately 3,900 retail customers in Sussex County, Delaware.

TESI produced approximately 2% of our 2020 consolidated operating revenues.

White Marsh operates or maintains water and/or wastewater systems that serve approximately 1,900 retail customers under more than 36 separate contracts.

White Marsh operates or maintains water and/or wastewater systems that serve approximately 4,500 service connections under 35 separate contracts.

White Marsh also owns two commercial properties that are leased to Tidewater for its administrative office campus and its field operations center.

12 unchanged sentences

Water Supplies and Contracts

Our New Jersey, Delaware and Pennsylvania water supply systems are physically separate and are not interconnected.

Our New Jersey and Delaware water supply systems are physically separate and are not interconnected.

In New Jersey, the Pinelands System and Bayview System are not interconnected with the Middlesex System or each other.

We believe we have adequate sources of water supply to meet the current service requirements of our present customers in New Jersey, Delaware and Pennsylvania.

We believe we have adequate sources of water supply to meet the current service requirements of our present customers in New Jersey and Delaware.

Middlesex System

Our Middlesex System, which produced approximately 13.7 billion gallons in 2020, obtains water from surface sources and wells (groundwater sources).

In 2020, surface sources of water provided approximately 64% of the Middlesex System’s water supply, groundwater sources provided approximately 27% from 31 Company-owned wells and the balance was purchased from a non-affiliated water utility regulated by the New Jersey Board of Public Utilities (NJBPU) under an agreement which expires February 27, 2026.

Our Middlesex System produced approximately 14.0 billion gallons in 2021 from:

Olsen Surface Water Treatment Plant (CJO Plant)-10.4 billion gallons;

Twenty-seven Company-owned wells (ground water)-2.3 billion gallons, and;

The balance purchased from a non-affiliated water utility regulated by the New Jersey Board of Public Utilities (NJBPU) under an agreement which expires February 27, 2026.

This agreement provides for minimum purchases of 3.0 million gallons per day (mgd) of treated water with provisions for additional purchases.

As more fully described under Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation, Recent Developments, Regulatory Notice of Non-Compliance, Middlesex ceased pumping from its Company-owned wells in South Plainfield, New Jersey in December 2021.

It is intended, but not guaranteed, that these wells will remain out of service until the construction of some, or all, of a facility to provide an enhanced treatment process to comply with new State of New Jersey water quality regulations relative to poly- and perfluoroalkyl substances, collectively referred to as PFAS.

The entire facility is expected to be completed and in-service by mid-2023.

Until that date, additional surface water production from the CJO Plant and additional treated water purchases from a non-affiliated water utility are intended to replace the ground water source production.

The Middlesex System’s distribution storage facilities are used to supply water to customers at times of peak demand, outages and emergencies.

The principal source of surface water for the Middlesex System is the Delaware & Raritan Canal, which is owned by the State of New Jersey and operated as a water resource by the New Jersey Water Supply Authority (NJWSA).

Middlesex is under contract with the NJWSA, which expires November 30, 2023, and provides for average purchases of 27.0 mgd of untreated water from the Delaware & Raritan Canal, augmented by the Round

Valley/Spruce Run Reservoir System.

The untreated surface water is pumped to, and treated at, the Middlesex Carl J.

Olsen (CJO) Water Treatment Plant.

The principal source of surface water for the Middlesex System is the Delaware & Raritan Canal, which is owned by the State of New Jersey and operated by the New Jersey Water Supply Authority (NJWSA).

The untreated surface water is pumped to, and treated at, the CJO Plant.

Water supply to Bayview customers is derived from two wells, which produced approximately 6.0 million gallons in 2021.

12 unchanged sentences

The total capacity of the plant is 0.5 mgd, and the system treated approximately 96.0 million gallons in 2021.

The TESI System is comprised of seven wastewater collection and treatment systems, which are not interconnected.

The treatment plants provide clarification, sedimentation, and disinfection.

