What changed in this filing

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Item 1A. Risk Factors

2025-02-28 compared with 2024-03-01 · 88 added, 119 removed, 202 unchanged (51% of the section changed)

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These factors may adversely affect our ability to supply water in sufficient quantities to our customers.

Governmental drought restrictions may result in decreased customer demand for water services and can adversely affect our revenue and

Governmental drought restrictions, heightened levels of rainfall and temperatures during the typically warmer months that are cooler than

normal may result in decreased customer demand for water services and can adversely affect our revenue and earnings.

Our water sources or water service provided

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Our sources of water or water in our distribution

systems may become contaminated by naturally-occurring or man-made compounds or other events.

In the event that any portion of our water

supply sources or water distribution systems is contaminated, we may need to interrupt service to our customers until we are able to remediate

the contamination or substitute the flow of water from an uncontaminated water source through existing interconnections with other water

purveyors or through our transmission and distribution systems, where possible.

We may also incur significant costs in treating any contaminated

water, or remediating the effects on our treatment and distribution systems, through the use of our current treatment facilities, or development

of new treatment methods.

Our inability to substitute water supply from an uncontaminated water source, or to adequately treat the contaminated

water supply in a cost-effective manner, may reduce our revenues or increase our expenses and make us less profitable.

systems have in the past and in the future may again become contaminated by naturally-occurring or man-made compounds or other contaminants.

In the event that any portion of our water supply sources or water distribution systems is contaminated, we may need to interrupt service

to our customers until we are able to remediate the contamination or substitute the flow of water from an uncontaminated water source

through existing interconnections with other water purveyors or through our transmission and distribution systems, where possible.

may also incur significant costs in treating any contaminated water, or remediating the effects on our treatment and distribution systems,

through the use of our current treatment facilities, or development of new treatment methods.

Our inability to substitute water supply

from an uncontaminated water source, or to adequately treat the contaminated water supply in a cost-effective manner, may reduce our revenues

or increase our expenses and make us less profitable.

We may be unable to recover costs associated with

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In addition, we could be subject to

claims for damages arising from government enforcement actions or legal actions arising out of interruption of service or perceived human

exposure to hazardous substances in our drinking water and water supplies.

claims for damages arising from government enforcement actions or legal actions arising out of interruption of service or actual or perceived

human exposure to contaminants in our drinking water and water supplies.

Such costs could adversely affect our financial results.

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to substantial claims and litigation, which are inherently subject to uncertainties and are potentially subject to unfavorable regulatory

Negative impacts to our profitability and/or our reputation may occur even if we are not responsible for the contamination

or the consequences arising out of human exposure to contamination or hazardous substances in the water supplies.

Pending or future claims

against us could have a material adverse impact on our financial condition, results of operations and cash flows.

and/or legal actions.

Previously, claims have been brought against us alleging our customers received contaminated water.

Negative impacts

to our profitability and/or our reputation may occur even if we are not responsible for the contamination or the consequences arising

out of human exposure to contamination or hazardous substances in the water supplies.

Pending or future claims against us could have a

material adverse impact on our financial condition, results of operations and cash flows.

The necessity for ongoing physical and technological security has

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Because of physical and technological threats

to the health and security of the United States of America, we employ procedures to review and modify security measures.

We provide ongoing

training and communications to our employees about threats to our water supply, our assets and related systems and our employees’

personal safety.

We have incurred, and will continue to incur, costs for security measures in efforts to protect against such risks.

to the health and security of the United States of America, we employ physical and technological security measures to guard against such

threats and have implemented procedures to review and modify security measures.

We provide ongoing training and communications to our

employees about threats to our water supply, our assets and related systems and our employees’ personal safety.

We have incurred,

and will continue to incur, costs for security measures in efforts to protect against such risks.

Climate variability may cause weather volatility

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Increased climate variability may cause increased

precipitation and flooding, increased frequency and severity of storms and other weather events, potential degradation of water quality,

decreases in available water supply, changes in water usage patterns and disruptions in service.

Because of the uncertainty of weather

volatility related to climate variability, we cannot predict its potential impact on our financial condition, results of operations, cash

flows and liquidity.

Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered

through rates we charge to our customers, there can be no assurance that the NJBPU or the DEPSC would authorize recovery of such costs,

in whole or in part.

precipitation and flooding, increased frequency and severity of storms and droughts and other weather events, any of which may result

in degradation of water quality, decreases in available water supply, changes in water usage patterns and disruptions in service.

of the uncertainty of weather volatility related to climate variability, we cannot predict its potential impact on our financial condition,

results of operations, cash flows and liquidity.

Although some or all potential expenditures and costs with respect to our regulated

businesses could be recovered through rates we charge to our customers, there can be no assurance that the NJBPU or the DEPSC would authorize

recovery of such costs, in whole or in part.

Regulatory Risks

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we charge our customers.

