MIDDLESEX WATER COMSEX
MIDDLESEX WATER CO Commitments Disclosure
Commitments and Contingent Liabilities
Water Supply – Middlesex’s agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water expires November 30, 2048. NJSWA provides for an average purchase of 27.0 million gallons a day (mgd), with a peak up to 47.0 mgd. Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.
Middlesex also has an agreement with a non-affiliated NJBPU-regulated water utility for the purchase of treated water. This agreement, which expires February 27, 2031, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional purchases if needed.
Tidewater contracts with the City of Dover, Delaware to purchase treated water of up to 75.0 million gallons annually.
Purchased water costs are shown below:
| (In Millions) | |||||||||||||||||||||||
| Years Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||
| Untreated | $ | 3.6 | $ | 3.5 | $ | 3.2 | |||||||||||||||||
| Treated | 4.4 | 4.0 | 5.3 | ||||||||||||||||||||
| Total Costs | $ | 8.0 | $ | 7.5 | $ | 8.5 | |||||||||||||||||
Leases - The Company determines if an arrangement is a lease at the inception of the lease. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.
The Company has entered into an operating lease of office space for administrative purposes, expiring in December 2029. The Company has not entered into any finance leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.
The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an explicit discount rate and as such the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining the present value of lease payments.
Given the impacts of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and was $0.8 million for each of the years ended December 31, 2025, 2024 and 2023.
Information related to operating lease ROU assets is as follows:
| (In Millions) | |||||||||||||||||
| December 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| ROU Asset at Lease Inception | $ | 7.3 | $ | 7.3 | |||||||||||||
| Accumulated Amortization | (5.3) | (4.7) | |||||||||||||||
| Current ROU Asset | $ | 2.0 | $ | 2.6 | |||||||||||||
The Company’s future minimum commitments as of December 31, 2025 are as follows:
| (In Millions) | |||||||||||
| December 31, 2025 | |||||||||||
| 2026 | $ | 0.8 | |||||||||
| 2027 | 0.9 | ||||||||||
| 2028 | 0.9 | ||||||||||
| 2029 | 0.9 | ||||||||||
| 2030 | — | ||||||||||
| Total Lease Payments | $ | 3.5 | |||||||||
| Imputed Interest | (1.1) | ||||||||||
| Present Value of Lease Payments | 2.4 | ||||||||||
| Less Current Portion* | (0.6) | ||||||||||
| Non-Current Lease Liability | $ | 1.8 | |||||||||
*Included in Other Current Liabilities | |||||||||||
Construction – In connection with the Company’s planned capital expenditures, the Company has entered into several contractual construction agreements that in total obligate it to expend an estimated $21 million in the future. The actual
amount and timing of capital expenditures is dependent on the need for replacement of existing infrastructure, customer growth, residential new home construction and sales, project scheduling, supply chain issues and continued refinement of project scope and costs.
Contingencies – Based on our operations in the heavily-regulated water and wastewater industries, the Company is routinely involved in disputes, claims, lawsuits and other regulatory and legal matters, including responsibility for fines and penalties relative to regulatory compliance. At this time, Management does not believe the final resolution of any such matters, whether asserted or unasserted, will have a material adverse effect on the Company’s financial position, results of operations or cash flows. In addition, the Company maintains business insurance coverage that may mitigate the effect of current or future loss contingencies.
Change in Control Agreements – The Company has Change in Control Agreements with its executive officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2018 | Mar 8, 2019 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.