UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
DC 20549





FORM
10-Q/A





(Mark
One)


þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
the quarterly period ended March 31, 2008





OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from _________________ to______________________





Commission
File Number     0-422





MIDDLESEX
WATER COMPANY


(Exact
name of registrant as specified in its charter)





New
      Jersey
              (State
      of incorporation)
            22-1114430
              (IRS
      employer identification no.)





1500
Ronson Road, Iselin, NJ  08830


(Address
of principal executive offices, including zip code)


(732)
634-1500


(Registrant's
telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes þ     No
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.


Large
accelerated filer  ̈   
 Accelerated filer þ     
Non-accelerated filer  ̈    
Smaller reporting company  ̈





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).


Yes  ̈     No
þ





The
number of shares outstanding of each of the registrant's classes of common
stock, as of May 2, 2008: Common Stock, No Par Value: 13,266,186 shares
outstanding.








Explanatory
Note




This
amendment on Form 10-Q/A reflects the restatement of the unaudited Condensed
Consolidated Balance Sheets of Middlesex Water Company (the Company) as of March
31, 2008 and the Condensed Consolidated Statement of Capital Stock and Long-term
Debt as of March 31, 2008, to correct the accounting and disclosure for
Long-term Debt and the Current Portion of Long-Term Debt, as discussed in Note
11 of the Notes to the Condensed Consolidated Financial Statements (Unaudited)
included in Part I. - Item 1. In addition, the Company has amended Part I - Item
4 to update the disclosures regarding disclosure controls and
procedures.




The
restatement affects only Part I. - Items 1, 3 and 4, and Part II. - Items 1
and 6. Except for the foregoing amended items, all of the information in this
Form 10-Q/A is as of May 6, 2008, the filing date of the original Form 10-Q for
the quarter ended March 31, 2008, and has not been updated for the events
subsequent to that date other than for the matter discussed above.

















INDEX








PART I.
            FINANCIAL INFORMATION
            PAGEItem 1.
            Financial Statements:Condensed Consolidated Statements of Income
            1Condensed Consolidated Balance Sheets
            2Condensed Consolidated Statements of Cash
    Flows
            3Condensed Consolidated Statements of Capital Stock and
      Long-term Debt
            4Notes to Unaudited Condensed Consolidated Financial
      Statements
            5Item 2.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            12Item 3.
            Quantitative and Qualitative Disclosures of Market
      Risk
            17Item 4.
            Controls and Procedures
            17PART II.
            OTHER INFORMATIONItem 1.
            Legal Proceedings
            18Item 1A.
            Risk Factors
            18Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            18Item 3.
            Defaults upon Senior Securities
            18Item 4.
            Submission of Matters to a Vote of Security
      Holders
            18Item 5.
            Other Information
            18Item 6.
            Exhibits
            19SIGNATURES
            20








Index




MIDDLESEX WATER COMPANYCONDENSED
      CONSOLIDATED STATEMENTS OF INCOME(Unaudited)(In
      thousands except per share amounts)Three
      Months Ended March 31,2008
              
              
              2007Operating
      Revenues
              
              $
              20,855
              
              
              $
              18,988Operating
      Expenses:Operations
              
              
              11,102
              
              
              
              10,192Maintenance
              
              
              996
              
              
              
              978Depreciation
              
              
              1,931
              
              
              
              1,845Other
      Taxes
              
              
              2,479
              
              
              
              2,251Total
      Operating Expenses
              
              
              16,508
              
              
              
              15,266Operating
      Income
              
              
              4,347
              
              
              
              3,722Other
      Income (Expense):Allowance
      for Funds Used During Construction
              
              
              103
              
              
              
              112Other
      Income
              
              
              241
              
              
              
              226Other
      Expense
              
              
              (46
              )
              
              
              (5
              )Total
      Other Income, net
              
              
              298
              
              
              
              333Interest
      Charges
              
              
              1,517
              
              
              
              1,384Income
      before Income Taxes
              
              
              3,128
              
              
              
              2,671Income
      Taxes
              
              
              1,124
              
              
              
              902Net
      Income
              
              
              2,004
              
              
              
              1,769Preferred
      Stock Dividend Requirements
              
              
              62
              
              
              
              62Earnings
      Applicable to Common Stock
              
              $
              1,942
              
              
              $
              1,707Earnings
      per share of Common Stock:Basic
              
              $
              0.15
              
              
              $
              0.13Diluted
              
              $
              0.15
              
              
              $
              0.13Average
      Number of Common Shares Outstanding:Basic
              
              
              13,254
              
              
              
              13,176Diluted
              
              
              13,585
              
              
              
              13,507Cash
      Dividends Paid per Common Share
              
              $
              0.1750
              
              
              $
              0.1725See
      Notes to Condensed Consolidated Financial Statements
   1
 Index
  MIDDLESEX
      WATER COMPANYCONDENSED
      CONSOLIDATED  BALANCE SHEETS(Unaudited)(In
      thousands)
  March
      31,
              
              
              December
      31,ASSETS
              
              
              2008
              
              
              2007(Restated
      -See Note 11)UTILITY
      PLANT:
              Water
      Production
              
              $
              99,220
              
              
              $
              98,942Transmission
      and Distribution
              
              
              267,052
              
              
              
              264,939General
              
              
              26,022
              
              
              
              24,874Construction
      Work in Progress
              
              
              13,080
              
              
              
              9,833TOTAL
              
              
              405,374
              
              
              
              398,588Less
      Accumulated Depreciation
              
              
              66,363
              
              
              
              64,736UTILITY
      PLANT - NET
              
              
              339,011
              
              
              
              333,852CURRENT
      ASSETS:
              Cash
      and Cash Equivalents
              
              
              1,462
              
              
              
              2,029Accounts
      Receivable, net
              
              
              8,099
              
              
              
              8,227Unbilled
      Revenues
              
              
              4,364
              
              
              
              4,609Materials
      and Supplies (at average cost)
              
              
              1,273
              
              
              
              1,205Prepayments
              
              
              995
              
              
              
              1,363TOTAL
      CURRENT ASSETS
              
              
              16,193
              
              
              
              17,433DEFERRED
      CHARGES
              Unamortized
      Debt Expense
              
              
              2,862
              
              
              
              2,884AND
      OTHER ASSETS:
              Preliminary
      Survey and Investigation Charges
              
              
              5,964
              
              
              
              5,283Regulatory
      Assets
              
              
              15,868
              
              
              
              16,090Operations
      Contracts Fees Receivable
              
              
              4,216
              
              
              
              4,184Restricted
      Cash
              
              
              6,199
              
              
              
              6,418Non-utility
      Assets - Net
              
              
              6,149
              
              
              
              6,183Other
              
              
              347
              
              
              
              348TOTAL
      DEFERRED CHARGES AND OTHER ASSETS
              
              
              41,605
              
              
              
