UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)
þ ☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the quarterly period ended September 30, 2019~~

For the quarterly period ended June 30, 2020

¨ OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~For the transition period from _________________ to______________________~~

For the transition period from ___________to ___________

Commission File Number 0-422

MIDDLESEX WATER COMPANY

(Exact name of registrant as specified in its charter)

New Jersey

22-1114430

(State of incorporation)

~~22-1114430~~(IRS employer identification no.)

~~(IRS employer identification no.)~~

485C Route One South, Iselin, New Jersey 08830

(Address of principal executive offices, including zip code)

(732) 634-1500

(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	MSEX	NASDAQ

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.

Yesþ ☒ No¨

☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post files).

Yesþ ☒ No¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

~~Large accelerated filer~~¨ ~~Accelerated filer~~þ ~~Non-accelerated filer~~¨

~~Smaller reporting company~~¨ ~~Emerging growth company~~¨

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes¨ ☐ Noþ ☒

The number of shares outstanding of each of the registrant's classes of common stock, as of ~~October~~July 31, ~~2019:~~2020: Common Stock, No Par Value: ~~16,669,540~~17,464,795 shares outstanding.

INDEX

	PAGE
PART I.		FINANCIAL INFORMATION	~~PAGE~~

Item 1.	Financial Statements (Unaudited):	1

	Condensed Consolidated Statements of Income	1

	Condensed Consolidated Balance Sheets	2

	Condensed Consolidated Statements of Cash Flows	3

	Condensed Consolidated Statements of Capital Stock and Long-Term Debt	4

	Condensed Consolidated Statements of Common Stockholders’ Equity	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17 16

Item 3.	Quantitative and Qualitative Disclosures of Market Risk	26 24

Item 4.	Controls and Procedures	27 24

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	28 25

Item 1A.	Risk Factors	28 25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28 25

Item 3.	Defaults upon Senior Securities	28 25

Item 4.	Mine Safety Disclosures	28 25

Item 5.	Other Information	28 25
Item 6.Exhibits		25
~~Item 6.~~	~~Exhibits~~	28

SIGNATURES		29 26

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands except per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018

Operating Revenues $ 37,769 $ 38,713 $ 101,859 $ 104,809

Operating Expenses:
Operations and Maintenance 17,669 18,114 50,569 52,773
Depreciation 4,246 3,792 12,415 11,137
Other Taxes 3,871 3,889 10,913 10,910

Total Operating Expenses 25,786 25,795 73,897 74,820

Operating Income 11,983 12,918 27,962 29,989

Other Income (Expense):
Allowance for Funds Used During Construction 871 424 2,030 805
Other Income (Expense), net (4 ) 409 (142 ) 1,277

Total Other Income, net 867 833 1,888 2,082

Interest Charges 1,996 1,723 4,984 4,929

Income before Income Taxes 10,854 12,028 24,866 27,142

Income Taxes (265 ) (262 ) (952 ) 1,683

Net Income 11,119 12,290 25,818 25,459

Preferred Stock Dividend Requirements 30 36 102 108

Earnings Applicable to Common Stock $ 11,089 $ 12,254 $ 25,716 $ 25,351

Earnings per share of Common Stock:
Basic $ 0.67 $ 0.75 $ 1.56 $ 1.55
Diluted $ 0.66 $ 0.74 $ 1.55 $ 1.54

Average Number of
Common Shares Outstanding:
Basic 16,610 16,394 16,520 16,379
Diluted 16,757 16,550 16,673 16,535

~~Index~~

~~MIDDLESEX WATER COMPANY~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(Unaudited)~~

~~(In thousands)~~

September 30, December 31,
ASSETS 2019 2018
UTILITY PLANT: Water Production $ 157,970 $ 156,423
Transmission and Distribution 536,367 512,202
General 80,635 74,371
Construction Work in Progress 69,651 32,878
TOTAL 844,623 775,874
Less Accumulated Depreciation 166,873 157,387
UTILITY PLANT - NET 677,750 618,487

CURRENT ASSETS: Cash and Cash Equivalents 3,151 3,705
Accounts Receivable, net 13,407 11,762
Unbilled Revenues 9,417 7,293
Materials and Supplies (at average cost) 5,159 5,411
Prepayments 3,577 2,644
TOTAL CURRENT ASSETS 34,711 30,815

DEFERRED CHARGES Operating Lease Right of Use Asset 6,133 —
AND OTHER ASSETS: Preliminary Survey and Investigation Charges 2,252 5,254
Regulatory Assets 100,320 99,236
Restricted Cash 53,927 1,956
Non-utility Assets - Net 10,306 9,989
Other 1,954 2,093
TOTAL DEFERRED CHARGES AND OTHER ASSETS 174,892 118,528
TOTAL ASSETS $ 887,353 $ 767,830

CAPITALIZATION AND LIABILITIES
CAPITALIZATION: Common Stock, No Par Value $ 170,562 $ 157,354
Retained Earnings 105,233 91,433
TOTAL COMMON EQUITY 275,795 248,787
Preferred Stock 2,084 2,433
Long-term Debt 228,272 152,851
TOTAL CAPITALIZATION 506,151 404,071

CURRENT Current Portion of Long-term Debt 7,161 7,343
LIABILITIES: Notes Payable 58,500 48,500
Accounts Payable 20,178 19,325
Accrued Taxes 12,132 14,230
Accrued Interest 799 1,289
Unearned Revenues and Advanced Service Fees 1,048 1,036
Other 3,657 2,640
TOTAL CURRENT LIABILITIES 103,475 94,363

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

DEFERRED CREDITS Customer Advances for Construction 22,682 22,572
AND OTHER LIABILITIES: Operating Lease Obligation 5,908 —
Accumulated Deferred Income Taxes 50,947 47,270
Employee Benefit Plans 27,826 30,661
Regulatory Liabilities 72,000 79,112
Other 2,567 2,730
TOTAL DEFERRED CREDITS AND OTHER LIABILITIES 181,930 182,345

CONTRIBUTIONS IN AID OF CONSTRUCTION 95,797 87,051
TOTAL CAPITALIZATION AND LIABILITIES $ 887,353 $ 767,830

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019

Operating Revenues	$	35,277		$	33,393		$	67,046		$	64,090

Operating Expenses:
Operations and Maintenance		17,620			16,781			34,812			32,901
Depreciation		4,629			4,123			9,077			8,170
Other Taxes		3,643			3,539			7,245			7,042

Total Operating Expenses		25,892			24,443			51,134			48,113

Operating Income		9,385			8,950			15,912			15,977

Other Income (Expense):
Allowance for Funds Used During Construction		795			643			1,917			1,158
Other Income (Expense), net		334			(80	)		720			(138	)

Total Other Income, net		1,129			563			2,637			1,020

Interest Charges		1,946			1,788			3,615			2,988

Income before Income Taxes		8,568			7,725			14,934			14,009

Income Taxes		(1,145	)		(421	)		(2,447	)		(687	)

Net Income		9,713			8,146			17,381			14,696

Preferred Stock Dividend Requirements		30			36			60			72

Earnings Applicable to Common Stock	$	9,683		$	8,110		$	17,321		$	14,624

Earnings per share of Common Stock:
Basic	$	0.55		$	0.49		$	0.99		$	0.89
Diluted	$	0.55		$	0.49		$	0.99		$	0.88

Average Number of Common Shares Outstanding :
Basic		17,462			16,519			17,449			16,474
Diluted		17,577			16,675			17,564			16,630

~~Index~~

~~MIDDLESEX WATER COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

~~(In thousands)~~

Nine Months Ended September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 25,818 $ 25,459
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 12,858 11,743
Provision for Deferred Income Taxes (8,379 ) (5,975 )
Equity Portion of Allowance for Funds Used During Construction (AFUDC) (1,330 ) (538 )
Cash Surrender Value of Life Insurance (187 ) (119 )
Stock Compensation Expense 409 757
Changes in Assets and Liabilities:
Accounts Receivable (1,645 ) (2,759 )
Unbilled Revenues (2,124 ) (2,098 )
Materials and Supplies 252 (1,515 )
Prepayments (933 ) (1,111 )
Accounts Payable 853 5,606
Accrued Taxes (2,098 ) 3,400
Accrued Interest (490 ) (545 )
Employee Benefit Plans (640 ) (1,426 )
Unearned Revenue & Advanced Service Fees 12 85
Other Assets and Liabilities 972 1,899

