================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

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

~~For the quarterly period ended September 30, 2004~~

OR

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

(Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to______________________

Commission File Number 0-422

MIDDLESEX WATER COMPANY
~~(Exact~~ (Exact name of registrant as specified in its charter)

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

New Jersey 22-1114430 (State of incorporation) (IRS employer identification no.) 1500 Ronson Road, Iselin, NJ 08830
~~(Address~~ (Address of principal executive offices, including zip code)

(732) 634-1500
~~(Registrant’s~~ (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes |X| No |_|

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Yes |X| No |_|

The number of shares outstanding of each of the ~~registrant’s~~registrant's classes of common stock, as of ~~October 29, 2004:~~May 2, 2005: Common Stock, No Par Value: ~~11,344,172~~11,380,682 shares outstanding.

================================================================================

INDEX

		~~PAGE~~

~~PART I.~~	~~FINANCIAL INFORMATION~~

~~Item 1.~~	~~Financial Statements:~~

	~~Condensed Consolidated Statements of Income~~		1

	~~Condensed Consolidated Balance Sheets~~		2

	~~Condensed Consolidated Statement of Cash Flows~~		3

	~~Condensed Consolidated Statements of Capital Stock and Long-term Debt~~		4

	~~Condensed Consolidated Statements of Comprehensive Income~~		5

	~~Notes to Condensed Consolidated Financial Statements~~		6

~~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~~		20

~~Item 2.~~	~~Changes in Securities~~		20

~~Item 3.~~	~~Defaults upon Senior Securities~~		20

~~Item 4.~~	~~Submission of Matters to a Vote of Security Holders~~		21

~~Item 5.~~	~~Other Information~~		21

~~Item 6.~~	~~Exhibits~~		21

~~SIGNATURE~~			21

PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements: Condensed Consolidated Statements of Income 1 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statement of Cash Flows 3 Condensed Consolidated Statements of Capital Stock and Long-term Debt 4 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 3. Quantitative and Qualitative Disclosures of Market Risk 18 Item 4. Controls and Procedures 18 PART II. OTHER INFORMATION Item 1. Legal Proceedings 18 Item 2. Changes in Securities 18 Item 3. Defaults upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 5. Other Information 19 Item 6. Exhibits 19 SIGNATURE 20

M~~IDDLESEX~~ MIDDLESEX WATER ~~COMPAN~~Y
COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

Twelve Months Ended September 30,

2004

2003

2004

2003

2004

2003

Operating Revenues

$
19,856,688

$
17,585,575

$
53,502,334

$
48,564,914

$
69,048,634

$
63,759,946

Operating Expenses:

Operations

9,193,804

8,687,828

27,455,475

24,292,699

35,828,875

31,478,131

Maintenance

759,352

830,877

2,430,319

2,612,556

3,346,876

3,457,835

Depreciation

1,467,523

1,342,059

4,353,222

3,960,856

5,755,093

5,242,946

Other Taxes

2,224,028

2,081,210

6,195,329

5,950,472

8,060,775

7,854,295

Income Taxes

1,714,802

1,143,264

3,240,804

2,764,542

3,713,480

3,592,126

Total Operating Expenses

15,359,509

14,085,238

43,675,149

39,581,125

56,705,099

51,625,333

Operating Income

4,497,179

3,500,337

9,827,185

8,983,789

12,343,535

12,134,613

Other Income:

Allowance for Funds Used During Construction

179,173

95,448

309,455

253,253

372,121

336,482

Other Income

33,418

41,705

170,983

83,896

218,586

199,144

Other Expense

(85
)

(984
)

(29,761
)

(68,708
)

(50,984
)

(122,367
)

Total Other Income, net

212,506

136,169

450,677

268,441

539,723

413,259

Interest Charges

1,347,475

1,243,888

3,991,681

3,830,926

5,387,785

5,099,090

Net Income

3,362,210

2,392,618

6,286,181

5,421,304

7,495,473

7,448,782

Preferred Stock Dividend Requirements

63,697

63,697

191,090

191,090

254,786

254,786

Earnings Applicable to Common Stock

$
3,298,513

$
2,328,921

$
6,095,091

$
5,230,214

$
7,240,687

$
7,193,996

Earnings per share of Common Stock:

Basic

$
0.29

$
0.22

$
0.55

$
0.50

$
0.67

$
0.69

Diluted

$
0.29

$
0.22

$
0.55

$
0.50

$
0.66

$
0.68

Average Number of

Common Shares Outstanding :

Basic

11,316,768

10,505,517

10,989,209

10,448,226

10,880,220

10,472,573

Diluted

11,659,908

10,848,657

11,332,349

10,791,366

11,223,360

10,815,713

Cash Dividends Paid per Common Share

$
0.1650

$
0.1613

$
0.4950

$
0.4839

$
0.6600

$
0.6452

Three Months Ended March 31, 2005 2004 =========================== Operating Revenues $16,742,903 $15,875,733 --------------------------- Operating Expenses: Operations 9,041,996 8,904,091 Maintenance 898,685 862,508 Depreciation 1,548,048 1,436,230 Other Taxes 2,083,134 1,945,194 Income Taxes 666,770 507,359 --------------------------- Total Operating Expenses 14,238,633 13,655,382 --------------------------- Operating Income 2,504,270 2,220,351 Other Income: Allowance for Funds Used During Construction 210,450 49,561 Other Income 55,219 19,806 Other Expense (8,145) (3,236) --------------------------- Total Other Income, net 257,524 66,131 Interest Charges 1,382,092 1,252,842 --------------------------- Net Income 1,379,702 1,033,640 Preferred Stock Dividend Requirements 63,697 63,697 --------------------------- Earnings Applicable to Common Stock $ 1,316,005 $ 969,943 --------------------------- Earnings per share of Common Stock: Basic $ 0.12 $ 0.09 Diluted $ 0.12 $ 0.09 Average Number of Common Shares Outstanding : Basic 11,367,475 10,579,095 Diluted 11,710,615 10,922,235 Cash Dividends Paid per Common Share $ 0.1675 $ 0.1650 See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

September 30,
2004

December 31,
2003

ASSETS

UTILITY PLANT:
Water Production

$
79,388,120

$
77,265,782

Transmission and Distribution

178,501,289

174,455,437

General

20,061,010

19,776,293

Construction Work in Progress

16,517,777

2,798,070

TOTAL

294,468,196

274,295,582

Less Accumulated Depreciation

50,782,036

47,510,797

UTILITY PLANT - NET

243,686,160

226,784,785

NONUTILITY ASSETS - NET

4,337,165

4,147,685

CURRENT ASSETS:
Cash and Cash Equivalents

2,601,686

3,005,610

Accounts Receivable

7,180,976

5,682,608

Unbilled Revenues

4,124,599

3,234,788

Materials and Supplies (at average cost)

1,594,800

1,419,142

Prepayments

1,035,892

1,009,304

TOTAL CURRENT ASSETS

16,537,953

14,351,452

DEFERRED CHARGES
AND OTHER ASSETS:
Unamortized Debt Expense

3,166,448

3,272,783

Preliminary Survey and Investigation Charges

882,065

1,380,771

Regulatory Assets

8,655,119

8,216,117

Operations Contracts Fees Receivable

699,806

699,806

Restricted Cash

1,437,163

3,825,420

Other

545,272

513,116

TOTAL DEFERRED CHARGES AND OTHER ASSETS

15,385,873

17,908,013

TOTAL ASSETS

$
279,947,151

$
263,191,935

CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
Common Stock, No Par Value

$
71,583,902

$
56,924,028

Retained Earnings

22,908,761

22,668,348

Accumulated Other Comprehensive Income, net of tax

35,904

50,808

TOTAL COMMON EQUITY

94,528,567

79,643,184

Preferred Stock

4,063,062

4,063,062

Long-term Debt

100,277,424

97,376,847

TOTAL CAPITALIZATION

198,869,053

181,083,093

CURRENT
LIABILITIES:
Current Portion of Long-term Debt

1,089,578

1,067,258

Notes Payable

6,000,000

12,500,000

Accounts Payable

7,408,853

4,777,400

Taxes Accrued

7,863,080

6,258,739

Interest Accrued

711,915

1,810,639

Unearned Revenues and Advanced Service Fees

744,851

602,854

Other

815,683

678,596

TOTAL CURRENT LIABILITIES

24,633,960

27,695,486

COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)

DEFERRED CREDITS:
Customer Advances for Construction

12,275,493

11,711,846

Accumulated Deferred Investment Tax Credits

1,716,220

1,775,183

Accumulated Deferred Income Taxes

14,617,451

14,125,970

Employee Benefit Plans

5,252,701

5,086,988

Regulatory Liability - Cost of Utility Plant Removal

5,234,354

4,830,308

Other

861,444

909,498

TOTAL DEFERRED CREDITS

39,957,663

38,439,793

CONTRIBUTIONS IN AID OF CONSTRUCTION

16,486,475

15,973,563

TOTAL CAPITALIZATION AND LIABILITIES

$
279,947,151

$
263,191,935

March 31, December 31, ASSETS 2005 2004 ======================================================================================================================= UTILITY PLANT: Water Production $ 84,008,905 $ 82,340,798 Transmission and Distribution 190,591,871 188,026,091 General 20,503,687 20,451,215 Construction Work in Progress 12,939,425 13,013,391 ------------------------------------------------------------------------------------ TOTAL 308,043,888 303,831,495 Less Accumulated Depreciation 53,253,309 52,017,761 ------------------------------------------------------------------------------------ UTILITY PLANT - NET 254,790,579 251,813,734 ------------------------------------------------------------------------------------ ======================================================================================================================= CURRENT ASSETS: Cash and Cash Equivalents 1,739,186 4,034,768 Accounts Receivable, net 6,081,133 6,316,853 Unbilled Revenues 3,594,987 3,572,713 Materials and Supplies (at average cost) 1,298,836 1,203,906 Prepayments 591,754 823,976 ------------------------------------------------------------------------------------ TOTAL CURRENT ASSETS 13,305,896 15,952,216 ------------------------------------------------------------------------------------ ======================================================================================================================= DEFERRED CHARGES Unamortized Debt Expense 3,137,481 3,172,254 AND OTHER ASSETS: Preliminary Survey and Investigation Charges 1,293,538 1,032,182 Regulatory Assets 8,418,941 8,198,565 Restricted Cash 10,715,906 13,257,106 Non-utility Assets, net 5,363,244 5,237,622 Other 462,932 465,419 ------------------------------------------------------------------------------------ TOTAL DEFERRED CHARGES AND OTHER ASSETS 29,392,042 31,363,148 ------------------------------------------------------------------------------------ TOTAL ASSETS $297,488,517 $299,129,098 ------------------------------------------------------------------------------------ CAPITALIZATION AND LIABILITIES ======================================================================================================================= CAPITALIZATION: Common Stock, No Par Value $ 72,369,198 $ 71,979,902 Retained Earnings 22,516,420 23,103,908 Accumulated Other Comprehensive Income, net of tax 44,228 44,841 ==================================================================================== TOTAL COMMON EQUITY 94,929,846 95,128,651 ==================================================================================== Preferred Stock 4,063,062 4,063,062 Long-term Debt 115,343,509 115,280,649 ------------------------------------------------------------------------------------ TOTAL CAPITALIZATION 214,336,417 214,472,362 ------------------------------------------------------------------------------------ ======================================================================================================================= CURRENT Current Portion of Long-term Debt 1,153,562 1,091,351 LIABILITIES: Notes Payable 9,500,000 11,000,000 Accounts Payable 4,314,812 6,001,806 Accrued Taxes 8,699,514 6,784,380 Accrued Interest 931,729 1,703,131 Unearned Revenues and Advanced Service Fees 395,834 387,156 Other 741,153 795,456 ------------------------------------------------------------------------------------ TOTAL CURRENT LIABILITIES 25,736,604 27,763,280 ------------------------------------------------------------------------------------ ======================================================================================================================= COMMITMENTS AND CONTINGENT LIABILITIES (Note 6) ======================================================================================================================= DEFERRED CREDITS Customer Advances for Construction 12,032,771 12,366,060 AND OTHER LIABILITIES: Accumulated Deferred Investment Tax Credits 1,676,912 1,696,566 Accumulated Deferred Income Taxes 14,873,351 14,556,153 Employee Benefit Plans 5,875,032 5,464,056 Regulatory Liability - Cost of Utility Plant Removal 5,522,494 5,363,152 Other 807,918 849,551 ------------------------------------------------------------------------------------ TOTAL DEFERRED CREDITS AND OTHER LIABILITIES 40,788,478 40,295,538 ------------------------------------------------------------------------------------ ======================================================================================================================= CONTRIBUTIONS IN AID OF CONSTRUCTION 16,627,018 16,597,918 ------------------------------------------------------------------------------------ TOTAL CAPITALIZATION AND LIABILITIES $297,488,517 $299,129,098 ------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.