              41,390TOTAL
      ASSETS
              
              $
              396,809
              
              
              $
              392,675CAPITALIZATION
      AND LIABILITIESCAPITALIZATION:
              Common
      Stock, No Par Value
              
              $
              106,025
              
              
              $
              105,668Retained
      Earnings
              
              
              27,064
              
              
              
              27,441Accumulated
      Other Comprehensive Income, net of tax
              
              
              57
              
              
              
              69TOTAL
      COMMON EQUITY
              
              
              133,146
              
              
              
              133,178Preferred
      Stock
              
              
              3,958
              
              
              
              3,958Long-term
      Debt
              
              
              116,423
              
              
              
              131,615TOTAL
      CAPITALIZATION
              
              
              253,527
              
              
              
              268,751CURRENT
              Current
      Portion of Long-term Debt
              
              
              17,768
              
              
              
              2,723LIABILITIES:
              Notes
      Payable
              
              
              9,000
              
              
              
              6,250Accounts
      Payable
              
              
              4,535
              
              
              
              6,477Accrued
      Taxes
              
              
              9,697
              
              
              
              7,611Accrued
      Interest
              
              
              975
              
              
              
              1,916Unearned
      Revenues and Advanced Service Fees
              
              
              758
              
              
              
              758Other
              
              
              1,446
              
              
              
              1,274TOTAL
      CURRENT LIABILITIES
              
              
              44,179
              
              
              
              27,009COMMITMENTS
      AND CONTINGENT LIABILITIES (Note 7)DEFERRED
      CREDITS
              Customer
      Advances for Construction
              
              
              21,796
              
              
              
              21,758AND
      OTHER LIABILITIES:
              Accumulated
      Deferred Investment Tax Credits
              
              
              1,441
              
              
              
              1,461Accumulated
      Deferred Income Taxes
              
              
              18,096
              
              
              
              17,940Employee
      Benefit Plans
              
              
              13,871
              
              
              
              13,333Regulatory
      Liability - Cost of Utility Plant Removal
              
              
              5,876
              
              
              
              5,726Other
              
              
              1,337
              
              
              
              459TOTAL
      DEFERRED CREDITS AND OTHER LIABILITIES
              
              
              62,417
              
              
              
              60,677CONTRIBUTIONS
      IN AID OF CONSTRUCTION
              
              
              36,686
              
              
              
              36,238TOTAL
      CAPITALIZATION AND LIABILITIES
              
              $
              396,809
              
              
              $
              392,675See
      Notes to Consolidated Financial Statements.  2
 Index


MIDDLESEX
      WATER COMPANYCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In
      thousands)Three
      Months Ended March 31,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
              
              $
              2,004
              
              
              $
              1,769Adjustments
      to Reconcile Net Income toNet
      Cash Provided by Operating Activities:Depreciation
      and Amortization
              
              
              2,088
              
              
              
              1,995Provision
      for Deferred Income Taxes and ITC
              
              
              123
              
              
              
              128Equity
      Portion of AFUDC
              
              
              (54
              )
              
              
              (54
              )Cash
      Surrender Value of Life Insurance
              
              
              172
              
              
              
              (56
              )Changes
      in Assets and Liabilities:Accounts
      Receivable
              
              
              128
              
              
              
              (209
              )Unbilled
      Revenues
              
              
              245
              
              
              
              (65
              )Materials
      & Supplies
              
              
              (68
              )
              
              
              (119
              )Prepayments
              
              
              368
              
              
              
              319Other
      Assets
              
              
              (213
              )
              
              
              (210
              )Accounts
      Payable
              
              
              (1,006
              )
              
              
              (468
              )Accrued
      Taxes
              
              
              2,092
              
              
              
              2,369Accrued
      Interest
              
              
              (941
              )
              
              
              (984
              )Employee
      Benefit Plans
              
              
              678
              
              
              
              706Unearned
      Revenue & Advanced Service Fees
              
              
              -
              
              
              
              8Other
      Liabilities
              
              
              115
              
              
              
              267NET
      CASH PROVIDED BY OPERATING ACTIVITIES
              
              
              5,731
              
              
              
              5,396CASH
      FLOWS FROM INVESTING ACTIVITIES:Utility
      Plant Expenditures, Including AFUDC of $49 in 2008 and $58 in
      2007
              
              
              (6,327
              )
              
              
              (3,620
              )Restricted
      Cash
              
              
              219
              
              
              
              599Preliminary
      Survey & Investigation Charges
              
              
              (681
              )
              
              
              (663
              )NET
      CASH USED IN INVESTING ACTIVITIES
              
              
              (6,789
              )
              
              
              (3,684
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Redemption
      of Long-term Debt
              
              
              (490
              )
              
              
              (425
              )Proceeds
      from Issuance of Long-term Debt
              
              
              343
              
              
              
              41Net
      Short-term Bank Borrowings
              
              
              2,750
              
              
              
              -Deferred
      Debt Issuance Expenses
              
              
              (28
              )
              
              
              (30
              )Common
      Stock Issuance Expense
              
              
              -
              
              
              
              (15
              )Restricted
      Cash
              
              
              -
              
              
              
              (23
              )Proceeds
      from Issuance of Common Stock
              
              
              357
              
              
              
              349Payment
      of Common Dividends
              
              
              (2,319
              )
              
              
              (2,272
              )Payment
      of Preferred Dividends
              
              
              (62
              )
              
              
              (62
              )Construction
      Advances and Contributions-Net
              
              
              (60
              )
              
              
              137NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
              
              
              491
              
              
              
              (2,300
              )NET
      CHANGES IN CASH AND CASH EQUIVALENTS
              
              
              (567
              )
              
              
              (588
              )CASH
      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
              
              
              2,029
              
              
              
              5,826CASH
      AND CASH EQUIVALENTS AT END OF PERIOD
              
              $
              1,462
              
              
              $
              5,238SUPPLEMENTAL
      DISCLOSURE OF NON-CASH ACTIVITY:Utility
      Plant received as Construction Advances and Contributions
              
              $
              546
              
              
              $
              1,610SUPPLEMENTAL
      DISCLOSURE OF CASH FLOWS INFORMATION:Cash
      Paid During the Year for:Interest
              
              $
              2,546
              
              
              $
              2,461Interest
      Capitalized
              
              $
              (49
              )
              
              $
              (58
              )Income
      Taxes
              
              $
              701
              
              
              $
              15See
      Notes to Condensed Consolidated Financial Statements.


