Company: MSEX
Filing Date: 2025-03-11
Form Type: 10-K/A
Source: 0001174947-25-000318
Chunk: 13

Company: MIDDLESEX WATER CO
Filing Date: 2025-03-11
Form: 10-K/A
Chunk 13
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2 - Rate and Regulatory Matters Rate Matters Middlesex– The approval by the NJBPU in February 2024 of the negotiated settlement of the Middlesex 2023 base rate case is expected to increase annual operating revenues by $ 15.4million, effective March 1, 2024. The approved tariff rates were designed to recover increased operating costs as well as a return on invested capital of $ 563.1million, based on an authorized return on common equity of 9.6%. Middlesex has made capital infrastructure investments to ensure prudent upgrade and replacement of its utility assets to support continued regulatory compliance, resilience and overall quality of service. In August 2023, Middlesex and 3M Company (3M) executed a settlement agreement (Settlement Agreement) to resolve a lawsuit Middlesex previously initiated claiming 3M introduced Perfluoroalkyl Substances (PFAS) into the Company’s water supply for its Park Avenue Wellfield Treatment Plant (Park Avenue Plant). The rate case settlement provided that the net proceeds from the 3M Settlement Agreement were to be used to mitigate the increase in customer rates and reimburse Middlesex for previously incurred costs for the construction of the Park Avenue Plant PFAS treatment upgrades, including depreciation and carrying costs. This resulted in the reclassification of $ 48.3million from Regulatory Liabilities to Contributions in Aid of Construction from the December 31, 2023 balance sheet. In 2024, the Company also recognized the recovery of $ 0.9million for depreciation and $ 4.1million for carrying costs associated with the Park Avenue Plant PFAS treatment upgrades, as well as the recovery of $ 2.6million of previously incurred operating treatment costs while the Park Avenue Plant PFAS treatment upgrades were in process. The Middlesex Lead Service Line Replacement (LSLR) Plan, which was approved by the NJBPU in January 2024, has commenced and Middlesex is currently recovering $ 1.2million of costs for replacing customer-owned lead service lines incurred through June 2024, which are being recovered between September 2024 and February 2025. Costs of $ 0.6million for replacing customer-owned lead service lines incurred between July 2024 through December 2024 will be recovered beginning in March 2025 through August 2025. The LSLR surcharge is required to be reset every six months over the life of the LSLR Plan. Cost recovery for replacing Company-owned lead service lines are recoverable through