The combined total treatment capacity of the plants is 0.7 mgd.

The TESI System treated approximately 125.6 million gallons in 2020.

Human Capital Management

The Company aims to attract and retain the best employees by offering competitive compensation packages along with career development and training opportunities in a safe, supportive and inclusive work environment.

Our mission, our business philosophy and the way we deliver for our customers, our shareholders and our employees is rooted in what we, as an enterprise, believe to be our core values of Respect, Integrity, Growth, Honesty and Teamwork.

The Company strives to attract and retain employees by offering competitive compensation packages along with career development and training opportunities in a safe, supportive and inclusive work environment.

Our mission, our business philosophy and the manner in which we deliver value for our customers, our shareholders and our employees is inherent in what we, as an enterprise, believe to be our core values of Respect, Integrity, Growth, Honesty and Teamwork.

Our employees’

success is a key element of the Company’s success.

As of December 31, 2020, the Company employed 348 employees.

As of December 31, 2021, the Company had 347 employees.

None of our employees are subject to a collective bargaining agreement.

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Compensation increases and incentive compensation are based on merit, which is communicated to employees and well documented in our bi-annual performance evaluation process.

Benefits include a variety of programs to enhance employee overall physical, mental and financial health and well-being, including healthcare insurance, employer funded retirement savings plans, life insurance, disability insurance, accident insurance, tuition reimbursement, flu shots, wellness newsletters and webinars, incentive programs for achieving fitness milestones, financial counseling, elder care assistance, substance abuse support and more.

The Company has implemented safety programs and management practices to promote a culture of safety to protect its employees.

Benefits include a variety of programs to enhance employee overall physical, mental and financial health and well-being, including healthcare insurance, employer funded retirement savings plans, life insurance, disability insurance, accident insurance, tuition reimbursement, flu shots, wellness newsletters and webinars, flexible hybrid office and remote work capabilities, incentive programs for achieving fitness milestones, financial counseling, elder care assistance, substance abuse support and more.

The Company has implemented safety programs and management practices designed to promote a culture of safety to protect its employees.

This includes required trainings for employees, as well as specific qualifications and certifications for certain operational employees.

These active and on-going workplace health and safety training programs and policies keep our rates of occupational injury and illness low.

All employees have been empowered to report, and immediately stop, work which, in their opinion, is unsafe or is not consistent with our safety policies and procedures.

They can take this action without fear of reprisal.

In response to the Novel Coronavirus (COVID-19) pandemic, the Company implemented significant changes that it determined were in the best interest of our employees and customers, as well as in addition to complying with government emergency orders and regulations.

While the nature of our utility services business necessitated our operating workforce continue to operate in the field and at treatment facilities, we implemented numerous measures to help ensure the safety of those employees, and the public, amidst the pandemic.

We closed our administrative offices in late March 2020 and arranged for all affected employees to be able work remotely.

In late June 2020, we reopened our offices to accommodate 25% capacity for employees only and those offices remain closed to the public and visitors.

For further discussion of the impact of COVID-19 on the Company, see Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation, Recent Developments, Novel Coronavirus (COVID-19 ).

In response to the ongoing Coronavirus (COVID-19) pandemic, the Company continues to implement changes it determines are in the best interest of our employees and customers, as well required to comply with government emergency orders and regulations.

While the nature of our utility services business requires portions of our workforce to operate in the field and at treatment facilities, we employ and maintain a variety of processes to help ensure the safety of those employees and the public in light of the ongoing pandemic.

For further discussion of the impact of the COVID-19 pandemic on the Company, see Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation, Recent Developments, Coronavirus (COVID-19 ).

Employee Development and Training

The Company supports and utilizes various training and educational programs and has developed additional company-wide and project-specific employee training and educational programs, including tuition assistance for full time employees enrolled in pre-approved undergraduate or graduate courses or professional licensing courses.

The Company employs various training and other educational programs and has developed company-wide and project-specific training and educational programs, including tuition assistance for full-time employees enrolled in pre-approved undergraduate or graduate courses or professional licensing courses.