3
 Index
  MIDDLESEX
      WATER COMPANYCONDENSED
      CONSOLIDATED STATEMENTS OF CAPITAL STOCKAND
      LONG-TERM DEBT(Unaudited)(In
      thousands)
  March
      31,
              
              
              December
      31,2008
              
              
              2007(Restated
      -See Note 11)Common
      Stock, No Par Value:Shares
      Authorized -
              40,000Shares
      Outstanding -
              2008
      - 13,262
              
              
              $
              106,025
              
              
              $
              105,6682007
      - 13,246Retained
      Earnings
              
              
              
              
              27,064
              
              
              
              27,441Accumulated
      Other Comprehensive Income, net of tax
              
              
              
              57
              
              
              
              69TOTAL
      COMMON EQUITY
              
              
              $
              133,146
              
              
              $
              133,178Cumulative
      Preference Stock, No Par Value:Shares
      Authorized - 100Shares
      Outstanding - NoneCumulative
      Preferred Stock, No Par Value:Shares
      Authorized - 139Shares
      Outstanding - 37Convertible:Shares
      Outstanding, $7.00 Series - 14
              
              
              
              1,457
              
              
              
              1,457Shares
      Outstanding, $8.00 Series - 12
              
              
              
              1,399
              
              
              
              1,399Nonredeemable:Shares
      Outstanding, $7.00 Series - 1
              
              
              
              102
              
              
              
              102Shares
      Outstanding, $4.75 Series - 10
              
              
              
              1,000
              
              
              
              1,000TOTAL
      PREFERRED STOCK
              
              
              $
              3,958
              
              
              $
              3,958Long-term
      Debt8.05%,
      Amortizing Secured Note, due December 20, 2021
              
              
              $
              2,775
              
              
              $
              2,8006.25%,
      Amortizing Secured Note, due May 22, 2028
              
              
              
              8,470
              
              
              
              8,5756.44%,
      Amortizing Secured Note, due August 25, 2030
              
              
              
              6,277
              
              
              
              6,3476.46%,
      Amortizing Secured Note, due September 19, 2031
              
              
              
              6,557
              
              
              
              6,6274.22%,
      State Revolving Trust Note, due December 31, 2022
              
              
              
              691
              
              
              
              6913.30%
      to 3.60%, State Revolving Trust Note, due May 1, 2025
              
              
              
              3,358
              
              
              
              3,1683.49%,
      State Revolving Trust Note, due January 25, 2027
              
              
              
              743
              
              
              
              6034.03%,
      State Revolving Trust Note, due December 1, 2026
              
              
              
              974
              
              
              
              9744.00%
      to 5.00%, State Revolving Trust Bond, due September 1,
2021
              
              
              
              695
              
              
              
              6950.00%,
      State Revolving Fund Bond, due September 1, 2021
              
              
              
              528
              
              
              
              538First
      Mortgage Bonds:5.20%,
      Series S, due October 1, 2022
              
              
              
              12,000
              
              
              
              12,0005.25%,
      Series T, due October 1, 2023
              
              
              
              6,500
              
              
              
              6,5006.40%,
      Series U, due February 1, 2009
              
              
              
              15,000
              
              
              
              15,0005.25%,
      Series V, due February 1, 2029
              
              
              
              10,000
              
              
              
              10,0005.35%,
      Series W, due February 1, 2038
              
              
              
              23,000
              
              
              
              23,0000.00%,
      Series X, due September 1, 2018
              
              
              
              581
              
              
              
              5914.25%
      to 4.63%, Series Y, due September 1, 2018
              
              
              
              765
              
              
              
              7650.00%,
      Series Z, due September 1, 2019
              
              
              
              1,317
              
              
              
              1,3425.25%
      to 5.75%, Series AA, due September 1, 2019
              
              
              
              1,785
              
              
              
              1,7850.00%,
      Series BB, due September 1, 2021
              
              
              
              1,656
              
              
              
              1,6854.00%
      to 5.00%, Series CC, due September 1, 2021
              
              
              
              1,995
              
              
              
              1,9955.10%,
      Series DD, due January 1, 2032
              
              
              
              6,000
              
              
              
              6,0000.00%,
      Series EE, due September 1, 2024
              
              
              
              7,004
              
              
              
              7,1123.00%
      to 5.50%, Series FF, due September 1, 2024
              
              
              
              8,385
              
              
              
              8,3850.00%,
      Series GG, due September 1, 2026
              
              
              
              1,685
              
              
              
              1,7104.00%
      to 5.00%, Series HH, due August 1, 2026
              
              
              
              1,950
              
              
              
              1,9500.00%,
      Series II, due August 1, 2027
              
              
              
              1,750
              
              
              
              1,7503.40%
      to 5.00%, Series JJ, due August 1, 2027
              
              
              
              1,750
              
              
              
              1,750SUBTOTAL
      LONG-TERM DEBT
              
              
              
              134,191
              
              
              
              134,338Less:
      Current Portion of Long-term Debt
              
              
              
              (17,768
              )
              
              
              (2,723
              )TOTAL LONG-TERM
      DEBT
              
              
              $
              116,423
              
              
              $
              131,615See
      Notes to Condensed Consolidated Financial Statements.


4
 Index





MIDDLESEXWATER COMPANY


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





Note
1 – Basis of Presentation





Middlesex
Water Company (Middlesex or the Company) is the parent company and sole
shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental
Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands
Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility
Service Affiliates, Inc. (USA), and Utility Service Affiliates  (Perth
Amboy) Inc. (USA-PA). Southern Shores Water Company, LLC (Southern Shores) and
White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned
subsidiaries of Tidewater. The financial statements for Middlesex and its
wholly-owned subsidiaries (the Company) are reported on a consolidated
basis.  All significant intercompany accounts and transactions have
been eliminated.





The
consolidated notes within the 2007 Form 10-K are applicable to these financial
statements and, in the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements contain all adjustments necessary
(including normal recurring accruals) to present fairly the financial position
as of March 31, 2008, the results of operations for the three month periods
ended March 31, 2008 and 2007, and cash flows for the three month periods ended
March 31, 2008 and 2007. Information included in the Condensed Consolidated
Balance Sheet as of December 31, 2007, has been derived from the Company’s
audited financial statements for the year ended December 31, 2007.





Certain
reclassifications have been made to the prior year financial statements to
conform with the current period presentation.





Recent
Accounting Pronouncements – In September 2006, the Financial Accounting
Standards Board (FASB) issued SFAS 157, Fair Value Measurements, which
establishes a framework for measuring fair value and expands disclosures about
fair value measurements.  SFAS 157 is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, Effective
Date of FASB Statement No. 157, which deferred the effective date of SFAS 157 to
fiscal years beginning after November 15, 2008 for nonfinancial assets and
nonfinancial liabilities. Adoption of SFAS 157 did not have a material impact on
its financial statements.





FASB
statement No. 141 (R) “Business Combinations” was issued in December of 2007.
This Statement establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree. The Statement also provides guidance for recognizing and measuring the
goodwill acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The guidance will become
effective as of the beginning of a company’s fiscal year beginning after
December 15, 2008. This new pronouncement will impact the Company’s accounting
for business combinations completed beginning January 1, 2009.








5
 Index


Note 2–Rate Matters





On April
29, 2008 Pinelands Water and Pinelands Wastewater filed with the New Jersey
Board of Public Utilities (BPU) for base rate increases of 19.8% and 22.9%,
respectively.  These combined increase requests represent $0.3 million
of additional revenues needed to cover higher operations and maintenance costs
of those systems.  We cannot predict whether the BPU will ultimately
approve, deny, or reduce the amount of our requests.





