What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-03-01 · 500 added, 564 removed, 765 unchanged (58% of the section changed)

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To the Stockholders and the Board of Directors of Middlesex Water Company:

Opinions on the Financial Statements and Internal Control

over Financial Reporting

Opinions on the Financial Statements and Internal Control over Financial

We have audited the accompanying consolidated

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statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based

on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on

criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations

and their cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally

accepted in the United States of America.

Also in our opinion, because of the effect of the material weaknesses described below on the

achievement of the objectives of the control criteria, the Company has not maintained, in all material respects, effective internal control

over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013)

In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of their

operations and their cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles

generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal

control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

A material weakness is a deficiency, or a combination of deficiencies,

in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s

annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been

identified and included in the accompanying Management’s Report on Internal Control Over Financial Reporting appearing under Item

There were 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.

As a result, automated and manual process controls dependent

on those ITGCs were also not effective.

There were ineffective controls related

to income tax accounting for a non-routine transaction.

We considered the material weaknesses in determining the nature, timing,

and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and our opinion regarding the effectiveness

of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company’s management is responsible for these consolidated

financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness

of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial

Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company’s

internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting

Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

The Company’s management is responsible

for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment

of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal

Control over Financial Reporting.

Our responsibility is to express an opinion on the Company's consolidated financial statements and an

opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered

with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect

to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the

consolidated financial statements are free of material misstatement, whether due to error or fraud and whether effective internal

control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures

to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control

over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a

material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over financial

reporting was maintained in all material respects.

Our audits of the financial statements included

performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal

control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk

that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our

audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal

Control Over Financial Reporting

A company's internal control over financial reporting is a process designed

to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those

policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of

the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could

have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of

changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We believe that our audits

provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control

Over Financial Reporting

A company's internal control over financial reporting

is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial

reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately

and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions

are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition

of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal

control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated

below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated

to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved

our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate

opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Tax Accounting for Non-Routine Transaction

Audit Matter Description

described in Notes 1 and 2 to the consolidated financial statements, the Company executed a non-routine litigation settlement agreement

Management estimated and recorded the income tax effects of this non-routine transaction.

identified management’s assessment, accounting and financial statement presentation and disclosure of income taxes for this non-routine

transaction as a critical audit matter.

Auditing management’s assessment, accounting, presentation and disclosure required a high

degree of judgment and subjectivity and the use of individuals with specialized knowledge.

We Addressed the Matter in Our Audit

primary procedures we performed to address this critical audit matter included:

§ Testing the effectiveness of controls relating to income taxes, including controls over the determination

of the accounting and presentation for the non-routine transaction.

§ Testing management’s process for determining the accounting for income taxes.

Due to the non-routine

nature of the transaction, we evaluated the appropriateness of the facts and circumstances relating to the transaction and the applicable

tax regulations and financial reporting requirements.

§ Utilizing internal tax specialists to assist in evaluating the appropriateness of the income tax accounting

impact from the significant non-routine transaction and in assessing the presentation and disclosure in the consolidated financial statements.

§ Evaluating whether the amounts and assumptions used in the calculation were reasonable.

/s/ Baker Tilly US, LLP

Critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

We have served as the Company's auditor since 2006.

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Operating Income

Other Income (Expense):

Other Income:

Allowance for Funds Used During Construction

Other Income (Expense), net

Other Income, net

Total Other Income, net

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Common Shares Outstanding :

See Notes to Consolidated

Financial Statements.

See Notes to Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

CONSOLIDATED BALANCE SHEETS

BALANCE SHEETS

(In thousands)

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Cash and Cash Equivalents

Accounts Receivable, net of allowance for uncollectible accounts of $ 2,137 and $ 2,326 , respectively

Accounts Receivable, net of allowance for credit losses of $ 2,695 and $ 2,137 , respectively in 2024 and 2023

Litigation Settlement Receivable

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Operating Lease Right of Use Asset

Preliminary Survey and Investigation Charges

Regulatory Assets

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Retained Earnings

TOTAL COMMON EQUITY

COMMON STOCKHOLDERS’ EQUITY

Preferred Stock

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OTHER LIABILITIES:

Customer Advances for Construction

Advances for Construction

Lease Obligations

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Depreciation and Amortization

Provision for Deferred Income Taxes

Provision for Deferred Income Taxes and

Investment Tax Credits

Equity Portion of Allowance for Funds Used During Construction (AFUDC)

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Unbilled Revenues

Materials & Supplies

Materials and Supplies

Accounts Payable

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Employee Benefit Plans

Unearned Revenue & Advanced Service Fees

Unearned Revenue and Advanced Service

Recovered Costs Litigation

Other Assets and Liabilities

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CASH FLOWS FROM INVESTING ACTIVITIES:

Utility Plant Expenditures, Including AFUDC of $ 975 in 2023, $ 927 in 2022 and $ 1,148 in 2021

Utility Plant Expenditures, Including AFUDC-Debt of $ 511 in 2024, $ 975 in 2023 and $ 927 in 2022

Proceeds from Sale of Subsidiary

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Net Short-term Bank Borrowings

Proceeds from Litigation Settlement, net

Deferred Debt Issuance Expense

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Utility Plant received as Construction Advances and Contributions

Long-term Debt Deobligation

Accrued Payables for Utility Plant

Non-Cash Consideration for Sale of Subsidiary

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Litigation Settlement Payable

Conversion of Preferred Stock Into

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

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(In thousands)

December 31, December 31,

Common Stock, No Par Value

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Retained Earnings 197,061 176,227

TOTAL COMMON EQUITY

TOTAL COMMON STOCKHOLDERS’ EQUITY $ 445,263 $ 422,991

Cumulative Preferred Stock, No Par Value:

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Shares Outstanding, $7.00 Series - 2024 - 5 ;

2023 - 10 $ 556 $ 1,005

Nonredeemable:

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Cash Dividends on Preferred Stock

Common Stock Issuance Expenses

Balance at December 31, 2022

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Cash Dividends on Preferred Stock

Common Stock Issuance Expenses

Conversion of $ 7 Preferred Stock to Common Stock

Balance at December 31, 2024

See Notes to Consolidated

Financial Statements.

See Notes to Consolidated Financial Statements.

MIDDLESEX WATER COMPANY

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(White Marsh) are wholly-owned subsidiaries of Tidewater.

“we,” “our,” and “us” collectively refer to Middlesex and its subsidiaries,

Middlesex has operated as a water utility in New

Jersey since 1897 and in Delaware, through our wholly-owned subsidiary, Tidewater, since 1992.

We are in the business of collecting, treating,

distributing and selling water for domestic, commercial, municipal, industrial and fire protection purposes.

We are in the business of providing an

essential water utility service for domestic, commercial, municipal, industrial and fire protection purposes.

We also operate New Jersey

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Under the equity method of accounting, the Company records its investment interests in Non-Utility Assets and its percentage share of

the earnings or losses of the investees in Other Income (Expense).

the earnings or losses of the investees in Other Income.

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(d) Regulatory Accounting - We maintain

our books and records in accordance with accounting principles generally accepted in the United States of America.