NET CASH PROVIDED BY OPERATING ACTIVITIES 23,348 32,863
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $700 in 2019 and $267 in 2018 (61,220 ) (49,518 )

NET CASH USED IN INVESTING ACTIVITIES (61,220 ) (49,518 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt (6,315 ) (6,013 )
Proceeds from Issuance of Long-term Debt 82,446 9,265
Net Short-term Bank Borrowings 10,000 20,500
Deferred Debt Issuance Expense (754 ) (862 )
Common Stock Issuance Expense (22 ) —
Proceeds from Issuance of Common Stock 12,449 864
Payment of Common Dividends (11,893 ) (10,993 )
Payment of Preferred Dividends (102 ) (108 )
Construction Advances and Contributions-Net 3,480 3,140

NET CASH PROVIDED BY FINANCING ACTIVITIES 89,289 15,793
NET CHANGES IN CASH AND CASH EQUIVALENTS 51,417 (862 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD 5,661 6,397
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 57,078 $ 5,535

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions $ 5,375 $ 3,028
Long-term Debt Deobligation $ 130 $ —

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest $ 5,929 $ 5,090
Interest Capitalized $ 700 $ 267
Income Taxes $ 6,752 $ 3,191

See Notes to Condensed Consolidated Financial Statements.

3 1

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

		June 30,		December 31,
ASSETS		2020		2019
UTILITY PLANT:	Water Production	$	161,971	$	160,870
	Transmission and Distribution		617,276		556,517
	General		82,916		83,043
	Construction Work in Progress		61,566		75,520
	TOTAL		923,729		875,950
	Less Accumulated Depreciation		177,568		170,220
	UTILITY PLANT - NET		746,161		705,730

CURRENT ASSETS:	Cash and Cash Equivalents		13,196		2,230
	Accounts Receivable, net		12,619		11,908
	Unbilled Revenues		8,939		7,183
	Materials and Supplies (at average cost)		5,274		5,445
	Prepayments		3,961		2,367
	TOTAL CURRENT ASSETS		43,989		29,133

AND OTHER ASSETS:	Operating Lease Right of Use Asset		5,573		5,944
	Preliminary Survey and Investigation Charges		2,670		2,054
	Regulatory Assets		111,494		110,479
	Restricted Cash		28,936		44,269
	Non-utility Assets - Net		10,639		10,370
	Other		1,408		1,899
	TOTAL DEFERRED CHARGES AND OTHER ASSETS		160,720		175,015
	TOTAL ASSETS	$	950,870	$	909,878

CAPITALIZATION AND LIABILITIES
CAPITALIZATION:	Common Stock, No Par Value	$	216,365		215,125
	Retained Earnings		117,008		108,667
	TOTAL COMMON EQUITY		333,373		323,792
	Preferred Stock		2,084		2,084
	Long-term Debt		237,939		230,777
	TOTAL CAPITALIZATION		573,396		556,653

CURRENT	Current Portion of Long-term Debt		7,340		7,178
LIABILITIES:	Notes Payable		37,500		20,000
	Accounts Payable		22,803		23,306
	Accrued Taxes		10,106		7,635
	Accrued Interest		2,092		2,031
	Unearned Revenues and Advanced Service Fees		1,329		1,211
	Other		3,124		3,620
	TOTAL CURRENT LIABILITIES		84,294		64,981

COMMITMENTS AND CONTINGENT LIABILITIES (Note 7)

DEFERRED CREDITS	Customer Advances for Construction		24,342		23,905
AND OTHER LIABILITIES:	Lease Obligations		5,329		5,732
	Accumulated Deferred Income Taxes		57,350		54,408
	Employee Benefit Plans		33,731		34,671
	Regulatory Liabilities		64,998		69,152
	Other		2,480		2,546
	TOTAL DEFERRED CREDITS AND OTHER LIABILITIES		188,230		190,414

CONTRIBUTIONS IN AID OF CONSTRUCTION			104,950		97,830
	TOTAL CAPITALIZATION AND LIABILITIES	$	950,870	$	909,878

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	17,381		$	14,696
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization		10,304			8,455
Provision for Deferred Income Taxes and Investment Tax Credits		(7,206	)		(5,075	)
Equity Portion of Allowance for Funds Used During Construction (AFUDC)		(1,182	)		(775	)
Cash Surrender Value of Life Insurance		(47	)		(200	)
Stock Compensation Expense		632			703
Changes in Assets and Liabilities:
Accounts Receivable		(711	)		6
Unbilled Revenues		(1,756	)		(952	)
Materials & Supplies		171			36
Prepayments		(1,594	)		(1,273	)
Accounts Payable		(503	)		(1,269	)
Accrued Taxes		2,471			(1,840	)
Accrued Interest		61			(10	)
Employee Benefit Plans		840			(2,804	)
Unearned Revenue & Advanced Service Fees		118			11
Other Assets and Liabilities		1,840			1,911

NET CASH PROVIDED BY OPERATING ACTIVITIES		20,819			11,620
CASH FLOWS FROM INVESTING ACTIVITIES:
Utility Plant Expenditures, Including AFUDC of $735 in 2020, $383 in 2019		(45,417	)		(35,698	)

NET CASH USED IN INVESTING ACTIVITIES		(45,417	)		(35,698	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-term Debt		(2,288	)		(2,356	)
Proceeds from Issuance of Long-term Debt		9,721			13,217
Net Short-term Bank Borrowings		17,500			10,900
Deferred Debt Issuance Expense		(33	)		(1	)
Common Stock Issuance Expense		(37	)		(5	)
Proceeds from Issuance of Common Stock		608			7,081
Payment of Common Dividends		(8,942	)		(7,906	)
Payment of Preferred Dividends		(60	)		(72	)
Construction Advances and Contributions-Net		3,762			1,719

NET CASH PROVIDED BY FINANCING ACTIVITIES		20,231			22,577
NET CHANGES IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(4,367	)		(1,501	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD		46,499			5,661
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	42,132		$	4,160


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITY:
Utility Plant received as Construction Advances and Contributions	$	3,796		$	3,825
Long term Debt Deobligation	$	-		$	130

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash Paid During the Year for:
Interest	$	3,754		$	3,401
Interest Capitalized	$	735		$	383
Income Taxes	$	377		$	5,842

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL STOCK AND LONG-TERM DEBT

(Unaudited)

(In ~~thousands~~thousands)

September 30, December 31,
2019 2018
Common Stock, No Par Value
Shares Authorized -    40,000
Shares Outstanding - 2019 - 16,670; 2018 - 16,403 $ 170,562 $ 157,354

Retained Earnings 105,233 91,433
TOTAL COMMON EQUITY $ 275,795 $ 248,787

Cumulative Preferred Stock, No Par Value:
Shares Authorized -   2019 - 123; 2018 - 126
Shares Outstanding - 2019 - 20; 2018 - 23
   Convertible:
Shares Outstanding, $7.00 Series - 10 1,005 1,005
Shares Outstanding, $8.00 Series - 2019 - 0; 2018 - 3 — 349
   Nonredeemable:
Shares Outstanding, $7.00 Series -   1 79 79
Shares Outstanding, $4.75 Series - 10 1,000 1,000
TOTAL PREFERRED STOCK $ 2,084 $ 2,433