M~~IDDLESEX~~ MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH ~~FLOW~~S
FLOWS (Unaudited)

Nine Months Ended September 30,

Twelve Months Ended September 30,

2004

2003

2004

2003

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income

$
6,286,181

$
5,421,304

$
7,495,473

$
7,448,782

Adjustments to Reconcile Net Income to

Net Cash Provided by Operating Activities:

Depreciation and Amortization

4,735,468

4,288,489

6,080,842

5,755,882

Provision for Deferred Income Taxes

182,178

231,330

257,767

390,279

Allowance for Funds Used During Construction

(309,455
)

(253,253
)

(372,121
)

(336,482
)

Changes in Assets and Liabilities:

Accounts Receivable

(1,498,368
)

(739,938
)

(412,736
)

94,629

Unbilled Revenues

(889,811
)

(690,448
)

(253,060
)

(445,748
)

Materials & Supplies

(175,658
)

(137,097
)

(267,366
)

(193,632
)

Prepayments

(26,588
)

(334,983
)

114,483

(62,000
)

Other Assets

(479,433
)

(655,528
)

451,897

(827,383
)

Operations Contracts Receivable

—

—

(699,806
)

—

Accounts Payable

2,631,453

1,172,965

3,718,919

998,840

Accrued Taxes

1,612,018

930,136

1,015,697

(76,575
)

Accrued Interest

(1,098,724
)

(875,333
)

(27,030
)

45,723

Employee Benefit Plans

165,713

(290,201
)

263,165

(156,753
)

Unearned Revenue & Advanced Service Fees

141,997

(137,555
)

465,817

(147,636
)

Other Liabilities

89,033

689,285

(836,683
)

132,147

NET CASH PROVIDED BY OPERATING ACTIVITIES

11,366,004

8,619,173

16,995,258

12,620,073

CASH FLOWS FROM INVESTING ACTIVITIES:

Utility Plant Expenditures*

(20,629,121
)

(13,121,493
)

(27,081,833
)

(16,789,966
)

Cash Surrender Value & Other Investments

(123,714
)

—

(590,004
)

(4,438
)

Restricted Cash

2,388,257

1,254,887

3,454,528

2,933,258

Investment in Associated Companies

—

—

—

(20,618
)

Proceeds from Real Estate Dispositions

—

344,972

187,950

344,972

Preliminary Survey & Investigation Charges

498,706

(645,659
)

862,062

(863,174
)

Other Assets

—

(169,003
)

121,739

(229,301
)

NET CASH USED IN INVESTING ACTIVITIES

(17,865,872
)

(12,336,296
)

(23,045,558
)

(14,629,267
)

CASH FLOWS FROM FINANCING ACTIVITIES:

Redemption of Long-term Debt

(943,353
)

(762,143
)

(1,065,637
)

(777,944
)

Proceeds from Issuance of Long-term Debt

3,866,250

11,155,568

3,916,405

11,156,853

Net Short-term Bank Borrowings (Repayments)

(6,500,000
)

(5,150,000
)

(6,500,000
)

(4,750,000
)

Deferred Debt Issuance Expenses

(17,618
)

(196,935
)

(15,167
)

(206,195
)

Common Stock Issuance Expense

(379,532
)

—

(482,816
)

(3,688
)

Restricted Cash

—

132

(11
)

132

Proceeds from Issuance of Common Stock

14,659,874

2,980,026

15,289,707

3,353,942

Payment of Common Dividends

(5,475,146
)

(5,050,066
)

(7,216,334
)

(6,717,698
)

Payment of Preferred Dividends

(191,090
)

(191,090
)

(254,786
)

(254,786
)

Construction Advances and Contributions-Net

1,076,559

968,685

2,005,677

1,406,449

NET CASH PROVIDED BY FINANCING ACTIVITIES

6,095,944

3,754,177

5,677,038

3,207,065

NET CHANGES IN CASH AND CASH EQUIVALENTS

(403,924
)

37,054

(373,262
)

1,197,871

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

3,005,610

2,937,894

2,974,948

1,777,077

CASH AND CASH EQUIVALENTS AT END OF YEAR

$
2,601,686

$
2,974,948

$
2,601,686

$
2,974,948

*Excludes Allowance for Funds Used During Construction.

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash Paid During the Year for:

Cash Paid for Interest

$
5,090,405

$
4,764,452

$
5,387,831

$
4,929,207

Interest Capitalized

$
(309,455
)
$
(253,253
)
$
(372,121
)
$
(336,482
)

Income Taxes

$
1,755,500

$
1,615,000

$
2,612,500

$
3,122,500

Three Months Ended March 31, 2005 2004 ============================ CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 1,379,702 $ 1,033,640 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and Amortization 1,720,355 1,499,191 Provision for Deferred Income Taxes and ITC (25,049) (58,444) Allowance for Funds Used During Construction (210,450) (49,561) Changes in Assets and Liabilities: Accounts Receivable 235,720 (201,372) Unbilled Revenues (22,274) (18,363) Materials & Supplies (94,930) (228,443) Prepayments 232,222 161,209 Other Assets (28,823) 30,126 Accounts Payable (1,686,994) (606,899) Accrued Taxes 1,915,449 1,897,195 Accrued Interest (771,402) (1,091,009) Employee Benefit Plans 410,976 211,445 Unearned Revenue & Advanced Service Fees 8,678 260,004 Other Liabilities (95,936) 99,805 - --------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,967,244 2,938,524 - --------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Utility Plant Expenditures* (4,192,222) (2,935,590) Cash Surrender Value & Other Investments (85,936) (57,864) Restricted Cash 2,541,200 299,378 Preliminary Survey & Investigation Charges (261,356) (94,170) - --------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (1,998,314) (2,788,246) - --------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Redemption of Long-term Debt (210,575) (212,204) Proceeds from Issuance of Long-term Debt 335,646 1,084,746 Net Short-term Bank (Repayments) Borrowings (1,500,000) 975,000 Deferred Debt Issuance Expenses (7,500) (17,512) Common Stock Issuance Expense -- (204,286) Proceeds from Issuance of Common Stock 389,296 507,153 Payment of Common Dividends (1,903,493) (1,744,975) Payment of Preferred Dividends (63,697) (63,697) Construction Advances and Contributions-Net (304,189) (183,889) - --------------------------------------------------------------------------------------- NET CASH (USED BY) PROVIDED BY FINANCING ACTIVITIES (3,264,512) 140,336 - --------------------------------------------------------------------------------------- NET CHANGES IN CASH AND CASH EQUIVALENTS (2,295,582) 290,614 - --------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,034,768 3,005,610 - --------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,739,186 $ 3,296,224 - --------------------------------------------------------------------------------------- *Excludes Allowance for Funds Used During Construction SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: Cash Paid During the Period for: Interest $ 2,111,221 $ 2,453,181 Interest Capitalized $ (210,450) $ (49,561) Income Taxes $ 300,000 $ 112,000 - ---------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.

M~~IDDLESEX~~ MIDDLESEX WATER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK
AND LONG-TERM ~~DEB~~T
DEBT (Unaudited)

September 30,
2004

December 31,
2003

Common Stock, No Par Value

Shares Authorized - 20,000,000

Shares Outstanding - 2004 - 11,327,237

$
71,583,902

$
56,924,028

2003 - 10,566,937

Retained Earnings

22,908,761

22,668,348

Accumulated Other Comprehensive Income, net of tax

35,904

50,808

TOTAL COMMON EQUITY

94,528,567

79,643,184

Cumulative Preference Stock, No Par Value:

Shares Authorized - 100,000

Shares Outstanding - None

Cumulative Preferred Stock, No Par Value

Shares Authorized - 140,497

Convertible:

Shares Outstanding, $7.00 Series - 14,881

1,562,505

1,562,505

Shares Outstanding, $8.00 Series - 12,000

1,398,857

1,398,857

Nonredeemable:

Shares Outstanding, $7.00 Series - 1,017

101,700

101,700

Shares Outstanding, $4.75 Series - 10,000

1,000,000

1,000,000

TOTAL PREFERRED STOCK

4,063,062

4,063,062

Long-term Debt

8.05%, Amortizing Secured Note, due December 20, 2021

3,082,294

3,136,531

6.25%, Amortizing Secured Note, due May 22, 2028

9,940,000

10,255,000

4.22%, State Revolving Trust Note, due December 31, 2022

374,775

192,281

3.60%, State Revolving Trust Note, due May 1, 2025

2,348,316

580,792

4.00%, State Revolving Trust Bond, due September 1, 2021

790,000

820,000

0.00%, State Revolving Fund Bond, due September 1, 2021

652,306

690,833

0.00%, State Revolving Fund Note, due September 1, 2025

1,916,232

—

First Mortgage Bonds:

5.20%, Series S, due October 1, 2022

12,000,000

12,000,000

5.25%, Series T, due October 1, 2023

6,500,000

6,500,000

6.40%, Series U, due February 1, 2009

15,000,000

15,000,000

5.25%, Series V, due February 1, 2029

10,000,000

10,000,000

5.35%, Series W, due February 1, 2038

23,000,000

23,000,000

0.00%, Series X, due September 1, 2018

755,006

807,956

4.25%, Series Y, due September 1, 2018

920,000

965,000

0.00%, Series Z, due September 1, 2019

1,679,979

1,792,435

5.25%, Series AA, due September 1, 2019

2,085,000

2,175,000

0.00%, Series BB, due September 1, 2021

2,048,094

2,168,277

4.00%, Series CC, due September 1, 2021

2,275,000

2,360,000

5.10%, Series DD, due January 1, 2032

6,000,000

6,000,000

SUBTOTAL LONG-TERM DEBT

101,367,002

98,444,105

Less: Current Portion of Long-term Debt

(1,089,578
)

