CONSULTING AGREEMENT
                              --------------------

            This Consulting Agreement (the "Agreement") is entered into as of
the 23rd day of January, 2003, by and between J. Richard Tompkins (the
"Consultant") and Middlesex Water Company (the "Company").

            WHEREAS, the Consultant has served as CEO of the Company up to his
retirement as of January 31, 2003; and

            WHEREAS, the Company desires to enter into a consulting agreement
with the Consultant following his retirement upon the terns and conditions set
forth herein; and

            WHEREAS, at the time of his retirement, the Consultant was the
beneficial owner of 10,950 shares of Restricted Stock of the Company which is
held by the Company in escrow (the "Restricted Stock"); and

            WHEREAS, the Company has the right to reacquire those shares of
Restricted Stock which were not held by the Consultant for five years prior to
his retirement from the Company; and

            WHEREAS, the Consultant has requested the Company to waive its right
to reacquire the Restricted Stock, and the Company has agreed to consider such
request subject to the terms and conditions hereinafter set forth.

            NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein; and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree as follows:

            1.          The Consultant hereby acknowledges that the Company has
                        the right to reacquire the Restricted Stock upon the
                        Consultant's retirement at no cost to the Company. In
                        consideration of the terms and conditions set forth
                        herein, the Company is willing to waive its right to
                        reacquire such Restricted Stock and is willing to
                        distribute the Restricted Stock to the Consultant at
                        such times and upon such terms as hereinafter set forth.

            2.          Commencing February 1, 2003 and continuing up to and
                        including January 31, 2004, the Consultant shall act as
                        a consultant to the Company for which he will receive a
                        fee of $50,000 per year. Although the parties have not
                        specified a fixed time for such consulting services, it
                        is contemplated that the Consultant will be available
                        for such consulting services approximately three days
                        per month based on a value of approximately $1,200 to
                        $1,500 per day.




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            3.          During the consulting period, the Consultant will be
                        available to review correspondence, render advice on
                        projects as requested by the Company, attend various
                        meetings as requested by the Company, and in general, to
                        perform any and all such other services as the Company
                        may reasonably require of the Consultant as a consultant
                        to the Company.

            4.          During the period of the consulting agreement referred
                        to above, and continuing for a two-year period
                        thereafter, the Consultant agrees that he will not
                        directly, or indirectly, in any individual or
                        representative capacity, carry on, engage or participate
                        in any business in the State of New Jersey and Delaware
                        that is in direct competition in any manner whatsoever
                        with the business of the Company, except as may be
                        expressly agreed to in writing by the Company.

            5.          Unless the Consultant fails to perform his obligations
                        and duties as set forth in this Agreement, the Company
                        agrees to release from escrow and to distribute shares
                        of Restricted Stock to the Consultant in accordance with
                        the following schedule:

                           |X|  On October 1,           2003 -  2,750 Shares
                           |X|  On October 1,           2004 -  2,750 Shares
                           |X|  On October 1,           2005 -  2,750 Shares
                           |X|  On February 1, 2006 -   2,700 Shares

            6.          In the event of the disability (as defined under the
                        Company's 1989 Restricted Stock Plan, as the same may be
                        amended from time to time, herein the "Plan") of the
                        Consultant during the term of this Agreement, or in the
                        event of a Change in Control Event as defined in the
                        Plan, the right of the Company to reacquire the
                        Restricted Stock shall lapse and cease to be effective.
                        Upon the occurrence of either such event, the balance of
                        the Restricted Stock shall be released from escrow and
                        delivered to the Consultant. Additionally, in the event
                        that the Consultant should die during the term of this
                        Agreement, the right of the Company to reacquire the
                        Restricted Stock shall lapse and cease to be effective,
                        and the balance of the Restricted Stock then held in
                        escrow shall be paid to the Consultant's beneficiary as
                        provided for under the Plan.

            7.          This Agreement constitutes the entire agreement of the
                        parties relating to the subject matter hereof, and this
                        Agreement supercedes all prior communications,
                        representations or agreements, verbal or written between
                        the parties relating to the subject matter hereof.


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            8.          This Agreement is for the benefit of the Consultant and
                        the Company and will be governed by and construed in
                        accordance with the laws of the State of New Jersey.
                        Neither party may assign or otherwise transfer its
                        rights or delegate its duties under this Agreement
                        without prior written consent, and any attempt to do so
                        without consent is void.

            9.          Each party acknowledges that he or it has had the
                        opportunity to review the provisions of this Agreement
                        with independent advisors (financial, legal or
                        otherwise) prior to the execution of this Agreement by
                        each such party.

            IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.

                                                MIDDLESEX WATER COMPANY

                                                By:      /s/ Dennis G. Sullivan
                                                         ----------------------
                                                            Dennis G. Sullivan
                                                            President



                                                By:      /s/ J. Richard Tompkins
                                                         -----------------------
                                                            J. Richard Tompkins