Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 444

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1C
Chunk 444
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the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation
to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such
the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining
the present value of lease payments.

Given the impacts of accounting for regulated
operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are
consistent with lease expense and was $0.8 million for each of the years ended December 31, 2024, 2023 and 2022.

Information related to operating lease ROU assets is as follows:

    (In Millions)

    December 31,

    2024 
    2023
  
    ROU Asset at Lease Inception 
    $7.3  
    $7.3 
  
    Accumulated Amortization 
     (4.7) 
     (4.1)
  
    Current ROU Asset 
    $2.6  
    $3.2 

The Company’s future minimum operating lease commitments as of
December 31, 2024 are as follows:

    (In Millions)

    December 31, 2024
  
    2025 
    $0.8 
  
    2026 
     0.8 
  
    2027 
     0.9 
  
    2028 
     0.9 
  
    2029 
     0.9 
  
    Total Lease Payments 
    $4.3 
  
    Imputed Interest 
     (1.3)
  
    Present Value of Lease Payments 
     3.0 
  
    Less Current Portion* 
     (0.6)
  
    Non-Current Lease Liability 
    $2.4 

    *Included in Other Current Liabilities

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,