(1,067,258
)

TOTAL LONG-TERM DEBT

$
100,277,424

$
97,376,847

March 31, December 31, 2005 2004 ============================================================================================================ Common Stock, No Par Value Shares Authorized - 20,000,000 Shares Outstanding - 2005 - 11,377,403 $ 72,369,198 $ 71,979,902 2004 - 11,358,772 Retained Earnings 22,516,420 23,103,908 Accumulated Other Comprehensive Income, net of tax 44,228 44,841 - ------------------------------------------------------------------------------------------------------------ TOTAL COMMON EQUITY 94,929,846 95,128,651 - ------------------------------------------------------------------------------------------------------------ Cumulative Preference Stock, No Par Value: Shares Authorized - 100,000 Shares Outstanding - None Cumulative Preferred Stock, No Par Value Shares Authorized - 140,497 Convertible: Shares Outstanding, $7.00 Series - 14,881 1,562,505 1,562,505 Shares Outstanding, $8.00 Series - 12,000 1,398,857 1,398,857 Nonredeemable: Shares Outstanding, $7.00 Series - 1,017 101,700 101,700 Shares Outstanding, $4.75 Series - 10,000 1,000,000 1,000,000 - ------------------------------------------------------------------------------------------------------------ TOTAL PREFERRED STOCK 4,063,062 4,063,062 - ------------------------------------------------------------------------------------------------------------ Long-term Debt 8.05%, Amortizing Secured Note, due December 20, 2021 3,044,055 3,063,389 6.25%, Amortizing Secured Note, due May 22, 2028 9,730,000 9,835,000 4.22%, State Revolving Trust Note, due December 31, 2022 784,000 784,000 3.60%, State Revolving Trust Note, due May 1, 2025 2,683,962 2,348,316 4.00% to 5.00%, State Revolving Trust Bond, due September 1, 2021 790,000 790,000 0.00%, State Revolving Fund Bond, due September 1, 2021 641,580 652,306 First Mortgage Bonds: 5.20%, Series S, due October 1, 2022 12,000,000 12,000,000 5.25%, Series T, due October 1, 2023 6,500,000 6,500,000 6.40%, Series U, due February 1, 2009 15,000,000 15,000,000 5.25%, Series V, due February 1, 2029 10,000,000 10,000,000 5.35%, Series W, due February 1, 2038 23,000,000 23,000,000 0.00%, Series X, due September 1, 2018 742,578 755,006 4.25% to 4.63%, Series Y, due September 1, 2018 920,000 920,000 0.00%, Series Z, due September 1, 2019 1,650,588 1,679,979 5.25% to 5.75%, Series AA, due September 1, 2019 2,085,000 2,085,000 0.00%, Series BB, due September 1, 2021 2,014,399 2,048,095 4.00% to 5.00%, Series CC, due September 1, 2021 2,275,000 2,275,000 5.10%, Series DD, due January 1, 2032 6,000,000 6,000,000 0.00%, Series EE, due September 1, 2024 7,715,909 7,715,909 3.00% to 5.50%, Series FF, due September 1, 2024 8,920,000 8,920,000 - ------------------------------------------------------------------------------------------------------------ SUBTOTAL LONG-TERM DEBT 116,497,071 116,372,000 - ------------------------------------------------------------------------------------------------------------ Less: Current Portion of Long-term Debt (1,153,562) (1,091,351) - ------------------------------------------------------------------------------------------------------------ TOTAL LONG-TERM DEBT $ 115,343,509 $ 115,280,649 - ------------------------------------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.

MIDDLESEX WATER COMPANY
~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~
~~(Unaudited)~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

Twelve Months Ended
September 30,

2004

2003

2004

2003

2004

2003

Net Income

$
3,362,210

$
2,392,618

$
6,286,181

$
5,421,304

$
7,495,473

$
7,448,782

Other Comprehensive Income:

Change in Value of Equity Investments,

Net of Income Tax

(11,703
)

—

(14,904
)

—

35,904

—

Other Comprehensive Income

(11,703
)

—

(14,904
)

—

35,904

—

Comprehensive Income

$
3,350,507

$
2,392,618

$
6,271,277

$
5,421,304

$
7,531,377

$
7,448,782

~~See Notes to Condensed Consolidated Financial Statements.~~

~~MIDDLESEX WATER COMPANY~~
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 –- Summary of Significant Accounting Policies

Organization –- Middlesex Water Company ~~(Middlesex or the Company)~~(Middlesex) is the parent company and sole shareholder of Tidewater Utilities, Inc. (Tidewater), Tidewater Environmental Services, Inc. (TESI), Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy) Inc. (USA-PA) and Bayview Water Company. Southern Shores Water Company, LLC (Southern Shores) and White Marsh Environmental Systems, Inc. (White Marsh) are wholly-owned subsidiaries of Tidewater. The financial statements for Middlesex and its wholly owned subsidiaries (the Company) are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated.

The consolidated notes within the ~~2003~~2004 Form ~~10-K/A-2~~10-K are applicable to these financial statements and, in the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position as of ~~September 30, 2004~~March 31, 2005 and the results of operations for the three ~~nine, and twelve~~ month periods ended ~~September 30,~~March 31, 2005 and 2004, ~~and 2003,~~ and cash flows for the ~~nine and twelve~~three month periods ended ~~September 30, 2004~~March 31, 2005 and ~~2003.~~2004. Information included in the Balance Sheet as of December 31, ~~2003,~~2004, has been derived from the ~~Company’s~~Company's audited financial statements for the year ended December 31, ~~2003. Certain reclassifications of prior period data have been made to conform with current presentation.~~

2004. Recent Accounting Pronouncements - In ~~May~~December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.123(R) "Share-Based Payment" (SFAS 123(R)), which replaces SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". The Statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. The Statement also establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. This statement was originally effective for quarters beginning after June 15, 2005, however on April 14, 2005, the Securities and Exchange Commission adopted a rule which makes the provisions of SFAS 123(R) effective for fiscal periods beginning after June 15, 2005 (January 1, 2006 for the Company). The Company currently recognizes compensation expense at fair value for stock-based payment awards in accordance with SFAS No. 123 "Accounting for Stock-Based Compensation," and does not anticipate adoption of this standard will have a material impact on its financial position, results of operations, or cash flows. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (SFAS 153). SFAS 153 addresses the measurement of exchanges of nonmonetary assets and redefines the scope of transactions that should be measured based on the fair value of the assets exchanged. SFAS 153 is effective for nonmonetary asset exchanges occurring in quarters beginning after June 15, 2005. The Company does not anticipate adoption of this standard will have a material impact on its financial position, results of operations, or cash flows. In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, ~~“Accounting~~"Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of ~~2003”~~2003" (FSP 106-2). FSP 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Drug Act) for employers who sponsor postretirement health care plans that provide prescription drug benefits. FSP 106-2 also requires those employers to provide certain disclosures 5 regarding the effect of the federal subsidy provided by the Medicare Drug Act. The Medicare Drug Act generally permits plan sponsors that provide retiree prescription drug benefits that are ~~“actuarially equivalent”~~"actuarially equivalent" to the benefits of Medicare Part D to be eligible for a non-taxable federal subsidy. FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004. FSP 106-2 provides that if the effect of the Medicare Drug Act is not considered a significant event, the measurement date for the adoption of FSP 106-2 is delayed until the next regular measurement date. Based on Management's discussions with its Actuary, Management determined the effect of the Medicare Drug Act is not considered a significant event and thus the Company ~~will account~~accounted for the effects of FSP 106-2 at its next measurement date (January 1, 2005). The adoption of FSP 106-2 ~~will~~did not have a material effect on the ~~Company’s~~Company's financial statements.

In March 2004, the Emerging Issues Task Force (EITF) reached consensus on EITF No. 03-1, ~~“The~~"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain ~~Investments”~~Investments" (EITF 03-1). EITF 03-1 further defines the meaning of an ~~“other-than-temporary impairment”~~"other-than-temporary impairment" and its application to debt and equity securities. Impairment occurs when the fair value of a security is less than its cost basis. When such a condition exists, the investor is required to evaluate whether the impairment is other-than-temporary as defined in EITF 03-1. When an impairment is other-than-temporary, the security must be written down to its fair value. EITF 03-1 also requires additional annual quantitative and qualitative disclosures for available for sale and held to maturity impaired investments that are not other-than temporarily impaired. On September 30, 2004, the FASB issued FSP EITF 03-1-1, ~~“Effective~~"Effective date of ~~Paragraph’s~~Paragraph's 10-20 of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain ~~Investments”~~Investments" (FSP EITF 03-1-1). FSP EITF 03-1-1 delayed the effective date for the measurement and recognition guidance contained in EITF 03-1 until further implementation guidance is issued. The Company does not expect any material effects from the adoption of EITF 03-1 on its financial statements.

~~Rate Matters~~ ~~- Effective May 27, 2004, Middlesex Water Company received approval from~~In March 2005, the ~~New Jersey Board~~FASB issued Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" (FIN 47), to clarify the term "conditional asset retirement obligation" as used in Statement of ~~Public Utilities (BPU)~~Financial Accounting Standards SFAS No. 143, "Accounting for Asset Retirement Obligations." Conditional asset retirement obligation refers to a ~~9.5%,~~ legal obligation to perform an asset retirement activity in which the timing and/or ~~$4.3 million increase in its water rates. This increase represents~~method of settlement are conditional on a ~~portion~~future event that may or may not be within the control of the ~~Company’s November 2003 request~~entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a ~~total rate increase of 17.8% to cover~~conditional asset retirement obligation if the ~~costs of its increased capital investment, as well as maintenance and operating expenses.~~

Effective June 24, 2004, Pinelands Water Company and Pinelands Wastewater Company received approval from the BPU for rate increases of 9.2% and 9.9%, respectively, or approximately $131,000 in the aggregate. This increase represents a portionfair value of the ~~Company’s~~liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred, generally, upon acquisition, construction, development and/or through the normal operation of the asset. Uncertainty about the timing and/or method of settlement should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective no later than the end of fiscal years ending after December ~~2003 request~~15, 2005 (December 31, 2005 for calendar-year enterprises). The Company does not anticipate adoption of this standard will have a ~~total rate increase~~material impact on its financial position, results of ~~approximately $250,000 to help offset the increasing costs associated~~operations, or cash flows. Rate Matters - As part of an approved settlement with ~~capital improvements, and the operation and maintenance of their systems.~~

~~Effective June 25, 2004, Tidewater received approval from~~ the Delaware Public Service Commission (PSC) ~~for an interim rate increase of 15%, or $1.5 million increase in its water rates, which includes 4.5% of previously implemented Distribution System Improvement Charges (DSIC). On~~on October 19, 2004, ~~the PSC approved a settlement between~~ Tidewater and interveners in the matter. The settlement allows the 15% interim rates to become permanent. This increase represents a portion of the Company’s April 2004 request for a 24% rate increase to accommodate the growth of Tidewater’s customer base, improvements to water treatment, fire protection and to interconnect systems for service reliability and back-up. As part of the settlement, Tidewater will bewas eligible to apply for a second phase rate increase of $0.5 million, provided it ~~completes~~completed a number of capital projects within a specified time schedule. Tidewater ~~must file~~filed an application for this increase ~~no earlier than~~on March ~~2005 nor later than May~~28, 2005. Upon verification of project completion, the new rates ~~will become~~became effective ~~30 days after the filing date.~~on April 27, 2005. Tidewater also agreed to waive its right to file ~~DSIC~~Distribution System Improvement Charges (DISC) applications over the next three six-month cycles (January and July 2005, and January 2006) and to defer making an application for a general rate increase until after April 27, 2006. 6 In accordance with the tariff established for Southern Shores, an annual rate increase of 3% was implemented on January 1, ~~2006.~~

2005. The increase cannot exceed the lesser of the regional Consumer Price Index or 3%. Stock Based Compensation -~~As permitted by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), the~~ The Company ~~elected to account~~recognizes compensation expense at fair value for its ~~stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Had compensation costs for the Company’s~~ restricted stock ~~plan been determined based~~awards in accordance with SFAS 123. As discussed in Note 1, SFAS 123(R) is effective for fiscal periods beginning after June 15, 2005. The Company does not anticipate that the adoption of this standard will have a material impact on ~~the methodology prescribed in SFAS No. 123, there would have been no effect on~~ its financial position, results of operations, or cash flows.

