Company: MSEX
Filing Date: 2025-05-01
Form Type: 10-Q
Source: 0001174947-25-000677
Chunk: 54

Company: MIDDLESEX WATER CO
Filing Date: 2025-05-01
Form: 10-Q
Item: Item 8
Chunk 54
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 Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2048. This agreement with
the NJWSA provides for an average purchase of 27 million gallons a day (mgd) with a peak up to 47.0 mgd. Pricing is set annually by the
NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds
certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated
NJBPU-regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2026, provides for the minimum
purchase of 3.0 mgd of treated water with provisions for additional purchases if needed.

Tidewater contracts with the City of Dover in Delaware
to purchase treated water of up to 75.0 million gallons annually.

Purchased water costs are shown below:

    (In Thousands) 

    Three Months Ended 

    March 31, 

    2025  
    2024 

    Treated 
    $887  
    $909 
  
    Untreated 
     992  
     850 
  
    Total Costs 
    $1,879  
    $1,759 

Leases – The Company determines if an
arrangement is a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company
control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

The Company has entered into an operating lease of
office space for administrative purposes, expiring in January 2030. The Company has not entered into any finance leases. The exercise
of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

The right-of-use (ROU) asset recorded represents 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 the 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 the commencement date in determining
the present value of lease payments.

13 

Given the impacts