Middlesex and certain

of its subsidiaries, which account for 93 % of Operating Revenues and 99 % of Total Assets, are subject to regulation in the state in which

they operate.

Those companies are required to maintain their accounts in accordance with regulatory authorities’ rules and guidelines,

which may differ from other authoritative accounting pronouncements.

In those instances, the Company follows the guidance provided in

Accounting Standards Codification (ASC) 980, Regulated Operations .

our books and records in accordance with accounting principles generally accepted in the United States of America (GAAP).

Middlesex and

certain of its subsidiaries, which account for 93 % of Operating Revenues and 99 % of Total Assets, are subject to regulation in the state

in which they operate.

Those companies are required to maintain their accounts in accordance with regulatory authorities’ rules

and guidelines, which may differ from other authoritative accounting pronouncements.

In those instances, the Company follows the guidance

provided in Accounting Standards Codification (ASC) 980, Regulated Operations .

In accordance with ASC 980, Regulated Operations ,

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Retirement benefit

plan obligations and expense are determined

based on investment performance, discount rates and various other demographic factors related

plan obligations and expense are determined based on investment performance, discount rates and various other demographic factors related

to the population participating in the Company’s retirement benefit plans, all of which can change significantly in future years.

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Cost includes direct material, labor and indirect charges for pension benefits and payroll taxes.

labor, materials, supervision and other expenses incurred in making repairs and minor replacements and in maintaining the properties is

charged to the appropriate expense accounts.

At December 31, 2023, there was no event or change in circumstance that would indicate that

the carrying amount of any long-lived asset was not recoverable.

labor, materials, supervision and other expenses incurred in making repairs and maintenance of the properties is charged to the appropriate

expense accounts.

At December 31, 2024, there was no event or change in circumstance that would indicate that the carrying amount of any

long-lived asset was not recoverable.

(g) Depreciation – Depreciation

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calculated based on the estimated useful lives, ranging from 3 to 42 years.

(h) Preliminary Survey and Investigation (PS&I)

Costs – In the design of water and wastewater systems that the Company ultimately intends to construct, own and operate,

certain expenditures are incurred to advance those project activities.

These PS&I costs are recorded as deferred charges on the balance

sheet as these costs are expected to be recovered through future rates charged to customers as the underlying project assets are placed

into service as utility plant.

If it is subsequently determined that costs for a project recorded as PS&I are not recoverable through

rates charged to our customers, the applicable PS&I costs are recorded as Other Expense on the Statement of Income at that time.

(i) Customers’ Advances for Construction

(CAC) – Utility plant and/or cash advances are provided to the Company by customers, real estate developers and builders

in order to extend utility service to their properties.

These transactions are recorded as CAC.

Contractual Refunds of CACs in the form

of cash are made by the Company and are based on either additional operating revenues generated from new customers or, as new customers

(i) Advances for Construction –

Cash advances are provided to the Company by customers, real estate developers and builders in order to extend utility service to

their properties.

These transactions are recorded as Advances for Construction.

Contractual Refunds of Advances for Construction in the

form of cash are made by the Company and are based on either additional operating revenues generated from new customers or, as new customers

are connected to the respective system.

After all refunds are made and/or contract terms have expired, any remaining balance is transferred

to Contributions in Aid of Construction.

Contributions in Aid of Construction (CIAC) – CIAC include

direct non-refundable contributions of utility plant and/or cash and the portion of CAC that becomes non-refundable.

In accordance with regulatory requirements, CAC

and CIAC are not depreciated.

to Contributions in Aid of Construction (CIAC).

CIAC – CIAC include direct non-refundable contributions

of utility plant and/or cash and the portion of Advances for Construction that becomes non-refundable.

In accordance with regulatory requirements, Advances

for Construction and CIAC are not depreciated.

In addition, these amounts reduce the investment base for purposes of setting rates.

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for each company and then depreciated with the utility plant direct costs over the underlying assets’ estimated useful life.

is calculated using each company’s weighted cost of debt and equity as approved in their most recent

respective regulatory rate

is calculated using each company’s weighted cost of debt and equity as approved in their most recent respective regulatory rate

The AFUDC rates for the years ended December 31, 2024, 2023 and 2022 for Middlesex and Tidewater are as follows:

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reasonable and supportable forecasts on expected collectability of accounts receivable.

The allowance for doubtful accounts was $ 2.1 million

The allowance for credit losses was $ 2.7 million

and $ 2.1 million as of December 31, 2024 and 2023, respectively.

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(l) Revenues - The Company’s revenues

are primarily generated from regulated tariff-based sales of water and wastewater services and non-regulated operation and maintenance

are primarily generated from regulated tariff-based water and wastewater utility services and non-regulated operation and maintenance

contracts for services on water and wastewater systems owned by others.

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The Company’s regulated revenue results

from tariff-based sales from the provision of water and wastewater services to residential, industrial, commercial, fire-protection and

wholesale customers.

Residential customers are billed quarterly while most industrial, commercial, fire-protection and wholesale customers

are billed monthly.

from tariff-based water and wastewater utility services to residential, industrial, commercial, fire-protection and wholesale customers.

Residential customers are billed quarterly while most industrial, commercial, fire-protection and wholesale customers are billed monthly.

Payments by customers are due between 15 to 30 days after the invoice date.

Revenue is recognized as the water and

wastewater services are delivered to customers as well as from accrual of unbilled revenues estimated from the last meter reading date

to the end of the accounting period utilizing factors such as historical customer data, regional weather indicators and general economic

conditions in the relevant service territories.

Unearned Revenues and Advance Service Fees include fixed service charge billings in advance

to Tidewater customers recognized as service is provided to the customer.

Revenue is recognized as the water and wastewater services

are delivered to customers which includes an accrual of unbilled revenues estimated from the last meter reading date to the end of the

accounting period utilizing factors such as historical customer data and regional weather indicators.

Unearned Revenues and Advance Service

Fees include fixed service charge billings in advance to Tidewater customers recognized as service is provided to the customer.

Non-regulated service contract revenues consist

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revenues and accounts receivable are from contracts with customers.

The Company records its allowance for doubtful accounts based on historical

write-offs combined with an evaluation of current economic conditions within its service territories.

The Company’s contracts do not contain any

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Long-Term Debt - Unamortized Debt Expense and Premiums on Long-Term Debt, included on the consolidated balance sheet in long-term

debt, are amortized over the lives of the related debt issues.

debt, are amortized over the lives of the related debt.

(n) Income Taxes - Middlesex files a consolidated

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Investment tax credits have been deferred and are amortized over the estimated useful life of the related property.

In the event that there are interest and penalties associated with income tax adjustments from income tax authority examinations, these

amounts will be reported under interest expense and other expense, respectively.

For more information on income taxes, see Note 3 –

Income Taxes .

In the event there are interest and penalties associated with income tax adjustments from income tax authority examinations, these amounts

will be reported under interest charges and other expense, respectively.

For more information on income taxes, see Note 3 – Income

(o) Cash and Cash Equivalents - For purposes

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Cash and cash equivalents represent bank balances and money market funds with investments maturing in less than 90 days.

