Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 1098

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 1098
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673 
  
    Healthcare Cost Trend Rate 1% Decrease 
     (2,824) 
     (549)

Recent Accounting Standards 

See Note 1(q) of the Notes to Consolidated Financial
Statements for a discussion of recent accounting pronouncements.

36 

ITEM 7A.QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to market risk associated with
changes in interest rates and commodity prices. The Company is subject to the risk of fluctuating interest rates in the normal course
of business. Our policy is to manage interest rates through the use of fixed rate long-term debt and, to a lesser extent, variable rate
short-term debt. The Company’s interest rate risk related to existing fixed rate, long-term debt is not material due to the term
of the majority of our First Mortgage Bonds, which have final maturity dates ranging from 2026 to 2059. Over the next twelve months, approximately
$7.7 million of the current portion of existing long-term debt instruments will mature. The Company manages its interest rate risk related
to existing variable-rate short-term debt by limiting our variable rate exposure. Applying a hypothetical change in the rate of interest
charged by 10% on those fixed- and variable-rate borrowings would not have a material effect on our earnings. Fixed rate long-term debt
and variable rate short-term debt agreements were not entered into for trading purposes.

Our risks associated with commodity price increases
for chemicals, electricity and other commodities are reduced through contractual arrangements and the ability to recover price increases
through rates. Non-performance by these commodity suppliers could have a material adverse impact on our results of operations, financial
position and cash flows.

We are exposed to credit risk for both our Regulated
and Non-Regulated business segments. Our Regulated operations serve residential, commercial, industrial and municipal customers while
our Non-Regulated operations engage in business activities with developers, government entities and other customers. Our primary credit
risk is exposure to customer default on contractual obligations and the associated loss that may be incurred due to the non-payment of
customer accounts receivable balances. Our credit risk is managed through established credit and collection policies which are in compliance
with applicable regulatory requirements and involve monitoring of customer exposure and the use of credit risk mitigation measures such
as letters of credit or prepayment arrangements. Our credit portfolio is diversified with no significant customer or industry concentrations.
In addition, our Regulated businesses are generally able to