Long-term Debt:
   8.05%, Amortizing Secured Note, due December 20, 2021 $ 715 $ 924
   6.25%, Amortizing Secured Note, due May 19, 2028 3,640 3,955
   6.44%, Amortizing Secured Note, due August 25, 2030 3,057 3,267
   6.46%, Amortizing Secured Note, due September 19, 2031 3,337 3,547
   4.22%, State Revolving Trust Note, due December 31, 2022 202 228
   3.60%, State Revolving Trust Note, due May 1, 2025 1,519 1,632
   3.30% State Revolving Trust Note, due March 1, 2026 309 351
   3.49%, State Revolving Trust Note, due January 25, 2027 349 389
   4.03%, State Revolving Trust Note, due December 1, 2026 474 501
   4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021 60 111
   0.00%, State Revolving Fund Bond, due August 1, 2021 50 88
   3.64%, State Revolving Trust Note, due July 1, 2028 225 235
   3.64%, State Revolving Trust Note, due January 1, 2028 73 77
   3.45%, State Revolving Trust Note, due August 1, 2031 851 907
   6.59%, Amortizing Secured Note, due April 20, 2029 3,343 3,604
   7.05%, Amortizing Secured Note, due January 20, 2030 2,583 2,771
   5.69%, Amortizing Secured Note, due January 20, 2030 5,299 5,684
   4.45%, Amortizing Secured Note, due April 20, 2040 9,057 9,387
   4.47%, Amortizing Secured Note, due April 20, 2040 3,361 3,483
   3.75%, State Revolving Trust Note, due July 1, 2031 1,892 1,954
   2.00%, State Revolving Trust Note, due February 1, 2036 1,013 1,064
   3.75%, State Revolving Trust Note, due November 30, 2030 990 1,024
   0.00% Construction Loans 38,171 16,509
   First Mortgage Bonds:
0.00%, Series Z, due August 1, 2019 — 113
5.25% to 5.75%, Series AA, due August 1, 2019 — 155
0.00%, Series BB, due August 1, 2021 241 362
4.00% to 5.00%, Series CC, due August 1, 2021 331 489
0.00%, Series EE, due August 1, 2023 1,455 1,876
3.00% to 5.50%, Series FF, due August 1, 2024 2,440 2,980
0.00%, Series GG, due August 1, 2026 633 723
4.00% to 5.00%, Series HH, due August 1, 2026 710 795
0.00%, Series II, due August 1, 2024 429 520
3.40% to 5.00%, Series JJ, due August 1, 2027 588 671
0.00%, Series KK, due August 1, 2028 807 898
5.00% to 5.50%, Series LL, due August 1, 2028 928 1,010
0.00%, Series MM, due August 1, 2030 1,037 1,137
3.00% to 4.375%, Series NN, due August 1, 2030 1,190 1,415
0.00%, Series OO, due August 1, 2031 1,806 1,956
2.00% to 5.00%, Series PP, due August 1, 2031 660 700
5.00%, Series QQ, due October 1, 2023 9,915 9,915
3.80%, Series RR, due October 1, 2038 22,500 22,500
4.25%, Series SS, due October 1, 2047 23,000 23,000
0.00%, Series TT, due August 1, 2032 1,957 2,107
3.00% to 3.25%, Series UU, due August 1, 2032 755 800
0.00%, Series VV, due August 1, 2033 2,003 2,147
3.00% to 5.00%, Series WW, due August 1, 2033 755 795
0.00%, Series XX, due August 1, 2047 10,627 11,006
3.00% to 5.00%, Series YY, due August 1, 2047 3,785 3,860
0.00%, Series 2018A, due August 1, 2047 6,678 6,917
3.00%-5.00%, Series 2018B, due August 1, 2047 2,320 2,365
4.00%, Series 2019A, due August 1, 2059 32,500 —
5.00%, Series 2019B, due August 1, 2059 21,200 —
SUBTOTAL LONG-TERM DEBT 231,820 162,904
Add: Premium on Issuance of Long-term Debt 8,164 1,259
Less: Unamortized Debt Expense (4,551 ) (3,969 )
Less: Current Portion of Long-term Debt (7,161 ) (7,343 )
TOTAL LONG-TERM DEBT $ 228,272 $ 152,851

	June 30,			December 31,
	2020			2019
Common Stock, No Par Value
Shares Authorized - 40,000
Shares Outstanding - 2020 - 17,464; 2019 - 17,434	$	216,365		$	215,125

Retained Earnings		117,008			108,667
TOTAL COMMON EQUITY	$	333,373		$	323,792

Cumulative Preferred Stock, No Par Value:
Shares Authorized - 120
Shares Outstanding - 2020 - 20: 2019 - 20
Convertible:
Shares Outstanding, $7.00 Series - 10	$	1,005		$	1,005
Nonredeemable:
Shares Outstanding, $7.00 Series - 1		79			79
Shares Outstanding, $4.75 Series - 10		1,000			1,000
TOTAL PREFERRED STOCK	$	2,084		$	2,084

Long-term Debt:
8.05%, Amortizing Secured Note, due December 20, 2021	$	493		$	643
6.25%, Amortizing Secured Note, due May 19, 2028		3,325			3,535
6.44%, Amortizing Secured Note, due August 25, 2030		2,847			2,987
6.46%, Amortizing Secured Note, due September 19, 2031		3,127			3,267
4.22%, State Revolving Trust Note, due December 31, 2022		147			175
3.60%, State Revolving Trust Note, due May 1, 2025		1,288			1,405
3.30% State Revolving Trust Note, due March 1, 2026		288			309
3.49%, State Revolving Trust Note, due January 25, 2027		328			349
4.03%, State Revolving Trust Note, due December 1, 2026		419			446
4.00% to 5.00%, State Revolving Trust Bond, due August 1, 2021		60			60
0.00%, State Revolving Fund Bond, due August 1, 2021		48			50
3.64%, State Revolving Trust Note, due July 1, 2028		214			214
3.64%, State Revolving Trust Note, due January 1, 2028		69			69
3.45%, State Revolving Trust Note, due August 1, 2031		822			851
6.59%, Amortizing Secured Note, due April 20, 2029		3,081			3,255
7.05%, Amortizing Secured Note, due January 20, 2030		2,396			2,521
5.69%, Amortizing Secured Note, due January 20, 2030		4,915			5,171
4.45%, Amortizing Secured Note, due April 20, 2040		8,727			8,946
4.47%, Amortizing Secured Note, due April 20, 2040		3,238			3,320
3.75%, State Revolving Trust Note, due July 1, 2031		1,829			1,829
2.00%, State Revolving Trust Note, due February 1, 2036		987			1,013
2.00%, State Revolving Trust Note, due November 1, 2038		1,579			1,309
3.75%, State Revolving Trust Note, due November 30, 2030		919			955
0.00% Construction Loans		49,918			40,467
First Mortgage Bonds:
0.00%, Series BB, due August 1, 2021		235			241
4.00% to 5.00%, Series CC, due August 1, 2021		331			331
0.00%, Series EE, due August 1, 2023		1,407			1,456
3.00% to 5.50%, Series FF, due August 1, 2024		2,440			2,440
0.00%, Series GG, due August 1, 2026		621			632
4.00% to 5.00%, Series HH, due August 1, 2026		710			710
0.00%, Series II, due August 1, 2024		416			429
3.40% to 5.00%, Series JJ, due August 1, 2027		588			588
0.00%, Series KK, due August 1, 2028		790			807
5.00% to 5.50%, Series LL, due August 1, 2028		928			928
0.00%, Series MM, due August 1, 2030		1,003			1,037
3.00% to 4.375%, Series NN, due August 1, 2030		1,190			1,190
0.00%, Series OO, due August 1, 2031		1,756			1,806
2.00% to 5.00%, Series PP, due August 1, 2031		660			660
5.00%, Series QQ, due October 1, 2023		9,915			9,915
3.80%, Series RR, due October 1, 2038		22,500			22,500
4.25%, Series SS, due October 1, 2047		23,000			23,000
0.00%, Series TT, due August 1, 2032		1,906			1,957
3.00% to 3.25%, Series UU, due August 1, 2032		755			755
0.00%, Series VV, due August 1, 2033		1,956			2,004
3.00% to 5.00%, Series WW, due August 1, 2033		755			755
0.00%, Series XX, due August 1, 2047		10,500			10,627
3.00% to 5.00%, Series YY, due August 1, 2047		3,785			3,785
0.00%, Series 2018A, 2017 RENEW due August 1, 2047		6,599			6,678
3.00%-5.00%, Series 2018B, 2017 RENEW due August 1, 2047		2,320			2,320
4.00%, Series 2019A, due August 1, 2059		32,500			32,500
5.00%, Series 2019B, due August 1, 2059		21,200			21,200
SUBTOTAL LONG-TERM DEBT		241,830			234,397
Add: Premium on Issuance of Long-term Debt		7,866			8,064
Less: Unamortized Debt Expense		(4,417	)		(4,506	)
Less: Current Portion of Long-term Debt		(7,340	)		(7,178	)
TOTAL LONG-TERM DEBT	$	237,939		$	230,777