Effective
January 1, 2008, Tidewater received approval from the Delaware Public Service
Commission (PSC) to increase their Distribution System Improvement Charge (DSIC)
from 0.17% to 1.62%.  The DSIC increase is expected to generate
approximately $0.2 million of additional revenue.





In
accordance with the tariff established for Southern Shores, an annual rate
increase of 3% was implemented on January 1, 2008. The increase cannot exceed
the lesser of the regional Consumer Price Index or 3%. The contracted rate
schedule is set to expire on December 31, 2008. The Company is in the process of
renegotiating the rate schedule.





Note
3 – Capitalization





Common Stock –During the three
months ended March 31, 2008, there were 15,710 common shares (approximately $0.3
million) issued under the Company’s Dividend Reinvestment and Common Stock
Purchase Plan (DRP).





Long-term Debt– On March 18,
2008 Middlesex filed an application with the BPU seeking approval to issue up to
$4.0 million of first mortgage bonds through the New Jersey Environmental
Infrastructure Trust under the New Jersey State Revolving Fund (SRF) program. If
approved by the BPU, the Company expects to complete the transaction in November
2008.  Proceeds from this financing will be used for the ongoing main
cleaning and lining project in 2009.  The Company expects a decision
on this matter during the second quarter of 2008.





Long-term
Debt decreased $15.0 million during 2008 for the First Mortgage Bond Series U,
which matures on February 1, 2009.  There was an equal and offsetting
increase in the Current Portion of Long-term Debt for the Series U
bond.





Note
4 – Earnings Per Share





Basic earnings per share (EPS) are
computed on the basis of the weighted average number of shares outstanding
during the period presented.  Diluted EPS assumes the conversion of
both the Convertible Preferred Stock $7.00 Series and the Convertible Preferred
Stock $8.00 Series.





(In
      Thousands Except per Share Amounts)
              Three
      Months Ended March 31,Basic:
            
            2008
            
            
            Shares
            
            
            2007
            
            
            SharesNet
      Income
            
            $
            2,004
            
            
            
            13,254
            
            
            $
            1,769
            
            
            
            13,176Preferred
      Dividend
            
            
            (62
            )
            
            
            
            
            
            
            (62
            )Earnings
      Applicable to Common Stock
            
            $
            1,942
            
            
            
            13,254
            
            
            $
            1,707
            
            
            
            13,176Basic
      EPS
            
            $
            0.15
            
            
            
            
            
            
            $
            0.13Diluted:Earnings
      Applicable to Common Stock
            
            $
            1,942
            
            
            
            13,254
            
            
            $
            1,707
            
            
            
            13,176$7.00
      Series Preferred Dividend
            
            
            24
            
            
            
            167
            
            
            
            24
            
            
            
            167$8.00
      Series Preferred Dividend
            
            
            24
            
            
            
            164
            
            
            
            24
            
            
            
            164Adjusted
      Earnings Applicable to  Common Stock
            
            $
            1,990
            
            
            
            13,585
            
            
            $
            1,755
            
            
            
            13,507Diluted
      EPS
            
            $
            0.15
            
            
            
            
            
            
            $
            0.13





6
 Index





Note
5 – Business Segment Data





The
Company has identified two reportable segments. One is the regulated business of
collecting, treating and distributing water on a retail and wholesale basis to
residential, commercial, industrial and fire protection customers in parts of
New Jersey and Delaware. This segment also includes regulated wastewater systems
in New Jersey and Delaware.  The Company is subject to regulations as
to its rates, services and other matters by the States of New Jersey and
Delaware with respect to utility services within these States. The other segment
is primarily comprised of non-regulated contract services for the operation and
maintenance of municipal and private water and wastewater systems in New Jersey
and Delaware.  Inter-segment transactions relating to operational
costs are treated as pass-through expenses. Finance charges on inter-segment
loan activities are based on interest rates that are below what would normally
be charged by a third party lender.








(In
      Thousands)
              Three
      Months Ended
              March
      31,Operations
      by Segments:
            2008
            
            
            2007Revenues:Regulated
            
            $
            18,422
            
            
            $
            16,688Non
      – Regulated
            
            
            2,484
            
            
            
            2,345Inter-segment
      Elimination
            
            
            (51
            )
            
            
            (45
            )Consolidated
      Revenues
            
            $
            20,855
            
            
            $
            18,988Operating
      Income:Regulated
            
            $
            3,891
            
            
            $
            3,466Non
      – Regulated
            
            
            456
            
            
            
            256Consolidated
      Operating Income
            
            $
            4,347
            
            
            $
            3,722Net
      Income:Regulated
            
            $
            1,701
            
            
            $
            1,636Non
      – Regulated
            
            
            303
            
            
            
            133Consolidated
      Net Income
            
            $
            2,004
            
            
            $
            1,769Capital
      Expenditures:Regulated
            
            $
            6,311
            
            
            $
            3,525Non
      – Regulated
            
            
            16
            
            
            
            95Total
      Capital Expenditures
            
            $
            6,327
            
            
            $
            3,620




As
      of
              March
      31,
              2008
            
            
            As
      of
              December
      31,
              2007Assets:Regulated
            
            $
            391,808
            
            
            $
            387,931Non
      – Regulated
            
            
            8,717
            
            
            
            8,157Inter-segment
      Elimination
            
            
            (3,716
            )
            
            
            (3,413
            )Consolidated
      Assets
            
            $
            396,809
            
            
            $
            392,675








7
 Index


Note
6 – Short-term Borrowings





As of
March 31, 2008, the Company has established lines of credit aggregating $33.0
million. At March 31, 2008, the outstanding borrowings under these credit lines
were $9.0 million at a weighted average interest rate of 4.06%.





The
weighted average daily amounts of borrowings outstanding under the Company’s
credit lines and the weighted average interest rates on those amounts were $7.5
million and $0 at 4.65% and none for the three months ended March 31, 2008 and
2007, respectively.





Interest
rates for short-term borrowings under the lines of credit are below the prime
rate with no requirement for compensating balances.








Note
7 – Commitments and Contingent Liabilities





Guarantees
- USA-PA operates the City of Perth Amboy, New Jersey (Perth Amboy) water and
wastewater systems under contract through June 30, 2018. The agreement was
effected under New Jersey’s Water Supply Public/Private Contracting Act and the
New Jersey Wastewater Public/Private Contracting Act. Under the agreement,
USA-PA receives a fixed fee and in addition, a variable fee based on increased
system billing. Scheduled fixed fee payments for 2008 are $8.0 million. The
fixed fees will increase over the term of the contract to $10.2 million per
year.