(p) Restricted Cash – Restricted

cash includes cash proceeds from loan transactions entered into through government financing programs and are held in trusts for specific

capital expenditures or debt service.

(q) Use of Estimates - Conformity with

accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect

the reported amounts in the financial statements.

Actual results could differ from those estimates.

(r) Recent Accounting Pronouncements - There are no new adopted

or proposed accounting guidance that the Company is aware of that could have a material impact on the Company’s consolidated financial

(s) Regulatory Notice of Non-Compliance –

In September 2021, the New Jersey Department of Environmental Protection (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 (Park Avenue Plant) in South Plainfield, New Jersey exceeded a NJDEP standard 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 comply with the new standard prior to the regulation being enacted.

completion was not expected until mid-2023, the Company implemented an interim solution to meet the Notice requirements.

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.

In September 2022, the Company entered into an

Administrative Consent Order (ACO) with the NJDEP with respect to the Notice, which voided any further notice regarding the fact that

the permanent treatment solution was not in service by September 7, 2022 as required by the Notice.

As prescribed in the ACO, the Company

was to issue periodic public notifications until the ACO was closed.

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.

The Company had previously initiated a lawsuit against

3M Company (3M), in connection with the Company’s claim that 3M introduced perfluoroalkyl substances (commonly known as “PFAS”),

which include PFOA, into the Company’s water supply at its Park Avenue Plant.

On August 29, 2023, Middlesex and 3M executed

a settlement agreement (the Settlement Agreement) to resolve the lawsuit.

The Settlement Agreement provides that:

● 3M will pay $ 93.2 million in two installments, one payment of $ 23.3 million received in December 2023

and one payment of $ 69.9 million in July 2024.

Middlesex is obligated to pay 30 % of the proceeds received plus reimbursable out-of-pocket

legal expenses to its lawyers as legal fees, or $ 29.5 million in total;

● Proceeds received from the Settlement Agreement are being used to mitigate the impact of the increase

in Middlesex’s customer rates approved by the NJBPU, which is to be implemented March 1, 2024 (for further discussion of Middlesex’s

base rate increase, see Note 2, Rate Matters, Middlesex below);

● Middlesex, by nature of its status as a U.S.

water purveyor impacted by PFAS, was automatically included

in a Multi-District Litigation Settlement before the United States District Court for the District of South Carolina in which 3M and other

companies (Non-3M Companies) are participants.

Middlesex agreed as part of the Settlement Agreement to remain a member of the plaintiff

class in order to be eligible to obtain future additional compensation from 3M and the Non-3M Companies for any future remediation which

may be required of its water treatment facilities;

● Middlesex and 3M agreed to enter into a joint mediation which occurred November 2023, to resolve two PFOA-related

class action lawsuits against Middlesex seeking restitution for medical, water replacement and other claimed related costs.

Both Middlesex

and 3M are defendants in these lawsuits.

These lawsuits remain in the legal process and their ultimate resolution is not known at this

(p) Use of Estimates - Conformity with

GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements.

Actual results

could differ from those estimates.

(q) Recent Accounting Pronouncements - The recently issued accounting

standards and their impact on the Company as of December 31, 2024 are as follows:

Standard Description Date of Adoption Application Effect on the

Financial Statements

Accounting Standards Update (“ASU”) 2023-07 “Improvements to Reportable Segment Disclosures” The ASU requires disclosure of significant segment expenses, extends certain annual disclosures to interim periods, and additional qualitative disclosures regarding the chief operating decision maker.

The ASU is effective for the Company beginning with its annual financial statements for the year ended December 31, 2024 .

Retrospective The Company adopted ASU 2023-07, including a recast of 2023 and 2022 information, by including additional required disclosures within the Notes to the Consolidated Financial Statements -see Note 8- Reportable Segments .

ASU 2023-09 “Improvements to Income Tax Disclosures” The ASU amends certain income tax disclosure requirements, including adding requirements to present the reconciliation of income tax expense computed at the statutory rate to actual income tax expense using both percentages and amounts and providing a disaggregation of income taxes paid.

Further, certain disclosures are eliminated, including the current requirement to disclose information on changes in unrecognized tax benefits in the next 12 months.

The ASU is effective for the Company beginning with its annual financial statements for the year ending December 31, 2025 .

Early adoption is permitted.

Prospective, with retrospective application also permitted.

The Company is currently evaluating the requirements of ASU 2023-09.

ASU 2024-03 “Disaggregation of Income Statement Expenses” The ASU enhances disclosures related to income statement expenses to further disaggregate expenses in the footnotes to the financial statements.

The standard requires disaggregation of any relevant expense caption presented on the face of the income statement that contains the following expense categories:

purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion.

Further, the standard requires disclosure of the total amount and the entity’s definition of selling expenses.

The ASU is effective for the Company beginning with its annual financial statements for the year ended December 31, 2027 .

Prospective, with retrospective application also permitted.

The Company is currently evaluating the requirements of ASU 2024-03.

(r) Reclassifications – Certain reclassifications have

been made to prior periods in the Consolidated Financial Statements and Notes to conform to the current presentation.

Note 2 - Rate and Regulatory Matters

Middlesex – 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.

Net proceeds from the 3M Settlement

Agreement 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 CIAC in the March 31, 2024 balance sheet.

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 Note 1(s) - Regulatory Notice of Non-Compliance above.

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.

Middlesex – The approval by the

NJBPU in February 2024 of the negotiated settlement of the Middlesex 2023 base rate case is expected to increase annual operating revenues

by $ 15.4 million, effective March 1, 2024.

The approved tariff rates were designed to recover increased operating costs as well as a

return on invested capital of $ 563.1 million, based on an authorized return on common equity of 9.6 %.

Middlesex has made capital infrastructure

investments to ensure prudent upgrade and replacement of its utility assets to support continued regulatory compliance, resilience and

overall quality of service.

In August 2023, Middlesex and 3M Company (3M) executed a settlement agreement (Settlement Agreement) to resolve

a lawsuit Middlesex previously initiated claiming 3M introduced Perfluoroalkyl Substances (PFAS) into the Company’s water

supply for its Park Avenue Wellfield Treatment Plant (Park Avenue Plant).

The rate case settlement provided that the net proceeds

from the 3M Settlement Agreement were to be used to mitigate the increase in customer rates and reimburse Middlesex for previously incurred

costs for the construction of the Park Avenue Plant PFAS treatment upgrades, including depreciation and carrying costs.

This resulted

in the reclassification of $ 48.3 million from Regulatory Liabilities to Contributions in Aid of Construction from the December 31, 2023

balance sheet.

In 2024, the Company also recognized the recovery of $ 0.9 million for depreciation and $ 4.1 million for carrying costs

associated with the Park Avenue Plant PFAS treatment upgrades, as well as the recovery of $ 2.6 million of previously incurred operating

treatment costs while the Park Avenue Plant PFAS treatment upgrades were in process.