Note 2 –- Capitalization

Common Stock ~~– In May 2004,~~ -During the Company had a common stock offering of 700,000 shares that was priced at $19.80. The majority of the net proceeds of approximately $13.3 million were used to repay most of the Company’s outstanding short-term borrowings. During the ninethree months ended ~~September 30, 2004,~~March 31, 2005, there were ~~60,300~~18,631 common shares (approximately ~~$1.4~~$0.4 million) issued under the ~~Company’s~~Company's Dividend Reinvestment and Common Stock Purchase Plan.

On April 28, 2005, the Company filed with the Securities and Exchange Commission on Form S-3 to issue shares under its Dividend Reinvestment and Common Stock Purchase Plan at a 5% discount on optional cash payments and reinvested dividends for a six-month period commencing on June 1, 2005, and concluding on December 1, 2005. Long-term Debt ~~– On March 24, 2004,~~ -On May 6, 2005, Tidewater filed an application with the PSC seeking approval to finance up to $16.0 million in the form of long-term debt securities. Of this amount, Tidewater received loan approval ~~from~~in April 2005 under the ~~PSC to borrow $0.8 million to fund a portion of its multi-year capital program. Subsequent to the PSC approval, Tidewater closed on a~~ Delaware State Revolving Fund (SRF) ~~loan~~program of ~~$0.8~~$2.0 million. The Delaware SRF program ~~will allow,~~allows, but does not obligate, Tidewater to draw down against a General Obligation Note for ~~three~~two specific ~~projects.~~projects over a two-year period ending in April 2007. The interest rate is set on the loan closing date and is based on 62.5% of the interest rate for a 10+ year high quality corporate bond. Tidewater has received a commitment letter from CoBank, a rural cooperative financial institution, approving the conversion of Tidewater's existing $7.0 million short-term borrowings with CoBank and an additional $7.0 million of funding for an aggregated $14.0 million mortgage type loan to be repaid over a term of 25 years. The terms of the CoBank loan allows, but does not obligate, Tidewater to draw down against the additional $7.0 million at any time after the loan closing through August 31, 2006. During that period, there is a commitment fee of 12.5 basis points, or 0.125%, on the unused balance. The interest rate for the CoBank loan will be ~~charged~~a variable rate set weekly by CoBank, with Tidewater having an ~~annual fee, which is~~option to fix the interest rate at any time over the life of the loan at a ~~combination~~margin over CoBank's cost of ~~interest charges~~funds. The SRF and ~~administrative fees, of 3.30% on the outstanding principal amount. All unpaid principal and fees~~CoBank borrowings must be ~~paid on or before March 1, 2026.~~

~~Middlesex received approval from~~approved by the BPU to issue up to $18.0 million of first mortgage bonds through the New Jersey Environmental Infrastructure Trust under the New Jersey SRF program. Of this amount, $5.0 million of interim SRF funding was made availablePSC prior to the Company prior the closing of the first mortgage bonds. At September 30, 2004, the Company had $1.9 million in borrowings outstanding under the interim SRF funding at 0% interest. The Company closed on $16.6 million of Series EE and FF bonds on November 4, 2004, which included the interim borrowings.

loan closings. 7 Note 3 –- Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding. Diluted EPS assumes the conversion of both the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 Series.

~~(In~~ (In Thousands Except for per Share Amounts)

Three Months Ended September 30,

Basic:

2004
Income

Wtd Average
Shares

2003
Income

Wtd Average
Shares

Net Income

$
3,362

11,317

$
2,393

10,506

Preferred Dividend

(64
)

(64
)

Earnings Applicable to Common Stock

$
3,298

11,317

$
2,329

10,506

Basic EPS

$
0.29

$
0.22

Diluted:

Earnings Applicable to Common Stock

$
3,298

11,317

$
2,329

10,506

$7.00 Series Dividend

26

179

26

179

$8.00 Series Dividend

24

164

24

164

Adjusted Earnings Applicable to Common Stock

$
3,348

11,660

$
2,379

10,849

Diluted EPS

$
0.29

$
0.22

Nine Months Ended September 30,

Basic:

2004
Income

Wtd Average
Shares

2003
Income

Wtd Average
Shares

Net Income

$
6,286

10,989

$
5,421

10,448

Preferred Dividend

(191
)

(191
)

Earnings Applicable to Common Stock

$
6,095

10,989

$
5,230

10,448

Basic EPS

$
0.55

$
0.50

Diluted:

Earnings Applicable to Common Stock

$
6,095

10,989

$
5,230

10,448

$7.00 Series Dividend

78

179

78

179

$8.00 Series Dividend

72

164

72

164

Adjusted Earnings Applicable to Common Stock

$
6,245

11,332

$
5,380

10,791

Diluted EPS

$
0.55

$
0.50

Twelve Months Ended September 30,

Basic:

2004
Income

Wtd Average
Shares

2003
Income

Wtd Average
Shares

Net Income

$
7,495

10,880

$
7,449

10,473

Preferred Dividend

(255
)

(255
)

Earnings Applicable to Common Stock

$
7,240

10,880

$
7,194

10,473

Basic EPS

$
0.67

$
0.69

Diluted:

Earnings Applicable to Common Stock

$
7,240

10,880

$
7,194

10,473

$7.00 Series Dividend

104

179

104

179

$8.00 Series Dividend

96

164

96

164

Adjusted Earnings Applicable to Common Stock

$
7,440

11,223

$
7,394

10,816

Diluted EPS

$
0.66

$
0.68
��

Three Months Ended March 31, Weighted Weighted 2005 Average 2004 Average Basic: Income Shares Income Shares ------------------------------------------------------------------------------------------ Net Income $ 1,380 11,367 $ 1,034 10,579 Preferred Dividend (64) (64) ------- ------- ------- ------- Earnings Applicable to Common Stock $ 1,316 11,367 $ 970 10,579 Basic EPS $ 0.12 $ 0.09 ------------------------------------------------------------------------------------------ Diluted: ------------------------------------------------------------------------------------------ Earnings Applicable to Common Stock $ 1,316 11,367 $ 970 10,579 $7.00 Series Preferred Dividend 26 179 26 179 $8.00 Series Preferred Dividend 24 164 24 164 ------- ------- ------- ------- Adjusted Earnings Applicable to Common Stock $ 1,366 11,710 $ 1,020 10,922 Diluted EPS $ 0.12 $ 0.09
Note 4 –- Business Segment Data

The Company has identified two reportable segments. One is the regulated business of collecting, treating and distributing water on a retail and wholesale basis to residential, commercial, industrial and fire protection customers in parts of New Jersey and Delaware. ItThis segment also ~~operates~~includes the operations of a regulated wastewater system in New Jersey. The Company is subject to regulations as to its rates, services and other matters by the States of New Jersey and Delaware with respect to utility services within these States. The other segment ~~is the~~primarily includes non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the Consolidated Notes to the Financial Statements in the ~~Company’s~~Company's Annual Report for the period ended December 31, ~~2003~~2004 filed on Form ~~10-K/A-2.~~10-K. Inter-segment transactions relating to operational costs are treated as ~~pass through~~pass-through expenses. Finance charges on inter-segment loan activities are based on interest rates that are below what would normally be charged by a third party lender. These inter-segment transactions are eliminated in the ~~Company’s~~Company's consolidated financial statements.

8

(Dollars in Thousands)

Three Months Ended
September 30,

Nine Months Ended
September 30,

Twelve Months Ended
September 30,

Operations by Segments:

2004

2003

2004

2003

2004

2003

Revenues:

    Regulated

$
17,296

$
15,360

$
45,786

$
42,427

$
59,067

$
55,669

    Non – Regulated

2,590

2,256

7,806

6,204

10,102

8,169

Inter-segment Elimination

(30
)

(30
)

(90
)

(66
)

(120
)

(78
)

Consolidated Revenues

$
19,856

$
17,586

$
53,502

$
48,565

$
69,049

$
63,760

Operating Income:

    Regulated

$
4,341

$
3,329

$
9,454

$
8,629

$
11,840

$
11,573

    Non – Regulated

156

171

373

355

504

562

Consolidated Operating Income

$
4,497

$
3,500

$
9,827

$
8,984

$
12,344

$
12,135

Net Income:

    Regulated

$
3,245

$
2,260

$
6,026

$
5,179

$
7,139

$
7,014

    Non – Regulated

117

133

260

242

356

435

Consolidated Net Income

$
3,362

$
2,393

$
6,286

$
5,421

$
7,495

$
7,449

Capital Expenditures:

    Regulated

$
11,563

$
4,784

$
20,478

$
12,559

$
26,921

$
15,999

    Non – Regulated

31

1

151

562

161

791

Total Capital Expenditures

$
11,594

$
4,785

$
20,629

$
13,121

$
27,082

$
16,790

As of
September 30, 2004

As of
December 31, 2003

Assets:

Regulated

$
276,516

$
259,689

Non – Regulated

5,322

5,223

Inter-segment Elimination

(1,891
)

(1,720
)

Consolidated Assets

$
279,947

$
263,192

(Dollars in Thousands) Three Months Ended March 31, Operations by Segments: 2005 2004 --------------------------------------------------------------------- Revenues: Regulated $ 14,759 $ 13,391 Non - Regulated 2,014 2,515 Inter-segment Elimination (30) (30) ---------------------------- Consolidated Revenues $ 16,743 $ 15,876 ---------------------------- Operating Income: Regulated $ 2,374 $ 2,073 Non - Regulated 130 147 ---------------------------- Consolidated Operating Income $ 2,504 $ 2,220 ---------------------------- Net Income: Regulated $ 1,273 $ 925 Non - Regulated 107 109 ---------------------------- Consolidated Net Income $ 1,380 $ 1,034 ---------------------------- Capital Expenditures: Regulated $ 4,133 $ 2,862 Non - Regulated 59 74 ---------------------------- Total Capital Expenditures $ 4,192 $ 2,936 ---------------------------- As of As of March 31, 2005 December 31, 2004 -------------- ----------------- Assets: Regulated $ 294,609 $ 296,260 Non - Regulated 5,061 4,943 Inter-segment Elimination (2,181) (2,074) ---------------------------- Consolidated Assets $ 297,489 $ 299,129 ---------------------------- Note 5 –- Short-term Borrowings

The Board of Directors has authorized lines of credit for up to an aggregate of $40.0 million. As of ~~September 30, 2004,~~March 31, 2005, the Company has established ~~revolving~~ lines of credit aggregating $40.0 million. At ~~September 30, 2004,~~March 31, 2005, the outstanding borrowings under these credit lines were ~~$6.0~~$9.5 million at a weighted average interest rate of ~~2.15%~~4.05%. As of that date, the Company had borrowing capacity of ~~$34.0~~$30.5 million under its credit lines.