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands)

Common Common
Stock Stock Retained
Shares Amount Earnings Total

For the Three Months Ended September 30, 2018
Balance at July 1, 2018 16,392 156,251 79,826 $ 236,077
Net Income — — 12,290 12,290
Dividend Reinvestment & Common Stock Purchase Plan 8 266 — 266
Restricted Stock Award, Net - Employees — 242 — 242
Shares Forfeited (2 ) (18 ) — (18 )
Cash Dividends on Common Stock ($0.2238 per share) — — (3,667 ) (3,667 )
Cash Dividends on Preferred Stock — — (36 ) (36 )
Balance at September 30, 2018 16,398 $ 156,741 $ 88,413 $ 245,154

For the Nine Months Ended September 30, 2018
Balance at January 1, 2018 16,352 $ 155,120 $ 74,055 $ 229,175
Net Income — — 25,459 25,459
Dividend Reinvestment & Common Stock Purchase Plan 21 864 — 864
Restricted Stock Award, Net - Employees 23 628 — 628
Stock Award - Board Of Directors 4 147 — 147
Shares Forfeited (2 ) (18 ) — (18 )
Cash Dividends on Common Stock ($0.6713 per share) — — (10,993 ) (10,993 )
Cash Dividends on Preferred Stock — — (108 ) (108 )
Balance at September 30, 2018 16,398 $ 156,741 $ 88,413 $ 245,154

For the Three Months Ended September 30, 2019
Balance at July 1, 2019 16,554 $ 165,138 $ 98,146 $ 263,284
Net Income — — 11,119 11,119
Dividend Reinvestment & Common Stock Purchase Plan 92 5,368 — 5,368
Restricted Stock Award, Net - Employees 1 172 — 172
Shares Forefeited (18 ) (466 ) — (466 )
Conversion of $8.00 Convertible Preferred Stock 41 350 — 350
Cash Dividends on Common Stock ($0.2400 per share) — — (3,987 ) (3,987 )
Cash Dividends on Preferred Stock — — (30 ) (30 )
Common Stock Expenses — — (15 ) (15 )
Balance at September 30, 2019 16,670 $ 170,562 $ 105,233 $ 275,795

For the Nine Months Ended September 30, 2019
Balance at January 1, 2019 16,403 $ 157,354 $ 91,433 $ 248,787
Net Income — — 25,818 25,818
Dividend Reinvestment & Common Stock Purchase Plan 222 12,449 — 12,449
Restricted Stock Award, Net - Employees 18 679 — 679
Stock Award - Board Of Directors 4 196 — 196
Shares Forefeited (18 ) (466 ) — (466 )
Conversion of $8.00 Convertible Preferred Stock 41 350 — 350
Cash Dividends on Common Stock ($0.7200 per share) — — (11,893 ) (11,893 )
Cash Dividends on Preferred Stock — — (102 ) (102 )
Common Stock Expenses — — (23 ) (23 )
Balance at September 30, 2019 16,670 $ 170,562 $ 105,233 $ 275,795

	Common		Common
	Stock		Stock		Retained
	Shares		Amount		Earnings			Total

For the Three Months Ended June 30, 2019
Balance at April 1, 2019		16,451	$	160,142	$	94,000		$	254,142
Net Income		—		—		8,146			8,146
Dividend Reinvestment & Common Stock Purchase Plan		82		4,522		—			4,522
Restricted Stock Award, Net - Employees		17		278		—			278
Stock Award - Board Of Directors		4		196		—			196
Cash Dividends on Common Stock ($0.2400 per share)		—		—		(3,964	)		(3,964	)
Cash Dividends on Preferred Stock		—		—		(36	)		(36	)
Balance at June 30, 2019		16,554	$	165,138	$	98,146		$	263,284

For the Six Months Ended June 30, 2019
Balance at January 1, 2019		16,403	$	157,354	$	91,433		$	248,787
Net Income		—		—		14,696			14,696
Dividend Reinvestment & Common Stock Purchase Plan		130		7,081		—			7,081
Restricted Stock Award, Net - Employees		17		507		—			507
Stock Award - Board Of Directors		4		196		—			196
Cash Dividends on Common Stock ($0.4800 per share)		—		—		(7,906	)		(7,906	)
Cash Dividends on Preferred Stock		—		—		(72	)		(72	)
Common Stock Expenses		—		—		(5	)		(5	)
Balance at June 30, 2019		16,554	$	165,138	$	98,146		$	263,284

For the Three Months Ended June 30, 2020
Balance at April 1, 2020		17,439	$	215,600	$	111,800		$	327,400
Net Income		—		—		9,713			9,713
Dividend Reinvestment & Common Stock Purchase Plan		4		294		—			294
Restricted Stock Award - Net - Employees		17		226		—			226
Restricted Stock Award - Board of Directors		4		245		—			245
Cash Dividends on Common Stock ($0.2563 per share)		—		—		(4,475	)		(4,475	)
Cash Dividends on Preferred Stock		—		—		(30	)		(30	)
Balance at June 30, 2020		17,464	$	216,365	$	117,008		$	333,373

For the Six Months Ended June 30, 2020
Balance at January 1, 2020		17,434	$	215,125	$	108,667		$	323,792
Net Income		—		—		17,381			17,381
Dividend Reinvestment & Common Stock Purchase Plan		9		608		—			608
Restricted Stock Award - Net - Employees		17		387		—			387
Restricted Stock Award - Board Of Directors		4		245					245
Cash Dividends on Common Stock ($0.5125 per share)		—		—		(8,942	)		(8,942	)
Cash Dividends on Preferred Stock		—		—		(60	)		(60	)
Common Stock Expenses		—		—		(38	)		(38	)
Balance at June 30, 2020		17,464	$	216,365	$	117,008		$	333,373

See Notes to Condensed Consolidated Financial Statements.

Index

MIDDLESEX WATER COMPANY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation and Recent Developments

Middlesex Water Company (Middlesex or the Company) 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 Twin Lakes Utilities, Inc. (Twin Lakes). 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 ~~2018~~2019 Annual Report on Form 10-K ~~(2018~~(the 2019 Form 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 (including normal recurring accruals) to present fairly the financial position as of ~~September~~June 30, ~~2019 and~~2020, the results of operations for the three month and six month periods ended June 30, 2020 and 2019 and cash flows for the ~~three month and nine~~six month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019. Information included in the Condensed Consolidated Balance Sheet as of December 31, ~~2018,~~2019, has been derived from the Company’s audited financial statements for the year ended December 31, ~~2018~~2019 included in the ~~2018~~2019 Form 10-K.

Recent Developments

~~Tidewater to Acquire Water Systems~~Novel Coronavirus (COVID-19) - On ~~October 8, 2019,~~March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact on changing economic conditions due to COVID-19 is uncertain and could affect the Company’s results of operations, financial condition and liquidity in the future. While the Company’s operations and capital construction program have not been significantly disrupted to date from COVID-19, we are unable to accurately assess the impact that COVID-19 will have on our business, our customers and our vendors prospectively, due to numerous uncertainties, including the severity of the pandemic, the duration of the outbreak and actions which could potentially be taken by governmental and/or regulatory authorities. The Company has drawn partially on its available lines of credit to provide additional liquidity in the event there is a negative impact to the Company’s business, results of operations, financial condition or liquidity resulting from COVID-19. As of July 31, 2020, there remains $106.5 million available under these lines of credit (see Note 6, Short-term Borrowings for further information on lines of credit). In addition, the New Jersey Board of Public Utilities (NJBPU) and the Delaware Public Service Commission (DEPSC) ~~approved Tidewater’s request~~have allowed for potential future recovery of COVID-19 related incremental costs in customer rates by regulated utilities in their respective jurisdictions. Neither jurisdiction has yet to ~~purchase~~establish a timetable or method for formally seeking cost recovery. We will continue to monitor and evaluate the ~~water utility assets~~COVID-19 situation and its impact to the Company’s business, results of ~~J.H. Wilkerson~~operations, financial condition and ~~Son, Inc.~~liquidity.