The Middlesex Lead Service Line Replacement (LSLR)

Plan, which was approved by the NJBPU in January 2024, has commenced and Middlesex is currently recovering $ 1.2 million of costs for replacing

customer-owned lead service lines incurred through June 2024, which are being recovered between September 2024 and February 2025.

of $ 0.6 million for replacing customer-owned lead service lines incurred between July 2024 through December 2024 will be recovered beginning

in March 2025 through August 2025.

The LSLR surcharge is required to be reset every six months over the life of the LSLR Plan.

Cost recovery

for replacing Company-owned lead service lines are recoverable through traditional rate making in connection with general rate case filings.

In October 2023, the NJBPU approved Middlesex’s

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Under the terms of the Foundational

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

In September 2022, the NJBPU approved Middlesex's

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 – 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

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 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 – 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 15, 2023.

The requests were necessitated by capital infrastructure investments the companies have

made as well as increased operations and maintenance costs.

Southern Shores - 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.

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.

Twin Lakes Utilities, Inc.

(Twin Lakes) - 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

the 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

We are currently awaiting the Court’s decision.

The financial results, total assets and financial

obligations of Twin Lakes are not material to Middlesex.

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

In May 2024, the NJBPU approved a DSIC rate, effective

May 26, 2024, that is expected to result in $ 0.5 million of annual revenue.

In November 2024, the NJBPU approved a DSIC rate, effective

November 26, 2024, that is expected to result in an additional $ 0.6 million of annual revenue.

Middlesex expects to file for an additional

DSIC rate increase in April 2025.

In February 2025, the NJBPU approved Middlesex’s

petition to reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional annual costs of $ 0.5 million, primarily

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

A PWAC is a rate mechanism that allows for

the 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.

The new PWAC rate will be effective March 1, 2025.

Tidewater – In August 2024, Tidewater

filed an application with the DEPSC to increase its general rates for water service.

In the application, Tidewater seeks an overall increase

in annual operating revenue of $ 10.3 million or 25.66 % over current revenue.

The request for rate increases will allow Tidewater to recover

prudently incurred investments made in the last ten years to support continued regulatory compliance, enhanced water quality, service

reliability, security and resiliency of the water utility infrastructure assets.

Effective October 30, 2024, Tidewater received approval

of the DEPSC to suspend its DSIC rate and implement an interim rate increase, which is expected to result in approximately $ 2.5 million

of annual revenues, subject to refund pending the outcome of the rate case application.

In September 2024, the DEPSC approved Tidewater’s

petition to recover up to $ 2.1 million of costs associated with Tidewater’s obligation to identify and inventory lead service lines

throughout Tidewater’s service area, as required by federal law and Delaware regulations.

Recovery of these costs began February

1, 2025 and is expected to continue through January 2028.

Through December 31, 2024, Tidewater has spent $ 1.8 million, which is included

in Regulatory Assets.

Tidewater Acquisition of the Water Utility

Assets of the Town of Ocean View, Delaware – In February 2025, Tidewater and the Town of Ocean View, Delaware’s (Ocean

View) joint application for Tidewater’s purchase of all of the rights, title, and interest in the water utility assets of Ocean

View for $ 4.6 million was approved by the DEPSC.

Ocean View serves approximately 900 customers in Sussex County, Delaware.

Tidewater currently

provides water service to most residents of Ocean View other than the 900 customers currently served by Ocean View.

Closing on this purchase

is expected by April 2025.

Southern Shores - Southern Shores

provides water service to a 2,200 unit condominium community in Sussex County, Delaware under a DEPSC-approved agreement expiring December

Under the agreement, rates are increased when there are unanticipated capital expenditures or regulatory related changes

in operating expenses exceed certain thresholds.

In 2024, capital expenditures did exceed the established threshold.

In addition, rates

are increased annually by the lesser of the regional Consumer Price Index or 3 %.

Effective January 1, 2025, Southern Shores rates were

increased $ 0.1 million or 6.51 %.

Twin Lakes – Twin Lakes provides

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

In January 2021, the Pennsylvania Public Utility Commission

(PAPUC) appointed a large Pennsylvania based investor-owned utility as the receiver (the Receiver Utility) of the Twin Lakes system.

November 2021, the PAPUC issued an Order 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.

In January 2025, the United States Court of Appeals

for the Third Circuit (Third Circuit Court) upheld the PAPUC Order.

Following the Third Circuit Court’s decision, Middlesex will

not pursue further litigation in the federal courts and intends to submit the required escrow payment to complete the Receiver Utility’s

acquisition of the Twin Lakes system.

The estimated loss recorded by the Company related to this matter, and the financial results, total

assets and financial obligations of Twin Lakes are not material to Middlesex.

Regulatory Matters

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been excluded from rate base and, therefore, we are not earning a return on the unamortized balances.

We record regulatory liabilities

for amounts expected to be refunded to customers in the rate making process.

These items are detailed as follows:

(Thousands of Dollars)

Regulatory Assets

Recovery Periods

Retirement Benefits

Rate Cases, Tank Painting, and Other

Retirement benefits include pension and other

retirement benefits that have been recorded on the Consolidated Balance Sheet in accordance with the guidance provided in ASC 715 ,

Compensation – Retirement Benefits.

These amounts represent obligations in excess of current funding (regulatory asset) or less

than current funding (regulatory liability, which was $ 1.5 million as of December 31, 2023), which the Company believes will be fully

recovered or refunded in rates set by the regulatory authorities.

The recovery period for income taxes is dependent

(In Thousands)

Income Taxes (a)

Regulatory Liabilities

Income Taxes (c)

Cost of Removal (d)

Employee Benefit Plans (e)

Lawsuit Settlement (f)

New Jersey Revenue Taxes (g)

(a) The recovery period for income taxes is dependent

upon when the temporary differences between the tax and book treatment of various items reverse.

The net proceeds available to Middlesex from the

3M Settlement Agreement, after excluding legal fees, $ 63.6 million, were recorded as a regulatory liability,

as of December 31, 2023.

For further information on the 3M Settlement Agreement, see Rates, Note 1(s) - Regulatory Notice of Non-Compliance

and Rate Matters, Middlesex above.

The 2017 Tax Act reduced the statutory corporate

(b) Other primarily includes deferred costs for

rate cases and tank painting.

federal income tax rate from 35 % to 21 %.

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state public utility commissions.

As of December 31, 2023 and 2022, the Company has recorded regulatory liabilities of $ 28.2 million and

$ 29.0 million, respectively for excess income taxes collected through

rates due to the lower income tax rate under the 2017 Tax Act.

These regulatory liabilities are overwhelmingly related to utility plant

depreciation deduction timing differences, which are subject to Internal Revenue Service (IRS) normalization rules.

The IRS rules limit

how quickly the excess taxes attributable to accelerated taxes can be returned to customers.

The current base rates for Middlesex and

Pinelands customers became effective after 2017 and reflect the impact of the 2017 Tax Act on their revenue requirements.

The Company uses composite depreciation rates

for its regulated utility assets, which is currently an acceptable method under generally accepted accounting principles and is widely

used in the utility industry.

Historically, under the composite depreciation method, the anticipated costs of removing assets upon retirement

are provided for over the life of those assets as a component of depreciation expense.