The weighted average daily amounts of borrowings outstanding under the ~~Company’s~~Company's credit lines and the weighted average interest rates on those amounts were ~~$4.9~~$10.4 million and ~~$10.5~~$13.8 million at ~~2.05%~~3.85% and ~~1.71%~~1.56% for the three months ended ~~September 30,~~March 31, 2005 and 2004, ~~and 2003,~~ respectively. The weighted average daily amounts of borrowings outstanding under the Company’s credit lines and the weighted average interest rates on those amounts were $8.7 million and $14.5 million at 1.60% and 1.93% for the nine months ended September 30, 2004 and 2003, respectively.

Note 6 –- Commitments and Contingent Liabilities

A lawsuit was filed in 1998 against the Company for damages involving the break of both a Company water line and an underground electric power cable containing both electric lines and petroleum based insulating fluid. The electric utility also asserted claims against the Company. The lawsuit was settled in 2003, and by agreement, the electric ~~utility’s~~utility's counterclaim for approximately $1.1 million in damages was submitted to binding arbitration, in which the agreed maximum exposure of the Company is $0.3 ~~million.~~million, which the Company has accrued for. While we are unable to predict the outcome of the arbitration, we believe that we have substantial defenses. The Company is a defendant in various lawsuits. We believe the resolution of pending claims and legal proceedings will not have ~~not recorded any liability for~~a material adverse effect on the ~~claim.~~

A claim involving a construction subcontractor, the Company’s general contractor and the Company concerning a major construction project was settled during October 2004. The matter was instituted in 2001, and related to work required to be performed under a construction contract and related subcontracts and included payment issues and timing/delay issues. The amount that was determined to be due from us for the work performed was $1.4 million and was recorded as an addition to utility plant in service as of September 30, 2004.

Company's consolidated financial statements. Note 7 –- Employee Retirement Benefit Plans

Pension – - The Company has a noncontributory defined benefit pension plan, which covers ~~substantially~~ all employees with more than 1,000 hours of service. The Company expects to make cash contributions of $0.8 million during the current year. These contributions are expected to be made during the second quarter of 2005. In addition, the Company maintains an unfunded supplemental pension plan for its executives. Based on the 2004 pension plan valuation, the Company made cash contributions of $0.5 million during the current year, which is a decrease from the $1.0 million estimate disclosed at December 31, 2003. The Company does not anticipate the need for additional cash contributions at this time.

Post-retirement Benefits Other Than Pensions – - The Company has a post-retirement benefit plan other than pensions for substantially all of its retired employees. Coverage includes healthcare and life insurance. Retiree contributions are dependent on credited years of service. ~~Based on the 2004 post-retirement benefit plan valuation, the~~The Company expects to make total cash contributions of $1.2 million during the current ~~year, which is an increase from the $1.0 million estimate disclosed at December 31, 2003. The Company~~year. These contributions will be made ~~contributions of $0.2 million~~each quarter during ~~the third quarter of 2004 and $0.5 million for the nine-months ended September 30, 2004.~~

2005. The following table sets forth information relating to the ~~Company’s~~Company's periodic costs for its retirement plans.

(Dollars in Thousands)

Pension Benefits

Other Benefits

Three Months Ended September 30,

2004

2003

2004

2003

Service Cost

$
186

$
171

$
106

$
66

Interest Cost

346

339

145

121

Expected Return on Assets

(372
)

(318
)

(53
)

(44
)

Amortization of Unrecognized Losses

—

—

73

36

Amortization of Unrecognized Prior Service Cost

23

23

—

—

Amortization of Transition Obligation

—

—

34

34

Net Periodic Benefit Cost

$
183

$
215

$
305

$
213

Pension Benefits

Other Benefits

Nine Months Ended September 30,

2004

2003

2004

2003

Service Cost

$
559

$
513

$
319

$
197

Interest Cost

1,039

1,017

435

363

Expected Return on Assets

(1,118
)

(954
)

(160
)

(131
)

Amortization of Unrecognized Losses

—

—

219

107

Amortization of Unrecognized Prior Service Cost

69

69

—

—

Amortization of Transition Obligation

—

—

102

102

Net Periodic Benefit Cost

$
549

$
645

$
915

$
638

Pension Benefits

Other Benefits

Twelve Months Ended September 30,

2004

2003

2004

2003

Service Cost

$
730

$
694

$
385

$
253

Interest Cost

1,379

1,342

557

479

Expected Return on Assets

(1,437
)

(1,275
)

(204
)

(162
)

Amortization of Unrecognized Losses

—

—

255

135

Amortization of Unrecognized Prior Service Cost

92

92

—

—

Amortization of Transition Obligation

—

1

135

135

Net Periodic Benefit Cost

$
764

$
854

$
1,128

$
840

I~~tem~~ Note 8 - Other Comprehensive Income Comprehensive income was as follows: Three Months Ended March 31, 2005 2004 ----------------------------- Net Income $ 1,379,702 $ 1,033,640 Other Comprehensive Income: Change in Value of Equity Investments, Net of Income Tax (613) -- ----------------------------- Other Comprehensive Income (613) -- ----------------------------- Comprehensive Income $ 1,379,089 $ 1,033,640 ----------------------------- 11 Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of ~~Operation~~s

Operations The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of the Company included elsewhere herein and with the ~~company’s~~Company's Annual Report on Form ~~10-K/A-2~~10-K for the fiscal year ended December 31, ~~2003.~~

2004. Forward-Looking Statements

Certain statements contained in this quarterly report are ~~“forward-looking statements”~~"forward-looking statements" within the meaning of federal securities laws. The Company intends that these statements be covered by the safe harbors created under those laws. These statements include, but are not limited to:

	•	~~statements as to expected financial condition, performance, prospects and earnings of the Company;~~

	•	~~statements regarding strategic plans for growth;~~

	•	~~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 2004 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 operating results;~~

	•	~~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 cost of cash contributions to fund the Company’s pension plan, including statements as to anticipated rates of return on plan assets;~~

	•	~~statements as to trends; and~~

	•	~~statements regarding the availability and quality of our water supply.~~

- statements as to expected financial condition, performance, prospects and earnings of the Company; - statements regarding strategic plans for growth; - 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 2005 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 operating results; - 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 cost of cash contributions to fund the Company's pension plan, 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. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-looking statements. Important factors that could cause actual results to differ materially from anticipated results and outcomes include, but are not limited to:

	•	~~the effects of general economic conditions;~~

	•	~~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 of water;~~

	•	~~actions taken by government regulators, including decisions on base rate increase requests;~~

	•	~~weather variations and other natural phenomena;~~

	•	~~acts of war or terrorism; and~~

	•	~~other factors discussed elsewhere in this quarterly report.~~

- the effects of general economic conditions; - 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 of water; - actions taken by government regulators, including decisions on base rate increase requests; - new or additional water quality standards; - weather variations and other natural phenomena; - acts of war or terrorism; and - other factors discussed elsewhere in this quarterly report. Many of these factors are beyond the ~~Company’s~~Company's ability to control or predict. Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements, which only speak to the ~~Company’s~~12 Company's understanding as of the date of this quarterly report. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this quarterly report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

For an additional discussion of factors that may affect the ~~Company’s~~Company's business and results of operations, see Risk Factors in ~~our Prospectus filed~~the Company's Annual Report on Form ~~424(b)(4) dated May 7,~~10-K for the fiscal year ended December 31, 2004.

Overview

The Company has operated as a water utility in New Jersey since 1897, and in Delaware, through our wholly-owned subsidiary, Tidewater, since 1992. We are in the business of collecting, treating, distributing and selling water for domestic, commercial, municipal, industrial and fire protection purposes. We also operate a New Jersey municipal water and wastewater system under contract and provide wastewater services in New Jersey and Delaware through our subsidiaries. We are regulated as to rates charged to customers for water and wastewater services in New Jersey and for water services in Delaware, as to the quality of water service we provide and as to certain other matters. Our USA, USA-PA and White Marsh subsidiaries are not regulated utilities. ~~It is anticipated that rates for certain wastewater services in Delaware are also to be regulated.~~

Our New Jersey water utility system (the Middlesex System) provides water services to approximately 58,000 retail customers, primarily in central New Jersey. The Middlesex System also provides water service under contract to municipalities in central New Jersey with a total population of approximately 267,000. Through our subsidiary, USA-PA, we operate the water supply system and wastewater system for the City of Perth Amboy, New Jersey. Our other New Jersey subsidiaries, Pinelands Water and Pinelands Wastewater, provide water and wastewater services to residents in Southampton Township, New Jersey.

Our Delaware subsidiaries, Tidewater and Southern Shores, provide water services to approximately 25,000 retail customers in New Castle, Kent, and Sussex Counties, Delaware. Our TESI subsidiary commenced operations during 2005 as a regulated wastewater utility in Delaware. Although TESI has responded to numerous requests for proposal, the Company does not have any customers or revenues as of March 31, 2005. Our other Delaware subsidiary, White Marsh, serves ~~an additional~~ 1,900 customers in Kent and Sussex Counties.

Our USA subsidiary provides customers within the Middlesex System a service line maintenance program called LineCareSM. The majority of our revenue is generated from retail and contract water services to customers in our service areas. We record water service revenue as such service is rendered and include estimates for amounts unbilled at the end of the period for services provided after the last billing cycle. Fixed service charges are billed in advance by our subsidiary, Tidewater, and are recognized in revenue as the service is provided.

Our ability to increase operating income and net income is based significantly on three factors: weather, adequate and timely rate ~~increases,~~relief, and customer growth.

13 Recent Developments

Rate Increases

~~Effective May 27, 2004,~~ The Company anticipates that its Middlesex ~~Water Company received approval from~~subsidiary will file for a base rate increase with the New Jersey Board of Public Utilities (BPU) ~~for a 9.5%, or $4.3 million increase in its water rates.~~during the second quarter of 2005. This increase ~~represents a portion of the Company’s November 2003 request for a total rate increase of 17.8%~~is intended to ~~cover~~recover the costs of ~~its~~ increased capital ~~investment,~~investments, including a $9.7 million raw water pipeline, as well as ~~maintenance~~higher operating and ~~operating~~corporate governance expenses.