Contract Operations – In May 2020, USA, through a competitive bidding process, was awarded a ten-year, $8.3 million contract to operate and transfer the Certificate of Public Convenience and Necessity in order for Tidewater to serve the approximate 1,000 customers currently connected to eight community water systems located mostly in eastern Sussex County, Delaware. The DEPSC also authorized Tidewater to maintain the ~~existing rates that these customers currently pay.~~Borough of Highland Park, New Jersey’s water and wastewater systems. The ~~transaction is expected to close in the fourth quarter of 2019.~~contract commenced July 1, 2020.

Recently Adopted Accounting Guidance

~~Leases~~Credit Losses on Financial Instruments -~~On January 1, 2019, the Company adopted~~The Financial Accounting Standards Board ~~(FASB)~~ issued guidance ~~related~~on the measurement of credit losses on financial instruments, including trade receivables, which requires expected credit losses to ~~leases which required lessees to recognize a lease liability~~be measured based on historical experience, current conditions and ~~a right-of-use asset. The Company elected~~reasonable and supportable forecasts that affect the ~~optional transition method of adoption option to apply the requirements~~collectability of the ~~standard in the period~~reported amount of ~~adoption with no restatement of prior periods.~~financial assets. The ~~Company utilized the package of transition practical expedients provided by the~~ new guidance ~~including carrying forward prior conclusions related~~became effective January 1, 2020. For the Company, this applies primarily to ~~contracts that contain leases~~accounts receivable and lease classification. The Company also utilized the transition practical expedient permitting entities to forgo the evaluation of existing land easement arrangements to determine if they contain a lease. Land easement arrangements, or modifications to existing arrangements, entered into after adoption of this guidance will need to be evaluated to determine if they meet the definition of a lease.unbilled revenue balances. The adoption of this guidance ~~resulted in the recording of~~did not have a ~~$6.7 million right-of-use asset, a $7.1 million lease liability and a $0.4 million regulatory asset~~material impact on the Company’s consolidated ~~balance sheet as~~financial statements.

Expected credit losses on accounts receivable and unbilled revenues are based on historical write-offs combined with an evaluation of ~~January 1, 2019. For further discussion, see “~~~~Leases~~~~” in~~~~Note 7 – Commitments~~current conditions and ~~Contingent Liabilities~~.

reasonable and supportable forecasts. Customer accounts are written off when collection efforts have been exhausted.

There are no other new adopted or proposed accounting guidance that the Company is aware of that could have a material impact on the Company’s financial statements.

~~Index~~

Note 2–Rate and Regulatory Matters

Middlesex –In ~~December 2018,~~March 2020, the ~~New Jersey Board of Public Utilities (NJBPU)~~NJBPU approved Middlesex’s petition to ~~establish~~reset its Purchased Water Adjustment Clause (PWAC) tariff rate to recover additional ~~annual~~ costs of ~~less than $0.1~~$0.6 million ~~primarily~~ for the purchase of treated water from a non-affiliated water utility regulated by the NJBPU. The new PWAC rate became effective on April 4, 2020. A PWAC is a rate mechanism that allows for recovery of increased purchased water costs between base rate case filings. ~~The PWAC~~It is reset to zero once those increased costs are included in base rates. ~~The PWAC tariff rate became effective on January 1, 2019.~~

Tidewater -Effective July 1, ~~2019,~~2020, Tidewater ~~reset~~increased its ~~DEPSC approved~~DEPSC-approved Distribution System Improvement Charge (DSIC) rate, which is expected to generate ~~revenues~~revenue of approximately $0.5 million annually. A DSIC is a rate-mechanism that allows water utilities to recover investments in, and generate a return on, qualifying capital improvements made between base rate proceedings.

~~In February 2019, Tidewater received approval from~~Southern Shores - Effective January 1, 2020, the DEPSC approved the renewal of a multi-year agreement for water service to ~~reduce its~~a 2,200 unit condominium community in Sussex County, Delaware. Under the agreement, current rates ~~effective March 1, 2019,~~will remain in effect until December 31, 2024, but should there be unanticipated capital expenditures or regulatory related changes in operating expenses exceeding certain thresholds during this time period, rates are permitted to be adjusted to reflect such cost changes. Thereafter, rate increases, if any, cannot exceed the ~~lower corporate income tax rate enacted by~~lesser of the~~Tax Cuts and Jobs Act of 2017 (Tax Act), resulting in an overall rate decrease of 3.35%,~~ regional Consumer Price Index or ~~$1.0 million of revenues,~~3%. The new agreement expires on ~~an annual basis. The DEPSC also~~December 31, 2029.

Twin Lakes - In March 2020, the Pennsylvania Public Utilities Commission (PAPUC) approved a ~~one-time credit of $0.7 million to customers’ accounts related to the lower corporate income tax rate.~~

~~Pinelands -~~~~On October 25, 2019, Pinelands Water and Pinelands Wastewater concluded their base rate case matters when the NJBPU approved a $0.5~~$0.1 million increase in ~~annual~~annualized base rates ~~effective November 4, 2019.~~for Twin Lakes. In ~~March~~July 2019, ~~Pinelands Water and Pinelands Wastewater~~Twin Lakes had filed ~~petitions~~a petition with the ~~NJBPU~~PAPUC seeking permission to increase annualized base rates by approximately ~~$0.7~~$0.2 million, ~~per year. The requests were~~ necessitated by capital infrastructure investments ~~both companies had made,~~ and increased operations and maintenance costs. The new rates became effective April 19, 2020.

~~Twin Lakes~~COVID-19 -~~In July 2019, Twin Lakes filed a petition with~~The NJBPU and the ~~Pennsylvania Public Utilities Commission (PAPUC) seeking permission~~DEPSC have allowed for potential future recovery in customer rates of additional costs related to increase base rates by approximately $0.2 million per year. This request was necessitated by capital infrastructure investments Twin Lakes has made and increased operations and maintenance costs. We cannot predict whether the PAPUC will ultimately approve, deny, or reduce the amountCOVID-19 (for further discussion of the ~~request. A decision by~~impact of COVID-19 on the ~~PAPUC is not expected before the first quarter~~Company, see Note 1- Basis of ~~2020.~~Presentation and Recent Developments, Recent Developments).

Index

Note 3 – Capitalization

Common Stock -During the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, there were ~~221,558 common shares ($12.4 million) and 21,001~~9,378 common shares (approximately ~~$0.9~~$0.6 million) and 129,675 common shares ($7.1 million), respectively, issued under the Middlesex Water Company Investment Plan ~~(Investment~~(the Investment Plan). OnIn January 2, 2019, the Company ~~began offering shares~~had activated a limited share purchase discount feature of ~~its common stock for purchase at a 5% discount to participants in~~ the Investment Plan. InA 5% discount was available until August 2019, when the ~~200,000~~0.2 million share purchase limit ~~established for the 5% discount program~~ was reached and the ~~program was concluded.~~discount feature terminated.

In October 2019, the Company’s Board of Directors approved a plan to voluntarily offer a right of rescission (Rescission Offer) to Investment Plan participants who purchased shares of the Company’s common stock during the Eligible Period. During the Eligible Period, Investment Plan participants purchased 232,643 shares at an average price of $55.79 per share.