The Company recovers certain asset retirement

costs through rates charged to customers as an approved component of depreciation expense.

As of December 31, 2023 and 2022, the Company

has approximately $ 19.7 million and $ 17.7 million, respectively, of expected costs of removal recovered currently in rates in excess

of actual costs incurred as regulatory liabilities.

The Company has recorded regulatory liabilities for excess income taxes collected through rates due

to the lower income tax rate under the 2017 Tax Act.

These regulatory liabilities are overwhelmingly related to utility plant depreciation

deduction timing differences, which are subject to Internal Revenue Service (IRS) normalization rules.

The IRS rules limit how quickly

the excess taxes attributable to accelerated taxes can be returned to customers.

The current base rates for Middlesex and Pinelands customers

became effective after 2017 and reflect the impact of the 2017 Tax Act.

(d) The Company uses composite depreciation rates

for its regulated utility assets, which is currently an acceptable method under GAAP and is widely used in the utility industry.

Historically,

under the composite depreciation method, the anticipated costs of removing assets upon retirement are provided for over the life of those

assets as a component of depreciation expense.

The Company recovers certain asset retirement costs through rates charged to customers

as an approved component of depreciation expense.

(e) Retirement benefits include pension and other

retirement benefits that have been recorded on the Consolidated Balance Sheet in accordance with the guidance provided in ASC 715, Compensation

– Retirement Benefits .

These amounts represent obligations less than current funding.

(f) The net proceeds available to Middlesex from

the 3M Settlement Agreement were recorded as a regulatory liability and are being used for future related operating and maintenance costs.

(g) Revenue related taxes paid by the Company's

New Jersey Regulated subsidiaries, and reflected in those subsidiaries current base rates, were above enacted rates and will be refunded

back to customers in a future rate proceeding.

Note 3 – Income Taxes

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amount computed by applying the statutory rate on book income subject to tax for the following reasons:

(Thousands of Dollars)

(In Thousands)

Years Ended December 31,

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State Income Taxes – Net

Total Income Tax Expense (Benefit)

Total Income Tax Expense

Income tax expense (benefit) is comprised of the following:

(Thousands of Dollars)

(In Thousands)

Years Ended December 31,

Investment Tax Credits

Total Income Tax Expense (Benefit)

As part of Middlesex’s March 2018 base water

rate settlement with the NJBPU, Middlesex received approval for regulatory accounting treatment of income tax benefits associated with

the adoption of tangible property regulations issued by the IRS (fully amortized as of March 31, 2022) as well as prospective recognition

Total Income Tax Expense

As part of Middlesex’s March 2018 general

rate case settlement with the NJBPU, Middlesex received approval for regulatory accounting treatment of income tax benefits associated

with the adoption of tangible property regulations issued by the IRS (fully amortized as of March 31, 2022) as well as prospective recognition

of the income tax benefits for the immediate deduction of repair costs on tangible property.

This results in significant reductions in

the Company’s effective income tax rate, current income tax expense (benefit) and deferred income tax expense (benefit).

the Company’s effective income tax rate, current income tax expense and deferred income tax expense (benefit).

Deferred income taxes reflect the net tax effect of temporary differences

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of the net deferred tax liability are as follows:

(Thousands of Dollars)

(In Thousands)

Utility Plant Related

3 unchanged sentences

Total Accumulated Deferred Income Taxes

The determination of our provision for income

taxes requires the use of estimates and the interpretation and application of tax laws.

Judgment is required in assessing the deductibility

and recoverability of certain tax benefits.

We use the asset and liability method to determine and record deferred tax assets and liabilities,

representing future tax benefits and taxes payable, which result from the differences in basis recorded in GAAP financial statements and

amounts recorded in the income tax returns.

The deferred tax assets and liabilities are recorded utilizing the statutorily enacted tax

rates expected to be in effect at the time the assets are realized and/or the liabilities settled.

An offsetting valuation allowance is

recorded when it is more likely than not that some or all of the deferred income tax assets won’t be realized.

Any significant changes

to the estimates and judgments with respect to the interpretations, timing or deductibility could result in a material change to earnings

and cash flows.

Occasionally, federal and state taxing authorities

determine that it is necessary to make certain changes to the income tax laws.

These changes may include but are not limited to changes

in the tax rates and/or the treatment of certain items of income or expense.

Accounting guidance requires that the Company reflect the

effect of changes in tax laws or tax rates at the date of enactment.

Additionally, the Company is required to re-measure its deferred

tax assets and liabilities as of the date of enactment.

For non-regulated entities, the effects of changes in tax laws or tax rates are

required to be included in income from continuing operations for the period that includes the enactment date.

For regulated entities,

if as the result of an action by a regulator it is probable that the future increase or decrease in taxes payable for items such as changes

in tax laws or rates will be recovered from or returned to customers through future rates, an asset or liability shall be recognized for

that probable increase or decrease in future revenue.

Accounting guidance also requires that regulatory liabilities and/or assets be considered

a temporary difference for which a related deferred tax asset and/or liability shall be recognized.

Accounting guidance requires that we establish

reserves for uncertain tax positions, if any, when it is more likely than not that the positions will not be sustained when challenged

by taxing authorities.

Any changes to the estimates and judgments with respect to the interpretations, timing or deductibility could result

in a change to earnings and cash flows.

Interest and penalties related to unrecognized

tax benefits, if any, are recognized within interest charges and other expense, respectively.

Note 4 - Commitments and Contingent Liabilities

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Purchased water costs are shown below:

(Millions of Dollars)

(In Millions)

Years Ended December 31,

4 unchanged sentences

The Company has entered into an operating lease

of office space for administrative purposes, expiring in 2030.

of office space for administrative purposes, expiring in December 2029.

The Company has not entered into any finance leases.

The exercise of a

lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

The right-of-use (ROU) asset recorded represents

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*Included in Other Current Liabilities

Construction –The

Company has projected to spend approximately $ 75 million in 2024, $ 81 million in 2025 and $ 70 million in 2026 on its construction program.

As of December 31, 2023, the Company has entered into several contractual construction agreements that in total obligate it to expend

an estimated $ 6.7 million in the future.

The actual amount and timing of capital expenditures is dependent on the need for replacement

of existing infrastructure, customer growth, residential new home construction and sales, project scheduling, supply chain issues and

continued refinement of project scope and costs.

There is no assurance that projected customer growth and residential new home construction

and sales will occur.

Construction –

In connection with the Company’s planned capital expenditures, the Company has entered into several contractual construction agreements

that in total obligate it to expend an estimated $ 9.6 million in the future.

The actual amount and timing of capital expenditures is dependent

on the need for replacement of existing infrastructure, customer growth, residential new home construction and sales, project scheduling,

supply chain issues and continued refinement of project scope and costs.

Contingencies – Based on our operations

5 unchanged sentences

In addition, the Company maintains business insurance coverage that may

mitigate the effect of any current or future loss contingencies.

PFOA Matter - In November 2021, the Company

was served with two PFOA-related class action lawsuits seeking restitution for medical, water replacement and other related costs and

economic damages.