All employees receive training to identify and report operational and financial risks, as well as risks to Company brand and reputation, which fosters a personal culture of accountability and reinforces our commitment to a safe and sustainable workplace.

All employees receive cybersecurity training and other education regarding the handling of sensitive data.

All employees receive cybersecurity training and other education regarding their use of sensitive data.

Our Executive Management team and our Board of Directors continually assess succession plans, leadership development and policies and strategies regarding recruitment, retention, career development, diversity, equity and inclusion.

2 unchanged sentences

The Company is committed to DEI based upon our belief that embracing DEI benefits all stakeholders by maintaining a workforce with a variety of skills and perspectives as a result of their diverse backgrounds and experiences.

Specific DEI initiatives are in progress to further enhance our culture of belonging.

The Company is focused on recruitment of diverse candidates as well as on internal talent development of its diverse leaders so that all employees are provided with an opportunity to advance their careers within the Company.

Specific DEI initiatives are in progress to further enhance a culture consistent with our Company values.

The Company is focused on recruitment and/or development of both external and internal candidates so that all prospective and current employees are provided an opportunity to advance their careers.

The Company solicited our employees’

perceptions of the Company’s focus on DEI with a comprehensive survey, followed-up with numerous meetings of groups of employees to discuss the results of the survey and to further engage our employees on matters of DEI.

We expect to continue to monitor the results of

our DEI efforts and continually explore opportunities to further engage our employees to ensure our actions are in-fact fully consistent with our stated Company core values.

Our business in our franchised service areas is substantially free from direct competition with other public utilities, municipalities and other entities.

perceptions of the Company’s focus on DEI with a comprehensive survey, followed by numerous meetings of groups of employees to discuss the results of the survey and to further engage our employees on matters of DEI.

We expect to continue to monitor the results of our DEI efforts and continually explore opportunities to further engage our employees to ensure our actions are, in-fact, fully consistent with our stated Company core values.

Our business in our franchised service areas is substantially free from direct competition for growth with other public utilities, municipalities and other entities.

However, our ability to provide contract wholesale water supply and operations and maintenance services that are not under the jurisdiction of a state public utility commission is subject to competition from other public utilities, municipalities and other entities.

Although Tidewater and TESI have been granted exclusive franchises for each of their existing community water and wastewater systems, their ability to expand service areas can be affected by the Delaware Public Service Commission (DEPSC) awarding

franchises to other regulated water and wastewater utilities with whom we compete for such franchises and for projects.

Our rates charged to customers for water and wastewater services, the quality of the services we provide and certain other matters are regulated by the following state utility commissions (collectively, the Utility Commissions):

Pennsylvania Public Utility Commission (PAPUC).

Although Tidewater has been granted exclusive franchises for its existing community water systems, the ability to expand service areas can be affected by the Delaware Public Service Commission (DEPSC) awarding franchises to other regulated water utilities with whom we compete for such franchises and for projects.

Our rates charged to customers for utility services, the quality of the services we provide and certain other matters are regulated by the NJBPU and DEPSC (collectively, the Utility Commissions).

Our USA, USA-PA and White Marsh subsidiaries are not regulated public utilities as related to rates and service quality.

1 unchanged sentence

We are subject to environmental and water quality regulation by the following regulatory agencies (collectively, the Government Environmental Regulatory Agencies):

United States Environmental Protection Agency (EPA);

United States Environmental Protection Agency (USEPA);

New Jersey Department of Environmental Protection (NJDEP) with respect to operations in New Jersey;

Delaware Department of Natural Resources and Environmental Control, the Delaware Department of Health and Social Services-Division of Public Health (DEDPH), and the Delaware River Basin Commission (DRBC) with respect to operations in Delaware.

Pennsylvania Department of Environmental Protection (PADEP) with respect to operations in Pennsylvania.

