----

----

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

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

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

----

----

----

Index

D

| PART I.    | FINANCIAL INFORMATION                                                                      | PAGE   |
|------------|--------------------------------------------------------------------------------------------|--------|
|       |                                                                                       |   |
| Item 1.    | Financial Statements:                                                                      |   |
|       |                                                                                       |   |
|       | Condensed Consolidated Statements of Income                                                | 1      |
|       |                                                                                       |   |
|       | Condensed Consolidated Balance Sheets                                                      | 2      |
|       |                                                                                       |   |
|       | Condensed Consolidated Statements of Cash    Flows                                         | 3      |
|       |                                                                                       |   |
|       | Condensed Consolidated Statements of Capital Stock and      Long-term Debt                 | 4      |
|       |                                                                                       |   |
|       | Notes to Unaudited Condensed Consolidated Financial      Statements                        | 5      |
|       |                                                                                       |   |
| Item 2.    | Management's Discussion and Analysis of Financial Condition and      Results of Operations | 13     |
|       |                                                                                       |   |
| Item 3.    | Quantitative and Qualitative Disclosures of Market      Risk                               | 20     |
|       |                                                                                       |   |
| Item 4.    | Controls and Procedures                                                                    | 20     |
|       |                                                                                       |   |
| PART II.   | OTHER INFORMATION                                                                          |   |
|       |                                                                                       |   |
| Item 1.    | Legal Proceedings                                                                          | 21     |
|       |                                                                                       |   |
| Item 1A.   | Risk Factors                                                                               | 21     |
|       |                                                                                       |   |
| Item 2.    | Unregistered Sales of Equity Securities and Use of      Proceeds                           | 21     |
|       |                                                                                       |   |
| Item 3.    | Defaults upon Senior Securities                                                            | 21     |
|       |                                                                                       |   |
| Item 4.    | Submission of Matters to a Vote of Security      Holders                                   | 21     |
|       |                                                                                       |   |
| Item 5.    | Other Information                                                                          | 21     |
|       |                                                                                       |   |
| Item 6.    | Exhibits                                                                                   | 21     |
|       |                                                                                       |   |
| SIGNATURES | 22                                                                                         |

----

Index

|  MIDDLESEX WATER COMPANY                    |
|--------------------------------------------------|
| CONDENSED      CONSOLIDATED STATEMENTS OF INCOME |
| (Unaudited)                                      |
| (In      thousands except per share amounts)     |

|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |
|---------------------------------------------------|--------|---------------------------------------|--------|--------|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                              |   | Three      Months Ended September 30, |   |   | Nine      Months Ended September 30, |   |
|                                              |   | 2008                                  |   |   | 2007                                 |   |   | 2008   |   |   | 2007   |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |
| Operating      Revenues                           |   | $                                     | 25,653 |   |                                 | $      | 24,135 |   |   | $      | 69,543 |   |   | $ | 64,868 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Expenses:                          |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Operations                                        |   |                                  | 11,579 |   |                                 |   | 10,915 |   |   |   | 33,299 |   |   |   | 31,250 |   |
| Maintenance                                       |   |                                  | 995    |   |                                 |   | 1,046  |   |   |   | 3,102  |   |   |   | 3,060 |   |
| Depreciation                                      |   |                                  | 1,987  |   |                                 |   | 1,887  |   |   |   | 5,872  |   |   |   | 5,607 |   |
| Other      Taxes                                  |   |                                  | 2,708  |   |                                 |   | 2,558  |   |   |   | 7,715  |   |   |   | 7,221 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Total      Operating Expenses                     |   |                                  | 17,269 |   |                                 |   | 16,406 |   |   |   | 49,988 |   |   |   | 47,138 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Income                             |   |                                  | 8,384  |   |                                 |   | 7,729  |   |   |   | 19,555 |   |   |   | 17,730 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Other      Income (Expense):                      |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Funds Used During Construction |   |                                  | 180    |   |                                 |   | 168    |   |   |   | 445    |   |   |   | 421 |   |
| Other      Income                                 |   |                                  | 150    |   |                                 |   | 100    |   |   |   | 668    |   |   |   | 608 |   |
| Other      Expense                                |   |                                  | (12    | )      |                                 |   | (9     | )      |   |   | (169   | )      |   |   | (21 | ) |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Total      Other Income, net                      |   |                                  | 318    |   |                                 |   | 259    |   |   |   | 944    |   |   |   | 1,008 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Charges                             |   |                                  | 1,838  |   |                                 |   | 1,734  |   |   |   | 5,161  |   |   |   | 4,816 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      before Income Taxes                   |   |                                  | 6,864  |   |                                 |   | 6,254  |   |   |   | 15,338 |   |   |   | 13,922 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Income      Taxes                                 |   |                                  | 2,149  |   |                                 |   | 2,096  |   |   |   | 5,054  |   |   |   | 4,680 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income                                   |   |                                  | 4,715  |   |                                 |   | 4,158  |   |   |   | 10,284 |   |   |   | 9,242 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock Dividend Requirements        |   |                                  | 52     |   |                                 |   | 62     |   |   |   | 166    |   |   |   | 186 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Applicable to Common Stock          |   | $                                     | 4,663  |   |                                 | $      | 4,096  |   |   | $      | 10,118 |   |   | $ | 9,056 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per share of Common Stock:          |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                             |   | $                                     | 0.35   |   |                                 | $      | 0.31   |   |   | $      | 0.76   |   |   | $ | 0.69 |   |
| Diluted                                           |   | $                                     | 0.35   |   |                                 | $      | 0.31   |   |   | $      | 0.75   |   |   | $ | 0.68 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Average      Number of                            |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Common      Shares Outstanding :                  |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                             |   |                                  | 13,350 |   |                                 |   | 13,206 |   |   |   | 13,291 |   |   |   | 13,191 |   |
| Diluted                                           |   |                                  | 13,617 |   |                                 |   | 13,537 |   |   |   | 13,601 |   |   |   | 13,522 |   |
|                                              |   |                                  |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Cash      Dividends Paid per Common Share         |   | $                                     | 0.1750 |   |                                 | $      | 0.1725 |   |   | $      | 0.5250 |   |   | $ | 0.5175 |   |

