Company: MSEX
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001174947-25-000251
Chunk: 1121

Company: MIDDLESEX WATER CO
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 1121
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We have recorded certain costs as regulatory assets
because we expect full recovery of, or are currently recovering, these costs in the rates we charge customers. These deferred costs have
been excluded from rate base and, therefore, we are not earning a return on the unamortized balances. We record regulatory liabilities
for amounts expected to be refunded to customers in the rate making process. These items are detailed as follows:

50 

    (In Thousands)

    December 31,
  
     Regulatory
Assets 
    2024 
    2023
  
    Income Taxes (a) 
    $89,825  
    $84,419 
  
    Other (b) 
     11,958  
     6,275 
  
    Total 
    $101,783  
    $90,694 

     Regulatory Liabilities 

    Income Taxes (c) 
    $27,380  
    $28,188 
  
    Cost of Removal (d) 
     20,595  
     19,727 
  
    Employee Benefit Plans (e) 
     9,435  
     1,471 
  
    Lawsuit Settlement (f) 
     5,334  
     63,635 
  
    New Jersey Revenue Taxes (g) 
     1,813  
     — 
  
    Total 
    $64,557  
    $113,021 

(a) The recovery period for income taxes is dependent
upon when the temporary differences between the tax and book treatment of various items reverse.

(b) Other primarily includes deferred costs for
rate cases and tank painting.

(c) The 2017 Tax Act reduced the statutory corporate
federal income tax rate from 35% to 21%. The tariff rates charged to customers effective prior to 2018 in the Company’s
regulated companies include recovery of income taxes at the statutory rate in effect at the time those rates were approved by the respective
state public utility commissions. The Company has recorded regulatory liabilities for excess income taxes collected through rates due
to the lower income tax rate under the 2017 Tax Act. These regulatory liabilities are overwhelmingly related to utility plant depreciation
deduction timing differences, which are subject to Internal Revenue Service (IRS) normalization rules. The IRS rules limit how quickly
the excess taxes attributable to accelerated taxes can be returned to customers. The current base rates for Middlesex and Pinelands customers