In addition, our issuances of equity securities are subject to the prior approval of the NJBPU and require registration with the SEC.

2 unchanged sentences

For regulated rate setting purposes, we account separately for our regulated utility operations to facilitate independent rate setting by the applicable Utility Commissions.

In determining our regulated utility rates, the respective Utility Commissions consider the revenue, expenses, rate base of property used and useful in providing service to the public and a fair rate of return on investments within their separate jurisdictions.

In determining our regulated utility rates, the respective Utility Commissions consider the revenue, expenses and utility infrastructure used and useful in providing service to the public.

Rate determinations by the respective Utility Commissions do not guarantee achievement to us of specific rates of return for our regulated utility operations.

Thus, we may not achieve the stated rates of return authorized by the Utility Commissions.

Thus, we may not achieve the rates of return authorized by the Utility Commissions.

In addition, there can be no assurance that any future rate increases will be granted or, if granted, that they will be in the amounts requested.

Middlesex Rate Matters

In November 2020, Middlesex filed a petition with the NJBPU seeking approval to reset its Purchased Water Adjustment Clause (PWAC) tariff rate currently in effect to recover additional costs of $1.1 million for the purchase of treated water from a non-affiliated regulated water utility regulated by the NJBPU.

A PWAC is a rate mechanism that allows for recovery of increased purchased water costs between base rate case filings.

The PWAC is reset to zero once those increased costs are included in base rates.

We cannot predict whether the NJBPU will ultimately approve, deny or reduce the amount of our request.

In March 2020, the NJBPU approved Middlesex’s petition to reset its 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.

In December 2021, Middlesex’s petition to the NJBPU seeking permission to increase its base water rates was concluded, based on a negotiated settlement, resulting in an expected increase in annual operating revenues of $27.7 million.

The approved tariff rates were designed to recover increased operating costs as well as a return on invested capital of $513.5 million, based on an authorized return on common equity of 9.6%.

The increase is being implemented in two phases with $20.7 million of the increase effective January 1, 2022 and the remaining $7.0 million effective January 1, 2023.

As part of the negotiated settlement, the Purchased Water Adjustment Clause (PWAC), which is a rate mechanism that allows for recovery of increased purchased water costs between base rate case filings, was reset to zero.

In March 2021, the NJBPU approved Middlesex’s annual petition to reset its PWAC tariff rate to recover additional costs of $1.1 million for the purchase of treated water from a non-affiliated regulated water utility.

The new PWAC rate became effective April 4, 2021.

In March 2020, the NJBPU approved Middlesex’s annual petition to reset its 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.

The new PWAC rate became effective on April 4, 2020.

In March 2018, Middlesex’s petition to the NJBPU seeking permission to increase its base water rates was concluded, based on a negotiated settlement, resulting in an increase in annual operating revenues of $5.5 million.

The approved base water rates were designed to recover increased operating costs as well as a return on invested capital in rate base of $245.5 million, based on an authorized return on common equity of 9.6%.

As part of the settlement, Middlesex received approval for regulatory accounting treatment of accumulated deferred income tax benefits associated with required adoption of tangible property regulations issued by the Internal Revenue Service.

The settlement agreement allowed for a four-year amortization period for $28.7 million of deferred income tax benefits as well as prospective recognition of the income tax benefits for the immediate deduction of repair costs on tangible property.

The rate increase became effective April 1, 2018.

Tidewater Rate Matters

Effective January 1, 2021, Tidewater increased its DEPSC-approved Distribution System Improvement Charge (DSIC) rate, which is expected to generate revenues of approximately $0.6 million annually.

Effective January 1, 2021, Tidewater increased its DEPSC-approved Distribution System Improvement Charge (DSIC) rate, which was expected to generate revenues of approximately $0.6 million annually.

A DSIC is a rate-mechanism that allows water utilities to recover investments in, and generate a return on, qualifying capital improvements made between base rate proceedings.

In March 2021, Tidewater was notified by the DEPSC that it had determined Tidewater’s earned rate of return exceeded the rate of return authorized by the DEPSC.