In
connection with the agreement, Perth Amboy, through the Middlesex County
Improvement Authority, issued approximately $68.0 million in three series of
bonds. Middlesex guaranteed one of those series of bonds, designated the Series
C Serial Bonds, in the principal amount of approximately $26.3 million. Perth
Amboy guaranteed the two other series of bonds. The Series C Serial Bonds have
various maturity dates with the final maturity date on September 1, 2015. As of
March 31, 2008, approximately $22.6 million of the Series C Serial Bonds
remained outstanding.





Middlesex
is obligated to perform under the guarantee in the event notice is received from
the Series C Serial Bonds trustee of an impending debt service deficiency. If
Middlesex funds any debt service obligations as guarantor, Perth Amboy is
required to reimburse the Company. There are other provisions in the agreement
that make it unlikely that we would be required to perform under the guarantee,
such as scheduled annual rate increases for water and wastewater services as
well as rate increases that may be implemented at anytime by Perth Amboy. In the
event revenues from customers could not satisfy the reimbursement requirements,
Perth Amboy has Ad Valorem taxing powers, which could be used to raise the
needed amount.





Water
Supply - Middlesex has an agreement with the New Jersey Water Supply Authority
(NJWSA) for the purchase of untreated water through November 30, 2023, which
provides for an average purchase of 27 million gallons per day (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 regulated water utility for the
purchase of treated water. This agreement, which expires February 27, 2011,
provides for the minimum purchase of 3 mgd of treated water with provisions for
additional purchases.





8
 Index


Purchased
water costs are shown below:








(In
      Thousands)
              Three
      Months Ended
              March
      31,2008
            
            
            2007Purchased
      WaterTreated
            
            $
            522
            
            
            $
            460Untreated
            
            
            605
            
            
            
            598Total
      Costs
            
            $
            1,127
            
            
            $
            1,058








Construction
– The Company expects to spend approximately $36.9 million on its construction
program in 2008.





Litigation
– The Company is a defendant in lawsuits in the normal course of business. We
believe the resolution of pending claims and legal proceedings will not have a
material adverse effect on the Company’s consolidated financial
statements.





Change in
Control Agreements – The Company has Change in Control Agreements with its
Officers that provide compensation and benefits in the event of termination of
employment in connection with a change in control of the Company.





Note
8 – Employee Retirement Benefit Plans





Pension –The Company has a
noncontributory defined benefit pension plan, which covers all employees with
more than 1,000 hours of service in a year.   Employees hired
after March 31, 2007 are not eligible to participate in this plan, but do
participate in a defined contribution plan that provides an annual contribution
at the discretion of the Company based upon a percentage of the participants’
compensation. In order to be eligible for an annual contribution, the eligible
employee must be employed by the Company on December 31st of the year to which
the award pertains. The Company expects to make cash contributions of
approximately $1.5 million to the defined benefit pension plan over the
remainder of the current year. The Company also maintains an unfunded
supplemental retirement benefit plan for certain active and retired company
officers and currently pays $0.3 million in annual benefits to the retired
participants.





Postretirement Benefits Other Than
Pensions – The Company maintains a postretirement benefit plan other than
pensions for substantially all of its retired employees.  Employees
hired after March 31, 2007 are not eligible to participate in this
plan.  Coverage includes healthcare and life insurance. Retiree
contributions are dependent on credited years of service. The Company expects to
make cash contributions to the plan of approximately $1.5 million over the
remainder of the current year.


9
 Index


The
following table sets forth information relating to the Company’s periodic costs
for its retirement plans.








(In
      Thousands)Pension
      Benefits
            
            
            Other
      BenefitsThree
      Months Ended March 31,2008
            
            
            2007
            
            
            2008
            
            
            2007Service
      Cost
            $
            324
            
            
            $
            320
            
            
            $
            205
            
            
            $
            185Interest
      Cost
            
            452
            
            
            
            453
            
            
            
            224
            
            
            
            212Expected
      Return on Assets
            
            (455
            )
            
            
            (456
            )
            
            
            (120
            )
            
            
            (135
            )Amortization
      of Unrecognized Losses
            
            19
            
            
            
            66
            
            
            
            84
            
            
            
            68Amortization
      of Unrecognized Prior Service Cost
            
            2
            
            
            
            2
            
            
            
            -
            
            
            
            -Amortization
      of Transition Obligation
            
            -
            
            
            
            -
            
            
            
            34
            
            
            
            34Net
      Periodic Benefit Cost
            $
            342
            
            
            $
            385
            
            
            $
            427
            
            
            $
            364








Note
9 – Stock Based Compensation





The
Company maintains an escrow account for 71,253 shares of the Company's common
stock awarded under the 1997 Restricted Stock Plan, which has expired. Such
stock is subject to an agreement requiring forfeiture by the employee in the
event of termination of employment within five years of the award other than as
a result of retirement, death, disability or change in control. The Company
filed a petition with the BPU requesting approval of a stock-based compensation
plan called the 2008 Restricted Stock Plan.  The Company intends to
seek shareholder approval for the new plan at its May 21, 2008 annual meeting of
shareholders.  The maximum number of shares authorized for grant under
the proposed plan is 300,000 shares.





The
Company has also filed a petition with the BPU requesting approval of a
stock-based compensation plan for non-employee members of the Board of Directors
called the Director Stock Compensation Plan.  The Company intends to
seek shareholder approval for the new plan at its May 21, 2008 annual meeting of
shareholders.  The maximum number of shares authorized for grant under
the proposed plan is 100,000 shares.





The
Company recognizes compensation expense at fair value for its restricted stock
awards in accordance with SFAS 123(R), “Shared Based
Payment”.  Compensation expense is determined by the market value of
the stock on the date of the award and is being amortized over a five-year
period. Compensation expense for the three months ended March 31, 2008 and 2007
was $0.1 million. Total unearned compensation related to restricted stock was
$0.8 million and $0.6 million at March 31, 2008 and 2007,
respectively.





10
 Index


Note
10 – Other Comprehensive Income





Comprehensive
income was as follows:





(In
      Thousands)
              Three
      Months Ended
              March
      31,2008
            
            
            2007Net
      Income
            
            $
            2,004
            
            
            $
            1,769Other
      Comprehensive Income (Loss):Change
      in Value of Equity Investments,
              Net
      of Income Tax
            
            
            (12
            )
            
            
            8Other
      Comprehensive Income
            
            
            (12
            )
            
            
            8Comprehensive
      Income
            
            $
            1,992
            
            
            $
            1,777








Note
11 – Restatement of Condensed Consolidated Financial Statements





On August
1, 2008 and subsequent to the issuance of the Company’s Form 10-Q for the
quarterly period ended March 31, 2008, management determined that the previously
filed unaudited Condensed Consolidated Balance Sheets and Condensed Consolidated
Statement of Capital Stock and Long-term Debt needed to be
restated.





The
Restated Condensed Consolidated Balance Sheet and Restated Condensed
Consolidated Statement of Capital Stock and Long-term Debt as of March 31, 2008
reflect a reduction in Long-term Debt and increase in the Current Portion of
Long-term debt due to the maturity date of First Mortgage Bond Series U being
less than one year from the date of the financial statements.





