Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 1113

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 1113
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 NJBPU or DEPSC:

    Source of Supply
    1.15% -   3.44%
    Transmission and Distribution (T&D):
  
    Pumping
    2.00% -   5.39%
    T&D – Mains
    1.10%  -   3.13%
  
    Water Treatment
    1.65% -   7.09%
    T&D – Services
    2.12%  -   3.16%
  
    General Plant
    2.08% - 17.84%
    T&D – Other
    1.61%  -   4.63%
  
    Wastewater Collection
    1.42% -   1.81%

Non-regulated fixed assets consist primarily of
office buildings, furniture and fixtures, and transportation equipment. These assets are recorded at original cost and depreciation is
calculated based on the estimated useful lives, ranging from 3 to 42 years.

(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 (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.

(j) Allowance for Funds Used During Construction
(AFUDC) - Middlesex and its regulated subsidiaries capitalize AFUDC, which represents the cost of financing projects during construction.
AFUDC is added to the construction costs of individual projects exceeding specific cost and construction period thresholds established
for each company and then depreciated with the utility plant direct costs over the underlying assets’ estimated useful life. AFUDC
is calculated using each company’s weighted cost of debt and equity as approved in their most recent respective regulatory rate
order. The AFUDC rates