Middlesex and 3M agreed to enter into a joint mediation on these lawsuits (for further discussion of this matter, see

Note 1(s) Regulatory Notice of Non-Compliance ).

mitigate the effect of current or future loss contingencies.

Change in Control Agreements – The

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(In Millions)

As of December 31, 2023

Line of Credit

As of December 31, 2024 Line of Credit

Outstanding Available Maximum Credit Type Expiration Date

Bank of America $ —

January 24, 2025

January 31, 2026

$ 60.0 $ 60.0 Uncommitted January 23, 2026

PNC Bank 23.0 45.0 68.0 Committed January 31, 2027

CoBank, ACB (CoBank) —

12.0 12.0 Committed May 20, 2026

$ 23.0 $ 117.0 $ 140.0

dates for the Notes Payable as of December 31, 2024 are extendable at the discretion of the Company.

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the issuance of securities were approved by either the NJBPU or DEPSC, except where otherwise noted.

The Company issues shares of its common stock

in connection with its Middlesex Water Company Investment Plan (the Investment Plan), a direct share purchase and dividend reinvestment

plan for the Company’s common stock.

The Company raised approximately $ 12.1 million under the Investment Plan during 2023.

On March 1, 2023, the Company began offering shares of its common stock for purchase at a 3 % discount to participants in the Investment

The discount offering ended December 1, 2023.

The discount applied to all common stock purchases made under the Investment

Plan during that time period, whether by optional cash payment or by dividend reinvestment.

Since the inception of the Investment Plan

and its predecessor plan, the Company has periodically replenished the level of authorized shares in the plans.

In May 2023, Middlesex

received approval from the NJBPU to increase the number of authorized shares under the Investment Plan by 0.7 million shares.

0.7 million shares remain

registered with the United States Securities and Exchange Commission and available for issuance to participants

under the Investment Plan.

The Company issues shares of its common

stock in connection with its Middlesex Water Company Investment Plan (the Investment Plan), a direct share purchase and dividend

reinvestment plan for the Company’s common stock.

The Company raised approximately $ 1.0 million under the Investment Plan

Currently, 0.7 million

shares remain registered with the United States Securities and Exchange Commission and available

for issuance to participants under the Investment Plan.

In April 2023, Middlesex received approval from

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The conversion feature of the no par $ 7.00 Series

Cumulative and Convertible Preferred Stock allows the security holders to exchange one convertible preferred share for twelve shares of

Cumulative and Convertible Preferred Stock allows the security holders to convert one convertible preferred share for twelve shares of

the Company's common stock.

In addition, the Company may redeem up to 10 % of the outstanding convertible stock in any calendar year at

a price equal to the fair value of twelve shares of the Company's common stock for each share of convertible stock redeemed.

In 2024, 4,275 shares of the Company’s no par $ 7.00 Series Cumulative and Convertible Preferred Stock

were converted into 51,300 shares (approximately $ 0.4 million) of the Company’s common stock.

In addition, the Company may redeem

up to 10 % of the outstanding convertible stock in any calendar year at a price equal to the fair value of twelve shares of the Company's

common stock for each share of convertible stock redeemed.

Long-term Debt

5 unchanged sentences

at interest rates typically below rates available in the broader financial markets.

A portion of the borrowings under the New Jersey SRF

is interest-free.

Under the New Jersey SRF program, borrowers first

enter into a construction loan agreement with the New Jersey Infrastructure Bank (NJIB) at a below market interest rate.

When construction

on the qualifying project is substantially complete, NJIB will coordinate the conversion of the construction loan into a long-term securitized

loan with a portion of the principal balance having a stated interest rate of zero percent ( 0 %) and a portion of the principal balance

at a market interest rate at the time of closing using the credit rating of the State of New Jersey.

As a result of revised project funding

priority ranking for the NJIB SRF Program, the Company has no current projects in the NJIB SRF program.

However, it is seeking to have

Middlesex’s LSLR Project added to the qualified list in order to borrow under the NJIB SRF program.

Under the Delaware SRF program, borrowers 1) enter

into a long-term note agreement for a term not to exceed twenty years, 2) submit requisitions for cost reimbursements during the construction

period for up to two years after the agreement is executed and 3) as the proceeds are received from the requisitions, borrowers record

a corresponding debt obligation amount.

In April 2023, Middlesex received approval from

the NJBPU to borrow up to $ 300.0 million from the New Jersey SRF Program, the New Jersey Economic Development Authority, private placement

and other financial institutions as needed through December 31, 2025.

The Company may issue debt securities in a series of one or more

transaction offerings to help fund Middlesex’s multi-year capital construction program.

In March 2023, Middlesex closed on a $ 40.0 million,

5.24 % private placement of First Mortgage Bonds (FMBs) with a 2043 maturity date designated as Series 2023A.

Proceeds were used to reduce

the Company’s outstanding balances under its bank lines of credit.

In May 2022, Middlesex repaid its two outstanding

NJIB construction loans by issuing FMBs to the NJIB under two loan agreements.

The total amount of FMBs issued is $ 52.2 million and designated

as Series 2022A ($ 16.2 million) and Series 2022B ($ 36.0 million).

The interest rate on the Series 2022A bond is zero and the interest

rate on the Series 2022B bond ranges between 2.7 % and 3.0 %.

The final maturity date for both FMBs is August 1, 2056, with scheduled debt

service payments over the life of these loans.

In November 2021, Middlesex closed on a $ 19.5

million, 2.79 % private placement of FMBs with a 2041 maturity date designated as Series 2021A.

Proceeds were used to reduce the Company’s

outstanding balances under its lines of credit.

In June 2021, Middlesex received approval from

the NJBPU to redeem up to $ 45.5 million of outstanding FMBs, specifically Series RR ($ 22.5 million) and Series SS ($ 23.0 million), and

issue replacement FMBs at an overall lower cost of debt.

In November 2021, Middlesex closed on a $ 45.5 million, 2.90 % private placement

of FMBs, designated as Series 2021B with a 2051 maturity date to effectuate the redemptions.

In May 2023, Tidewater closed on a $ 20.0 million

loan from CoBank, ACB (CoBank) with an interest rate of 5.71 % and a 2033 maturity date and fully drew all funds by June 30, 2023 .

from the loan were used to pay off Tidewater’s outstanding balances under its bank lines of credit and for other general corporate

In April 2023, Tidewater closed on three DEPSC-approved

Delaware SRF loans totaling $ 10.2 million, all at interest rates of 2.0 % with maturity dates in 2043 and 2044.

Middlesex has received approval from the NJBPU

to borrow up to $ 300.0 million from the New Jersey SRF Program, the New Jersey Economic Development Authority, private placement and other

financial institutions as needed through December 31, 2025.

The Company expects to issue debt securities in a series of one or more transaction

offerings over a multi-year period to help fund Middlesex’s multi-year capital construction program.

In September 2024, Tidewater closed on a $ 2.2

million Delaware SRF loan with a 0.0 % interest rate with an expected maturity date in 2044 .

This loan is for costs associated with Tidewater’s

obligation, as required by federal law and Delaware regulations, to identify and inventory lead service lines throughout Tidewater’s

service area.

Tidewater has drawn down $ 1.7 million as of December 31, 2024.