~~Effective June 24, 2004, Pinelands Water Company and Pinelands Wastewater Company received approval from the BPU for rate increases~~ As part of 9.2% and 9.9%, respectively, or approximately $131,000 in the aggregate. This increase represents a portion of the Company’s December 2003 request for a total rate increase of approximately $250,000 to help offset the increasing costs associatedan approved settlement with ~~capital improvements, and the operation and maintenance of their systems.~~

~~Effective June 25, 2004, Tidewater received approval from~~ the Delaware Public Service Commission (PSC) ~~for an interim rate increase of 15%, or $1.5 million increase in its water rates, which includes 4.5% of previously implemented Distribution System Improvement Charge (DSIC). On~~on October 19, 2004, ~~the PSC approved a settlement between~~ Tidewater and interveners in the matter. The settlement allows the 15% interim rates to become permanent. This increase represents a portion of the Company’s April 2004 request for a total rate increase of 24% to accommodate the growth of Tidewater’s customer base, improvements to water treatment, fire protection and to interconnect systems for service reliability and back-up. As part of the settlement, Tidewater will bewas eligible to apply for a second phase rate increase of $0.5 million, provided it ~~completes~~completed a number of capital projects within a specified time schedule. Tidewater ~~must file~~filed an application for this increase ~~no earlier than~~on March ~~2005 nor later than May~~28, 2005. Upon verification of project completion, the new rates ~~will become~~became effective ~~30 days after the filing date.~~on April 27, 2005. Tidewater also agreed to waive its right to file DSIC applications over the next three six-month cycles (January and July 2005, and January 2006) and to defer making an application for a general rate increase until after April 1, 2006.

~~New Pipeline Project~~

~~During June 2004,~~ In accordance with the ~~Company began construction~~tariff established for Southern Shores, an annual rate increase of a $9.7 million raw water pipeline from its pump station in New Brunswick, New Jersey to its Water Treatment Plant in Edison, New Jersey. This new 60” pipeline will ensure backup water supply and will provide security and necessary redundancy for3% was implemented on January 1, 2005. The increase cannot exceed the ~~Company’s existing concrete supply line. The Company anticipates~~lesser of the ~~pipeline construction project will be completed by Spring 2005, and will be financed through low interest loans obtained through the New Jersey Environmental Infrastructure Trust.~~

regional Consumer Price Index or 3%. Results of Operations –- Three Months Ended ~~September 30, 2004~~

March 31, 2005 Operating revenues for the three months ended ~~September 30, 2004~~March 31, 2005 increased ~~$2.3~~$0.9 million or ~~12.9%~~5.5% from the same period in ~~2003.~~2004. Water sales improved by ~~$1.1~~$0.9 million in our New Jersey systems, which was primarily a result of base rate increases.

The increased water sales were partially offset by decreased water consumption during the current year period as compared to the prior year. Revenues rose in our Delaware service territories by ~~$0.8~~$0.5 million. Customer growth in Delaware provided additional water consumption sales, facility charges and connection fees oftotaling $0.4 ~~million, and base~~million. Base rate increases ~~accounted for $0.4 million.~~

Our new meter services venture through USA provided $0.6 million of additional revenues for completed installations. Revenues from our City of Perth Amboy contract decreased by $0.3 million due to scheduled reductions in fixed fees. All other operations accounted for $0.1 million of ~~higher revenues.~~

the increase. USA had reduced revenues of $0.5 million as compared to the same period in 2004. This reduction was due to our meter services venture completing its original contracts during December 2004. USA has not bid on, and consequently has not obtained any additional meter services contracts for 2005. Revenues for all of our other operations were consistent with the same period in 2004. While we anticipate continued growth in the number of customers and increased water consumption among our Delaware systems, such growth and increased consumption cannot be guaranteed. Weather conditions may adversely impact future water consumption ~~even with an~~in spite of anticipated growth in the number of customers. Our New Jersey systems are also highly dependent on the effects of weather. Our ability to generate operating revenues by our meter services venture is dependent upon our ability to obtain additional contracts, and there can be no assurance that we will be the successful bidder. USA did not submit bids for any meter service contracts during the ~~third~~first quarter and currently does not expect to submit any bids in the ~~fourth~~second quarter. ~~The existing meter~~As a result of anticipated regulation of wastewater services ~~contracts are expected~~in Delaware, we have established a new regulated wastewater operation (TESI) that commenced operations during fiscal 2005. Due to ~~be completed during~~ the ~~fourth quarter~~start-up nature of ~~2004.~~

this operation, we expect our expenses with respect to this subsidiary to exceed its revenues in the near term. 14 Operating expenses increased ~~$1.3~~$0.6 million or ~~9.0%~~4.3%. Operation and maintenance expenses increased ~~$0.4~~$0.2 million or ~~4.6%~~1.8%. The costs of our meter services venture increased $0.5 million due to completed installations and corporate governance related fees increased $0.1 million. These increases were partially offset by reduced costs related to our City of Perth Amboy contract of $0.2 million due to the reduced water treatment costs and a decrease of $0.1 million for water main costs in our Middlesex system. All other operating expenses increased $0.1 million.

Depreciation expense increased $0.1 million or 9.3%, primarily as a result of a higher level of utility plant in service. Since September 30, 2003, our net investment in utility plant has increased by $13.5 million.

Other taxes increased by $0.1 million, reflecting higher taxes on taxable gross revenues. Higher income taxes of $0.6 million over the prior year are attributable to improved operating results for 2004 as compared to 2003.

~~Other income increased $0.1 million, primarily due to higher AFUDC as a result of an increase in capital projects in New Jersey and Delaware.~~

~~Interest expense increased by $0.1 million, primarily due to higher average long-term borrowings as compared to the prior year period.~~

Net income increased by 40.5% to $3.3 million, and basic and diluted earnings per share increased from $0.22 to $0.29. The increase in earnings per share was impacted by the higher number of shares outstanding during the current year as a result of the sale of 700,000 shares of common stock in May 2004.

~~Results of Operations – Nine Months Ended September 30, 2004~~

Operating revenues for the nine months ended September 30, 2004 increased $4.9 million or 10.2% from the same period in 2003. Customer growth of 10.7% in Delaware provided additional consumption sales, facility charges and connection fees of $0.6 million, and base rate increases helped to improve revenues by $1.0 million. Revenues in New Jersey increased $1.7 million, primarily due to increased base rates. Our new meter services venture contributed an additional $1.8 million for completed installations. Revenues from our City of Perth Amboy contract decreased by $0.4 million due to scheduled reductions in fixed fees. All other revenues increased $0.2 million.

Operating expenses increased $4.1 million or 10.3%. Operation and maintenance expenses increased $3.0 million or 11.1%. In New Jersey, source of supply, which is primarily purchased water, and pumping costs, which is primarily purchased power, increased by $0.7 million. Purchased water increased as a result of a change in the unit cost and structure and base purchases under the raw water contract with the New Jersey Water Supply Authority and an increase in the cost of finished water by a non-affiliated water utility. Purchased power costs are higher due to the effect of the August 1, 2003 deregulation of electric generation in New Jersey and a rate increase on the remaining portion of electric service. Payroll and benefits costs, insurance and corporate governance related fees increased ~~$0.5~~$0.3 million. ~~As previously discussed,~~Water treatment costs for the Middlesex System increased $0.1 million. The continuing growth of our Delaware systems resulted in higher costs of water treatment, additional employees and related benefit expenses ~~and insurance~~ of ~~$0.6~~$0.2 million.

~~The~~ These increases were partially offset by reduced costs ofrelated to our meter services venture, ~~increased $1.6 million, primarily due to completed installations. Costs related to our City of Perth Amboy contract~~which decreased ~~by $0.3~~$0.5 million due to ~~reduced water treatment and real estate costs, and water main costs decreased by $0.2 million in our Middlesex system.~~the completion of the original projects during December 2004. All other operating ~~costs decreased by~~expenses increased $0.1 million. ~~All other operating costs increased $0.1 million.~~

Depreciation expense increased ~~$0.4~~$0.1 million or ~~9.9%, primarily as a result of a higher level of utility plant in service.~~

Other taxes increased by $0.2 million, reflecting higher taxes on taxable gross revenues. Higher income taxes of $0.5 million over the prior year period are attributable to improved operating results for 2004 as compared to 2003.

Other income increased $0.2 million, primarily due the recognition of a gain on the sale of real estate that had previously been deferred pending the outcome of the Middlesex rate case and higher AFUDC as a result of an increase in capital projects in New Jersey and Delaware.

~~Interest expense increased by $0.2 million, primarily due to higher average long-term borrowings as compared to the prior year period.~~

Net income increased by 16.0% to $6.3 million from $5.4 million in the prior year, and basic and diluted earnings per share increased from $0.50 to $0.55. The increase in earnings per share was impacted by the higher number of shares outstanding during the current year as a result of the sale of 700,000 shares of common stock in May 2004.

~~Results of Operations – Twelve Months Ended September 30, 2004~~

Operating revenues for the twelve months ended September 30, 2004 were $69.0 million, an increase of $5.3 million or 8.3%, compared to the twelve-month period ended September 30, 2003. Customer growth of 10.7% in Delaware provided additional consumption, connection fees and fixed services fees of $1.0 million. Base rate increases accounted for an additional $1.1 million. The Middlesex rate increase approved effective May 27, 2004 helped increase revenues by $1.5 million. Cool, wet weather caused consumption revenue to decline in New Jersey by $0.3 million. Service fees from our new meter services venture contributed $2.1 million primarily for completed installations. Wastewater operations and maintenance contract revenues increased by $0.2 million, due to customer growth. Revenues from our City of Perth Amboy contract decreased by $0.4 million due to scheduled reductions in fixed fees. All other revenues increased by $0.1 million.

Operating expenses increased $5.1 million or 9.8%. Operations and maintenance expenses increased $4.2 million or 12.1%. In New Jersey, water treatment, source of supply and pumping costs increased by $0.7 million. Purchased water increased as a result of a change in the unit cost structure and base purchases under the raw water contract with the New Jersey Water Supply Authority and an increase in the cost of finished water by a non-affiliated water utility. Purchased power costs are higher due to the effect of the August 1, 2003 deregulation of electric generation in New Jersey and a rate increase on the remaining regulated portion of electric service. Payroll and benefits costs, insurance and corporate governance related fees increased $0.8 million. Due to the continuing growth of our Delaware systems, the costs of water treatment, additional employees and related benefit expenses, insurance, bad debts, and consulting fees increased $1.0 million.

The costs of our meter services venture increased $1.8 million, primarily due to completed installations. Wastewater operations and maintenance costs increased by $0.2 million, as a result of the larger customer base. Costs related to our City of Perth Amboy contract decreased by $0.4 million due to due to reduced water treatment and real estate costs. All other operating costs increased by $0.1 million.

~~Depreciation expense increased $0.5 million or 9.8%~~7.8%, primarily as a result of a higher level of utility plant in service. Since ~~September 30, 2002,~~March 31, 2004, our net investment in utility plant has increased by ~~$32.5~~$21.9 million.

Other taxes increased by $0.1 million, reflecting higher taxes on taxable gross revenues. Higher income taxes of $0.2 million over the prior year are attributable to improved operating results for 2005 as compared to 2004. Other income increased $0.2 million, primarily due to higher AFUDC as a result of increases in capital projects in New Jersey and Delaware. Interest expense increased by ~~$0.3~~$0.1 million, primarily due to higher average long-term borrowings and higher average interest rates charged on short-term borrowings as compared to the prior year period.