The
restatement does not have any effect on net income, earnings applicable to
common stock or cash flows.





A summary
of the significant effects of the restatement is as follows:





Condensed
Consolidated Balance Sheet Effects:





March
      31, 2008
              (In
      Thousands)As
              Previously
              Reported
            
            
            As
              ReportedLong-term
      Debt
            
            $
            131,423
            
            
            $
            116,423Total
      Capitalization
            
            
            268,527
            
            
            
            253,527Current
      Portion of Long-term Debt
            
            
            2,768
            
            
            
            17,768Total
      Current Liabilities
            
            
            29,179
            
            
            
            44,179


Condensed
Consolidated Statement of Capital Stock and Long-term Debt:











March
      31, 2008
              (In
      Thousands)As
              Previously
              Reported
            
            
            As
              ReportedCurrent
      Portion of Long-term Debt
            
            $
            (2,768
            )
            
            $
            (17,768
            )Total
      Long-term Debt
            
            
            131,423
            
            
            
            116,423


11
 Index


Item
2.       Management’s Discussion and
Analysis of Financial Condition and Results of Operations


The
following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements of the Company included
elsewhere herein and with the Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2007.





Forward-Looking
Statements


Certain
statements contained in this periodic report and in the documents incorporated
by reference constitute “forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. The Company intends that these statements be covered by
the safe harbors created under those laws.  These statements include,
but are not limited to:





-
            statements
      as to expected financial condition, performance, prospects and earnings of
      the Company;-
            statements
      regarding strategic plans for
growth;


-
            statements
      regarding the amount and timing of rate increases and other regulatory
      matters;-
            statements
      regarding expectations and events concerning capital
      expenditures;


-
            statements
      as to the Company’s expected liquidity needs during fiscal 2008 and beyond
      and statements as to the sources and availability of funds to meet its
      liquidity needs;-
            statements
      as to expected rates, consumption volumes, service fees, revenues,
      margins, expenses and operating
results;


-
            statements
      as to the Company’s compliance with environmental laws and regulations and
      estimations of the materiality of any related costs;-
            statements
      as to the safety and reliability of the Company’s equipment, facilities
      and operations;


-
            statements
      as to financial projections;-
            statements
      as to the ability of the Company to pay
  dividends;


-
            statements
      as to the Company’s plans to renew municipal franchises and consents in
      the territories it serves;-
            expectations
      as to the amount of cash contributions to fund the Company’s retirement
      benefit plans, including statements as to anticipated discount rates and
      rates of return on plan assets;


-
            statements
      as to trends; and-
            statements
      regarding the availability and quality of our water
  supply.





These
forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results
expressed or implied by the forward-looking statements. Important factors that
could cause actual results to differ materially from anticipated results and
outcomes include, but are not limited to:





-
            the
      effects of general economic conditions;-
            increases
      in competition in the markets served by the
  Company;


-
            the
      ability of the Company to control operating expenses and to achieve
      efficiencies in its operations;-
            the
      availability of adequate supplies of
water;


-
            actions
      taken by government regulators, including decisions on base rate increase
      requests;-
            new
      or additional water quality
standards;


-
            weather
      variations and other natural phenomena;-
            the
      existence of attractive acquisition candidates and the risks involved in
      pursuing those acquisitions;


-
            acts
      of war or terrorism;-
            significant
      changes in the housing starts in
Delaware;


-
            the
      availability and cost of capital resources; and-
            other
      factors discussed elsewhere in this quarterly
  report.





12
 Index





Many of
these factors are beyond the Company’s ability to control or predict. Given
these uncertainties, readers are cautioned not to place undue reliance on any
forward-looking statements, which only speak to the Company’s understanding as
of the date of this report. The Company does not undertake any obligation to
release publicly any revisions to these forward-looking statements to reflect
events or circumstances after the date of this report or to reflect the
occurrence of unanticipated events, except as may be required under applicable
securities laws.





For an
additional discussion of factors that may affect the Company’s business and
results of operations, see Item 1A. - Risk Factors in the Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2007.





Overview


The
Company has operated as a water utility in New Jersey since 1897, and in
Delaware, through our wholly-owned subsidiary, Tidewater, since 1992. We are in
the business of collecting, treating, distributing and selling water for
residential, irrigation, commercial, municipal, industrial and fire protection
purposes. We also operate a New Jersey municipal water and wastewater system
under contract and provide wastewater services in New Jersey and Delaware
through our subsidiaries. Our utility companies are regulated as to rates
charged to customers for water and wastewater services in New Jersey and
Delaware, as to the quality of service provided and as to certain other matters.
Our USA, USA-PA and White Marsh subsidiaries are not regulated
utilities.





Our New
Jersey water utility system (the Middlesex System) provides water services to
approximately 59,500 retail, commercial and fire service customers, primarily in
central New Jersey. The Middlesex System also provides water service under
contract to municipalities in central New Jersey with a total population of
approximately 303,000. Through our subsidiary, USA-PA, we operate the water
supply system and wastewater collection system for the City of Perth Amboy, New
Jersey. Pinelands Water and Pinelands Wastewater provide water and wastewater
services to residents in Southampton Township, New Jersey.





Tidewater
and Southern Shores provide water services to approximately 31,800 retail
customers in New Castle, Kent, and Sussex Counties, Delaware. Our TESI
subsidiary provides regulated wastewater service to approximately 1,400
residential retail customers. White Marsh serves approximately 5,700 customers
under unregulated operating contracts with various owners of small water and
wastewater systems in Kent and Sussex Counties.





USA
provides customers both inside and outside of our service territories a service
line maintenance program called LineCareSM. We
offer a similar program for wastewater customers called LineCare+SM.





The
majority of our revenue is generated from regulated water services to customers
in our franchise areas. We record water service revenue as such service is
rendered and include estimates for amounts unbilled at the end of the period for
services provided since the end of the last billing cycle. Fixed service charges
are billed in advance by our subsidiary, Tidewater, and are recognized in
revenue as the service is provided.




Our
ability to increase operating income and net income is based significantly on
four factors: weather, adequate and timely rate relief, effective cost
management, and customer growth. These factors are evident in the discussions
below which compare our results of operations with prior periods.





13
 Index





Recent
Developments





Rate
Increases


On April
29, 2008 Pinelands Water and Pinelands Wastewater filed with the New Jersey
Board of Public Utilities (BPU) for base rate increases of 19.8% and 22.9%,
respectively.  These combined increase requests represent $0.3 million
of additional revenues needed to cover higher operations and maintenance costs
of their systems.  We cannot predict whether the BPU will ultimately
approve, deny, or reduce the amount of our requests.





Effective
January 1, 2008, Tidewater received approval from the Delaware Public Service
Commission (PSC) to increase their Distribution System Improvement Charge (DSIC)
from 0.17% to 1.62%.  The DSIC increase is expected to generate
approximately $0.2 million of additional revenue.





