What changed in this filing

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Item 1. Business

2024-03-01 compared with 2023-02-24 · 380 added, 303 removed, 210 unchanged (76% of the section changed)

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Inc., (USA-PA).

The Company’s principal executive offices are

located at 485C Route 1 South, Suite 400, Iselin, New Jersey 08830.

The Company’s principal executive offices

are located at 485C Route 1 South, Suite 400, Iselin, New Jersey 08830.

Our telephone number is (732) 634-1500.

Our website address is http://www.middlesexwater.com.

Our website address is

http://www.middlesexwater.com.

Information contained on our website is not part of this Annual Report on Form 10-K.

We make available, free of charge through our website,

reports and amendments filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, after such material

is electronically filed with or furnished to the United States Securities and Exchange Commission (the SEC).

We make available,

free of charge through our website, reports and amendments filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange

Act of 1934, after such material is electronically filed with or furnished to the United States Securities and Exchange Commission (the

Middlesex System

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approximately 66% of our 2023 consolidated operating revenues.

The Middlesex System’s retail customers are

located in an area of approximately 55 square miles in Woodbridge Township, the City of South Amboy, the Boroughs of Metuchen and Carteret,

portions of the Township of Edison and the Borough of South Plainfield, all in Middlesex County, and a portion of the Township of Clark

in Union County.

Retail customers include a mix of residential customers, large industrial concerns and commercial and light industrial

The Middlesex System’s retail customers

are located in an area of approximately 55 square miles in Woodbridge Township, the City of South Amboy, the Boroughs of Metuchen and

Carteret, portions of the Township of Edison and the Borough of South Plainfield, all in Middlesex County, and a portion of the Township

of Clark in Union County.

Retail customers include a mix of residential customers, large industrial concerns and commercial and light

industrial facilities.

These customers are located in generally well-developed areas of central New Jersey.

The contract customers of the Middlesex System comprise

an area of approximately 110 square miles with a population of over 200,000.

Contract sales to the Townships of Edison and Marlboro, the

City of Rahway and the Old Bridge Municipal Utilities Authority are supplemental to the water systems owned and operated by these customers.

The contract customers of the Middlesex System

comprise an area of approximately 110 square miles with a population of over 200,000.

Contract sales to the Townships of Edison and Marlboro,

the City of Rahway and the Old Bridge Municipal Utilities Authority are supplemental to the water systems owned and operated by these

Middlesex is the sole source of water for the Borough of Highland Park and the Township of East Brunswick.

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300 customers in Cumberland County, New Jersey.

This system is referred to as the Bayview System, and is not physically interconnected

This system is referred to as the Fortescue System, and is not physically interconnected

with the Middlesex System.

The Bayview System produced less than 0.1% of our 2022 consolidated operating revenues.

The Fortescue System produced less than 0.1% of our 2023 consolidated operating revenues.

Tidewater System

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Pinelands Wastewater provides wastewater collection

and treatment services to approximately 2,500 residential customers.

Under contract, it also services one municipal wastewater system

in Burlington County, New Jersey with approximately 200 residential customers.

Pinelands Wastewater produced approximately 1% of our 2022

consolidated operating revenues.

and treatment services to approximately 2,500 residential customers and one municipal wastewater system in Burlington County, New Jersey.

Pinelands Wastewater produced approximately 1% of our 2023 consolidated operating revenues.

USA operates the Borough

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expiring in 2030.

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.

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

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related home maintenance programs.

USA receives a service fee for the billing, cash collection and other administrative matters associated

with HomeServe’s service contracts.

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

USA receives a

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

USA produced approximately

2% of our 2023 consolidated operating revenues.

White Marsh operates or maintains water and/or wastewater

systems that serve approximately 4,500 service connections under 30 separate contracts.

White Marsh also owns two commercial properties

that are leased to Tidewater for its administrative office campus and its field operations center.

White Marsh operates or maintains water and/or

wastewater systems that serve approximately 4,300 service connections under 31 separate contracts.

White Marsh also owns two commercial

properties that are leased to Tidewater for its administrative office campus and its field operations center.

White Marsh produced approximately

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Financial Information

Consolidated operating revenues, operating income and net income are as

Consolidated operating revenues, operating income and net income are

(Thousands of Dollars)

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Water Supplies and Contracts

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 and Delaware.