Consequently, Tidewater reset its DSIC rate to zero effective April 1, 2021 and has refunded customers, with interest, primarily in the form of an account credit for DSIC revenue billed between April 1, 2020 and March 31, 2021.

Accordingly, in March 2021, Tidewater recorded a $0.8 million reserve, net of tax, for such refunds.

Tidewater applied the refund credits to individual customer accounts during the second quarter of 2021.

Effective March 1, 2019, Tidewater received approval from the DEPSC to reduce its rates to reflect the lower corporate income tax rate enacted by the Tax Cuts and Jobs Act of 2017, resulting in a 3.35% rate decrease for certain customer classes.

Pinelands Rate Matters

Effective November 4, 2019, Pinelands Water and Pinelands Wastewater received approval from the NJBPU to increase its base rates by $0.5 million.

The increased revenues were necessitated by capital infrastructure investments both companies had made and increased operations and maintenance costs.

Effective November 4, 2019, Pinelands received approval from the NJBPU to increase base rates by $0.5 million.

The increased revenues were necessitated by capital infrastructure investments and increased operations and maintenance costs.

Southern Shores Rate Matters

Effective January 1, 2020, the DEPSC approved the renewal of a multi-year agreement for water service to a 2,200 unit condominium community in Sussex County, Delaware.

Under the agreement, current rates will remain in effect until December 31, 2024, but should there be unanticipated capital expenditures or regulatory related changes in operating expenses exceeding certain thresholds during this time period, rates are permitted to be adjusted to reflect such cost changes.

Effective January 1, 2020, the DEPSC approved the renewal of a multi-year agreement for water service to a 2,200 unit condominium community we serve in Sussex County, Delaware.

Under the agreement, current rates will remain in effect until December 31, 2024.

In the event there are unanticipated capital expenditures or regulatory related changes in operating expenses exceeding certain thresholds during this time period, rates are permitted to be adjusted to reflect such cost changes.

Thereafter, rate increases, if any, cannot exceed the lesser of the regional Consumer Price Index or, 3%.

The new agreement expires on December 31, 2029.

This agreement expires on December 31, 2029.

Future Rate Filings

Management monitors the need for rate relief for our regulated entities on an ongoing basis.

When capital improvements and/or increases in operation and maintenance costs require rate relief, base rate increase requests are expeditiously filed with the respective Utility Commissions.

When capital improvements and/or increases in operation, maintenance or other costs indicate a need for rate relief, base rate increase requests are filed with the respective Utility Commissions.

Regulatory Service Matters

Twin Lakes Utilities, Inc.

(Twin Lakes) provides water services to approximately 115 residential customers in Shohola, Pennsylvania.

In 2020, Twin Lakes filed a petition requesting the PAPUC to exercise its discretion under Section 529 of the Pennsylvania Public Utility Code (the Code) to order the acquisition of Twin Lakes by a public utility as defined by the Code.

The PAPUC assigned an Administrative Law Judge (ALJ) to adjudicate the matter and submit a decision to the PAPUC.

Pre-filed testimony was submitted by all parties and an evidentiary hearing was held by the ALJ in early January 2021.

The briefing schedule concluded on February 25, 2021 and a decision by the ALJ is expected to be issued in the second quarter of 2021.

A final PAPUC Order on this matter is expected to also be issued during the second quarter of 2021.

Separately, in January 2021, the PAPUC issued an Order appointing a large Pennsylvania based investor-owned water utility as the receiver (the Receiver Utility) of the Twin Lakes system effective January 15, 2021 with the receivership to remain in place until the final outcome of the Section 529 proceeding.

In connection with this receivership, the Receiver Utility’s responsibilities will include operating and maintaining the system assets in compliance with all state, federal and local laws and regulations, maintaining existing or necessary permits, licenses, approvals, authorizations, orders, consents, registrations or filings, providing a list of recommended capital improvements, providing all supervision and personnel necessary and responding to system emergencies by taking necessary action to ensure the continued provision of adequate, efficient, safe and reasonable service.

