Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 1125

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 1125
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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, Delaware
to purchase treated water of up to 75.0 million gallons annually.

Purchased water costs are shown below:

    (In Millions)

    Years Ended December 31,

    2024 
    2023 
    2022
  
    Untreated 
    $3.5  
    $3.2  
    $3.2 
  
    Treated 
     4.0  
     5.3  
     3.9 
  
    Total Costs 
    $7.5  
    $8.5  
    $7.1 

53 

Leases - The Company determines if an arrangement
is a lease at the inception of the lease. 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 December 2029. 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 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