Our New Jersey and Delaware water supply systems

are physically separate and are not interconnected.

In New Jersey, the Pinelands System and Fortescue 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 and Delaware.

Middlesex System

Our Middlesex System produced approximately 14.2 billion

gallons in 2022 from:

Our Middlesex System produced approximately 13.8

billion gallons in 2023 from:

● The Carl J.

Olsen Surface Water Treatment Plant (CJO Plant)-10.7 billion gallons;

● Twenty-seven Company-owned wells (ground water)-0.8 billion gallons, and;

● Twenty-seven Company-owned wells (ground water)-2.0 billion gallons;

● The balance purchased from a non-affiliated water utility regulated by the New Jersey Board of Public

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per day (mgd) of treated water with provisions for additional purchases.

In December 2021, Middlesex temporarily ceased pumping

from its Company-owned wells at the Park Avenue Wellfield Treatment Plant in South Plainfield, New Jersey and alternate sources of supply

were obtained in order to comply with new State of New Jersey water quality regulations relative to poly- and perfluoroalkyl substances,

collectively referred to as PFAS that became effective in 2021.

Prior to 2021, the Company began design for

construction of an enhanced treatment process at the Park Avenue Wellfield Treatment Plant to meet the expected PFAS water quality

standards anticipated to be enacted by the State of New Jersey, which at that time were unknown as to their timing and extent.

June 2022, a portion of the enhanced treatment process was completed, placed into service and is effectively treating the ground

water in compliance with all state and federal drinking water standards.

In November 2021, Middlesex temporarily ceased

pumping from its Company-owned wells at the Park Avenue Wellfield Treatment Plant (Park Avenue Plant) in South Plainfield, New Jersey

and alternate sources of supply were obtained in order to comply with new State of New Jersey water quality regulations relative to poly-

and perfluoroalkyl substances, collectively referred to as PFAS, that became effective in 2021.

Prior to 2021, the Company began design for construction

of an enhanced treatment process at the Park Avenue Plant to meet the expected PFAS water quality standards anticipated to be enacted

by the State of New Jersey, which at that time were unknown as to their timing and extent.

In June 2022, a portion of the enhanced treatment

process was completed, placed into service and effectively treated the ground water in compliance with all state and federal drinking

water standards.

In June 2023, the Company completed the permanent construction of the entire Park Avenue Plant treatment upgrades and

placed the upgrades into operation in full compliance with the new State of New Jersey PFAS water quality regulations.

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 by the New Jersey Water Supply Authority

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 CJO Plant.

Water supply to customers of the Bayview System is

derived from two wells, which produced approximately 6.4 million gallons in 2022.

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).

Middlesex is under contract with the NJWSA, which expires November 30, 2048, and provides for average purchases of

27.0 mgd, with a peak up to 47.0 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 CJO Plant.

Water supply to customers of the Fortescue System

is derived from two wells, which produced approximately 6.7 million gallons in 2023.

Tidewater System

Our Tidewater System produced approximately 2.8 billion

gallons in 2022, primarily from 178 wells.

Tidewater expects to submit applications to Delaware regulatory authorities for the approval

of additional wells as growth, customer demand and water quality warrant.

Tidewater augments its water production with annual minimum

purchases of 15.0 million gallons of treated water under contract from the City of Dover, Delaware.

Tidewater does not have a central

water treatment facility for the over 460 separate communities it serves.

As the number has grown, many of Tidewater’s individual

systems have been interconnected, forming several regional systems that are served by multiple water treatment facilities owned by Tidewater.

Our Tidewater System produced approximately 2.9

billion gallons in 2023, primarily from 175 wells.

Tidewater expects to submit applications to Delaware regulatory authorities for the

approval of additional wells as growth, customer demand and water quality warrant.

Tidewater augments its water production with annual

purchases of up to 60.0 million gallons of treated water from the City of Dover, Delaware.

Tidewater does not have a central water treatment

facility for the over 470 separate communities it serves.

As the number has grown, many of Tidewater’s individual systems have been

interconnected, forming several regional systems that are served by multiple water treatment facilities owned by Tidewater.

Pinelands Water System

Water supply to our Pinelands Water System is derived

from four wells which produced approximately 139.6 million gallons in 2022.

The aggregate pumping capacity of the four wells is 2.2 mgd.

