Document:

Exhibit 10.7

 

 

 

 

 

TREATMENT AND PUMPING AGREEMENT

BETWEEN

MIDDLESEX WATER COMPANY

AND THE

TOWNSHIP OF EAST BRUNSWICK

DATED OCTOBER 1, 2014

 

 

    

     

    

 

TREATMENT AND PUMPING AGREEMENT

This Treatment and
Pumping Agreement (hereinafter referred to as the “Agreement”) made this 1st day of October, 2014 between MIDDLESEX
WATER COMPANY, a public utility and corporation organized under the laws of the State of New Jersey, with offices located at
1500 Ronson Road, Iselin, New Jersey (hereinafter referred to as “Middlesex”), and the TOWNSHIP OF EAST BRUNSWICK,
a municipal corporation of the State of New Jersey with offices located at 1 Jean Walling Civic Center, East Brunswick, New Jersey
08816 (hereinafter referred to as “East Brunswick”) (hereinafter collectively referred to as “the Parties”).

 

W I T N E S S E T H :

WHEREAS,  Middlesex
is engaged in the business of collecting, treating and distributing water for domestic, commercial, industrial and municipal uses
and owns and operates a public water treatment and supply system for these purposes; and

WHEREAS, East
Brunswick is desirous of engaging the services of Middlesex to treat and process water allocated to East Brunswick by the New Jersey
Water Supply Authority (NJWSA), a subdivision of the State of New Jersey, and in having Middlesex treat and deliver the water into
a water distribution transmission system owned by East Brunswick;

NOW THEREFORE,
in consideration of the promises and of the mutual covenants herein contained, the Parties hereto agree as follows:

		1.	SUPPLY OF WATER

Middlesex
agrees that it shall treat and pump such water as is supplied to it by the NJWSA on behalf of East Brunswick, upon the terms and
conditions set forth herein.

    

     

    

 Middlesex’s obligations hereunder to treat and pump the quantities of water contemplated by
this Agreement shall at all times be contingent upon, and limited to, such quantities of raw water as are supplied to it by the
NJWSA on behalf of East Brunswick.

		2.	TERM

This Agreement
shall be effective for a period of 30 years upon its execution by both Middlesex and East Brunswick.

		3.	MANAGEMENT AND OPERATION

Middlesex
shall maintain and operate the water in-take transmission system required to treat and pump the required water supply.

		4.	QUALITY OF WATER

Middlesex
warrants that it intends to treat and pump all water to East Brunswick in a manner consistent with all applicable federal and state
water quality statutes and regulations and Middlesex warrants that it will continue to monitor the raw water supply prior to treatment.

		5.	RATE

East Brunswick
shall pay for the treatment of water delivered pursuant to this Agreement at the New Jersey Board of Public Utilities (NJBPU) approved
tariff rate of $1,511.48 per million gallons or as said rate may be changed from time to time to the extent approved by the NJBPU,
as required by law.

		6.	METER STATION

Water to be
supplied by Middlesex hereunder shall be delivered to East Brunswick through an interconnection installed at the Carl J. Olsen
Treatment Plant in the Township of Edison, New Jersey.

    

     

    

		7.	METER, SERVICES AND OTHER APPURTENANCES

Middlesex
will furnish, install and maintain, at its own cost, a valved connection to East Brunswick’s water distribution transmission
system and a meter. The meter and connection will remain the property of Middlesex. Middlesex will maintain and verify the accuracy
of said meter, and report such to East Brunswick.

		8.	MINIMUM PAYMENT OBLIGATION

East Brunswick
shall be obligated to pay for the treatment of at least five (5) million gallons of water daily (regardless of actual demand or
consumption) unless a new minimum has been established under Paragraph 8 of this Agreement. In the event the NJWSA diversion privilege
for East Brunswick is reduced, the minimum payment obligation is reduced accordingly. Payment for water treated shall be made within
thirty days from the rendering to East Brunswick of a bill therefor.

		9.	INCREASE IN MINIMUM PAYMENT OBLIGATION

The total
daily quantity of water taken by East Brunswick at the meter station during on-peak periods may exceed five (5) million gallons
per day by up to 100% on a 24-hour basis, without affecting the minimum payment obligation. All water treated in any 24-hour period
in excess of five (5) million gallons shall be paid for at the Contract rate.

The quantity
of water treated in any peak hour during on-peak periods (6:00 A.M. to 10:00 P.M.) multiplied by 24 may exceed the five (5) million
gallons by 100% (equivalent to a maximum hourly flow of 10 million gallons per day) without affecting the minimum payment obligation.

    

     

    

The quantity
of water treated in any peak hour during off-peak periods (10:00 P.M. to 6:00 A.M.) may exceed five (5) million gallons per day
by 150% (equivalent to a maximum hourly flow of 12.5 million gallons per day) without affecting the minimum payment obligation.