----

Index

| MIDDLESEX      WATER COMPANY                          |
|-------------------------------------------------------|
| CONDENSED      CONSOLIDATED  BALANCE SHEETS |
| (Unaudited)                                           |
| (In      thousands)                                   |

|                                                 |                                                      |   | September      30, |    |   | December      31, |   |
|------------------------------------------------------|-----------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
| ASSETS                                               |                                                      |   | 2008               |    |   | 2007              |   |
| UTILITY      PLANT:                                  | Water      Production                                     |   | $                  | 104,381 |   |              | $      | 98,942 |   |
|                                                 | Transmission      and Distribution                        |   |               | 278,310 |   |              |   | 264,939 |   |
|                                                 | General                                                   |   |               | 26,765  |   |              |   | 24,874 |   |
|                                                 | Construction      Work in Progress                        |   |               | 13,162  |   |              |   | 9,833 |   |
|                                                 | TOTAL                                                     |   |               | 422,618 |   |              |   | 398,588 |   |
|                                                 | Less      Accumulated Depreciation                        |   |               | 69,331  |   |              |   | 64,736 |   |
|                                                 | UTILITY      PLANT - NET                                  |   |               | 353,287 |   |              |   | 333,852 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| CURRENT      ASSETS:                                 | Cash      and Cash Equivalents                            |   |               | 3,143   |   |              |   | 2,029 |   |
|                                                 | Accounts      Receivable, net                             |   |               | 10,472  |   |              |   | 8,227 |   |
|                                                 | Unbilled      Revenues                                    |   |               | 5,769   |   |              |   | 4,609 |   |
|                                                 | Materials      and Supplies (at average cost)             |   |               | 1,437   |   |              |   | 1,205 |   |
|                                                 | Prepayments                                               |   |               | 1,693   |   |              |   | 1,363 |   |
|                                                 | TOTAL      CURRENT ASSETS                                 |   |               | 22,514  |   |              |   | 17,433 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| DEFERRED      CHARGES                                | Unamortized      Debt Expense                             |   |               | 2,895   |   |              |   | 2,884 |   |
| AND      OTHER ASSETS:                               | Preliminary      Survey and Investigation Charges         |   |               | 6,419   |   |              |   | 5,283 |   |
|                                                 | Regulatory      Assets                                    |   |               | 15,506  |   |              |   | 16,090 |   |
|                                                 | Operations      Contracts Fees Receivable                 |   |               | 3,736   |   |              |   | 4,184 |   |
|                                                 | Restricted      Cash                                      |   |               | 5,095   |   |              |   | 6,418 |   |
|                                                 | Non-utility      Assets - Net                             |   |               | 6,387   |   |              |   | 6,183 |   |
|                                                 | Other                                                     |   |               | 386     |   |              |   | 348 |   |
|                                                 | TOTAL      DEFERRED CHARGES AND OTHER ASSETS              |   |               | 40,424  |   |              |   | 41,390 |   |
|                                                 | TOTAL      ASSETS                                         |   | $                  | 416,225 |   |              | $      | 392,675 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| CAPITALIZATION      AND LIABILITIES                  |                                                      |   |               |    |   |              |   |   |
| CAPITALIZATION:                                      | Common      Stock, No Par Value                           |   | $                  | 107,342 |   |              | $      | 105,668 |   |
|                                                 | Retained      Earnings                                    |   |               | 30,582  |   |              |   | 27,441 |   |
|                                                 | Accumulated      Other Comprehensive Income, net of tax   |   |               | -       |   |              |   | 69 |   |
|                                                 | TOTAL      COMMON EQUITY                                  |   |               | 137,924 |   |              |   | 133,178 |   |
|                                                 | Preferred      Stock                                      |   |               | 3,375   |   |              |   | 3,958 |   |
|                                                 | Long-term      Debt                                       |   |               | 115,009 |   |              |   | 131,615 |   |
|                                                 | TOTAL      CAPITALIZATION                                 |   |               | 256,308 |   |              |   | 268,751 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| CURRENT                                              | Current      Portion of Long-term Debt                    |   |               | 17,928  |   |              |   | 2,723 |   |
| LIABILITIES:                                         | Notes      Payable                                        |   |               | 22,200  |   |              |   | 6,250 |   |
|                                                 | Accounts      Payable                                     |   |               | 5,599   |   |              |   | 6,477 |   |
|                                                 | Accrued      Taxes                                        |   |               | 8,739   |   |              |   | 7,611 |   |
|                                                 | Accrued      Interest                                     |   |               | 1,043   |   |              |   | 1,916 |   |
|                                                 | Unearned      Revenues and Advanced Service Fees          |   |               | 823     |   |              |   | 758 |   |
|                                                 | Other                                                     |   |               | 1,556   |   |              |   | 1,274 |   |
|                                                 | TOTAL      CURRENT LIABILITIES                            |   |               | 57,888  |   |              |   | 27,009 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| COMMITMENTS      AND CONTINGENT LIABILITIES (Note 7) |                                                      |   |               |    |   |              |   |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| DEFERRED      CREDITS                                | Customer      Advances for Construction                   |   |               | 21,763  |   |              |   | 21,758 |   |
| AND      OTHER LIABILITIES:                          | Accumulated      Deferred Investment Tax Credits          |   |               | 1,402   |   |              |   | 1,461 |   |
|                                                 | Accumulated      Deferred Income Taxes                    |   |               | 18,839  |   |              |   | 17,940 |   |
|                                                 | Employee      Benefit Plans                               |   |               | 12,249  |   |              |   | 13,333 |   |
|                                                 | Regulatory      Liability - Cost of Utility Plant Removal |   |               | 6,103   |   |              |   | 5,726 |   |
|                                                 | Other                                                     |   |               | 763     |   |              |   | 459 |   |
|                                                 | TOTAL      DEFERRED CREDITS AND OTHER LIABILITIES         |   |               | 61,119  |   |              |   | 60,677 |   |
|                                                 |                                                      |   |               |    |   |              |   |   |   |
| CONTRIBUTIONS      IN AID OF CONSTRUCTION            |                                                      |   | 40,910             |    |   |              | 36,238 |   |
|                                                 | TOTAL      CAPITALIZATION AND LIABILITIES                 |   | $                  | 416,225 |   |              | $      | 392,675 |   |