On October 11, 2019, the Company filed a supplement to the Investment Plan prospectus (Prospectus Supplement) with the United States Securities and Exchange Commission registering both the Rescission Offer and the 232,643 shares sold during the Eligible Period and notifying eligible Investment Plan participants of the specific details of the Rescission Offer. Investment Plan participants have thirty (30) days from the notification date to decide to accept or reject the Rescission Offer. Based on the current market price of the Company’s common stock, the Company does not expect that the exercise of any applicable rescission rights under the Rescission Offer by participants will have a material impact on its results of operations, financial condition or liquidity.

~~Index~~

For the nine months ended September 30, 2019, 3,000 shares (approximately $0.3 million) of the Company’s no par $8.00 Series Cumulative and Convertible Preferred Stock were converted into 41,142 shares of common stock.

In May 2019, Middlesex received approval from the NJBPU to issue and sell up to 1,500,000 shares of its common stock in one or more transactions through December 31, 2022. Sales of additional shares of common stock are part of the Company’s comprehensive financing plan to fund its multi-year utility plant infrastructure investment program. As described below in “~~Long-term Debt”~~~~, the NJBPU approved the New Jersey Economic Development Authority (NJEDA) debt funding component of the financing plan.~~

Long-term Debt -Subject to regulatory approval, the Company periodically issues long-term debt to fund its investments in utility ~~plant and other assets.~~plant. To the extent possible, the Company finances qualifying capital projects under State Revolving Fund (SRF) loan programs in New Jersey and Delaware. These government programs provide financing at interest rates that are typically below rates available in the broader financial markets. A portion of the borrowings under the New Jersey SRF is interest-free. Under the New Jersey SRF program, borrowers first enter into a construction loan agreement with the New Jersey Infrastructure Bank (NJIB) at a below market interest rate. The ~~current~~ interest rate on the Company’s current construction loan borrowings is zero percent (0%). When construction on the qualifying project is substantially complete, NJIB will coordinate the conversion of the construction loan into a long-term securitized loan with a portion of the principal balance having a stated interest rate of zero percent (0%) and a portion of the principal balance at a market interest rate at the time of closing using the credit rating of the State of New Jersey. The ~~current~~ term of the long-term loans currently offered through the NJIB is up to thirty years. ~~The current portion of the principal balance having a stated interest rate of zero percent (0%) is 75% with the remaining portion of 25% having a market based interest rate.~~

The NJIB generally schedules its long-term debt financings in May and November. Middlesex currently has two projects that are in the construction loan phase of the New Jersey SRF ~~program:~~program as follows:

In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the construction of a large-diameter transmission pipeline from the CJO water treatment plant and interconnect with our distribution system. Middlesex closed on a $43.5 million NJIB interest-free construction loan in August 2018. Through September 30, 2019, Middlesex has drawn a total of $30.2 million and expects to draw down the remaining proceeds through the first quarter of 2020.

In April 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the construction of a large-diameter transmission pipeline from the Carl J. Olsen water treatment plant in Edison, New Jersey and interconnect with our distribution system. Middlesex closed on a $43.5 million NJIB interest-free construction loan in August 2018. Through June 30, 2020, Middlesex has drawn a total of $41.3 million and expects to continue to draw down on this construction loan through the third quarter of 2020.

In March 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the 2018 RENEW Program, which is an ongoing initiative to eliminate all unlined water distribution mains in the Middlesex system. Middlesex closed on an $8.7 million NJIB construction loan in September 2018. Through September 30, 2019, Middlesex has drawn a total of $8.0 million and drew the remaining proceeds in October 2019.

In March 2018, the NJBPU approved Middlesex’s request to participate in the NJIB loan program to fund the 2018 RENEW Program, which is an ongoing initiative to eliminate unlined water distribution mains in the Middlesex system. Middlesex closed on an $8.7 million NJIB construction loan in September 2018 and completed withdrawal of the proceeds in October 2019.

Index

The Company expects that the large-diameter transmission pipeline and the 2018 RENEW construction loans will be included in the NJIB ~~May~~November 2020 long-term debt financing program.

In ~~May~~September 2018, ~~Middlesex repaid its RENEW 2017 interest-free~~the NJIB announced changes to the SRF program for project funding priority ranking, the proportions of interest free loans and market interest rate loans and overall loan limits on interest free loan balances to investor-owned water utilities. These changes affect SRF projects for which the construction loan ~~by issuing~~closes after September 2018. Under the amended regulations, the principal balance having a stated interest rate of zero percent (0%) is 25% of the loan balance with the remaining 75% having a market based interest rate. This is limited to the ~~NJIB~~ first ~~mortgage bonds~~$10.0 million of the loan. Loan amounts above $10.0 million do not participate in the ~~amount~~0% rate program, but do participate at the market based interest rate. As a result of ~~$9.5 million designated as Series 2018A ($7.1 million) and Series 2018B ($2.4 million). The interest rate on~~all these changes, the Series 2018A bond is zero and the interest rate on the Series 2018B bond ranges between 3.0% and 5.0%. The final maturity date for both bonds is August 1, 2047, with scheduled debt service payments over the life of the loans.

~~Index~~

~~In 2019,~~Company’s future capital funding plan does not include participating in the NJIB ~~de-obligated principal payments of $0.1 million on Series NN of~~SRF program unless the ~~Company’s First Mortgage Bonds.~~

~~In order~~terms are further amended to help ensure adherence to its comprehensive financing plan, Middlesex received approval from the NJBPU in February 2019 to issue and sell up to $140 million of First Mortgage Bonds (FMB) through the NJEDA in one orbecome more ~~transactions through December 31, 2022. Because the interest paid~~favorable to the bondholders is exempt from federal and New Jersey income taxes, the interest rate on debt issued through the NJEDA is generally lower than otherwise achievable in the traditional taxable corporate bond market. However, the interest received by the bondholder is subject to the Alternative Minimum Tax.

Company.

In August 2019, Middlesex priced and closed on a ~~NJEDA~~New Jersey Economic Development Authority (NJEDA) debt financing transaction of $53.7 million by issuing ~~FMBs~~First Mortgage Bonds (FMB) designated as Series 2019A ($32.5 million at coupon interest rate of 4.0%) and Series 2019B ($21.2 million at coupon interest rate of 5.0%). The proceeds, including an issuance premium of $7.1 million, are being used to finance several projects under the Water For Tomorrow capital program initiated by the Company to upgrade and replace aging water utility infrastructure. The total proceeds of $60.8 million, initially recorded as Restricted Cash on the balance sheet, is held in escrow by a bond trustee and are drawn down by requisition for the qualifying projects. Through ~~September~~June 30, ~~2019,~~2020, Middlesex has drawn a total of ~~$7.6~~$32.3 million and currently expects to draw the remaining ~~$53.2~~$28.5 million of proceeds, currently included in Restricted Cash, through the third quarter of 2021.

In May 2020, Middlesex received approval from the NJBPU to borrow up to $100.0 million, in one or more private placement transactions to help fund Middlesex’s multi-year capital construction program. Although Middlesex intends to close on a private placement loan of up to $40 million before the end of 2020, ongoing volatility in the financial markets may influence the timing and amount of the transaction.

In March 2018, the DEPSC approved Tidewater’s request to borrow up to $0.9 million under the Delaware SRF program to fund the replacement of an entire water distribution system of a small Delaware community. Tidewater closed on the SRF loan in May 2018. In April 2019, Tidewater received approval from the DEPSC to increase the borrowing to $1.7 million based on revised project cost estimates. Tidewater closed on the additional SRF loan in October 2019 and ~~immediately began drawing on~~completed withdrawal of the ~~combined loan amount with expected draws continuing through the first quarter of~~proceeds in April 2020.