In May 2024, Tidewater closed on four DEPSC-approved

Delaware SRF loans totaling $ 5.6 million, all at interest rates of 2.0 % with expected maturity dates in 2044.

These loans are for the

construction, relocation, improvement, and/or interconnection of transmission mains.

Tidewater has drawn a total of $ 6.1 million through

December 31, 2023 and expects that the requisitions will continue through mid-2025.

In December 2021, Tidewater closed on a DEPSC-approved

$ 5.0 million Delaware SRF loan at an interest rate of 2.0 %.

The loan was for construction of a one million gallon elevated storage tank.

Through December 31, 2023, Tidewater has drawn a total of $ 4.8 million and expects that the requisitions will continue through the first

quarter of 2024.

The final maturity date on the loan is 2044.

In September 2021, Tidewater completed its $ 20

million secured borrowing with CoBank, at an interest rate of 3.94 % and a 2046 maturity date.

Proceeds from the loan were used to pay

off its outstanding balances under its lines of credit.

construction, relocation, improvement, and/or interconnection of transmission mains and construction of a water treatment facility.

has drawn down less than $ 0.1 million on these loans as of December 31, 2024.

Each project has its own construction timetable with the

last spending set to occur in 2026.

Separately, Tidewater has two active construction

projects funded by prior year Delaware SRF loans totaling $ 8.3 million with remaining availability of funds for borrowing.

are for the construction of a one million gallon elevated storage tank and construction, relocation, improvement, and interconnection

of transmission mains.

Tidewater has drawn a total of $ 4.9 million through December 31, 2024 and expects that the requisitions will continue

through the second quarter of 2025.

In July 2023, Pinelands Water and Pinelands Wastewater

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Proceeds were used to pay off outstanding intercompany loans with Middlesex and for ongoing capital

The aggregate annual principal repayment obligations

as of December 31, 2023 for all long-term debt over the next five years and thereafter are shown below:

In May 2023, Tidewater closed on a $ 20.0 million

loan from CoBank with an interest rate of 5.71 % and a 2033 maturity date and fully drew all funds by June 30, 2023.

Proceeds from the

loan were used to pay off Tidewater’s outstanding balances under its bank lines of credit and for other general corporate purposes.

In April 2023, Tidewater closed on two DEPSC-approved

Delaware SRF loans totaling $ 6.9 million, all at interest rates of 2.0 % with maturity dates in 2043 and 2044.

These loans are for the

construction, relocation, improvement, and/or interconnection of transmission mains.

Tidewater has fully drawn on these loans.

In March 2023, Middlesex closed on a $ 40.0 million,

5.24 % private placement of First Mortgage Bonds (FMBs) with a 2043 maturity date designated as Series 2023A.

Proceeds were used to reduce

the Company’s outstanding balances under its bank lines of credit.

In May 2022, Middlesex repaid its two outstanding

New Jersey Infrastructure Bank (NJIB) construction loans by issuing FMBs to the NJIB under two loan agreements.

The total amount of FMBs

issued is $ 52.2 million and designated as Series 2022A ($ 16.2 million) and Series 2022B ($ 36.0 million).

The interest rate on the Series

2022A bond is zero and the interest rate on the Series 2022B bond ranges between 2.7 % and 3.0 %.

The final maturity date for both FMBs

is August 1, 2056 , with scheduled debt service payments over the life of these loans.

The aggregate annual principal repayment obligations as of December

31, 2024 for all long-term debt over the next five years and thereafter are shown below:

(In Millions)

Annual Maturities

The weighted average interest rate on all long-term

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The following table presents the calculation of

basic and diluted earnings per share (EPS) for the years ended December 31, 2023, 2022 and 2021.

Basic EPS is computed on the basis of

the weighted average number of shares outstanding.

Diluted EPS assumes the conversion of the Convertible Preferred Stock $ 7.00 Series.

basic and diluted earnings per share (EPS) of common stock for the years ended December 31, 2024, 2023 and 2022.

Basic EPS is computed

on the basis of the weighted average number of shares outstanding.

Diluted EPS assumes the conversion of the Convertible Preferred Stock

$ 7.00 Series.

(In Thousands, Except Per Share Amounts)

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Under the fair value hierarchy,

the fair value of cash and cash equivalents is classified as a Level 1

measurement and the fair value of notes payable

and the Bonds in the table below are classified as Level 2 measurements.

the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of notes payable and the Bonds in

the table below are classified as Level 2 measurements.

The carrying amount and fair value of the Bonds were as follows:

(Thousands of Dollars)

(In Thousands)

At December 31,

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The carrying amount of these instruments was $ 229.8 million and $ 231.3 million at December 31, 2024 and 2023, respectively.

Customer advances

for construction have carrying amounts of $ 21.3 million and $ 21.4 million at December 31, 2023 and 2022, respectively.

Their relative

fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections,

customer consumption levels and future rate increases.

construction have carrying amounts of $ 22.6 million and $ 21.3 million at December 31, 2024 and 2023, respectively.

Their relative fair

values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer

consumption levels and future rate increases.

Note 7 - Employee Benefit Plans

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The tables below set forth information relating to the Company’s Pension Plan and Other Benefits Plan for 2024 and

( Thousands of Dollars)

(In Thousands)

Other Benefits Plan

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Ending Balance

( Thousands of Dollars)

(In Thousands)

Other Benefits Plan

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Funded Status

( Thousands of Dollars)

(In Thousands)

Other Benefits Plan

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Current Liability

Noncurrent Liability (Asset)

Net Liability (Asset) Recognized

(Thousands of Dollars)

Noncurrent Asset

Net Asset Recognized

(InThousands)

Other Benefits Plan

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all other amounts are included in Other

Income (Expense), net.

Amounts that are expected to be amortized from Regulatory Assets into

Net Periodic Benefit Cost in 2025 are as follows:

(Thousands of Dollars)

(In Thousands)

Actuarial Loss (Gain)

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for our Other Benefits Plan assumed a 8.0 % annual rate of increase in the per capita cost of covered healthcare benefits in 2024 with

the annual rate of increase declining 0.5 % per year for 2024-2029, resulting in an annual rate of increase in the per capita cost of covered

healthcare benefits of 4.5 % by year 2030.

the annual rate of increase declining 0.15 % per year for 2025-2044, resulting in an annual rate of increase in the per capita cost of

covered healthcare benefits of 5.0 % by year 2045.

A one-percentage point change in assumed healthcare cost trend rates

would have the following effects on the Other Benefits Plan:

(Thousands of Dollars)

(In Thousands)

1 Percentage Point

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are expected to be paid:

(Thousands of Dollars)

(In Thousands)

Other Benefits Plan

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The three levels of the fair value hierarchy are described as follows:

● Level 1 – Inputs to the valuation methodology are unadjusted quoted market prices for identical

assets or liabilities in accessible active markets.

● Level 2 – Inputs to the valuation methodology that are observable, either directly or indirectly,

such as quoted prices for similar assets or liabilities;

Level 1 – Inputs to the valuation methodology are unadjusted quoted market prices for identical assets or liabilities in accessible active markets.