Water supply to our Pinelands Water System is

derived from four wells which produced approximately 134.7 million gallons in 2023.

The aggregate pumping capacity of the four wells is

Wastewater Facilities

Pinelands Wastewater System

The Pinelands Wastewater System discharges into the

South Branch of the Rancocas Creek through a wastewater treatment plant that provides clarification, sedimentation, filtration and disinfection.

The Pinelands Wastewater System discharges into

the South Branch of the Rancocas Creek through a wastewater treatment plant that provides clarification, sedimentation, filtration and

disinfection.

The total capacity of the plant is 0.5 mgd, and the system treated approximately 94.8 million gallons in 2023.

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

As of December 31, 2022,

the Company had 350 employees.

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

We believe our employee relations

are positive.

As of December 31, 2023, the Company had 355 employees.

employees are subject to a collective bargaining agreement.

We believe our employee relations are positive.

Employee Compensation

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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.

All employees have been empowered to report, and immediately

stop, work which, in their personal judgement, is unsafe or is not consistent with our safety policies and procedures.

They can take this

action without fear of reprisal.

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.

All employees have been empowered to report,

and immediately stop, work which, in their personal judgement, 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 Coronavirus (COVID-19) pandemic,

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of those employees and the public in light of the 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, Coronavirus (COVID-19 )

Employee Development

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 their use of sensitive data.

Our Executive Management team and our Board of Directors continually assess succession

plans, leadership development progress and policies and strategies regarding recruitment, retention, career development, diversity, equity

and inclusion.

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 their use of sensitive data.

Our Executive Management team and our Board of Directors continually assess

succession plans, leadership development progress and policies and strategies regarding recruitment, retention, career development, diversity,

equity and inclusion.

Formalized succession planning strategies have been developed for key leadership positions.

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workforce with a variety of skills and perspectives as a result of their diverse backgrounds and experiences.

The Company is a signatory

The Company remains a signatory

to CEO Action for Diversity and Inclusion, a business led initiative which encourages companies to cultivate environments that support

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inclusion and diversity strategies.

The Company also delivered various DEI trainings throughout 2022 to its entire employee base.

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.

We are intentional in our efforts to attract candidates from historically marginalized groups and

seek a diverse pool of candidates for

apprenticeships and internship opportunities.

Statements on Diversity, Equity and Inclusion and

our Human Rights Policy can be found on our website.

We continue to monitor the results of our DEI efforts and continually explore opportunities

to further engage our employees and customers.

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 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.

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.

We are intentional in our efforts to attract candidates from historically marginalized groups

and seek a diverse pool of candidates for apprenticeships and internship opportunities.

Statements on DEI and our Human Rights Policy

can be found on our website.

We continue to monitor the results of our DEI efforts and continually explore opportunities to further engage

our employees and customers.

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 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,

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Commissions).

Our USA, USA-PA and White Marsh subsidiaries are not

regulated public utilities as related to rates and service quality.

Our USA, USA-PA and White Marsh subsidiaries are

not regulated public utilities as related to rates and service quality.

However, they are subject to federal and state environmental regulations

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and Social Services-Division of Public Health (DEDPH), and the Delaware River Basin Commission with respect to operations in Delaware.

In addition, our issuances of equity securities are

subject to the prior approval of the NJBPU and require registration with the Securities & Exchange Commission (SEC).

Our issuances

of long-term debt securities are subject to the prior approval of the respective state Public Utility Commissions.

In addition, our issuances of equity securities

are subject to the prior approval of the NJBPU and require registration with the United States Securities and Exchange Commission.

issuances of long-term debt securities are subject to the prior approval of the respective state Public Utility Commissions.

Regulation of Rates and Services

For regulated rate setting purposes, we account separately

for our regulated utility operations to facilitate independent rate setting by the applicable Public Utility Commissions.

In determining our regulated utility rates, the respective

Public Utility Commissions consider the revenue, expenses and utility infrastructure used and useful in providing service to the public.

Rate determinations by the respective Public Utility Commissions do not guarantee achievement by our regulated utility companies of specific

rates of return for our regulated utility operations.

Thus, we may not achieve the rates of return authorized by the Public 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

For regulated rate setting purposes, we account

separately for our regulated utility operations to facilitate independent rate setting by the applicable Public Utility Commissions.