----

Index

| MIDDLESEX      WATER COMPANY                         |
|------------------------------------------------------|
| CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (Unaudited)                                          |
| (In      thousands)                                  |

|                                                                                   |   |                                      |    |   |   |   |
|----------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|--------|--------|
|                                                                                   |   | Nine      Months Ended September 30, |    |
|                                                                                   |   | 2008                                      |    | 2007   |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                             |   |                                      |    |   |   |   |
| Net      Income                                                                        |   | $                                         | 10,284  |   |   | $      | 9,242 |   |
| Adjustments      to Reconcile Net Income to                                            |   |                                      |    |   |   |   |   |   |
| Net      Cash Provided by Operating Activities:                                        |   |                                      |    |   |   |   |   |   |
| Depreciation      and Amortization                                                     |   |                                      | 6,523   |   |   |   | 6,149 |   |
| Provision      for Deferred Income Taxes and ITC                                       |   |                                      | 860     |   |   |   | 628 |   |
| Equity      Portion of AFUDC                                                           |   |                                      | (230    | )      |   |   | (201 | ) |
| Cash      Surrender Value of Life Insurance                                            |   |                                      | 307     |   |   |   | (275 | ) |
| Gain      on Disposal of Equity Investments                                            |   |                                      | (86     | )      |   |   | - |   |
| Gain      on Sale of Real Estate                                                       |   |                                      | -       |   |   |   | (212 | ) |
| Changes      in Assets and Liabilities:                                                |   |                                      |    |   |   |   |   |   |
| Accounts      Receivable                                                               |   |                                      | (1,798  | )      |   |   | (2,939 | ) |
| Unbilled      Revenues                                                                 |   |                                      | (1,160  | )      |   |   | (1,619 | ) |
| Materials      & Supplies                                                          |   |                                      | (232    | )      |   |   | (32 | ) |
| Prepayments                                                                            |   |                                      | (330    | )      |   |   | (416 | ) |
| Other      Assets                                                                      |   |                                      | (457    | )      |   |   | (447 | ) |
| Accounts      Payable                                                                  |   |                                      | 57      |   |   |   | 1,183 |   |
| Accrued      Taxes                                                                     |   |                                      | 1,163   |   |   |   | 1,368 |   |
| Accrued      Interest                                                                  |   |                                      | (873    | )      |   |   | (976 | ) |
| Employee      Benefit Plans                                                            |   |                                      | (653    | )      |   |   | 270 |   |
| Unearned      Revenue & Advanced Service Fees                                      |   |                                      | 65      |   |   |   | 157 |   |
| Other      Liabilities                                                                 |   |                                      | (348    | )      |   |   | 266 |   |
| NET      CASH PROVIDED BY OPERATING ACTIVITIES                                         |   |                                      | 13,092  |   |   |   | 12,146 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                             |   |                                      |    |   |   |   |   |   |
| Utility      Plant Expenditures, Including AFUDC of $215 in 2008 and $220 in      2007 |   |                                      | (20,568 | )      |   |   | (15,579 | ) |
| Restricted      Cash                                                                   |   |                                      | 1,363   |   |   |   | 2,420 |   |
| Proceeds      from Real Estate Dispositions                                            |   |                                      | -       |   |   |   | 273 |   |
| Preliminary      Survey & Investigation Charges                                    |   |                                      | (1,137  | )      |   |   | (1,838 | ) |
| NET      CASH USED IN INVESTING ACTIVITIES                                             |   |                                      | (20,342 | )      |   |   | (14,724 | ) |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                             |   |                                      |    |   |   |   |   |   |
| Redemption      of Long-term Debt                                                      |   |                                      | (2,480  | )      |   |   | (2,214 | ) |
| Proceeds      from Issuance of Long-term Debt                                          |   |                                      | 1,079   |   |   |   | 132 |   |
| Net      Short-term Bank Borrowings                                                    |   |                                      | 15,950  |   |   |   | 6,550 |   |
| Deferred      Debt Issuance Expenses                                                   |   |                                      | (158    | )      |   |   | (30 | ) |
| Common      Stock Issuance Expense                                                     |   |                                      | -       |   |   |   | (15 | ) |
| Restricted      Cash                                                                   |   |                                      | (40     | )      |   |   | (11 | ) |
| Proceeds      from Issuance of Common Stock                                            |   |                                      | 1,091   |   |   |   | 1,060 |   |
| Payment      of Common Dividends                                                       |   |                                      | (6,977  | )      |   |   | (6,825 | ) |
| Payment      of Preferred Dividends                                                    |   |                                      | (166    | )      |   |   | (186 | ) |
| Construction      Advances and Contributions-Net                                       |   |                                      | 65      |   |   |   | 957 |   |
| NET      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               |   |                                      | 8,364   |   |   |   | (582 | ) |
| NET      CHANGES IN CASH AND CASH EQUIVALENTS                                          |   |                                      | 1,114   |   |   |   | (3,160 | ) |
| CASH      AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  |   |                                      | 2,029   |   |   |   | 5,826 |   |
| CASH      AND CASH EQUIVALENTS AT END OF PERIOD                                        |   | $                                         | 3,143   |   |   | $      | 2,666 |   |
|                                                                                   |   |                                      |    |   |   |   |   |   |
|                                                                                   |   |                                      |    |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF NON-CASH ACTIVITY:                                     |   |                                      |    |   |   |   |   |   |
| Utility      Plant received as Construction Advances and Contributions                 |   | $                                         | 4,612   |   |   | $      | 3,717 |   |
| Transfer      of Equity Investment to Employee Retirement Benefit Plans                |   | $                                         | 132     |   |   | $      | - |   |
|                                                                                   |   |                                      |    |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOWS INFORMATION:                                |   |                                      |    |   |   |
|    Cash      Paid During the Year for:                                  |   |                                      |    |   |   |   |   |   |
| Interest                                                                               |   | $                                         | 6,026   |   |   | $      | 5,795 |   |
| Interest      Capitalized                                                              |   | $                                         | (215    | )      |   | $      | (220 | ) |
| Income      Taxes                                                                      |   | $                                         | 3,515   |   |   | $      | 2,882 |   |