In the event
that the daily 24-hour quantity of water treated shall exceed ten (10) million gallons or the maximum hourly flow shall exceed
the rate of twelve and one-half (12.5) million gallons per day during on-peak periods, or the rate of 16 million gallons per day
during off-peak periods during more than four (4) consecutive days or during more than twelve (12) days during the year, the minimum
quantity of water which East Brunswick shall be obligated to pay for shall be increased to the greater of either two-thirds of
the daily quantity of water supplied or one-half of the quantity supplied in the peak hour multiplied by 24.

Any increased
minimum payment obligation shall continue in effect for six (6) months. At the end of any such six (6) month period the subsequent
minimum payment obligation shall be determined by the average usage, level maintained during the three (3) months prior to the
expiration of the 6-month period.

Nothing herein
shall prevent the Parties from mutually agreeing to increase for six (6) months the minimum amount of water treated daily for which
East Brunswick is obligated to pay. In the event that agreement among the Parties is so reached, the daily and hourly percentage
increase allowances concerning minimum payment obligations set forth in Paragraph 8 shall apply the same manner.

 

    

     

    

		10.	COMBINED CHARGE

The minimum
payment obligation shall be determined on the basis of the combined total daily quantity of water supplied through all the meter
stations if and when additional connections are required.

		11.	DEFINITIONS

Where the
words “daily” or “24-hours” are used in this Agreement, they shall refer to the 24-hour period between
the daily meter reading to be taken at 8:00 A.M. The words “on-peak” as used in this Agreement shall refer to the hours
of 6:00 A.M. through 10:00 P.M. during any given 24-hour period. The words “off-peak” as used in this Agreement shall
refer to hours of 10:00 P.M. through 6:00 A.M. during any given 24-hour period.

		12.	EXCEPTIONS FOR EMERGENCIES

The minimum
payment obligation shall not be affected in the event that the amount of water treated and pumped exceeds the daily or hourly limitations
established herein for not more than 24 hours in case of fire or 48 hours in case of main break emergencies and for not more than
five (5) days (120 consecutive hours) in the case of other catastrophes requiring an emergency supply of water, provided Middlesex
is promptly notified that any such emergency exists. The determination as to whether a fire or main break is considered an exception
for emergencies as contemplated under this provision will be made at the sole discretion of Middlesex. Middlesex agrees to act
in good faith to apply fair and reasonable judgment with respect to the characterization of such events. If either of the Parties
needs to provide emergency service to another utility or if either of the Parties declares an emergency due to some other event
than those listed 

    

     

    

above in this Paragraph, then the Parties will act in good faith to mutually agree on how such events shall be
addressed both operationally and financially.

		13.	METER READINGS

Middlesex
will read the meters daily for all water supplied to East Brunswick at each connection then in operation.

		14.	EXCUSED PERFORMANCE

Middlesex
agrees to provide a continuous, regular and uninterrupted supply of water, subject to the terms of this Agreement and subject further
to:

		a)	interruption of supply of unprocessed water from the NJWSA to Middlesex for whatever cause

		b)	interruption by reasons of acts of God, strike, State or Municipal interference or other causes
beyond its control

		c)	The supply of any water amounts, over the minimums listed in this document, shall be provided to
East Brunswick based on the ability and capability of Middlesex to provide the amounts and are not guaranteed.

In no event,
shall Middlesex be liable for damages to East Brunswick by reason of interruptions in supply of water to East Brunswick and its
customers for any cause whatsoever. Nor shall the payment provision apply if Middlesex is unable to supply water to East Brunswick;
provided, however that East Brunswick shall be responsible for all payment obligations for interruptions which are not caused by
Middlesex’s inability to supply water to East Brunswick with the exception of interruptions caused by the NJSWA.

 

    

     

    

		15.	INDEMNIFICATION

East Brunswick
shall completely indemnify, protect and hold harmless Middlesex from any and all costs, expenses, liability, losses, claims, suits
and proceedings for any nature whatsoever whether brought against East Brunswick or Middlesex provided that the same arise out
of any negligence, breach of warranty or other breach of duty by East Brunswick. Similarly, Middlesex shall completely indemnify,
protect and save harmless East Brunswick from any and all costs, expenses, liability, losses claims, suits and proceedings of any
nature whatsoever whether brought against East Brunswick or Middlesex provided that the same arise out of any negligence, breach
of warranty or other breach of duty by Middlesex. East Brunswick agrees to provide the aforesaid indemnification to Middlesex for
any costs or amounts that may be due from or payable by Middlesex as a result of the applicability of the New Jersey Gross Receipts
Tax and Franchise tax to the transactions contemplated by this Agreement.

