Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 7

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 1
Chunk 7
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 future rate increases will be granted or, if granted, that they will
be in the amounts requested.

Middlesex Rate Matters

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 $15.4 million, effective
March 1, 2024. The approved tariff rates were designed to recover increased operating costs as well as a return on invested capital of
$563.1 million, 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 $48.3 million
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 $0.9 million for depreciation and $4.1 million for carrying costs associated with the Park Avenue Plant PFAS
treatment upgrades, as well as the recovery of $2.6 million 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 $1.2 million 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 $0.6 million 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