----

Index

| MIDDLESEX      WATER COMPANY                            |
|---------------------------------------------------------|
| CONDENSED      CONSOLIDATED STATEMENTS OF CAPITAL STOCK |
| AND      LONG-TERM DEBT                                 |
| (Unaudited)                                             |
| (In      thousands)                                     |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | September      30, |    |   | December      31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2008               |    |   | 2007              |   |
| Common      Stock, No Par Value:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |               |    |   |              |   |
| Shares      Authorized    -40,000                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |               |    |   |              |   |
| Shares      Outstanding  -2008      - 13,364                                             2007 - 13,246                                                                                                                                                                   |   | $                  | 107,342 |   |              | $      | 105,668 |   |
| Retained      Earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |               | 30,582  |   |              |   | 27,441 |   |
| Accumulated      Other Comprehensive Income (Loss), net of tax                                                                                                                                                                                                                                                                                                                                                                                                                        |   |               | -       |   |              |   | 69 |   |
| TOTAL      COMMON EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                  | 137,924 |   |              | $      | 133,178 |   |
| Cumulative      Preference Stock, No Par Value:                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               |    |   |              |   |   |   |
| Shares      Authorized - 100                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               |    |   |              |   |   |   |
|         Shares Outstanding - None                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |               |    |   |              |   |   |   |
| Cumulative      Preferred Stock, No Par Value:                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |               |    |   |              |   |   |   |
|                Shares Authorized - 139                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |    |   |              |   |   |   |
|          Shares Outstanding -2008      - 32                                                2007 - 37                                                                                                                                                 |   |               |    |   |              |   |   |   |
|    Convertible:                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |               |    |   |              |   |   |   |
| Shares      Outstanding, $7.00 Series      -              14                                                                                                                                                                                                                                                                                                                                                    |   |               | 1,457   |   |              |   | 1,457 |   |
| Shares      Outstanding, $8.00 Series -  2008      -    7                                                                    2007 - 12 |   |               | 816     |   |              |   | 1,399 |   |
|    Nonredeemable:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |               |    |   |              |   |   |   |
|           Shares Outstanding, $7.00 Series      -                     1                                                                                                                                                                                                                                                                                                                |   |               | 102     |   |              |   | 102 |   |
|         Shares Outstanding, $4.75 Series      -                   10                                                                                                                                                                                                                                                                                                                                       |   |               | 1,000   |   |              |   | 1,000 |   |
| TOTAL      PREFERRED STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | $                  | 3,375   |   |              | $      | 3,958 |   |
| Long-term      Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |               |    |   |              |   |   |   |
|    8.05%,      Amortizing Secured Note, due December 20, 2021                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                  | 2,723   |   |              | $      | 2,800 |   |
|    6.25%,      Amortizing Secured Note, due May 22, 2028                                                                                                                                                                                                                                                                                                                                                                                                               |   |               | 8,260   |   |              |   | 8,575 |   |
|    6.44%,      Amortizing Secured Note, due August 25, 2030                                                                                                                                                                                                                                                                                                                                                                                                            |   |               | 6,137   |   |              |   | 6,347 |   |
|    6.46%,      Amortizing Secured Note, due September 19, 2031                                                                                                                                                                                                                                                                                                                                                                                                         |   |               | 6,417   |   |              |   | 6,627 |   |
|    4.22%,      State Revolving Trust Note, due December 31, 2022                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 674     |   |              |   | 691 |   |
|    3.30%      to 3.60%, State Revolving Trust Note, due May 1, 2025                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 3,661   |   |              |   | 3,168 |   |
|    3.49%,      State Revolving Trust Note, due January 25, 2027                                                                                                                                                                                                                                                                                                                                                                                                        |   |               | 670     |   |              |   | 603 |   |
|    4.03%,      State Revolving Trust Note, due December 1, 2026                                                                                                                                                                                                                                                                                                                                                                                                        |   |               | 957     |   |              |   | 974 |   |
|    3.64%,      State Revolving Trust Note, due July 1, 2028                                                                                                                                                                                                                                                                                                                                                                                                            |   |               | 348     |   |              |   | - |   |
|    3.64%,      State Revolving Trust Note, due January 1, 2028                                                                                                                                                                                                                                                                                                                                                                                                         |   |               | 140     |   |              |   | - |   |
|    4.00%      to 5.00%, State Revolving Trust Bond, due September 1,2021                                                                                                                                                                                                                                                                                                                                                                                               |   |               | 660     |   |              |   | 695 |   |
|    0.00%,      State Revolving Fund Bond, due September 1, 2021                                                                                                                                                                                                                                                                                                                                                                                                        |   |               | 500     |   |              |   | 538 |   |
|    First      Mortgage Bonds:                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               |    |   |              |   |   |   |
|  5.20%,      Series S, due October 1, 2022                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 12,000  |   |              |   | 12,000 |   |
|  5.25%,      Series T, due October 1, 2023                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 6,500   |   |              |   | 6,500 |   |
|  6.40%,      Series U, due February 1, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |               | 15,000  |   |              |   | 15,000 |   |
|  5.25%,      Series V, due February 1, 2029                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |               | 10,000  |   |              |   | 10,000 |   |
|  5.35%,      Series W, due February 1, 2038                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |               | 23,000  |   |              |   | 23,000 |   |
|    0.00%,      Series X, due September 1, 2018                                                                                                                                                                                                                                                                                                                                                                                                                         |   |               | 538     |   |              |   | 591 |   |
|         4.25% to 4.63%, Series Y, due September 1, 2018                                                                                                                                                                                                                                                                                                                                                                                                                     |   |               | 710     |   |              |   | 765 |   |
|         0.00%, Series Z, due September 1, 2019                                                                                                                                                                                                                                                                                                                                                                                                                              |   |               | 1,230   |   |              |   | 1,342 |   |
|         5.25% to 5.75%, Series AA, due September 1, 2019                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 1,675   |   |              |   | 1,785 |   |
|         0.00%, Series BB, due September 1, 2021                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 1,566   |   |              |   | 1,685 |   |
|         4.00% to 5.00%, Series CC, due September 1, 2021                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 1,895   |   |              |   | 1,995 |   |
|         5.10%, Series DD, due January 1, 2032                                                                                                                                                                                                                                                                                                                                                                                                                               |   |               | 6,000   |   |              |   | 6,000 |   |
|         0.00%, Series EE, due September 1, 2024                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 6,693   |   |              |   | 7,112 |   |
|         3.00% to 5.50%, Series FF, due September 1, 2024                                                                                                                                                                                                                                                                                                                                                                                                                    |   |               | 8,025   |   |              |   | 8,385 |   |
|         0.00%, Series GG, due September 1, 2026                                                                                                                                                                                                                                                                                                                                                                                                                             |   |               | 1,619   |   |              |   | 1,710 |   |
|         4.00% to 5.00%, Series HH, due August 1, 2026                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 1,880   |   |              |   | 1,950 |   |
|  0.00%,      Series II, due August 1, 2027                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 1,709   |   |              |   | 1,750 |   |
|         3.40% to 5.00%, Series JJ, due August 1, 2027                                                                                                                                                                                                                                                                                                                                                                                                                       |   |               | 1,750   |   |              |   | 1,750 |   |
| SUBTOTAL      LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               | 132,937 |   |              |   | 134,338 |   |
| Less:      Current Portion of Long-term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |               | (17,928 | )      |              |   | (2,723 | ) |
| TOTAL      LONG-TERM DEBT                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $                  | 115,009 |   |              | $      | 131,615 |   |