		16.	FIRM CAPACITY

For the purposes of the calculation
of the Firm Capacity allocated by the New Jersey Department of Environmental Protection (NJDEP) to Middlesex, the Daily Minimum
or Revised Daily Minimum conveyed to East Brunswick shall represent the amount by which the total Firm Capacity of Middlesex is
reduced.

		17.	REGULATORY APPROVALS

This Agreement
shall be filed with and subject to approval by the NJBPU as may be required by law.

 

    

     

    

		18.	GOVERNING LAW

This Agreement
shall be governed by and interpreted in accordance with the laws of the State of New Jersey.

IN WITNESS WHEREOF,
the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

	ATTEST:	 	 	MIDDLESEX WATER COMPANY
	 	 	 	 
	/s/Jay L. Kooper	 	/s/Dennis W. Doll
	Jay L. Kooper	12/5/16	 	Dennis W. Doll
	Vice President, General Counsel & Secretary	 	President and Chief Executive Officer
	 	 	 	 
	ATTEST:	 	 	TOWNSHIP OF EAST BRUNSWICK
	 	 	 	 
	/s/Nennette Perry	 	/s/David Stahl
	Nennette Perry, Municipal Clerk	 	Mayor David Stahl
	 	10/28/14Exhibit 10.13(a)

 

 

 

 

 

SECOND AMENDMENT TO

TRANSMISSION AGREEMENT

BETWEEN

MIDDLESEX WATER COMPANY

AND THE

TOWNSHIP OF EAST BRUNSWICK

DATED OCTOBER 1, 2014

 

 

    

     

    

 

SECOND AMENDMENT TO TRANSMISSION
AGREEMENT

This Second Amendment
to Transmission Agreement (hereinafter referred to as the “Agreement”) made this 28th day of November, 2016 between
MIDDLESEX WATER COMPANY, a public utility and corporation organized under the laws of the State of New Jersey, with offices
located at 1500 Ronson Road, Iselin, New Jersey (hereinafter referred to as “Middlesex”), and the TOWNSHIP OF EAST
BRUNSWICK, a municipal corporation of the State of New Jersey, with offices located at 1 Jean Walling Civic Center, East Brunswick,
New Jersey 08816 (hereinafter referred to as “East Brunswick”) (hereinafter collectively referred to as “the
Parties”).

W I T N E S S E T H :

WHEREAS, Middlesex
is engaged in the business of collecting, treating and distributing water for domestic, commercial, industrial and municipal uses
and owns and operates a public water treatment and supply system for these purposes; and

WHEREAS, East
Brunswick owns and operates a public water supply system that is connected to Middlesex’s water treatment and supply system
through an interconnection located at the Carl J. Olsen Treatment Plant in the Township of Edison, New Jersey (hereinafter “CJO
Treatment Plant”); and

WHEREAS, Middlesex
owns and operates the South River Basin Transmission Main (hereinafter referred to as “South River Basin Transmission Main”
or “SRBTM”) for the purpose of supplying water to customers located in the South River Basin; and

WHEREAS, East
Brunswick is desirous of utilizing temporary surplus capacity in its system to transport water through its 36-inch and 24-inch
transmission mains, that together extend from Middlesex’s CJO Treatment Plant through East Brunswick’s Tices Lane Pumping

    

     

    

Station and then to Middlesex’s South River Basin Transmission Main, for the purpose of supplying water to customers located
in the South River Basin;

WHEREAS, the
Parties entered into a Transmission Agreement Between Middlesex Water Company and the Township of East Brunswick, dated October,
16, 1992 (“Transmission Agreement”), which was subsequently amended by the Agreement to Modify A Transmission Agreement
Dated October 16, 1992 Between Middlesex Water Company and the Township of East Brunswick, dated June 22, 1998 (“First Amendment”);
and

WHEREAS, The
Parties desire to further amend certain provisions the Transmission Agreement through this Second Amendment To The Transmission
Agreement Between Middlesex Water Company and the Township of East Brunswick (“Second Amendment”);

NOW THEREFORE,
in consideration of the promises and of the mutual covenants herein contained, the Parties hereto agree as follows:

1.       Section
2 entitled “Term” of the Transmission Agreement is hereby amended to read as follows: “This Agreement
as amended by the Second Amendment shall be effective upon execution by the Parties for a period of fifteen (15) years subject
to a second term upon approval of both the Township of East Brunswick Governing Body and Middlesex Water Company that shall terminate
effective the same date as the termination of the Treatment and Pumping Agreement Between Middlesex Water Company and the Township
of East Brunswick, dated October 1, 2014. This Agreement as amended by the Second Amendment shall not terminate unless or until
written notice of intention to terminate the Agreement is given by either party at least thirty-six (36) months prior to the effective
date of the termination. At the end of each term, this Agreement shall automatically renew for an additional three (3)-year period
unless either 

    

     

    

party provides at least 36-months advance written notice of its intention to not renew the Agreement.”