In
accordance with the tariff established for Southern Shores, an annual rate
increase of 3% was implemented on January 1, 2008. The increase cannot exceed
the lesser of the regional Consumer Price Index or 3%. The contracted rate
schedule is set to expire on December 31, 2008. The Company is in the process of
renegotiating the rate schedule.





Operating
Results by Segment





The
Company has two operating segments, Regulated and Non-Regulated. Our Regulated
segment contributed 88% of total revenues and 85% of net income for the three
months ended March 31, 2008. This segment contributed 88% of total revenues and
92% of net income over the same three month period ended March 31, 2007. The
discussion of the Company’s results of operations is on a consolidated basis,
and includes significant factors by subsidiary. The segments in the tables
included below consist of the following companies: Regulated-Middlesex,
Tidewater, Pinelands, Southern Shores, and TESI; Non-Regulated- USA, USA-PA, and
White Marsh.











Results
of Operations – Three Months Ended March 31, 2008








(In
      Thousands)
              Three Months Ended
      March 31,2008
            
            
            2007Regulated
            
            
            Non-
              Regulated
            
            
            Total
            
            
            Regulated
            
            
            Non-
              Regulated
            
            
            TotalRevenues
            
            $
            18,422
            
            
            $
            2,433
            
            
            $
            20,855
            
            
            $
            16,688
            
            
            $
            2,300
            
            
            $
            18,988Operations
      and maintenance expenses
            
            
            10,208
            
            
            
            1,890
            
            
            
            12,098
            
            
            
            9,216
            
            
            
            1,954
            
            
            
            11,170Depreciation
      expense
            
            
            1,902
            
            
            
            29
            
            
            
            1,931
            
            
            
            1,814
            
            
            
            31
            
            
            
            1,845Other
      taxes
            
            
            2,421
            
            
            
            58
            
            
            
            2,479
            
            
            
            2,192
            
            
            
            59
            
            
            
            2,251Operating income
            
            
            3,891
            
            
            
            456
            
            
            
            4,347
            
            
            
            3,466
            
            
            
            256
            
            
            
            3,722Other
      income, net
            
            
            176
            
            
            
            122
            
            
            
            298
            
            
            
            333
            
            
            
            -
            
            
            
            333Interest
      expense
            
            
            1,446
            
            
            
            71
            
            
            
            1,517
            
            
            
            1,359
            
            
            
            25
            
            
            
            1,384Income
      taxes
            
            
            920
            
            
            
            204
            
            
            
            1,124
            
            
            
            804
            
            
            
            98
            
            
            
            902Net income
            
            $
            1,701
            
            
            $
            303
            
            
            $
            2,004
            
            
            $
            1,636
            
            
            $
            133
            
            
            $
            1,769





14
 Index





Operating
revenues for the three months ended March 31, 2008 increased $1.9 million, or
9.8%, from the same period in 2007.  Revenues in our Middlesex system
increased $1.1 million as a result of a 9.1% base rate increase implemented on
October 26, 2007.  Middlesex revenues also increased by $0.2 million
due to higher consumption by our customers in 2008.  Revenues improved
$0.3 million in our Tidewater system, of which $0.2 million was the result of an
additional 12% rate increase implemented on February 28,
2007.  Customer growth and higher consumption contributed $0.3 million
of revenues.  Fees charged for initial connection to our Delaware
Water system were $0.2 million lower in 2008 as new residential and commercial
development has slowed in our Delaware service
territories.   Revenues from our regulated wastewater operations
in Delaware increased by $0.1 million due to customer growth.  All
other operations accounted for $0.2 million of additional revenues.





While we
anticipate continued organic customer and consumption growth, particularly in
our Delaware systems, such growth and increased consumption cannot be
guaranteed. Revenues from our water systems are highly dependent on the effects
of weather, which may adversely impact future consumption despite customer
growth.  Appreciable organic customer and consumption growth is less
likely in our New Jersey systems due to the extent to which our service
territory is developed.  The Company expects its 2008 operating
revenues to reflect the full effect of the October 2007 Middlesex $5.0 million
rate increase.





Operation
and maintenance expenses for the three months ended March 31, 2008 increased
$0.9 million or 8.3%.  Labor and benefits costs increased $0.4 million
due to increases in wages and benefits costs and increased headcount to meet the
needs associated with continued growth in our Delaware service
territory.  Water Production costs were $0.3 million higher due to
increased sales in Delaware and higher costs for water, electric power,
chemicals and disposal of residuals in New Jersey.  The costs to
operate our TESI regulated wastewater facilities in Delaware increased by $0.1
million due to acquisition of the Milton, Delaware wastewater system during
2007.   All other expense categories increased by $0.1
million.





Depreciation
expense increased by $0.1 million, or 4.6%, primarily as a result of a higher
level of utility plant in service since March 31, 2007.





Interest
expense increased by $0.1 million commensurate with higher short-term borrowings
compared to the prior year period.





Other
taxes increased by $0.2 million generally reflecting additional taxes on higher
taxable gross revenue, payroll and real estate.





Income
taxes increased $0.2 million as a result of increased operating income as
compared to the prior year.





Net
income increased by 13.3% from $1.8 million to $2.0 million. Basic earnings per
share grew by 13.3% to $0.15 for the three months ended March 31, 2008 compared
to $0.13 for the same period in 2007.  Diluted earnings per share were
$0.15 and $0.13 for three months ended March 31, 2008 and 2007,
respectively.





15
 Index


Liquidity
and Capital Resources





Cash
flows from operations are largely dependent on three factors: the impact of
weather on water sales, adequate and timely rate increases, and customer growth.
The effect of those factors on net income is discussed in results of operations.
For the three months ended March 31, 2008, cash flows from operating activities
were $5.7 million, an increase of $0.3 million from the prior year. This
increase was attributable to increased earnings, and a decrease in customer
receivables.  These higher cash flows were partially offset by a
decrease in accounts payable due to the timing of payments.  The $5.7
million of net cash flow from operations enabled us to fund 91% of our utility
plant expenditures internally for the period, with the remainder funded with
proceeds from requisitions under the Delaware State Revolving Fund (SRF) program
loans.





The
capital spending program for 2008 is currently estimated to be $36.9
million.  Through March 31, 2008, we have expended $6.3
million.  For the remainder of 2008 we expect to incur $30.6 million
of costs.  We expect to spend an additional $11.6 million for
additions and improvements to our Delaware water systems; $3.7 million for
infrastructure additions for our Delaware wastewater systems; $1.1 million
towards implementation of a Company-wide information system upgrade; and $3.5
million for the RENEW program, to complete the cleaning and cement lining of
approximately nine miles of unlined water mains in the Middlesex system. There
remains a total of approximately 112 miles of unlined mains in the 730-mile
Middlesex system. The capital program also includes an additional $10.7 million
to be incurred over the remainder of 2008 for scheduled upgrades to our existing
systems in New Jersey.  The remaining spending for scheduled upgrades
include $3.4 million for improvements to existing plant, $4.7 million for mains,
$0.5 million for service lines, $0.3 million for meters, $0.2 million for
hydrants and $1.6 million for other infrastructure needs.