----

Index

T

----

Index

----

Index

|                                                         |   | (In      Thousands Except per Share Amounts)Three      Months Ended September 30, |   |
|--------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
| Basic:                                                       |   | 2008                                                                              |   |   | Shares |   |   | 2007 |   |   | Shares |   |
| Net      Income                                              |   | $                                                                                 | 4,715  |   |   |   | 13,350 |   |   | $ | 4,158 |   |   |   | 13,206 |   |
| Preferred      Dividend                                      |   |                                                                              | (52    | ) |   |   |   |   |   |  (62 | ) |   |   |   |
| Earnings      Applicable to Common Stock                     |   | $                                                                                 | 4,663  |   |   |   | 13,350 |   |   | $ | 4,096 |   |   |   | 13,206 |   |
|                                                         |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      EPS                                               |   | $                                                                                 | 0.35   |   |   |   |   |   |   | $ | 0.31 |   |   |   |   |   |
|                                                         |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted:                                                     |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Applicable to Common Stock                     |   | $                                                                                 | 4,663  |   |   |   | 13,350 |   |   | $ | 4,096 |   |   |   | 13,206 |   |
| $7.00      Series Preferred Dividend                         |   |                                                                              | 24     |   |   |   | 167 |   |   |   | 24 |   |   |   | 167 |   |
| $8.00      Series Preferred Dividend                         |   |                                                                              | 14     |   |   |   | 100 |   |   |   |  24 |   |   |   | 164 |   |
| Adjusted      Earnings Applicable to  Common Stock |   | $                                                                                 | 4,701  |   |   |   | 13,617 |   |   | $ | 4,144 |   |   |   | 13,537 |   |
|                                                         |   |                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      EPS                                             |   | $                                                                                 | 0.35   |   |   |   |   |   |   | $ | 0.31 |   |   |   |   |   |