2.       Section
7 entitled “Rate” of the Transmission Agreement is hereby amended to read as follows: “Middlesex shall
pay a transmission fee for the quantity of water transported pursuant to this Agreement at a rate of $100.00 per million gallons
plus an amount equal to 0.5 times the sum of annual increases to the United States Department of Labor Bureau of Labor Statistics
Consumer Price Index, Urban Earners and Clerical Workers (CPI-W), New York-Northern New Jersey-Long Island, NY-NJ-PA (1982-84 =
100), All Items (“CPI”) for the period between the effective date of Middlesex’s most recent rate increase approved
by the New Jersey Board of Public Utilities (“NJBPU”) and the effective date of the next Middlesex rate increase approved
by the NJBPU; provided that under no circumstances shall there be an adjustment based on a CPI increase of over 6 percent nor shall
there be an adjustment applied should the cumulative change in the CPI result in a decrease. Attached to and incorporated into
this Agreement as amended as “Attachment A” is a sample calculation to illustrate the adjustment agreed to by the Parties.”

3.       Section
17 entitled “Regulatory Approvals” of the Transmission Agreement is hereby amended to read as follows: “This
Agreement shall be filed with and subject to approval by the New Jersey Board of Public Utilities as may be required by law.”

4.       Section
18 entitled “Existing Rights and Obligations” of the Transmission Agreement is hereby amended to read as follows:
“Except as provided by this Agreement as amended, the rights and obligations of the Parties under the Treatment and Pumping
Agreement shall remain unchanged.”

 

    

     

    

5.       Section
19 entitled “Governing Law” of the Transmission Agreement is hereby amended to read as follows: “This
Agreement as amended shall be governed by and interpreted in accordance with the laws of the State of New Jersey.”

IN WITNESS WHEREOF,
the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

	ATTEST:	 	 	MIDDLESEX WATER COMPANY
	 	 	 	 
	/s/Jay L. Kooper	 	/s/Dennis W. Doll
	Jay L. Kooper	12/5/16	 	Dennis W. Doll
	Vice President, General Counsel & Secretary	 	President and Chief Executive Officer
	 	 	 	 
	ATTEST:	 	 	TOWNSHIP OF EAST BRUNSWICK
	 	 	 	 
	/s/Nennette Perry	 	/s/Kevin T. McEvoy
	Nennette Perry, Municipal Clerk	 	Mayor Kevin T. McEvoy
	 	11/29/16	 	 

    

     

    

Middlesex Water Company

East Brunswick Transmission Rate

O&M Cost Inflator - Example

 

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	Rate

 Increase	 
	January 2018 EB Transmission Rate Increase	 	 	 	 	 	 	 
	September/16 CPI Index (Actual)	 	 	259.059	 	 	 	 	 
	September/17 CPI Index (Forecast)	 	 	265.000	 	 	 	 	 
	Change	 	 	5.941	 	 	 	2.293%	 
	 	 	 	 	 	 	 	0.50	 
	 	 	 	 	 	 	 	1.147%	 
	 	 	 	 	 	 	 	 	 
	January 2019 EB Transmission Rate Increase	 	 	 	 	 	 	 	 
	September/17 CPI Index (Forecast)	 	 	265.000	 	 	 	 	 
	September/18 CPI Index (Forecast)	 	 	281.000	 	 	 	 	 
	Change	 	 	16.000	 	 	 	6.038%	 
	 	 	 	 	 	 	 	0.50	 
	 	 	 	 	 	 	 	3.019%	 
	 	 	 	 	 	 	 	 	 
	January 2020 EB Transmission Rate Increase	 	 	 	 	 	 	 	 
	September/18 CPI Index (Forecast)	 	 	281.000	 	 	 	 	 
	September/19 CPI Index (Forecast)	 	 	295.000	 	 	 	 	 
	Change	 	 	14.000	 	 	 	4.982%	 
	 	 	 	 	 	 	 	0.50	 
	 	 	 	 	 	 	 	2.491%	 
	 	 	 	 	 	 	 	 	 
	Cumulative Increase	 	 	 	6.657%	 
	 	 	 	 	 	 	 	 	 

 

Increase = Lower of 6% or Cumualtive Change in CPI

Under this example, the increase is effective January 2020, the effective date of the NJBPU approved rate increase.

 

CPI Source:

U.S. Department of Labor

Bureau of Labor Statistices

Consumer Price Index -Urban Wage Earners & Clerical Workers

New York-Northern New Jersey-Long Island, NY-NJ-CT-PA

http://www.bls.gov/regions/new-york-new-jersey/data/xg-tables/ro2xgcpiny.htm

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