Net income increased by ~~less than 1.0%~~33.5% to ~~$7.5~~$1.4 million, ~~from $7.4 million for the prior twelve-month period. However,~~and basic and diluted earnings per share ~~decreased by $0.02~~increased from $0.09 to ~~$0.67 and $0.66 per share, respectively, due to the increase in the number of common shares outstanding that resulted from the stock issuance previously discussed.~~

$0.12. Liquidity and Capital Resources

Cash flows from operations are largely ~~based~~dependent on three factors: weather, adequate and timely rate increases, and customer growth. The effect of those factors on net income is discussed in results of operations. For the ~~nine~~three months ended ~~September 30, 2004,~~March 31, 2005, cash flows from operating activities ~~increased $2.7~~were $3.0 million, ~~to $11.4 million, as compared~~which was comparable to the prior year. ~~This increase was primarily attributable to improved profitability during the current year period and the timing of payments to vendors and taxes.~~ The ~~$11.4~~$3.0 million of net cash flow from operations allowed us to fund approximately ~~55%~~71% of our utility plant expenditures for the period, with the remainder funded with ~~both short-term and~~restricted cash from the proceeds of previously issued long-term borrowings.

The ~~Company’s~~Company's capital program for ~~2004~~2005 is estimated to be ~~$28.9~~$28.5 million and includes ~~$13.1~~$16.5 million for water system additions and improvements for our Delaware systems, ~~$5.5~~$3.4 million ~~for a portion of~~to complete the ~~second~~new raw water line to ~~Middlesex’s~~the Middlesex primary water treatment plant that began in 2004, and ~~$4.1~~$3.3 million for the RENEW Program, which is our program to clean and cement line approximately nine miles of unlined mains in the Middlesex ~~System, of which eight were complete at September 30, 2004.~~System. There remains a total of approximately ~~130~~129 miles of unlined mains in the 730-mile Middlesex System. ~~Additional expenditures on the upgrade to the CJO Plant are estimated at $3.0 million.~~ The capital program also includes ~~$3.2~~$5.3 million for other scheduled upgrades to our existing systems in New Jersey. The scheduled upgrades consist of ~~$1.5~~$1.1 million for improvements to existing plant, $1.2 million for mains, $0.8 million for service lines, $0.3 million for meters, ~~$0.2~~$0.3 million for hydrants, and ~~$0.4~~$1.6 million for computer ~~systems.~~

systems and various other items. To pay for our capital program in ~~2004,~~2005, we will utilize internally generated funds and funds available under existing New Jersey Environmental Infrastructure Trust loans (currently, ~~$4.1~~$9.1 million) and Delaware State Revolving Fund (SRF) loans (currently, ~~$2.2~~$1.5 million), which provide low cost financing for projects that meet certain water quality and system improvement benchmarks. If necessary, we will also utilize short-term borrowings through $40.0 million of available lines of credit with three commercial banks. As of ~~September 30, 2004,~~March 31, 2005, there was ~~$6.0~~$9.5 million outstanding against the lines of credit.

15 On May 6, 2005, Tidewater filed an application with the PSC seeking approval to finance up to $16.0 million in the form of long-term debt securities. Of this amount, Tidewater received loan approval in April 2005 under the Delaware SRF program of $2.0 million. The Delaware SRF program allows, but does not obligate, Tidewater to draw down against a General Obligation Note for two specific projects over a two-year period ending in April 2007. The interest rate is set on the loan closing date and is based on 62.5% of the interest rate for a 10+ year high quality corporate bond. Tidewater has received a commitment letter from CoBank, a rural cooperative financial institution, approving the conversion of Tidewater's existing $7.0 million short-term borrowings with CoBank and an additional $7.0 million of funding for an aggregated $14.0 million mortgage type loan to be repaid over a term of 25 years. The terms of the CoBank loan allows, but does not obligate, Tidewater to draw down against the additional $7.0 million at any time after the loan closing through August 31, 2006. During that period, there is a commitment fee of 12.5 basis points, or 0.125%, on the unused balance. The interest rate for the CoBank loan will be a variable rate set weekly by CoBank, with Tidewater having an option to fix the interest rate at any time over the life of the loan at a margin over CoBank's cost of funds. The SRF and CoBank borrowings must be approved by the PSC prior to the loan closings. The Company periodically issues shares of common stock in connection with its dividend reinvestment and stock purchase plan. On April 27, 2005, the Company filed with the Securities and Exchange Commission on Form S-3 to issue shares under its Dividend Reinvestment and Common Stock Purchase Plan at a 5% discount on optional cash payments and reinvested dividends for a six-month period commencing on June 1, 2005, and concluding on December 1, 2005. From time to time, the Company may issue additional equity to reduce short-term indebtedness and for other general corporate purposes.

Going forward into ~~2005~~2006 through ~~2006,~~2007, we currently project that we will ~~be required to~~ expend approximately ~~$38.5~~$45.9 million for capital projects. ~~Plans to finance those projects are underway as we have received approval to borrow up to $18.0 million under~~To the ~~New Jersey Environmental Infrastructure Trust program. The Company closed on $16.6 million under the program on November 4, 2004. We anticipate that some~~extent possible and because of the favorable interest rates available to regulated water utilities, we will finance our capital ~~projects in Delaware will be eligible for the Delaware State Revolving Fund program in that state and we are pursuing those opportunities.~~expenditures under SRF loan programs. We also expect to use internally generated funds and proceeds from the sale of common stock through the Dividend Reinvestment and Common Stock Purchase Plan.

In addition to the effect of weather conditions on revenues, increases in certain operating costs will impact our liquidity and capital resources. As described in our overview section, we have recently received rate relief for Middlesex, the Pinelands Companies and Tidewater. Changes in operating costs and timing of capital projects will have an impact on revenues, earnings, and cash flows and will also impact the ~~need~~timing of ~~when we file~~filings for future rate increases.

Recent Accounting Pronouncements – - In ~~May~~December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.123(R) "Share-Based Payment", which replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". The Statement requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. The Statement also establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees, except for equity instruments held by employee share ownership plans. This statement was originally effective for quarters beginning after June 15, 2005, however on April 14, 2005, the Securities and Exchange Commission adopted a rule which makes the provisions of SFAS 123(R) effective for fiscal periods beginning after June 15, 2005 (January 1, 2006 for the Company). The Company currently recognizes compensation expense at fair value for stock-based payment awards in accordance with SFAS No. 123 "Accounting for Stock-Based Compensation," and does not anticipate adoption of this standard will have a material impact on its financial position, results of operations, or cash flows. 16 In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (SFAS 153). SFAS 153 addresses the measurement of exchanges of nonmonetary assets and redefines the scope of transactions that should be measured based on the fair value of the assets exchanged. SFAS 153 is effective for nonmonetary asset exchanges occurring in quarters beginning after June 15, 2005. The Company does not anticipate adoption of this standard will have a material impact on its financial position, results of operations, or cash flows. In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, ~~“Accounting~~"Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of ~~2003”~~2003" (FSP 106-2). FSP 106-2 provides guidance on the accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Drug Act) for employers who sponsor postretirement health care plans that provide prescription drug benefits. FSP 106-2 also requires those employers to provide certain disclosures regarding the effect of the federal subsidy provided by the Medicare Drug Act. The Medicare Drug Act generally permits plan sponsors that provide retiree prescription drug benefits that are ~~“actuarially equivalent”~~"actuarially equivalent" to the benefits of Medicare Part D to be eligible for a non-taxable federal subsidy. FSP 106-2 is effective for the first interim or annual period beginning after June 15, 2004. FSP 106-2 provides that if the effect of the Medicare Drug Act is not considered a significant event, the measurement date for the adoption of FSP 106-2 is delayed until the next regular measurement date. Based on Management's ~~discussion~~discussions with its Actuary, Management determined the effect of the Medicare Drug Act is not considered a significant event and thus the Company ~~will account~~accounted for the effects of FSP 106-2 at its next measurement date (January 1, 2005). The adoption of FSP 106-2 ~~will~~did not have a material effect on the ~~Company’s~~Company's financial statements.

In March 2004, the ~~EITF~~Emerging Issues Task Force (EITF) reached consensus on EITF ~~03-1.~~No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (EITF 03-1). EITF 03-1 further defines the meaning of an ~~“other-than-temporary impairment”~~"other-than-temporary impairment" and its application to debt and equity securities. Impairment occurs when the fair value of a security is less than its cost basis. When such a condition exists, the investor is required to evaluate whether the impairment is other-than-temporary as defined in EITF 03-1. When an impairment is other-than-temporary, the security must be written down to its fair value. EITF 03-1 also requires additional annual quantitative and qualitative disclosures for available for sale and held to maturity impaired investments that are not other-than temporarily impaired. On September 30, 2004, the FASB issued FSP EITF ~~03-1-1.~~03-1-1, "Effective date of Paragraph's 10-20 of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" (FSP EITF 03-1-1). FSP EITF 03-1-1 delayed the effective date for the measurement and recognition guidance contained in EITF 03-1 until further implementation guidance is issued. The Company does not expect any material effects from the adoption of EITF 03-1 on its financial statements.

In March 2005, the FASB issued Interpretation No. 47, "Accounting for Conditioned Asset Retirement Obligations" (FIN 47), to clarify the term "conditional asset retirement obligation" as used in Statement of Financial Accounting Standards SFAS No. 143, "Accounting for Asset Retirement Obligations." Conditional asset retirement obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred, generally, upon acquisition, construction, development and/or through the normal operation of the asset. Uncertainty about the timing and/or method of settlement should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. 17

I~~tem~~ FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005 (December 31, 2005 for calendar-year enterprises). The Company does not anticipate adoption of this standard will have a material impact on its financial position, results of operations, or cash flows. Item 3. Quantitative and Qualitative Disclosures of Market ~~Ris~~k

Risk The Company is subject to the risk of fluctuating interest rates in the normal course of business. Our policy is to manage interest rates through the use of fixed rate, long-term debt and, to a lesser extent, short-term debt. The ~~Company’s~~Company's interest rate risk related to existing fixed rate, long-term debt is not material due to the term of the majority of our Amortizing Secured Notes and First Mortgage Bonds, which have maturity dates ranging from 2009 to 2038. Over the next twelve months, approximately $1.1 million of the current portion of eleven existing long-term debt instruments will mature. Applying a hypothetical change in the rate of interest charged by 10% on those borrowings would not have a material effect on earnings.

I~~tem~~Item 4. Controls and ~~Procedure~~s

Procedures As required by Rule 13a-15 under the Exchange Act, an evaluation of the effectiveness of the design and operation of the ~~Company’s~~Company's disclosure controls and procedures was conducted by the ~~Company’s~~Company's Chief Executive Officer along with the ~~Company’s~~Company's Chief Financial Officer. Based upon that evaluation, the ~~Company’s~~Company's Chief Executive Officer and the ~~Company’s~~Company's Chief Financial Officer concluded that the ~~Company’s~~Company's disclosure controls and procedures are effective as of the end of the period covered by this Report. There have been no significant changes in the ~~Company’s~~Company's internal controls or in other factors, which could significantly affect internal controls during the quarter ended ~~September 30, 2004.~~

March 31, 2005. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange ~~Commission’s~~Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the ~~Company’s~~Company's Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosure.