In determining our regulated utility rates, the

respective Public Utility Commissions consider the revenue, expenses and utility infrastructure used and useful in providing service to

Rate determinations by the respective Public Utility Commissions do not guarantee achievement by our regulated utility companies

of specific rates of return for our regulated utility operations.

Thus, we may not achieve the rates of return authorized by the Public

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 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 was 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.

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 February 2024, Middlesex’s petition

to the NJBPU, filed in May 2023, seeking permission to increase its base water rates was concluded, based on a negotiated settlement

that 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.

proceeds from the settlement of Middlesex’s 3M Company (3M) lawsuit were used to recover costs for the construction of the

Park Avenue Plant PFAS treatment upgrades, including depreciation and carrying costs.

The rate case settlement will result in the

reclassification of $48.3 million from Regulatory Liabilities to Contributions in Aid of Construction in the March 31, 2024 balance

The Company will also record in the first quarter of 2024 the recovery of $0.7 million and $2.4 million of prior year

depreciation and carrying costs, respectively, as well as the recovery of $1.4 million of prior year costs which were associated

with the interim solution to comply with the Notice, all of which were approved in the rate case settlement.

For further information on the 3M settlement

agreement, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , Regulatory

Notice of Non-Compliance and Regulatory Matters .

In January 2024, the NJBPU approved Middlesex’s

petition for the proposed cost recovery of its Lead Service Line Replacement (LSLR) Plan and cost recovery of project costs associated

with replacing Middlesex customer-owned lead service lines.

Replacement of Middlesex and Middlesex customer-owned lead service lines is

required by the New Jersey LSLR Law.

Under this legislation, the costs associated with replacing customer-owned lead service lines are

recoverable through future customer surcharges.

Cost recovery for replacing Company-owned lead service lines are recoverable through traditional

base rate case filings.

The current estimates for replacement of Middlesex and Middlesex customer-owned lead service lines are approximately

$46 million to $77 million over a nine-year period.

In October 2023, the NJBPU approved Middlesex’s

petition for a Distribution System Improvement Charge (DSIC) Foundation Filing, which is a prerequisite to implementing a DSIC rate that

allows water utilities to recover investments in, and generate a return on, qualifying capital improvements to their water distribution

system made between base rate proceedings.

Middlesex is authorized to recover DSIC revenues up to five percent (5%) of total revenues

established in Middlesex’s 2021 base rate proceeding, or approximately $5.5 million.

Semi-annually, beginning in April 2024, the

Company must file for a change in its DSIC rate seeking recovery for DSIC-eligible investments made during the period.

DSIC rates remain

in effect until Middlesex’s next base rate case increase subsequent to the March 1, 2024 increase.

Under the terms of the Foundational

Filing, the Company is required to file a base rate petition before November 2026.

In September 2022, the NJBPU approved Middlesex's

Emergency Relief Motion to permit Middlesex to reset its PWAC tariff rate to recover additional costs of $2.7 million for the purchase

of treated water from a non-affiliated regulated water utility.

The increase, effective October 1, 2022, is on an interim basis and subject

to refund, with interest, pending final resolution expected in the second quarter of 2023.

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.

Emergency Relief Motion to reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional costs of $2.7 million

for the purchase of treated water from a non-affiliated water utility.

A PWAC is a rate mechanism that allows for recovery of increased

purchased water costs between base rate case filings.

The increase, effective October 1, 2022, was on an interim basis and subject to

refund with interest, pending final resolution of this matter, which the NJBPU provided in August 2023.

In connection with the full recovery

of the $2.7 million of additional costs, Middlesex reset its PWAC rate to zero in October 2023.

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 was 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.

part of the negotiated settlement, the PWAC was reset to zero.

Tidewater Rate Matters

On August 31, 2022, the DEPSC issued an Order requiring

Tidewater to reduce its base rates charged to general metered and private fire customers by 6%, effective for service rendered on and

after September 1, 2022.

In June 2022, the Delaware Division of the Public Advocate had filed a petition with the DEPSC requesting that

Tidewater’s rates be reduced based on the claim that Tidewater had been earning above its authorized rate of return.

The rate reduction

is expected to reduce annual revenues by approximately $2.2 million.

In December 2023, the DEPSC approved Tidewater’s

application to implement a new DSIC.

Effective January 1, 2024, Tidewater implemented a DSIC rate of 3.71%, which is expected to generate

revenue of approximately $1.3 million annually.