We cannot predict whether the PAPUC will ultimately approve or deny the Section 529 petition.

Twin Lakes’

PAPUC-approved annual revenues and rate base are currently set at $0.2 million and $1.5 million, respectively, and its financial results, total assets and financial obligations are not material to the Company.

The NJBPU and the DEPSC have allowed for potential future recovery in customer rates of additional costs related to COVID-19.

Neither jurisdiction has yet to establish a timeline or definitive formal procedures for seeking cost recovery (for further discussion of the impact of COVID-19 on the Company,see Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operation, Recent Developments, Novel Coronavirus (COVID-19 )).

Pursuant to the Pennsylvania Public Utility Code, Twin Lakes filed a petition requesting the Pennsylvania Public Utilities Commission (PAPUC) to order the acquisition of Twin Lakes by a capable public utility.

The PAPUC assigned an Administrative Law Judge (ALJ) to adjudicate the matter and submit a recommended decision (Recommended Decision) to the PAPUC.

As part of this legal proceeding the PAPUC also issued an Order in January 2021 appointing a large Pennsylvania based investor-owned water utility as the receiver (the Receiver Utility) of the Twin Lakes system until the petition is fully adjudicated by the PAPUC.

In November 2021, the PAPUC issued an Order affirming the ALJ’s Recommended Decision, ordering the Receiver Utility to acquire the Twin Lakes water system and for Middlesex to submit $1.7 million into an escrow account within 30 days.

Twin Lakes immediately filed a Petition For Review (PFR) with the Commonwealth Court of Pennsylvania (the Pennsylvania Court) seeking reversal and vacation of the escrow requirement on the grounds that it violates the Pennsylvania Public Utility Code as well as the United States Constitution.

In addition, Twin Lakes filed an emergency petition for stay of the PAPUC Order pending the Pennsylvania Court’s review of the merits arguments contained in Twin Lakes’

In December 2021, the Pennsylvania Court granted Twin Lakes’

emergency petition, pending its review.

A final decision by the Pennsylvania Court is not expected before June 2022.

The final adjudication of this matter cannot be predicted at this time.

The financial results, total assets and financial obligations of Twin Lakes are not material to Middlesex.

COVID-19 Pandemic

The NJBPU and the DEPSC have allowed for potential future recovery in customer rates of incremental costs related to COVID-19.

The Company has not deferred any COVID-19 related incremental costs.

Neither jurisdiction has yet to establish a timeline or definitive formal procedures for seeking cost recovery (for further discussion of the impact of COVID-19 on the Company, see Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, Recent Developments, Coronavirus (COVID-19 )).

Water and Wastewater Quality and Environmental Regulations

Government environmental regulatory agencies regulate our operations in New Jersey, Delaware and Pennsylvania with respect to water supply, treatment and distribution systems and the quality of the water.

Government environmental regulatory agencies regulate our operations in New Jersey and Delaware with respect to water supply, treatment and distribution systems and the quality of the water.

They also regulate our operations with respect to wastewater collection, treatment and disposal.

1 unchanged sentence

In addition, government environmental regulatory agencies continuously review current regulations governing the limits of certain organic compounds found in the water as byproducts of the treatment process.

We participate in industry-related research to identify the various types of technology that might reduce the level of organic, inorganic and synthetic compounds found in water.

The cost to water utilities to comply with the proposed water quality standards depends in part on the limits set in the regulations and on the method selected to treat the water to the required standards.

We regularly test our water to determine compliance with existing required government environmental regulatory agencies’

We participate in industry-related research to identify technologies that may reduce the level of organic, inorganic and synthetic compounds found in water.

The cost to water utilities to comply with any proposed water quality standards depends in part on the limits set in the regulations and on the method selected to treat the water to the required standards.

We regularly test our water to determine compliance with government environmental regulatory agencies’

water quality standards.