|                                                         |   | Nine      Months Ended September 30, |   |
|--------------------------------------------------------------|--------|--------------------------------------|--------|
| Basic:                                                       |   | 2008                                 |   |   | Shares |   |   | 2007 |   |   | Shares |   |
| Net      Income                                              |   | $                                    | 10,284 |   |   |   | 13,291 |   |   | $ | 9,242 |   |   |   | 13,191 |   |
| Preferred      Dividend                                      |   |                                 | (166   | ) |   |   |   |   |   |  (186 | ) |   |   |   |
| Earnings      Applicable to Common Stock                     |   | $                                    | 10,118 |   |   |   | 13,291 |   |   | $ | 9,056 |   |   |   | 13,191 |   |
|                                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      EPS                                               |   | $                                    | 0.76   |   |   |   |   |   |   | $ | 0.69 |   |   |   |   |   |
|                                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted:                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      Applicable to Common Stock                     |   | $                                    | 10,118 |   |   |   | 13,291 |   |   | $ | 9,056 |   |   |   | 13,191 |   |
| $7.00      Series Preferred Dividend                         |   |                                 | 73     |   |   |   | 167 |   |   |   | 73 |   |   |   | 167 |   |
| $8.00      Series Preferred Dividend                         |   |                                 | 52     |   |   |   | 143 |   |   |   |  72 |   |   |   | 164 |   |
| Adjusted      Earnings Applicable to  Common Stock |   | $                                    | 10,243 |   |   |   | 13,601 |   |   | $ | 9,201 |   |   |   | 13,522 |   |
|                                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      EPS                                             |   | $                                    | 0.75   |   |   |   |   |   |   | $ | 0.68 |   |   |   |   |   |
|                                                         |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Index

|                                         |   | (In      Thousands)     |   |
|----------------------------------------------|--------|-------------------------|--------|
|                                         |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                                         |   | September      30,      |   |   | September      30, |   |
| Operations      by Segments:                 |   | 2008                    |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Revenues:                                    |   |                    |   |   |   |   |   |   |   |   |   |   |
|    Regulated                  |   | $                       | 23,191 |   |   | $ | 21,906 |   |   | $ | 62,151 |   |   | $ | 58,239 |   |
|    Non      – Regulated |   |                    | 2,654  |   |   |   | 2,399 |   |   |   | 7,745 |   |   |   | 6,956 |   |
| Inter-segment      Elimination               |   |                    | (192   | ) |   |   | (170 | ) |   |   | (353 | ) |   |   | (327 | ) |
| Consolidated      Revenues                   |   | $                       | 25,653 |   |   | $ | 24,135 |   |   | $ | 69,543 |   |   | $ | 64,868 |   |
|  Operating      Income:                 |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Regulated                  |   | $                       | 7,886  |   |   | $ | 7,384 |   |   | $ | 18,122 |   |   | $ | 16,806 |   |
|    Non      – Regulated |   |                    | 498    |   |   |   | 345 |   |   |   | 1,433 |   |   |   | 924 |   |
| Consolidated      Operating Income           |   | $                       | 8,384  |   |   | $ | 7,729 |   |   | $ | 19,555 |   |   | $ | 17,730 |   |
|                                         |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Income:                             |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Regulated                  |   | $                       | 4,392  |   |   | $ | 3,959 |   |   | $ | 9,353 |   |   | $ | 8,739 |   |
|    Non      – Regulated |   |                    | 323    |   |   |   | 199 |   |   |   | 931 |   |   |   | 503 |   |
| Consolidated      Net Income                 |   | $                       | 4,715  |   |   | $ | 4,158 |   |   | $ | 10,284 |   |   | $ | 9,242 |   |
|                                         |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      Expenditures:                   |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Regulated                  |   | $                       | 6,703  |   |   | $ | 6,724 |   |   | $ | 19,987 |   |   | $ | 15,273 |   |
|    Non      – Regulated |   |                    | 326    |   |   |   | 81 |   |   |   | 581 |   |   |   | 306 |   |
| Total      Capital Expenditures              |   | $                       | 7,029  |   |   | $ | 6,805 |   |   | $ | 20,568 |   |   | $ | 15,579 |   |

|                                         |   | As      ofSeptember      30,2008 |    |   | As      ofDecember      31,2007 |   |
|----------------------------------------------|--------|----------------------------------|---------|--------|---------------------------------|--------|
| Assets:                                      |   |                             |    |   |                            |   |
|    Regulated                  |   | $                                | 409,829 |   |                            | $      | 387,931 |   |
|    Non      – Regulated |   |                             | 10,741  |   |                            |   | 8,157 |   |
| Inter-segment      Elimination               |   |                             | (4,345  | )      |                            |   | (3,413 | ) |
| Consolidated      Assets                     |   | $                                | 416,225 |   |                            | $      | 392,675 |   |

----

Index

----

Index

|                 |   | (In      Thousands)                        |   |
|----------------------|--------|--------------------------------------------|--------|
|                 |   | Three      Months Ended,September      30. |   |   | Nine      Months Ended,September      30. |   |
|                 |   | 2008                                       |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                 |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Purchased      Water |   |                                       |   |   |   |   |   |   |   |   |   |   |
| Treated              |   | $                                          | 539    |   |   | $ | 569 |   |   | $ | 1,588 |   |   | $ | 1,568 |   |
| Untreated            |   |                                       | 618    |   |   |   | 602 |   |   |   | 1,739 |   |   |   | 1,730 |   |
| Total      Costs     |   | $                                          | 1,157  |   |   | $ | 1,171 |   |   | $ | 3,327 |   |   | $ | 3,298 |   |