A Delaware DISC is subject to a semi-annual reset with an overall maximum rate of 7.5%.

In October 2023, the DEPSC issued an Order that

made a temporary base rate reduction permanent.

The initial DEPSC order required Tidewater to reduce its base rates charged to general

metered and private fire customers by 6.0%, effective for service rendered on and after September 1, 2022.

The rate reduction was ordered

as a result of Tidewater earning in excess of its authorized return, and resulted in reduced annual revenues of approximately $2.1 million

In March 2021, Tidewater was notified by the DEPSC

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Consequently, Tidewater

reset its Distribution System Improvement Charge (DSIC) rate to zero effective April 1, 2021 and refunded approximately $1.0 million to

customers primarily in the form of an account credit for DSIC revenue previously billed between April 1, 2020 and March 31, 2021.

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.

reset its DSIC rate to zero effective

April 1, 2021 and refunded approximately $1.0 million to customers primarily in the form of an account

credit for DSIC revenue previously billed between April 1, 2020 and March 31, 2021.

Pinelands Rate Matters

In September 2022, Pinelands Water and Pinelands Wastewater

filed separate petitions with the NJBPU seeking permission to increase base rates by approximately $0.6 million and $0.4 million per year,

respectively.

These requests were necessitated by capital infrastructure investments both companies have made, or have committed to make,

and increased operations and maintenance costs.

We cannot predict whether the NJBPU will ultimately approve, deny, or reduce the amount

of the requests.

A decision by the NJBPU in both matters is expected in the first quarter of 2023.

In April 2023, Pinelands Water and Pinelands Wastewater

concluded their base rate case matters when the NJBPU approved a combined $1.0 million increase in annual base rates, effective April

The requests were necessitated by capital infrastructure investments the companies have made as well as 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 we serve in Sussex County, Delaware.

the agreement, current rates were to remain in effect until December 31, 2024, unless there are unanticipated capital expenditures or

regulatory related changes in operating expenses exceeding certain thresholds during this time period.

In 2022, capital expenditures did

exceed the established threshold and rates were increased by 5.39%, effective January 1, 2023.

Beginning in 2025 and thereafter, inflation

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

Inflation based increases are in addition to

the threshold rate increases.

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 were to remain in effect until December 31, 2024, unless there are unanticipated capital expenditures

or regulatory related changes in operating expenses exceeding certain thresholds during this time period.

In 2022, capital expenditures

did exceed the established threshold and rates were increased by 5.39%, effective January 1, 2023.

Beginning in 2025 and thereafter, inflation-based

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

Inflation based increases are in addition to the

threshold rate increases.

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, maintenance or other costs indicate a

need for rate relief, base rate increase requests are filed with the respective Public Utility Commissions.

Management monitors the need for rate relief for

our regulated entities on an ongoing basis.

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 Public Utility Commissions.

Regulatory Service Matters

Twin Lakes Utilities, Inc.

(Twin Lakes) provides water

services to approximately 115 residential customers in Shohola, Pennsylvania.

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

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.

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’ PFR.

In December 2021, the Pennsylvania Court granted Twin Lakes’ emergency petition, pending

In August 2022, the Commonwealth Court issued an opinion upholding PAPUC’s November 2021 Order in its entirety.

2022, Twin Lakes filed a Petition For Allowance of Appeal to the Supreme Court of Pennsylvania seeking reversal of the Commonwealth Court’s

decision to uphold the escrow requirement on the grounds that the Pennsylvania Court erred in failing to address Twin Lakes’ constitutional

The timing of the final decision by the Supreme Court of Pennsylvania and the final adjudication of this matter cannot be predicted

at this time.

Twin Lakes Utilities, LLC (Twin Lakes) provides

water services to approximately 115 residential customers in Shohola, Pennsylvania.

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, the parent company of Twin Lakes, 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 Commonwealth 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 Commonwealth Court’s review of the merits arguments contained in Twin Lakes’ PFR.

In December 2021, the Commonwealth

Court granted Twin Lakes’ emergency petition, pending its review.

In August 2022, the Commonwealth Court issued an opinion upholding

PAPUC’s November 2021 Order in its entirety.