Fair Value of Financial Instruments - The following methods and assumptions were used by the Company in estimating its fair value disclosure for financial instruments for which it is practicable to estimate that value. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, trade receivables, accounts payable and notes payable approximate their respective fair values due to the short-term maturities of these instruments. The fair value of ~~FMB~~FMBs and ~~State Revolving Fund~~SRF Bonds (collectively, the Bonds) issued by Middlesex is based on quoted market prices for similar issues. Under the fair value hierarchy, the fair value of cash and cash equivalents is classified as a Level 1 measurement and the fair value of notes payable and the Bonds in the table below are classified as Level 2 measurements. The carrying amount and fair value of the Bonds were as follows:

	June 30, 2020		December 31, 2019
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Bonds	$150,876	$162,257	$151,361	$160,772

September 30, 2019 December 31, 2018
Carrying Fair Carrying Fair
Amount Value Amount Value
Bonds $151,361 $154,355 $101,411 $102,789

Index

For other long-term debt for which there was no quoted market price and there is not an active trading market, it was not practicable to estimate their fair value (for details, including carrying value, interest rate and due date on these series of long-term debt, please refer to those series noted as “Amortizing Secured Note”, “State Revolving Trust Note” and “Construction Loans” on the Condensed Consolidated Statements of Capital Stock and Long-Term Debt). The carrying amount of these instruments was ~~$80.5~~$91.0 million and ~~$61.5~~$83.0 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Customer advances for construction have carrying amounts of ~~$22.7~~$24.3 million and ~~$22.6~~$23.9 million ~~at September~~as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Their relative fair values cannot be accurately estimated since future refund payments depend on several variables, including new customer connections, customer consumption levels and future rate increases.

~~Index~~

Note 4 – Earnings Per Share

Basic earnings per share (EPS) are computed on the basis of the weighted average number of shares outstanding during the period presented. Diluted EPS assumes the conversion of ~~both~~the Convertible Preferred Stock $7.00 Series in 2020 and the Convertible Preferred Stock $7.00 Series and the Convertible Preferred Stock $8.00 ~~Series.~~Series in 2019.

	(In Thousands Except per Share Amounts)										(In Thousands Except per Share Amounts)
	Three Months Ended September 30,										Three Months Ended June 30,
	2019					2018					2020					2019
Basic:	Income			Shares		Income			Shares		Income			Shares		Income			Shares
Net Income	$	11,119			16,610	$	12,290			16,394	$	9,713			17,462	$	8,146			16,519
Preferred Dividend		(30	)				(36	)				(30	)				(36	)
Earnings Applicable to Common Stock	$	11,089			16,610	$	12,254			16,394	$	9,683			17,462	$	8,110			16,519

Basic EPS	$	0.67				$	0.75				$	0.55				$	0.49

Diluted:
Earnings Applicable to Common Stock	$	11,089			16,610	$	12,254			16,394	$	9,683			17,462	$	8,110			16,519
$7.00 Series Preferred Dividend		17			115		17			115		17			115		17			115
$8.00 Series Preferred Dividend		—			32		6			41		—			—		6			41
Adjusted Earnings Applicable to Common Stock	$	11,106			16,757	$	12,277			16,550	$	9,700			17,577	$	8,133			16,675

Diluted EPS	$	0.66				$	0.74				$	0.55				$	0.49

(In Thousands Except per Share Amounts)
Nine Months Ended September 30,
2019 2018
Basic: Income Shares Income Shares
Net Income $ 25,818 16,520 $ 25,459 16,379
Preferred Dividend (102 ) (108 )
Earnings Applicable to Common Stock $ 25,716 16,520 $ 25,351 16,379

Basic EPS $ 1.56 $ 1.55

Diluted:
Earnings Applicable to Common Stock $ 25,716 16,520 $ 25,351 16,379
$7.00 Series Preferred Dividend 50 115 50 115
$8.00 Series Preferred Dividend 12 38 18 41
Adjusted Earnings Applicable to Common Stock $ 25,778 16,673 $ 25,419 16,535

Diluted EPS $ 1.55 $ 1.54

Index

	(In Thousands Except per Share Amounts)
	Six Months Ended June 30,
	2020					2019
Basic:	Income			Shares		Income			Shares
Net Income	$	17,381			17,449	$	14,696			16,474
Preferred Dividend		(60	)				(72	)
Earnings Applicable to Common Stock	$	17,321			17,449	$	14,624			16,474

Basic EPS	$	0.99				$	0.89

Diluted:
Earnings Applicable to Common Stock	$	17,321			17,449	$	14,624			16,474
$7.00 Series Preferred Dividend		34			115		34			115
$8.00 Series Preferred Dividend		—			—		12			41
Adjusted Earnings Applicable to Common Stock	$	17,355			17,564	$	14,670			16,630

Diluted EPS	$	0.99				$	0.88

Note 5 – Business Segment Data

The Company has identified ~~two~~2 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, Delaware and Pennsylvania. This segment also includes regulated wastewater systems in New Jersey and Delaware. The Company is subject to regulations as to its rates, services and other matters by New Jersey, Delaware and Pennsylvania with respect to utility services within these states. The other segment is primarily comprised of non-regulated contract services for the operation and maintenance of municipal and private water and wastewater systems in New Jersey and Delaware. Inter-segment transactions relating to operational costs are treated as 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.

Index

	(In Thousands)												(In Thousands)
	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
Operations by Segments:	2019			2018			2019			2018			2020			2019			2020			2019
Revenues:
Regulated	$	35,000		$	34,628		$	93,342		$	93,002		$	32,289		$	30,444		$	61,226		$	58,342
Non – Regulated		3,020			4,304			9,032			12,286			3,180			3,087			6,141			6,012
Inter-segment Elimination		(251	)		(219	)		(515	)		(479	)		(192	)		(138	)		(321	)		(264	)
Consolidated Revenues	$	37,769		$	38,713		$	101,859		$	104,809		$	35,277		$	33,393		$	67,046		$	64,090

Operating Income:
Regulated	$	11,001		$	12,214		$	24,937		$	27,827		$	8,639		$	7,903		$	14,480		$	13,936
Non – Regulated		982			704			3,025			2,162			746			1,047			1,432			2,041
Consolidated Operating Income	$	11,983		$	12,918		$	27,962		$	29,989		$	9,385		$	8,950		$	15,912		$	15,977

Net Income:
Regulated	$	10,409		$	11,770		$	23,700		$	23,904		$	9,192		$	7,423		$	16,371		$	13,290
Non – Regulated		710			520			2,118			1,555			521			723			1,010			1,406
Consolidated Net Income	$	11,119		$	12,290		$	25,818		$	25,459		$	9,713		$	8,146		$	17,381		$	14,696

Capital Expenditures:
Regulated	$	25,437		$	21,141		$	60,998		$	49,469		$	19,913		$	23,268		$	44,882		$	35,561
Non – Regulated		85			—			222			49			357			106			535			137
Total Capital Expenditures	$	25,522		$	21,141		$	61,220		$	49,518		$	20,270		$	23,374		$	45,417		$	35,698

	As of			As of			As of			As of
	September 30,			December 31,			June 30,			December 31,
	2019			2018			2020			2019
Assets:
Regulated	$	886,280		$	764,749		$	953,703		$	910,081
Non – Regulated		9,593			8,994			10,150			9,686
Inter-segment Elimination		(8,520	)		(5,913	)		(12,983	)		(9,889	)
Consolidated Assets	$	887,353		$	767,830		$	950,870		$	909,878

Note 6 – Short-term Borrowings

~~As of September 30, 2019, the~~The Company ~~retained~~maintains lines of credit aggregating ~~$120.0 million, an increase of $20.0 million from June 30, 2019. In October 2019,~~$140.0 million.

	(Millions)
	As of June 30, 2020							Renewal Date
	Outstanding		Available		Maximum		Credit Type	Renewal Date
Bank of America	$	1.0	$	59.0	$	60.0	Uncommitted	September 18, 2020
PNC Bank		29.0		39.0		68.0	Committed	January 31, 2022
CoBank		7.5		4.5		12.0	Committed	November 30, 2020
	$	37.5	$	102.5	$	140.0

The interest rate for borrowings under the ~~Company increased its~~ lines of credit is set using the London InterBank Offered Rate (LIBOR) and adding a credit spread, which varies by financial institution. There is no requirement for a compensating balance under any of the established lines of credit. The CoBank line of credit is expected to ~~$140.0 million. At September 30, 2019,~~be renewed during the third quarter of 2020 for a term of twenty-four months. The Bank of America line of credit is renewed on an annual basis prior to its expiration.