----

Index

|                                                 |   | (In      Thousands)                   |   |
|------------------------------------------------------|--------|---------------------------------------|--------|
|                                                 |   | Pension      Benefits                 |   |   | Other      Benefits |   |
|                                                 |   | Three      Months Ended September 30, |   |
|                                                 |   | 2008                                  |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |
| Service      Cost                                    |   | $                                     | 312    |   |   | $ | 324 |   |   | $ | 194 |   |   | $ | 205 |   |
| Interest      Cost                                   |   |                                  | 488    |   |   |   | 452 |   |   |   | 252 |   |   |   | 224 |   |
| Expected      Return on Assets                       |   |                                  | (484   | ) |   |   | (455 | ) |   |   | (145 | ) |   |   | (120 | ) |
| Amortization      of Unrecognized Losses             |   |                                  | -      |   |   |   | 19 |   |   |   | 72 |   |   |   | 84 |   |
| Amortization      of Unrecognized Prior Service Cost |   |                                  | 2      |   |   |   | 2 |   |   |   | - |   |   |   | - |   |
| Amortization      of Transition Obligation           |   |                                  | -      |   |   |   | - |   |   |   | 34 |   |   |   | 34 |   |
| Net      Periodic Benefit Cost                       |   | $                                     | 318    |   |   | $ | 342 |   |   | $ | 407 |   |   | $ | 427 |   |
|                                                 |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                 |   | Pension      Benefits                |   |   | Other      Benefits |   |
|------------------------------------------------------|--------|--------------------------------------|--------|--------|---------------------|--------|
|                                                 |   | Nine      Months Ended September 30, |   |
|                                                 |   | 2008                                 |   |   | 2007                |   |   | 2008 |   |   | 2007 |   |
|                                                 |   |                                 |   |   |                |   |   |   |   |   |   |   |
| Service      Cost                                    |   | $                                    | 936    |   |                | $      | 972 |   |   | $ | 581 |   |   | $ | 616 |   |
| Interest      Cost                                   |   |                                 | 1,463  |   |                |   | 1,356 |   |   |   | 757 |   |   |   | 671 |   |
| Expected      Return on Assets                       |   |                                 | (1,453 | )      |                |   | (1,364 | ) |   |   | (436 | ) |   |   | (361 | ) |
| Amortization      of Unrecognized Losses             |   |                                 | -      |   |                |   | 56 |   |   |   | 216 |   |   |   | 253 |   |
| Amortization      of Unrecognized Prior Service Cost |   |                                 | 7      |   |                |   | 7 |   |   |   | - |   |   |   | - |   |
| Amortization      of Transition Obligation           |   |                                 | -      |   |                |   | - |   |   |   | 101 |   |   |   | 101 |   |
| Net      Periodic Benefit Cost                       |   | $                                    | 953    |   |                | $      | 1,027 |   |   | $ | 1,219 |   |   | $ | 1,280 |   |
|                                                 |   |                                 |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

----

Index

|                                                                          |   | (In      Thousands)                       |   |
|-------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                          |   | Three      Months EndedSeptember      30, |   |   | Nine      Months EndedSeptember      30, |   |
|                                                                          |   | 2008                                      |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                          |   |                                      |   |   |   |   |   |   |   |   |   |   |
| Net      Income                                                               |   | $                                         | 4,715  |   |   | $ | 4,158 |   |   | $ | 10,284 |   |   | $ | 9,242 |   |
|                                                                          |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (Loss):                                       |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in Value of Equity Investments,  Net      of Income Tax |   |                                      | ---    |   |   |   | (6 | ) |   |   | (12 | ) |   |   | (21 | ) |
| Less:  Adjustment      for Gain Included in Net Income              |   |                                      | ---    |   |   |   | --- |   |   |   | (57 | ) |   |   | --- |   |
|      Other      Comprehensive Income (Loss)          |   |                                      | ---    |   |   |   | (6 | ) |   |   | (69 | ) |   |   | (21 | ) |
|                                                                          |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      Income                                                     |   | $                                         | 4,715  |   |   | $ | 4,152 |   |   | $ | 10,215 |   |   | $ | 9,221 |   |

----

Index

s

|   | - | statements      as to expected financial condition, performance, prospects and earnings of      the Company; |
|--------|---|--------------------------------------------------------------------------------------------------------------|

|   | - | statements      regarding strategic plans forgrowth; |
|--------|---|------------------------------------------------------|

|   | - | 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 operatingresults; |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------|

|   | - | 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. |
|--------|---|------------------------------------------------------------------------------|

|   | - | the      effects of general economicconditions; |
|--------|---|-------------------------------------------------|

|   | - | 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 ofwater; |
|--------|---|-----------------------------------------------------|

|   | - | actions      taken by government regulators, including decisions on base rate increase      requests; |
|--------|---|-------------------------------------------------------------------------------------------------------|

|   | - | new      or additional water qualitystandards; |
|--------|---|------------------------------------------------|

|   | - | weather      variations and other naturalphenomena; |
|--------|---|-----------------------------------------------------|

|   | - | 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 inDelaware; |
|--------|---|------------------------------------------------------------|

|   | - | the      availability and cost of capital resources;and |
|--------|---|---------------------------------------------------------|

|   | - | other      factors discussed elsewhere in this quarterly  report. |
|--------|---|-------------------------------------------------------------------|