In September 2022, Twin Lakes filed a Petition For Allowance of Appeal (Appeal Petition)

to the Supreme Court of Pennsylvania seeking reversal of the Commonwealth Court’s decision to uphold the escrow requirement on the

grounds that the Commonwealth Court erred in failing to address Twin Lakes’ claims that because the $1.7 million escrow requirement

placed on Middlesex violated Middlesex’s constitutional rights, Middlesex’s refusal to submit this escrow payment would jeopardize

the relief Twin Lakes was otherwise entitled to in the appointment of the Receiver Utility.

In March 2023, the Supreme Court of Pennsylvania

issued a decision denying Twin Lakes’ Appeal Petition without addressing this claim on the merits.

As a result of the Pennsylvania

Courts’ failure to address Twin Lakes’ claim, Middlesex subsequently filed a Complaint with the United States District Court

for the Middle District of Pennsylvania to address the issue of whether the PAPUC’s Order violated Middlesex’s rights under

United States Constitution.

On January 18, 2024, the District Court issued an Order dismissing Middlesex’s Complaint without

addressing the issue of whether the PAPUC’s Order violated Middlesex’s rights under the United States Constitution.

31, 2024, Middlesex filed a Notice of Appeal of the District Court’s decision with the United States Court of Appeals for the Third

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 the COVID-19 pandemic.

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, Coronavirus (COVID-19 )).

Water and Wastewater Quality and Environmental Regulations

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

Regulations relating to water quality require us to

perform tests to ensure our water meets state and federal quality requirements.

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

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.

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 in South Plainfield, New Jersey exceeded a recently promulgated NJDEP standard effective in 2021.

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

Neither the NJDEP nor

Middlesex characterized this exceedance as an acute health threat.

However, Middlesex was required to notify its affected customers and

complied in November 2021 as required by the regulation.

Regulations relating to water quality require

us to perform tests to ensure our water meets state and federal quality requirements.

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 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.

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 Plant in South Plainfield, New Jersey exceeded a standard promulgated in a NJDEP regulation that became effective in

Middlesex was required by the regulation to notify its affected customers and complied within the required Notice period in November

The Notice further required the Company to take

any action necessary to comply with the new standard by September 7, 2022.

Prior to 2021, the Company began design for construction

of an enhanced treatment process at the Park Avenue Wellfield Treatment Plant to meet the expected PFAS water quality standards

anticipated to be enacted by the State of New Jersey, which at that time were unknown as to their timing and extent.

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

requirements.

The Park Avenue Wellfield Treatment Plant was temporarily taken off-line and alternate sources of supply were

Simultaneously, the Company accelerated a portion of the enhanced treatment project to allow a restart of the Park Avenue

Wellfield Treatment Plant ahead of historical higher water demand periods during the summer months.

In June 2022, a portion of the enhanced treatment

process was completed, placed into service and is effectively treating the ground water in compliance with all state and federal drinking

water standards.

Consequently, in November 2021, the Company implemented an

interim solution to meet the Notice requirements, which included putting the Park Avenue Wellfield Treatment Plant in off-line status

and obtaining alternate sources of supply.

In June 2022, the Company accelerated the in-service date for a portion of the enhanced treatment

project based on engineering analysis that allowed a restart of the Park Avenue Wellfield Treatment Plant to ensure continued compliance

with all state and federal drinking water standards.

On September 13, 2022, the Company entered into

an Administrative Consent Order (ACO) with the NJDEP, which required the Company to take whatever actions necessary to achieve and maintain

compliance with applicable regulations.

As prescribed in the ACO, the Company was to issue periodic public notifications until the ACO

In June 2023, the Company completed the permanent

construction of the entire Park Avenue Plant treatment upgrades and placed the upgrades into operation in full compliance with the NJDEP

PFOA standards.

In October 2023, the Company received confirmation from the NJDEP that it has complied with all requirements of the ACO

and consequently, the ACO has been closed.

In addition to the enhanced groundwater treatment

process for PFAS, we treat the groundwater supplies in our Middlesex System with chlorination for primary disinfection purposes and use

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;

Surface water treatment in our Middlesex

System is by conventional treatment;

coagulation, sedimentation and filtration.

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.

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 groundwater in the Pinelands Water

and Fortescue Systems (primary disinfection only) is performed at individual well sites.

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.

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 Lead, Copper and Lead Service Line Rules, the Federal Surface Water Treatment Rule and the Federal Total Coliform Rule and regulations

for maximum contaminant levels established for various volatile organic compounds.

