Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 432

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1C
Chunk 432
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 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 for the years ended December 31, 2024, 2023 and 2022 for Middlesex and Tidewater are as follows:

    2024  
    2023  
    2022 
  
    Middlesex 
     6.64%  
     6.35%  
     6.35% 
  
    Tidewater 
     7.92%  
     7.92%  
     7.92% 

46 

(k) Accounts Receivable – We record
bad debt expense based on a variety of factors such as our customers’ payment history, current economic conditions and trending
reasonable and supportable forecasts on expected collectability of accounts receivable. The allowance for credit losses was $2.7 million
and $2.1 million as of December 31, 2024 and 2023, respectively. For the years ended December 31, 2024, 2023 and 2022, bad debt expense
was $1.6 million, $1.0 million and $0.5 million, respectively. For the years ended December 31, 2024, 2023 and 2022, write-offs were $1.0
million, $1.2 million and $0.7 million, respectively.

(l) Revenues - The Company’s revenues
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. Revenue from contracts with customers is recognized when control
of a promised good or service is transferred to customers at an amount that reflects the consideration to which the Company expects to
be entitled in exchange for those goods and services.

The Company’s regulated revenue results
from tariff-based water and wastewater