----

Index

----

Index

----

Index

|                                     |   | (In      Thousands)                   |   |
|------------------------------------------|--------|---------------------------------------|--------|
|                                     |   | Three Months Ended      September 30, |   |
|                                     |   | 2008                                  |   |   | 2007 |   |
|                                     |   | Regulated                             |   |   | Non-Regulated |   |   | Total |   |   | Regulated |   |   | Non-Regulated |   |   | Total |   |
| Revenues                                 |   | $                                     | 23,191 |   |   | $ | 2,462 |   |   | $ | 25,653 |   |   | $ | 21,906 |   |   | $ | 2,229 |   |   | $ | 24,135 |   |
| Operations      and maintenance expenses |   |                                  | 10,704 |   |   |   | 1,870 |   |   |   | 12,574 |   |   |   | 10,173 |   |   |   | 1,788 |   |   |   | 11,961 |   |
| Depreciation      expense                |   |                                  | 1,955  |   |   |   | 32 |   |   |   | 1,987 |   |   |   | 1,854 |   |   |   | 33 |   |   |   | 1,887 |   |
| Other      taxes                         |   |                                  | 2,646  |   |   |   | 62 |   |   |   | 2,708 |   |   |   | 2,495 |   |   |   | 63 |   |   |   | 2,558 |   |
|   Operating      income        |   |                                  | 7,886  |   |   |   | 498 |   |   |   | 8,384 |   |   |   | 7,384 |   |   |   | 345 |   |   |   | 7,729 |   |
|                                     |   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      income                        |   |                                  | 223    |   |   |   | 95 |   |   |   | 318 |   |   |   | 259 |   |   |   | -- |   |   |   | 259 |   |
| Interest      expense                    |   |                                  | 1,780  |   |   |   | 58 |   |   |   | 1,838 |   |   |   | 1,707 |   |   |   | 27 |   |   |   | 1,734 |   |
| Income      taxes                        |   |                                  | 1,937  |   |   |   | 212 |   |   |   | 2,149 |   |   |   | 1,977 |   |   |   | 119 |   |   |   | 2,096 |   |
|   Net      income              |   | $                                     | 4,392  |   |   | $ | 323 |   |   | $ | 4,715 |   |   | $ | 3,959 |   |   | $ | 199 |   |   | $ | 4,158 |   |

----

Index

|                                     |   | (In      Thousands)                  |   |
|------------------------------------------|--------|--------------------------------------|--------|
|                                     |   | Nine Months Ended      September 30, |   |
|                                     |   | 2008                                 |   |   | 2007 |   |
|                                     |   | Regulated                            |   |   | Non-Regulated |   |   | Total |   |   | Regulated |   |   | Non-Regulated |   |   | Total |   |
| Revenues                                 |   | $                                    | 62,151 |   |   | $ | 7,392 |   |   | $ | 69,543 |   |   | $ | 58,239 |   |   | $ | 6,629 |   |   | $ | 64,868 |   |
| Operations      and maintenance expenses |   |                                 | 30,710 |   |   |   | 5,691 |   |   |   | 36,401 |   |   |   | 28,884 |   |   |   | 5,426 |   |   |   | 34,310 |   |
| Depreciation      expense                |   |                                 | 5,782  |   |   |   | 90 |   |   |   | 5,872 |   |   |   | 5,510 |   |   |   | 97 |   |   |   | 5,607 |   |
| Other      taxes                         |   |                                 | 7,537  |   |   |   | 178 |   |   |   | 7,715 |   |   |   | 7,039 |   |   |   | 182 |   |   |   | 7,221 |   |
|   Operating      income        |   |                                 | 18,122 |   |   |   | 1,433 |   |   |   | 19,555 |   |   |   | 16,806 |   |   |   | 924 |   |   |   | 17,730 |   |
|                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      income                        |   |                                 | 640    |   |   |   | 304 |   |   |   | 944 |   |   |   | 1,008 |   |   |   | --- |   |   |   | 1,008 |   |
| Interest      expense                    |   |                                 | 4,978  |   |   |   | 183 |   |   |   | 5,161 |   |   |   | 4,738 |   |   |   | 78 |   |   |   | 4,816 |   |
| Income      taxes                        |   |                                 | 4,431  |   |   |   | 623 |   |   |   | 5,054 |   |   |   | 4,337 |   |   |   | 343 |   |   |   | 4,680 |   |
|   Net      income              |   | $                                    | 9,353  |   |   | $ | 931 |   |   | $ | 10,284 |   |   | $ | 8,739 |   |   | $ | 503 |   |   | $ | 9,242 |   |

----

Index

----

Index

----

Index

| Item      3.     | Quantitative      and Qualitative Disclosures of Market  Risk |
|--------------------------------------|---------------------------------------------------------------|

| Item      4.     | Controls      and Procedures |
|--------------------------------------|------------------------------|
|                                 |                         |

----

Index

I

| Item      1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Legal      Proceedings                                                                                                                                                      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Reference      is made to the Company’s Annual Report on Form 10-K for the year ended      December 31, 2007, the Quarterly Report on Form 10-Q/A filed for the      period ended March 31, 2008, and the Quarterly Report on Form 10-Q filed      for the period ended June 30, 2008.  Note 7 to the unaudited      Condensed Consolidated Financial Statements for the period ended September      30, 2008, included in Part I of this Quarterly Report on Form 10-Q, 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, revenue growth may not meet      our expectations and our financial results could be    impacted. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Except      as described above, information about risk factors for the nine months      ended September 30, 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 Sales of Equity Securities and Use of      Proceeds                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| Item      3.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Defaults      Upon Senior Securities                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| Item      4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Submission      of Mattersto a Vote of SecurityHolders                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| Item      5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Other      Information                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                        |
| 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. |

----

Index

N

|   | MIDDLESEX      WATER COMPANY |                         |
|--------|------------------------------|------------------------------|
|   |                         |                         |   |
|   | By:                          | /s/ A. Bruce O’Connor  |   |
|   |                         | A.      Bruce O’Connor |   |
|   |                         | Vice      President and      |   |
|   |                         | Chief      Financial Officer |   |