The Company must comply with various environmental

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the Spill Prevention, Control, and Countermeasure Rule and the Discharge Prevention Program of the New Jersey Spill Compensation and Control

Customer demand for our water during the warmer months

is generally greater than other times of the year due primarily to additional consumption of water in connection with irrigation systems,

swimming pools, cooling systems and other outside water use.

Throughout the year, and particularly during typically warmer months, demand

may vary with temperature and rainfall timing and overall levels.

In the event that temperatures during the typically warmer months are

cooler than normal, or if there is more rainfall than normal, the customer demand for our water may decrease and therefore, adversely

Customer demand for our water during the warmer

months is generally greater than other times of the year due primarily to additional consumption of water in connection with irrigation

systems, swimming pools, cooling systems and other outside water use.

Throughout the year, and particularly during typically warmer months,

demand may vary with temperature and rainfall timing and overall levels.

In the event that temperatures during the typically warmer months

are cooler than normal, or if there is more rainfall than normal, the customer demand for our water may decrease and therefore, adversely

affect our revenues.

This table lists information concerning our executive management

In May 2023, President and Chief Executive

Officer, Dennis W.

Doll announced a plan to retire upon turning age 65.

On January 23, 2024, the Company named Nadine Leslie as

its new President and Chief Executive Officer effective March 1, 2024.

Leslie will also be appointed to the Board

of Directors effective March 1, 2024.

Doll will remain Chairman of the Company’s Board of Directors through the expiration

of his current term as a Director as of the May 21, 2024 Annual Meeting of Shareholders.

This table lists information concerning our executive management team

Principal Position(s)

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Vice President-General Counsel and Secretary

Vice President-Information Technology

Vice President-Information Technology and Chief Technology Officer

Bernadette M.

Vice President-Corporate Affairs

Doll joined the Company as Executive Vice President in November 2004 and was named President and Chief Executive Officer, and a Director

of Middlesex, effective January 1, 2006.

In May 2010, he was elected Chairman of the Board, also serving as Chairman of the Boards

of the Company’s subsidiary companies.

He is a Past President of the National Association of Water Companies and past Chairman of

the Board of the New Jersey Utilities Association, representing the state’s electric, gas, water and telecommunications industries.

He is a past Chairman of the Board of The Water Research Foundation where he continues to serve as Director Emeritus, and has served as

a Director and member of the Executive Committee of the Board of Directors of the American Water Works Association.

He presently serves

as Treasurer and member of the Board of Court Appointed Special Advocates of Middlesex County, NJ serving the needs of children living

in foster care.

President-Tidewater

Corporate Controller and Principal Accounting Officer

Doll joined the Company as Executive Vice President in November 2004 and was named President and Chief Executive Officer,

and a Director of Middlesex, effective January 1, 2006.

In May 2010, he was elected Chairman of the Board, also serving as Chairman

of the Boards of the Company’s subsidiary companies.

He is a Past President of the National Association of Water Companies and past

Chairman of the Board

of the New Jersey Utilities Association, representing the state’s electric, gas, water and telecommunications

He is a past Chairman of the Board of The Water Research Foundation where he continues to serve as a non-Trustee member of

the Audit Committee.

He has also served as a Director and member of the Executive Committee of the Board of Directors of the American

Water Works Association.

He presently serves as Treasurer and member of the Board of Trustees of Court Appointed Special Advocates of

Middlesex County, NJ serving the needs of children living in foster care.

Bruce O’Connor – Mr.

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On January 1, 2019, Mr.

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

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

O’Connor was appointed Senior Vice President of Middlesex.

O’Connor is also the principal

financial officer and a Director of all Middlesex subsidiaries.

Christian Andreasen, Jr.

a licensed professional engineer, joined the Company in 1982, was named Assistant Vice President-Enterprise Engineering in January 2019

and promoted to Vice President-Enterprise Engineering in July 2019.

He is President and a Director of Pinelands Water and Pinelands Wastewater.

Andreasen, a licensed professional engineer, joined the Company in 1982, was named Assistant Vice President-Enterprise Engineering in

January 2019 and promoted to Vice President-Enterprise Engineering in July 2019.

He is President and a Director of Pinelands Water and

Pinelands Wastewater.

