Forward-Looking Statements

The company made statements about expected future financial performance, business plans, regulations, and other matters. These statements are forward-looking and actual results may differ due to risks and uncertainties.

Overview

Middlesex Water Company provides water and wastewater services to about 60,000 retail customers in New Jersey through its Middlesex System and about 60,000 retail customers in Delaware through its subsidiary Tidewater. The company also operates water and wastewater systems under contract for government and private entities.

Recent Developments

• Base water rates for the Middlesex System were increased by $15.4 million annually starting March 2024 based on a rate case settlement. This will help cover costs and infrastructure investments.
• Middlesex settled a lawsuit with 3M related to water contamination, which provided funds to reduce the rate increase and cover certain costs.
• Tidewater implemented a 3.71% Distribution System Improvement Charge effective January 2024 to generate $1.3 million in additional annual revenue.
• New federal drinking water regulations were established for certain PFAS chemicals with required monitoring by 2027 and treatment upgrades by 2029 if levels exceed limits. Middlesex is developing plans to meet the new regulations.

Financings

• Tidewater was approved for $6.6 million in low-interest state loans to fund various infrastructure projects through 2026.
• Middlesex plans to invest $78 million in 2024 on projects including water main replacements, treatment plant upgrades, and technology systems.

Outlook

• Rate increase requests may be filed later in 2024 for some subsidiaries to cover continued investments and cost increases.
  
• Organic customer growth is expected to continue but may be challenged by economic conditions.
• $226 million is budgeted for capital projects over 2024-2026, including main replacements, lead service line replacements, treatment plant improvements, and renewable energy initiatives.
  
• Additional stock offerings may occur to help fund the capital program.

Operating Results by Segment

Segment	Revenues (3 Months Ended March 31)
Regulated	$37.4 million (2024) $34.9 million (2023)
Non-Regulated	$3.1 million (2024) $3.2 million (2023)

• Revenues increased mainly due to Middlesex and Tidewater customer growth and rate increases
• Expenses increased largely due to higher water treatment costs, labor costs, professional services, and taxes
• Other income increased primarily due to recovery of prior costs related to the 3M settlement

Liquidity and Capital Resources

• Cash from operations decreased by $9.3 million in the quarter due to timing of payments
• Cash used for investing decreased by $10.1 million due to lower capital expenditures
• Cash from financing decreased by $1.4 million due to lower equity issuances

To fund its 2024 capital program, the company plans to use:

• Internally generated funds
• Short-term borrowing on $140 million of available lines of credit
• Long-term borrowing including private placements and state revolving funds
• Investment Plan stock sales
• 3M settlement proceeds

Market Risks

The company has interest rate risk on existing debt, but the majority is fixed long-term debt so there is minimal exposure. Commodity price risks are mitigated through contracts and recovery through utility rates. Credit risk is managed through policies in line with regulators. Retirement plan risk is mitigated through the ability to recover costs in rates.