Level 2 – Inputs to the valuation methodology that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

quoted prices in markets that are not active;

or other inputs that are observable

or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

If the asset or liability

has a specified contractual term, the Level 2 input must be observable for substantially the full term of the asset or liability.

● Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

If the asset or liability has a specified contractual term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Certain investments in cash and cash equivalents,

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measured and recorded at fair value within the fair value hierarchy:

(Thousands of Dollars)

(In Thousands)

As of December 31, 2024

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Total Investments

(Thousands of Dollars)

(In Thousands)

As of December 31, 2023

1 unchanged sentence

Common Equity Securities

Corporate Bonds

Agency/US Debt

Sovereign/Non-US Debt

Total Investments

1 unchanged sentence

assets measured and recorded at fair value within the fair value hierarchy:

(Thousands of Dollars)

(In Thousands)

As of December 31, 2024

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Total Investments

(Thousands of Dollars)

(In Thousands)

As of December 31, 2023

3 unchanged sentences

Benefit Plans Contributions

For the Pension Plan, Middlesex made total

cash contributions of $ 0.4 million in 2023 and expects to make cash contributions of approximately $ 0.9 million in 2024.

For the Other Benefits Plan, Middlesex made

For the Pension Plan, Middlesex made total cash

contributions of $ 2.8 million in 2024 and expects to make approximately $ 0.9 million of cash contributions in 2025.

For the Other Benefits Plan, Middlesex made total

cash contributions of $ 0.9 million in 2024 and expects to make approximately $ 1.0 million of cash contributions in 2025.

The Company maintains a 401(k) defined contribution

plan, which covers substantially all employees with more than 1,000 hours of service.

Under the terms of the Plan, the Company matches

100 % of a participant’s contributions, which do not exceed 1 % of a participant’s compensation, plus 50 % of a participant’s

contributions exceeding 1 %, but not more than 6 %.

The Company’s matching contribution was $ 0.8 million, $ 0.7 million and $ 0.7 million

for the years ended December 31, 2023, 2022 and 2021, respectively.

plan, which covers substantially all employees (temporary employee needs to complete at least 1,000 hours of service to be eligible).

Under the terms of the plan, the Company matches 100 % of a participant’s contributions, which do not exceed 1 % of a participant’s

compensation, plus 50 % of a participant’s contributions exceeding 1 %, but not more than 6 %.

The Company’s matching contribution

was $ 0.8 million, $ 0.8 million and $ 0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Employees hired after March 31, 2007 are not eligible

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For the years ended December 31, 2023 and 2022, the Company made qualifying

discretionary contributions totaling $ 0.9 million and $ 0.8 million, respectively.

discretionary contributions of $ 0.9 million for each year.

Stock-Based Compensation

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Shares of restricted stock issued

under the plan are subject to forfeiture by the employee in the event of termination of employment for any reason within five years of

other than as a result of retirement at normal retirement age, death, disability or change in control.

The maximum number of

shares authorized for award under the plan is 300,000 shares, of which approximately 75 % remain available for issuance.

under the plan are subject to forfeiture by the employee in the event of termination of employment for any reason within three or five

years of the award, as applicable, other than as a result of retirement at normal retirement age, death, disability or change in control.

The maximum number of shares authorized for award under the plan is 300,000 shares, of which approximately 70 % remain available for issuance.

The Company recognizes compensation expense at

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Balance, December 31, 2024

Unearned compensation is recognized over a period of 4 years.

Note 8 – Business Segment Data

The Company’s Chief Operating Decision Maker

(CODM) consists of the Company’s Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer.

The CODM evaluates

segment performance and profitability using net income.

This metric provides a clear, consistent basis for analyzing the financial results

of each segment and supports decision-making regarding the allocation of resources.

Resource allocation to the Company’s regulated

and non-regulated segments begins with the annual budgeting process, which establishes initial funding and resource levels for each segment.

budget incorporates key financial and operational inputs, including anticipated revenues, expenses, capital and financing requirements,

aligning with the Company’s strategic objectives and regulatory obligations.

The CODM reviews budget-to-actual variances on

a monthly, quarterly and year to-date basis and makes interim decisions to reallocate resources among segments as needed, ensuring a timely

and effective response to changing conditions.

For the regulated segment, the CODM uses this assessment to determine whether the segment

is achieving its regulatory authorized rate of return.

The segments follow the same accounting policies

as described in Note 1 – Organization, Summary of Significant Accounting Policies and Recent Developments .

Segment profit

or loss is based on Net Income.

Expenses used to determine operating income before taxes are charged directly to each segment or are allocated

based on the applicable cost allocation factors.

Assets allocated to each segment are based upon specific identification of such assets

provided by Company records.

The effects of all intra-segment and/or intercompany transactions are eliminated in the consolidated financial

The Company has identified two reportable segments.

One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial,

industrial and fire protection customers in parts of New Jersey and Delaware.

This segment also includes regulated wastewater systems

in New Jersey and Delaware.

The Company is subject to regulations as to its rates, services and other matters by the states of New Jersey

and Delaware with respect to utility service within these states.

The other segment is primarily comprised of non-regulated contract services

for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware.

Inter-segment transactions relating to operational

costs are treated as pass-through expenses.

Finance charges on inter-segment loan activities are based on interest rates that are below

what would normally be charged by a third party lender.

(Thousands of Dollars)

industrial and fire protection customers in parts of New Jersey and Delaware and includes Middlesex, Tidewater, Pinelands Water and Southern

This segment also includes a regulated wastewater system in New Jersey, Pinelands Wastewater.

The Company is subject to regulations

as to its rates, services and other matters by the states of New Jersey and Delaware with respect to utility service within these states.

The other segment is primarily comprised of non-regulated contract

services for the operation and maintenance of municipal and private

water and wastewater systems in New Jersey and Delaware and includes USA, USA-PA, and White Marsh.

(In Thousands)

Years Ended December 31,

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Consolidated Revenues

Operating Income:

Operating Expenses

Purchased Water:

Non – Regulated

Consolidated Operating Income

Inter-segment Elimination

Consolidated Purchased Water

Other Operations and Maintenance Expenses:

Non – Regulated

Inter-segment Elimination

Consolidated Other Operations and Maintenance Expenses

Non – Regulated

Consolidated Other Taxes

Depreciation:

1 unchanged sentence

Consolidated Depreciation

Other Income, Net:

Operating Income:

Non – Regulated

Consolidated Operating Income

Other Income (Expense), Net:

Non – Regulated

Inter-segment Elimination

Consolidated Other Income, Net

Consolidated Other Income (Expense), Net

(In Thousands)

Years Ended December 31,

Operation by Segments (continued)

Interest Expense:

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Total Capital Expenditures

(Thousands of Dollars)

(In Thousands)

December 31, 2024

5 unchanged sentences

Financial information for each quarter of 2024 and 2023 is as follows:

(Thousands of Dollars, Except per Share Data)

(In Thousands of Dollars, Except Per Share Data)

Operating Revenues

9 unchanged sentences

Operating Revenues

Gain on Sale of Subsidiary

Operating Income

14 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 8. Financial Statements and Supplementary Data