Andreasen serves as a Member and Vice Chair of the NJDEP’s Water Supply Advisory Council.

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Fullagar serves

as Sector Chair of the New Jersey Infrastructure Advisory Committee.

as Sector Chair of the New Jersey Infrastructure Advisory Committee and is a Member of the NJDEP’s Licensed Operator Advisory Committee.

Ginegaw – Ms.

6 unchanged sentences

Ginegaw serves as a volunteer director on the Board of the New Jersey Utilities Association.

Kooper joined the

Company in 2014 as Vice President and General Counsel and serves as Secretary for the Company and all subsidiaries.

Prior to joining the

Kooper held various positions in private and public entities as well as in private law practice, representing electric, gas,

water, wastewater, telephone and cable companies as well as municipalities and private clients before 17 state public utility commissions

Kooper joined

the Company in 2014 as Vice President and General Counsel and serves as Secretary for the Company and all subsidiaries.

Prior to joining

the Company, Mr.

Kooper held various positions in private and public entities as well as in private law practice, representing electric,

gas, water, wastewater, telephone and cable companies as well as municipalities and private clients before 17 state public utility commissions

and legislatures, federal agencies and federal and state appellate courts.

2 unchanged sentences

New Jersey Chapter) and the New Jersey State Bar Association’s Public Utility Law Section (current Consultor and Past Chairman)

and on other non-profit boards based in New

Jersey, including as President of Temple B’Nai Abraham in Livingston, New Jersey and

and on other non-profit boards based in New Jersey, including as President of Temple B’Nai Abraham in Livingston, New Jersey and

as a Director of the Crohn’s and Colitis Foundation’s New Jersey Chapter.

Simpson – Ms.

Simpson joined

the Company in 2009, was named Assistant Vice President-Information Technology in January 2019 and promoted to Vice President- Information

Technology in July 2019.

joined the Company in 2009, was named Assistant Vice President-Information Technology in January 2019 and promoted to Vice President-

Information Technology in July 2019.

In April 2022, Ms.

1 unchanged sentence

Prior to joining the Company, Ms.

various Information Technology positions and has gained an extensive array of technical and business computer certifications.

Simpson held various Information Technology positions and has gained an extensive array of technical and business computer certifications.

Simpson serves as a member of the Delaware Cyber Security Advisory Council, the Society for Information Management, New Jersey chapter

1 unchanged sentence

Bernadette M.

Sohler joined

the Company in 1994 and was named Vice President-Corporate Affairs in March 2007.

She also serves as Vice President of USA.

Prior to joining

the Company, Ms.

Sohler held marketing and public relations management positions in the financial services industry.

Sohler serves

as a volunteer director on area Chambers of Commerce and several other non-profit Boards and is the former Chair of the New Jersey Utilities

joined the Company in 1994 after having served in several marketing and public relations management positions in the financial services

She was named Director of Communications in 2004 and promoted to Vice President-Corporate Affairs in March 2007 and also serves

as Vice President of USA.

Sohler is a volunteer director on area Chambers of Commerce and several other non-profit Boards supporting

public safety and the arts.

She is a past director of the National Association of Water Companies and former Chair of the New Jersey Utilities

Association’s Communications Committee.

Patrick – Mr.

licensed professional engineer, joined Tidewater in February 2002 as Vice President of Engineering.

He was promoted to Vice President

and General Manager in April 2012, Executive Vice President in April 2023, and President in December 2023.

Patrick has extensive

experience in regulatory compliance, permitting, planning and design.

Prior to joining Tidewater, he served as Kent County, Delaware Public

Works Director and County Engineer where he had overall responsibility for the County’s regional wastewater facilities.

Patrick also held prior positions with the Delaware Department of Natural Resources and Environmental Control as well as

the Delaware Division of Public Health.

Capko, a Certified

Public Accountant, joined the Company in 2009 as Corporate Controller.

On March 28, 2023, Mr.

Capko was appointed Principal Accounting

Officer of Middlesex.

Capko is also a Director and Treasurer of Tidewater and White Marsh and Controller of USA, USA-PA, Pinelands

Water and Pinelands Wastewater.

Prior to joining Middlesex, Mr.

Capko was an Audit Senior Manager with Deloitte & Touche LLP, with

a focus on publicly traded regulated utilities including several regulated public utility clients subject to the jurisdiction of the NJBPU.

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