To fund
our capital program in 2008, we have utilized internally generated funds, and
funds available under existing New Jersey SRF program loans (currently, $3.5
million) and Delaware SRF program loans (currently, $2.8 million). These
programs provide low cost financing for projects that meet certain water quality
and system improvement benchmarks. If needed, we will also borrow funds through
$33.0 million of available lines of credit with several financial institutions.
As of March 31, 2008, $9.0 million was outstanding against the lines of
credit.





We
periodically issue shares of common stock in connection with our dividend
reinvestment and stock purchase plan (DRP).  From time to time, we may
issue additional equity to reduce short-term indebtedness, fund our capital
program, and for other general corporate purposes.





We
currently project that we may be required to expend between $88.4 million and
$121.8 million for capital projects in 2009 and 2010 combined. The exact amount
is dependent on customer growth, residential housing sales and project
scheduling.  In particular, Middlesex has filed a prudence review
application with the BPU for a proposed major transmission pipeline designed to
strengthen its existing transmission network and provide system redundancy and
reliability.  Initial estimates to construct the pipeline are $26.2
million.  The duration and outcome of the BPU review process may
affect the construction schedule as well as the project viability.





To the
extent possible and because of favorable interest rates available to regulated
water utilities, we expect to finance our capital expenditures under the SRF
loan programs. We also expect to use internally generated funds and proceeds
from the sale of common stock through the Dividend Reinvestment and Common Stock
Purchase Plan.  It may also be necessary to sell shares of our Common
Stock through a public offering.





In
addition to the effect of weather conditions on revenues, increases in certain
operating costs will impact our liquidity and capital resources. We received
rate relief for Middlesex in October 2007 and for Tidewater and


16
 Index


Southern
Shores on January 1, 2008.  Changes in operating costs and timing of
capital projects will have an impact on revenues, earnings, and cash flows and
will also impact the timing of filings for future rate increases.





Recent Accounting
Pronouncements – See Note 1 of the Notes to Unaudited Condensed
Consolidated Financial Statements for a discussion of recent accounting
pronouncements.





Item
      3.
            Quantitative
      and Qualitative Disclosures of Market
  Risk





The
Company is subject to the risk of fluctuating interest rates in the normal
course of business.  Our capital program is partially financed with
fixed rate, long-term debt and, to a lesser extent, short-term debt. The
Company’s interest rate risk related to existing fixed rate, long-term debt is
not material due to the term of the majority of our Amortizing Secured Notes and
First Mortgage Bonds, which have final maturity dates ranging from 2009 to
2038.  Over the next twelve months, approximately $17.8 million of the
current portion of twenty existing long-term debt instruments will mature.
Applying a hypothetical change in the rate of interest of 10% on those
borrowings would not have a material effect on earnings.





Item
      4.
            Controls
      and Procedures




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in Company reports filed or
submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company’s Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding disclosure.
 
 On August
1, 2008 and subsequent to the issuance of the Company’s Form 10-Q for the
quarterly period ended March 31, 2008, management determined that the previously
filed unaudited Condensed Consolidated Balance Sheets and Condensed Consolidated
Statement of Capital Stock and Long-term Debt needed to be
restated.  The restatement is necessary to reflect a reduction in
Long-term Debt and a corresponding increase in the Current Portion of Long-term
Debt due to the February 1, 2009 maturity date of the Company’s First Mortgage
Bond Series U being less than one year from the date of the filed financial
statements.
 
 As
required by Rule 13a-15 under the Exchange Act, an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures was conducted by the Company’s Chief Executive Officer along with
the Company’s Chief Financial Officer. Based upon that evaluation, which
included consideration of the restatements, the Company’s Chief Executive
Officer and the Company’s Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were not effective as of the end of the
period covered by this report. As a result of this conclusion, the Company
performed additional review and analysis to ensure its consolidated financial
statements are prepared in accordance with generally accepted accounting
principles.  Accordingly, management believes that the condensed
consolidated financial statements included in this report fairly present in all
material respects our financial condition, results of operations and cash flows
for the periods presented.
 
 Based on
the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer
have concluded that the Company’s disclosure controls over financial reporting
were not effective in meeting the objectives as described above during the
quarter covered by this report. In connection with the discovery of errors
related to recording and reporting of Long-term Debt and the Current Portion of
Long-term Debt, the Company has subsequently implemented additional procedures
related to the evaluation and review of maturity dates for Long-term Debt to
ensure proper classification of debt maturing in less than one year to the
Current Portion of Long-term Debt. Management believes these changes will
remediate the errors that led to the restatement and enhance the reliability and
effectiveness of the financial reporting process.





17
 Index


PART
II.  OTHER INFORMATION








Item
      1.
            Legal
      Proceedings





Reference
is made to the Company’s Annual Report on Form 10-K for the year ended December
31, 2007.  Note 7 to the unaudited Condensed Consolidated Financial
Statements for the period ended March 31, 2008, included in Part 1 of this
Quarterly Report on Form 10-Q/A, is hereby incorporated by
reference.





Item
      1A.
            Risk
      Factors





We expect
our revenues to increase from customer growth in Delaware for our regulated
water operations and, to a lesser degree, our regulated wastewater operations as
a result of the anticipated construction and sale of new housing units in the
territories we serve.  Although the residential building market in
Delaware has experienced growth in recent years, this growth may not continue in
the future.  If housing starts in the Delaware territories we serve
decline significantly as a result of economic conditions or otherwise, our
revenue growth may not meet our expectations and our financial results could be
negatively impacted.





Except as
described above, information about risk factors for the three months ended March
31, 2008 does not differ materially from those set forth in Part I, Item 1A. of
the Company’s Annual Report on Form 10-K for the year ended December 31,
2007.





Item
      2.
            Unregistered
      Salesof Equity Securities and Use of
    Proceeds





None.





Item
      3.
            Defaults
      UponSenior
Securities





None.





Item
      4.
            Submission
      of Matters to a Vote of Security
  Holders





None.





Item
      5.
            Other
      Information





None.








18
 Index





Item
      6.
            Exhibits





31
            Section
      302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of
      the Securities Exchange Act of
1934.





31.1
            Section
      302 Certification by A. Bruce O’Connor pursuant to Rules 13a-14 and 15d-14
      of the Securities Exchange Act of
1934.





32
            Section
      906 Certification by Dennis W. Doll pursuant to 18 U.S.C. §1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.





32.1
            Section
      906 Certification by A. Bruce O’Connor pursuant to 18 U.S.C. §1350, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.

















19
 Index


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





MIDDLESEX
      WATER COMPANYBy:
            /s/ A. Bruce
      O’ConnorA.
      Bruce O’ConnorVice
      President andChief
      Financial Officer








Date:
August 6, 2008




20