Middlesex(MSEX) - 2024 Q4 - Annual Report

Capital Investment and Projects - Middlesex Water Company plans to invest approximately $93 million in 2025 for capital projects, including the replacement of 19,550 linear feet of cast iron main and construction of new elevated water tanks in Delaware [181]. - The Company has projected to spend approximately$387 million for the 2025-2027 capital investment program, including $105 million for upgrading the Carl J. Olson Surface Water Treatment Plant to integrate PFAS removal [194]. - Tidewater's acquisition of the water utility assets of Ocean View, Delaware for$4.6 million is expected to close by April 2025, serving approximately 900 customers [177]. - Middlesex has received approval to borrow up to $300.0 million from the New Jersey SRF Program through December 31, 2025, to fund its multi-year capital construction program [229]. - Tidewater closed on a$2.2 million Delaware SRF loan at a 0.0% interest rate, with an expected maturity date in 2044, for costs associated with identifying lead service lines [230]. - Tidewater has two active construction projects funded by Delaware SRF loans totaling $8.3 million, with$4.9 million drawn down as of December 31, 2024 [232]. Revenue and Income - The approved settlement of the Middlesex 2023 base rate case is expected to increase annual operating revenues by $15.4 million, effective March 1, 2024, based on an authorized return on common equity of 9.6$10.3 million or 25.66% over current revenue, to recover investments made in the last ten years [190]. - Operating revenues for 2024 increased by $25.6 million to$191.9 million compared to 2023, driven by higher customer demand and rate increases [198]. - Operating income rose to $53.2 million in 2024, up from$39.2 million in 2023, reflecting a 35.7% increase [197]. - Net income for 2024 was $44.4 million, a significant increase of 40.8$31.6 million in 2023 [197]. Expenses and Costs - Operations and maintenance expenses increased by $9.2 million to$92.4 million in 2024, primarily due to higher labor and energy costs [198]. - Interest expense rose by $0.9 million to$14.0 million in 2024, attributed to higher average debt and interest rates [204]. - Other taxes increased by $3.1 million to$21.9 million in 2024, primarily due to higher gross receipts and payroll-related taxes [200]. - Other income, net increased by $5.6 million to$12.1 million in 2024, mainly due to recovery of costs related to PFAS treatment upgrades [203]. Customer Growth and Market Conditions - Organic residential customer growth in the Tidewater system is approximately 3.5% in 2024, contributing to the overall growth strategy [193]. - The Regulated segment contributed approximately 93% of total revenues for the years ended December 31, 2024, 2023, and 2022, indicating a stable revenue stream from regulated operations [195]. Financial Position and Risk Management - The company has $140 million in available lines of credit, with$23.0 million outstanding at a weighted average interest rate of 5.63% [226]. - The weighted average daily borrowings outstanding under credit lines were $38.7 million and$35.7 million at interest rates of 6.33% and 6.13% for the years ended December 31, 2024 and 2023, respectively [227]. - The total known contractual obligations as of December 31, 2024, amount to $724 million, with$359 million in long-term debt and $247 million in interest on long-term debt [245]. - The Company manages interest rate risk through fixed-rate long-term debt and has approximately$7.7 million of long-term debt instruments maturing in the next twelve months [261]. - The company has reduced risks associated with commodity price increases through contractual arrangements and the ability to recover price increases through rates [262]. - Credit risk exposure is present in both Regulated and Non-Regulated business segments, with a focus on customer default on contractual obligations [263]. - The credit portfolio is diversified with no significant customer or industry concentrations, and credit risk is managed through established credit and collection policies [263]. - The company's retirement benefit plan assets are exposed to market price variations, impacting retirement benefit plan expense and funded status [264]. - There were no material changes to primary market risk exposures in 2024, nor are any expected in the future [264]. Retirement and Benefits - The Company contributed $3.7 million to its retirement benefit plans in 2024 and expects to contribute approximately$1.8 million in 2025 [246]. - The discount rate for the Pension Plan is 5.47% and for the Other Benefits Plan is 5.49% as of December 31, 2024 [257]. - The Company raised approximately $1.0 million through the issuance of shares under the Investment Plan during 2024 [240].