Treatment of groundwater in our Middlesex System is by chlorination for primary disinfection purposes.

In addition, at certain locations, air stripping is used for removal of volatile organic compounds.

In September 2021, the NJDEP issued a Notice of Non-Compliance (Notice) to Middlesex based on self-reporting by Middlesex that the level of Perfluorooctanoic Acid (PFOA) in water treated at its Park Avenue Wellfield Treatment Plant exceeded a recently promulgated NJDEP standard effective in 2021.

Neither the NJDEP nor Middlesex has characterized this exceedance as an acute health emergency.

The Notice required the Company to take any action necessary to comply with the new standard by September 7, 2022.

The NJDEP standard for PFOA was developed based on a Health-based Maximum Contaminant Level (MCL) of 14 parts per trillion (ppt).

Although the USEPA has not yet implemented an enforceable regulation relative to PFOA, the water distributed from the Park Avenue Well Field Treatment Plant does meet the USEPA’s current health advisory level of 70 parts per trillion (ppt) and would meet the NJDEP’s pre-2021 standard guidance level, which was not a regulation, of 40 ppt.

Construction of an enhanced treatment process at the Park Avenue Well Field Treatment Plant to comply with the new NJDEP standard had already begun when the Notice was issued by the NJDEP.

Included in the project are enhancements to corrosion control.

Since completion is not expected until mid-2023, in December 2021, the Company implemented an interim solution to meet the Notice requirements.

The Park Avenue Well Field Treatment Plant was taken off-line and alternate sources of supply have been obtained.

The Company is in the process of implementing an acceleration of a portion of the Park Avenue Wellfield treatment upgrades in order to meet anticipated increases in the historical higher water demand periods during the summer months and intended to result in compliance with the requirements of the Notice.

In addition to the pending enhanced groundwater treatment process for PFOA, we treat the groundwater supplies in our Middlesex System with chlorination for primary disinfection purposes and use air stripping for removal of volatile organic compounds.

Surface water treatment in our Middlesex System is by conventional treatment;

coagulation, sedimentation and filtration.

The treatment process includes pH adjustment, chlorination for disinfection, and corrosion control for the distribution system.

Treatment of groundwater in our Tidewater System is by chlorination for disinfection purposes and, in some cases, pH adjustment and filtration for nitrate and iron removaland granular activated carbon filtration for organics removal.

The treatment process includes pH adjustment, ozone and chlorination for disinfection, and corrosion control for the distribution system.

Treatment of groundwater in our Tidewater System is by chlorination for disinfection purposes and, in some cases, pH adjustment and filtration for nitrate and iron removal and granular activated carbon filtration for organics removal.

Chloramination is used for final disinfection at Southern Shores.

Treatment of groundwater in the Pinelands Water and Bayview Systems (primary disinfection only) is performed at individual well sites.

Treatment of wastewater in the Pinelands Wastewater and TESI Systems includes rotating biological contactors.

Membrane bioreactors, sequential batch reactors and lagoon treatment coupled with spray irrigation are also utilized in the TESI System.

The NJDEP, DEDPH and PADEP monitor our activities and review the results of water quality tests that are performed for adherence to applicable regulations.

Treatment of wastewater in the Pinelands Wastewater System includes the use of rotating biological contactors.

The NJDEP and DEDPH monitor our activities and review the results of water quality tests that are performed for adherence to applicable regulations.

Other applicable regulations include the Federal Lead and Copper Rule, the Federal Surface Water Treatment Rule and the Federal Total Coliform Rule and regulations for maximum contaminant levels established for various volatile organic compounds.

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On January 1, 2019, Mr.

O’Connor was appointed Senior Vice President of Middlesex and President of Tidewater, TESI and White Marsh.

O’Connor was appointed Senior Vice President of Middlesex and President of Tidewater and White Marsh.

O’Connor is also the principal financial officer and a Director of all Middlesex subsidiaries.

32 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