We cannot raise utility rates in our regulated businesses without petitioning the appropriate Public Utility

If these agencies modify, delay or deny our petition, our revenues will not increase and our earnings will decline unless

we are able to reduce costs without degrading service quality.

We cannot raise utility rates in our regulated businesses without petitioning and receiving approval from the

appropriate Public Utility Commissions.

If these agencies modify, delay or deny our petition, our revenues will not increase and our earnings

will decline unless we are able to reduce costs without degrading service quality.

The NJBPU regulates our public utility companies

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That means, for example, that we cannot raise the utility rates we charge to our customers without first

petitioning the NJBPU and navigating a lengthy administrative process.

Similarly, the DEPSC regulates our public utility companies in

We cannot provide assurance as to when we will request approval for any such matter, nor can we predict whether these Public

Utility Commissions will approve, deny or reduce the amount of such requests.

petitioning the NJBPU for approval and navigating a lengthy administrative process.

Similarly, the DEPSC regulates our public utility

companies in Delaware.

We cannot provide assurance as to when we will request approval for any such matter, nor can we predict whether

these Public Utility Commissions will approve, deny or reduce the amount of such requests.

Certain costs are not completely within our control.

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Government environmental regulatory agencies’

regulations relating to water quality require us to perform expanded types of testing to ensure our water meets state and federal water

quality requirements.

We are subject to USEPA regulations under the Federal Safe Drinking Water Act and under the Federal Clean Water

Act regarding

regulations relating to water quality require us to perform additional testing to ensure our water meets state and federal water quality

requirements.

We are subject to USEPA regulations under the Federal Safe Drinking Water Act and under the Federal Clean Water Act regarding

wastewater services.

Regulations under the Safe Drinking Water Act include the Lead and Copper Rule, the maximum contaminant

levels established for various volatile organic compounds, the Federal Surface Water Treatment Rule and the Total Coliform Rule.

are also similar NJDEP regulations for our New Jersey water systems.

The NJDEP and DEDPH monitor our activities and review the results

of water quality tests we perform for adherence to applicable regulations.

In addition, Government Environmental Regulatory Agencies are

continually reviewing regulations governing the limits of certain organic compounds found in the water as byproducts of treatment.

Regulations under the Safe Drinking Water Act include the Lead and Copper Rule, the maximum contaminant levels established

for various volatile organic compounds, the Federal Surface Water Treatment Rule and the Total Coliform Rule.

There are also similar NJDEP

regulations for our New Jersey water systems.

The NJDEP and DEDPH monitor our activities and review the results of water quality tests

we perform for adherence to applicable regulations.

In addition, Government Environmental Regulatory Agencies are continually reviewing

regulations governing the limits of certain organic compounds found in the water as byproducts of treatment.

We are also subject to regulations related to

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This may result in the imposition of fines from environmental regulators or restrictions on our operations which could curtail

our ability to upgrade or replace utility system assets.

our ability to upgrade or replace utility system assets and have a material adverse effect on our financial condition and results of operations.

We face competition from other utilities and

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do not protect us against incurring costs in excess of revenues we earn pursuant to the contracts.

There can be no absolute assurance

we will not experience losses resulting from these contracts.

Losses under these contracts, or our failure or inability to perform or

renew such agreements, may have a material adverse effect on our financial condition and results of operations.

There can be no assurance we will not

experience losses resulting from these contracts.

Losses under these contracts, or our failure or inability to perform or renew such agreements,

may have a material adverse effect on our financial condition and results of operations.

Capital market conditions and key assumptions

may adversely impact the value of our postretirement benefit plan assets and liabilities.

Market factors can adversely affect the rate of

return on assets held in trusts to satisfy our future postretirement benefit obligations, as well as negatively affect interest rates,

which impacts the discount rates used in the determination of our postretirement benefit actuarial valuations.

In addition, changes in

demographics, such as increases in life expectancy assumptions, can increase future postretirement benefit obligations.

Any negative impact

to these factors, either individually or a combination thereof, may have a material adverse effect on our financial condition and results

of operations.

Market factors can adversely affect (1) the rate

of return on assets held in trusts to satisfy our future postretirement benefit obligations and (2) interest rates.

Reduced rates of return

can increase the level of contributions required by us to satisfy future postretirement benefit obligations.

Changes in interest rates

impact the discount rates used in the determination of our postretirement benefit actuarial valuations.

In addition, changes in demographics,

such as increases in life expectancy assumptions, can increase future postretirement benefit obligations.

Any negative impact to these

factors, either individually or a combination thereof, may have a material adverse effect on our financial condition and results of operations.

An element of our growth strategy is the acquisition

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Any pending or future acquisitions we decide to undertake will involve

The acquisition and/or operation of water and

wastewater systems is an element of our growth strategy.

