Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 75

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1
Chunk 75
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28,188 
  
    Cost of Removal (d) 
     20,595  
     19,727 
  
    Employee Benefit Plans (e) 
     9,435  
     1,471 
  
    Lawsuit Settlement (f) 
     5,334  
     63,635 
  
    New Jersey Revenue Taxes (g) 
     1,813  
     — 
  
    Total 
    $64,557  
    $113,021 

(a) The recovery period for income taxes is dependent
upon when the temporary differences between the tax and book treatment of various items reverse.

(b) Other primarily includes deferred costs for
rate cases and tank painting.

(c) The 2017 Tax Act reduced the statutory corporate
federal income tax rate from 35% to 21%. The tariff rates charged to customers effective prior to 2018 in the Company’s
regulated companies include recovery of income taxes at the statutory rate in effect at the time those rates were approved by the respective
state public utility commissions. 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