P~~ART~~ PART II. OTHER ~~INFORMATIO~~N

I~~tem~~INFORMATION Item 1. Legal ~~Proceeding~~s

~~A claim involving a construction subcontractor,~~Proceedings Reference is made to the ~~Company’s general contractor and~~Company's Annual Report on Form 10-K for the ~~Company concerning a major construction project was settled during October~~year ended December 31, 2004. The matter was instituted in 2001, and related to work required to be performed under a construction contract and related subcontracts and included payment issues and timing/delay issues. The amount that was determined to be due from us for work performed was $1.4 million and was recorded as an addition to utility plant in service as of September 30, 2004.

I~~tem~~Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceed~~s

Proceeds None.

I~~tem~~ Item 3. Defaults Upon Senior ~~Securitie~~s

Securities None.

I~~tem~~ Item 4. Submission of Matters to a Vote of Security ~~Holder~~s

Holders None.

I~~tem~~ 18 Item 5. Other ~~Informatio~~n

Information None.

I~~tem~~ Item 6. ~~Exhibit~~s


31	~~Section 302 Certification by Dennis G. Sullivan 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 G. Sullivan 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.~~

Exhibits 31 Section 302 Certification by Dennis G. Sullivan 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 G. Sullivan pursuant to 18 U.S.C. ss.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. ss.1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 19

S~~IGNATURE~~S

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~MIDDLESEX WATER COMPANY~~

	~~By:~~	~~/s/ A. Bruce O’Connor~~

		~~A. Bruce O’Connor~~
		~~Vice President and~~ ~~Chief Financial Officer~~

~~Date: November 9, 2004~~

MIDDLESEX WATER COMPANY By: /s/ A. Bruce O'Connor --------------------- A. Bruce O'Connor Vice President and Chief Financial Officer Date: May 6, 2005 20

				Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended September 30,
				2004			2003			2004			2003			2004			2003


Operating Revenues				$	19,856,688		$	17,585,575		$	53,502,334		$	48,564,914		$	69,048,634		$	63,759,946


Operating Expenses:
	Operations				9,193,804			8,687,828			27,455,475			24,292,699			35,828,875			31,478,131
	Maintenance				759,352			830,877			2,430,319			2,612,556			3,346,876			3,457,835
	Depreciation				1,467,523			1,342,059			4,353,222			3,960,856			5,755,093			5,242,946
	Other Taxes				2,224,028			2,081,210			6,195,329			5,950,472			8,060,775			7,854,295
	Income Taxes				1,714,802			1,143,264			3,240,804			2,764,542			3,713,480			3,592,126


		Total Operating Expenses			15,359,509			14,085,238			43,675,149			39,581,125			56,705,099			51,625,333


			Operating Income		4,497,179			3,500,337			9,827,185			8,983,789			12,343,535			12,134,613

Other Income:
	Allowance for Funds Used During Construction				179,173			95,448			309,455			253,253			372,121			336,482
	Other Income				33,418			41,705			170,983			83,896			218,586			199,144
	Other Expense				(85	)		(984	)		(29,761	)		(68,708	)		(50,984	)		(122,367	)


		Total Other Income, net			212,506			136,169			450,677			268,441			539,723			413,259

Interest Charges					1,347,475			1,243,888			3,991,681			3,830,926			5,387,785			5,099,090


Net Income					3,362,210			2,392,618			6,286,181			5,421,304			7,495,473			7,448,782

Preferred Stock Dividend Requirements					63,697			63,697			191,090			191,090			254,786			254,786


Earnings Applicable to Common Stock				$	3,298,513		$	2,328,921		$	6,095,091		$	5,230,214		$	7,240,687		$	7,193,996


Earnings per share of Common Stock:
	Basic			$	0.29		$	0.22		$	0.55		$	0.50		$	0.67		$	0.69
	Diluted			$	0.29		$	0.22		$	0.55		$	0.50		$	0.66		$	0.68

Average Number of
	Common Shares Outstanding :
	Basic				11,316,768			10,505,517			10,989,209			10,448,226			10,880,220			10,472,573
	Diluted				11,659,908			10,848,657			11,332,349			10,791,366			11,223,360			10,815,713

Cash Dividends Paid per Common Share				$	0.1650		$	0.1613		$	0.4950		$	0.4839		$	0.6600		$	0.6452

			September 30, 2004		December 31, 2003

ASSETS

UTILITY PLANT:		Water Production	$	79,388,120	$	77,265,782
		Transmission and Distribution		178,501,289		174,455,437
		General		20,061,010		19,776,293
		Construction Work in Progress		16,517,777		2,798,070

		TOTAL		294,468,196		274,295,582
		Less Accumulated Depreciation		50,782,036		47,510,797

		UTILITY PLANT - NET		243,686,160		226,784,785

		NONUTILITY ASSETS - NET		4,337,165		4,147,685

CURRENT ASSETS:		Cash and Cash Equivalents		2,601,686		3,005,610
		Accounts Receivable		7,180,976		5,682,608
		Unbilled Revenues		4,124,599		3,234,788
		Materials and Supplies (at average cost)		1,594,800		1,419,142
		Prepayments		1,035,892		1,009,304

		TOTAL CURRENT ASSETS		16,537,953		14,351,452

DEFERRED CHARGES AND OTHER ASSETS:		Unamortized Debt Expense		3,166,448		3,272,783
DEFERRED CHARGES AND OTHER ASSETS:		Preliminary Survey and Investigation Charges		882,065		1,380,771
		Regulatory Assets		8,655,119		8,216,117
		Operations Contracts Fees Receivable		699,806		699,806
		Restricted Cash		1,437,163		3,825,420
		Other		545,272		513,116

		TOTAL DEFERRED CHARGES AND OTHER ASSETS		15,385,873		17,908,013

		TOTAL ASSETS	$	279,947,151	$	263,191,935


CAPITALIZATION AND LIABILITIES
CAPITALIZATION:	Common Stock, No Par Value		$	71,583,902	$	56,924,028
	Retained Earnings			22,908,761		22,668,348
	Accumulated Other Comprehensive Income, net of tax			35,904		50,808

	TOTAL COMMON EQUITY			94,528,567		79,643,184

	Preferred Stock			4,063,062		4,063,062
	Long-term Debt			100,277,424		97,376,847

	TOTAL CAPITALIZATION			198,869,053		181,083,093

CURRENT LIABILITIES:	Current Portion of Long-term Debt			1,089,578		1,067,258
CURRENT LIABILITIES:	Notes Payable			6,000,000		12,500,000
	Accounts Payable			7,408,853		4,777,400
	Taxes Accrued			7,863,080		6,258,739
	Interest Accrued			711,915		1,810,639
	Unearned Revenues and Advanced Service Fees			744,851		602,854
	Other			815,683		678,596

	TOTAL CURRENT LIABILITIES			24,633,960		27,695,486

COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)

DEFERRED CREDITS:	Customer Advances for Construction			12,275,493		11,711,846
	Accumulated Deferred Investment Tax Credits			1,716,220		1,775,183
	Accumulated Deferred Income Taxes			14,617,451		14,125,970
	Employee Benefit Plans			5,252,701		5,086,988
	Regulatory Liability - Cost of Utility Plant Removal			5,234,354		4,830,308
	Other			861,444		909,498

	TOTAL DEFERRED CREDITS			39,957,663		38,439,793

CONTRIBUTIONS IN AID OF CONSTRUCTION				16,486,475		15,973,563

	TOTAL CAPITALIZATION AND LIABILITIES		$	279,947,151	$	263,191,935

		Three Months Ended September 30,					Nine Months Ended September 30,					Twelve Months Ended September 30,
		2004			2003		2004			2003		2004		2003


Net Income		$	3,362,210		$	2,392,618	$	6,286,181		$	5,421,304	$	7,495,473	$	7,448,782

Other Comprehensive Income:
Change in Value of Equity Investments,
Net of Income Tax			(11,703	)		—		(14,904	)		—		35,904		—

	Other Comprehensive Income		(11,703	)		—		(14,904	)		—		35,904		—


Comprehensive Income		$	3,350,507		$	2,392,618	$	6,271,277		$	5,421,304	$	7,531,377	$	7,448,782

	Three Months Ended September 30,
Basic:	2004 Income			Wtd Average Shares		2003 Income			Wtd Average Shares

Net Income	$	3,362			11,317	$	2,393			10,506
Preferred Dividend		(64	)				(64	)

Earnings Applicable to Common Stock	$	3,298			11,317	$	2,329			10,506

Basic EPS	$	0.29				$	0.22

Diluted:

Earnings Applicable to Common Stock	$	3,298			11,317	$	2,329			10,506
$7.00 Series Dividend		26			179		26			179
$8.00 Series Dividend		24			164		24			164

Adjusted Earnings Applicable to Common Stock	$	3,348			11,660	$	2,379			10,849

Diluted EPS	$	0.29				$	0.22

							(Dollars in Thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended September 30,
Operations by Segments:	2004			2003			2004			2003			2004			2003

Revenues:
Regulated	$	17,296		$	15,360		$	45,786		$	42,427		$	59,067		$	55,669
Non – Regulated		2,590			2,256			7,806			6,204			10,102			8,169
Inter-segment Elimination		(30	)		(30	)		(90	)		(66	)		(120	)		(78	)

Consolidated Revenues	$	19,856		$	17,586		$	53,502		$	48,565		$	69,049		$	63,760

Operating Income:
Regulated	$	4,341		$	3,329		$	9,454		$	8,629		$	11,840		$	11,573
Non – Regulated		156			171			373			355			504			562

Consolidated Operating Income	$	4,497		$	3,500		$	9,827		$	8,984		$	12,344		$	12,135


Net Income:
Regulated	$	3,245		$	2,260		$	6,026		$	5,179		$	7,139		$	7,014
Non – Regulated		117			133			260			242			356			435

Consolidated Net Income	$	3,362		$	2,393		$	6,286		$	5,421		$	7,495		$	7,449


Capital Expenditures:
Regulated	$	11,563		$	4,784		$	20,478		$	12,559		$	26,921		$	15,999
Non – Regulated		31			1			151			562			161			791

Total Capital Expenditures	$	11,594		$	4,785		$	20,629		$	13,121		$	27,082		$	16,790

	As of September 30, 2004			As of December 31, 2003

Assets:
Regulated	$	276,516		$	259,689
Non – Regulated		5,322			5,223
Inter-segment Elimination		(1,891	)		(1,720	)

Consolidated Assets	$	279,947		$	263,192

	(Dollars in Thousands)
	Pension Benefits						Other Benefits

	Three Months Ended September 30,
	2004			2003			2004			2003


Service Cost	$	186		$	171		$	106		$	66
Interest Cost		346			339			145			121
Expected Return on Assets		(372	)		(318	)		(53	)		(44	)
Amortization of Unrecognized Losses		—			—			73			36
Amortization of Unrecognized Prior Service Cost		23			23			—			—
Amortization of Transition Obligation		—			—			34			34

Net Periodic Benefit Cost	$	183		$	215		$	305		$	213