This strategy depends on identifying suitable opportunities that meet our risk/reward

profile and reaching mutually agreeable terms with acquisition candidates or contract parties.

Further, acquisitions may result in dilution

in the value of our equity securities, incurrence of debt and contingent liabilities and fluctuations in financial results.

the assets, operations, contracts or companies we acquire may not achieve the revenues and profitability projected.

The acquisition and/or operation of additional

water and wastewater systems is an element of our growth strategy.

This strategy depends on identifying suitable opportunities that meet

our risk and reward profile and reaching mutually agreeable terms with acquisition candidates or contract parties.

Acquisitions may result

in dilution in the value of our equity securities, incurrence of debt and contingent liabilities and fluctuations in financial results.

In addition, identifying suitable opportunities, negotiating terms, and integrating operations may require management attention without

any assurance of achieving a projected outcome.

Even if an acquisition is successfully consummated, or we enter into an agreement to operate

additional water or wastewater systems, the assets, operations, contracts or companies we acquire may not achieve the projected revenues

and profitability.

Our ability to achieve organic customer growth in our market area

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if necessary, borrowings under existing credit facilities, will be sufficient to enable us to make our debt payments as they become due.

If, however, we do not generate sufficient cash, we may be required to refinance our obligations or sell additional equity, which may

be on terms that are less favorable than we desire.

If, however, we do not generate sufficient cash, we may be required to attempt to refinance our obligations or sell additional equity.

No assurance can be given that any refinancing

or sale of equity will be possible when needed, or that we will be able to negotiate acceptable terms.

or sale of equity will be possible when needed, or that we will be able to negotiate favorable terms.

In addition, our failure to comply

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default under these documents, which could result in an acceleration of our indebtedness.

Our business is subject to seasonal fluctuations,

which could affect demand for our water service and our revenues.

Demand for our water during the warmer months

is generally greater than during colder months due primarily to additional consumption of water in connection with irrigation systems,

swimming pools, cooling systems and other outdoor water use.

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

may vary with temperature and rainfall levels.

In the event that temperatures during the typically warmer months are cooler than normal,

or if there is more rainfall than normal, the demand for our water may decrease and adversely affect our revenues.

General economic conditions may materially

and adversely affect our financial condition and results of operations.

Adverse economic conditions could negatively impact

our customers’ water usage demands, particularly the level of water usage demand by our commercial and industrial customers in our

Middlesex System.

If water demand by our commercial and industrial customers in our Middlesex System decreases, our financial condition

and results of operations could be negatively impacted until completion of a subsequent base rate filing.

The current concentration of our business in

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A change in any of

these conditions could make it more costly for us to conduct our business.

these conditions could make it more costly for us to conduct our business or reduce the revenue earned in conducting our business.

We are subject to anti-takeover measures that

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not in the best interest of the common shareholders.

We identified material weaknesses in our internal

controls which, if not remediated appropriately or timely, could result

in loss of investor confidence and adversely impact our stock price.

Internal controls related to the operation

of technology systems are critical to maintaining adequate internal control over financial reporting.

During the fourth quarter of

2023, management identified a material weakness in internal control related to ineffective information technology general controls

(ITGCs) in the areas of user access and change management over certain information technology (IT) systems that support the

Company’s financial reporting processes.

Certain of those controls were found to be deficient because of a lack of

sufficient IT control processes designed to prevent or detect unauthorized changes in applications and data in selected IT

environments.

In December 2023, management implemented various auditing and monitoring solutions that provide greater transparency

into changes made within our IT systems.

These control solutions are supported by a timely review process that focuses on the proper

authorization and approval of IT system changes.

Due to the timing of implementing the solutions, the controls implemented did not

operate over a sufficient time period to adequately test and validate the remediation and reassess other ITGCs, which may require

further remediation actions.

In addition, there were ineffective controls related to income tax

accounting for a non-routine transaction, which management has identified as a material weakness in internal controls over financial reporting.

Therefore, management concluded that our internal control over financial

reporting was not effective as of December 31, 2023.

Until remediation measures are completed, fully tested and determined effective,

we will not be able to conclude that the material weaknesses have been remediated.

If we are unable to determine that our remediation

measures are effective or otherwise remediate the material weaknesses, or are otherwise unable to maintain effective internal control

over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately,

and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or

investigations requiring management resources and payment of legal and other expenses, negatively affecting investor confidence in our

financial statements and adversely impacting our stock price.

General Risks

General economic conditions may materially and adversely affect

our financial condition and results of operations.

Adverse economic conditions could negatively impact our customers’

water usage demands, particularly the level of water usage demand by our commercial and industrial customers in our Middlesex System.

If water demand by our commercial and industrial customers in our Middlesex System decreases, our financial condition and results of operations

could be negatively impacted until completion of a subsequent base rate filing.

We rely on our information technology systems to help manage our

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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 1A. Risk Factors