The weighted average interest rate on the outstanding borrowings at June 30, 2020 under these credit lines ~~were $58.5 million at a weighted average interest rate of 3.06%~~is 1.21%.

~~Index~~

The weighted average daily amounts of borrowings outstanding under the Company’s credit lines and the weighted average interest rates on those amounts were as follows:

(In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Average Daily Amounts Outstanding $ 58,259 $ 43,402 $ 56,881 $ 34,332
Weighted Average Interest Rates 3.26% 3.24% 3.45% 3.09%

		(In Thousands)
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2020			2019			2020			2019
Average Daily Amounts Outstanding	$	36,445		$	50,992		$	28,901		$	50,485
Weighted Average Interest Rates		1.65	%		3.52	%		1.96	%		3.57	%

The maturity dates for the ~~$58.5~~$37.5 million outstanding as of ~~September~~June 30, ~~2019~~2020 are in ~~October 2019~~July 2020 through ~~December 2019~~August 2020 and are ~~extendable~~renewable at the discretion of the Company.

~~Interest rates for short-term borrowings under the lines of credit are below the prime rate with no requirement for compensating balances.~~11

Index

Note 7 – Commitments and Contingent Liabilities

Water Supply- Middlesex has an agreement with the New Jersey Water Supply Authority (NJWSA) for the purchase of untreated water through November 30, 2023, which provides for an average purchase of 27.0 million gallons a day (mgd). Pricing is set annually by the NJWSA through a public rate making process. The agreement has provisions for additional pricing in the event Middlesex overdrafts or exceeds certain monthly and annual thresholds.

Middlesex also has an agreement with a non-affiliated ~~regulated~~NJBPU-regulated water utility for the purchase of treated water. This agreement, which expires February ~~27, 2021,~~28, 2026, provides for the minimum purchase of 3.0 mgd of treated water with provisions for additional ~~purchases.~~

purchases if needed.

Tidewater contracts with the City of Dover, Delaware to purchase 15.0 million gallons of treated water annually.

Purchased water costs are shown below:

	(In Thousands)
	Three Months Ended				Nine Months Ended				(In Thousands)
	September 30,				September 30,				Three Months Ended					Six Months Ended
	2019		2018		2019		2018		June 30,					June 30,
										2020		2019			2020		2019
Treated	$	818	$	836	$	2,415	$	2,427		$	932	$	827		$	1,725	$	1,597
Untreated		878		948		2,521		2,728			782		782			1,652		1,643
Total Costs	$	1,696	$	1,784	$	4,936	$	5,155		$	1,714	$	1,609		$	3,377	$	3,240

Guarantees-As part of an agreement with the County of Monmouth, New Jersey (County), Middlesex serves as guarantor of the performance of Applied Water Management, Inc. (AWM), an unaffiliated wastewater treatment contractor, to operate a County-owned leachate pretreatment facility at the Monmouth County Reclamation Center in Tinton Falls, New Jersey. The performance guaranty is effective through ~~2028~~2029 unless another guarantor, acceptable to the County, replaces Middlesex before such date. ~~Under agreements with AWM and Natural Systems Utilities, LLC (NSU), the parent company of AWM, Middlesex earns a fee for providing the performance guaranty.~~ In addition, Middlesex may provide operational support to the facility, as ~~needed, and~~needed. AWM and ~~NSU, serving~~its parent company, Natural Systems Utilities (NSU), serve as guarantor to Middlesex with respect to the performance of AWM and have indemnified Middlesex against any claims that may arise under the Middlesex guaranty to the County.

If ~~required~~requested to perform under the guaranty to the County and, if AWM and NSU, as guarantor to Middlesex, do not fulfill their obligations to indemnify Middlesex against any claims that may arise under the Middlesex guaranty to the County, Middlesex would be required to fulfill the remaining operational commitment of AWM. ~~As of September 30, 2019~~The liability and ~~December 31, 2018,~~asset for the ~~liability recognized~~guaranty are included in Other Non-Current Liabilities and Other Non-Current Assets on the balance sheet ~~for the guaranty is~~and are approximately $1.3 million and $1.4 million as of June 30, 2020 and ~~$1.5 million,~~December 31, 2019, respectively.

In November 2019, Middlesex was notified that the County terminated its Agreement with AWM. AWM had initiated legal action against the County in the Superior Court of New Jersey, Monmouth County that in part contests the County’s exercise of this termination. The County filed a counter-claim against NSU and has brought Middlesex into the suit as a third-party defendant. We continue to monitor this litigation; however, given the cancellation of the underlying operating contract by the County, we do not anticipate the ultimate outcome will have a material impact on the Company’s results of operations or financial condition.

Index

Leases-The Company determines if ana contractual arrangement ismeets the criteria to be characterized as a lease at inception. Generally, a lease agreement exists if the Company determines that the arrangement gives the Company control over the use of an identified asset and obtains substantially all of the benefits from the identified asset.

The Company has entered into an operating lease of office space for administrative purposes, expiring in 2030. The Company has not entered into any ~~finance~~financing leases. The exercise of a lease renewal option for the Company’s administrative offices is solely at the discretion of the Company.

The right-of-use (ROU) asset recorded represents the Company’s right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s operating lease does not provide an implicit discount rate and as such, the Company used an estimated incremental borrowing rate (4.03%) based on the information available at commencement date in determining the present value of lease payments.

Given the impacts of accounting for regulated operations, and the resulting recognition of expense at the amounts recovered in customer rates, expenditures for operating leases are consistent with lease expense and ~~was~~were $0.2 million and $0.1 million for ~~each of~~ the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively and ~~$0.5~~$0.4 million and $0.3 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ respectively.

Information related to operating lease ROU assets and lease liabilities is as follows:

(In Millions)
September 30, 2019
ROU Asset at Lease Inception $ 7.3
Accumulated Amortization (1.2 )
Current ROU Asset $ 6.1

	(In Millions)
	As of June 30, 2020			As of December 31, 2019
ROU Asset at Lease Inception	$	7.3		$	7.3
Accumulated Amortization		(1.7	)		(1.4	)
Current ROU Asset	$	5.6		$	5.9

The Company’s future minimum operating lease commitments ~~as of September 30, 2019~~ are as follows:

(In Millions)
September 30, 2019
2019 $ 0.2
2020 0.8
2021 0.8
2022 0.8
2023 0.8
Thereafter 5.2
Total Lease Payments $ 8.6
Imputed Interest (2.0 )
Present Value of Lease Payments 6.6
Less Current Portion* (0.7 )
Non-Current Lease Liability $ 5.9

*Included in Other Current Liabilities

~~Index~~

	(In Millions)
	June 30, 2020
2020	$	0.4
2021		0.8
2022		0.8
2023		0.8
2024		0.8
Thereafter		4.4
Total Lease Payments	$	8.0
Imputed Interest		(1.9	)
Present Value of Lease Payments		6.1
Less Current Portion*		(0.8	)
Non-Current Lease Liability	$	5.3

*Included in Other Current Liabilities

Construction - The Company has forecasted to spend approximately ~~$105~~$119 million for its construction program in ~~2019.~~2020. The Company has entered into several ~~contractual~~ construction ~~agreements~~contracts that, in the aggregate, obligate ~~it to expend~~expenditure of an estimated ~~$68~~$43 million in the future. The timing and amount of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain ~~projects.~~projects and could be impacted if the effects of the COVID-19 pandemic continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments).

~~Litigation~~Contingencies - ~~The~~ Based on our operations in the heavily-regulated water and wastewater industries, the Company is ~~a defendant~~routinely involved in disputes, claims, lawsuits ~~in the normal course of business. We~~and other regulatory and legal matters, including responsibility for fines and penalties relative to regulatory compliance. At this time, Management does not believe the final resolution of ~~pending claims and legal proceedings~~any such matters, whether asserted or unasserted, will ~~not~~ have a material adverse effect on the Company’s ~~consolidated~~ financial ~~statements.~~position, results of operations or cash flows. In addition, the Company maintains business insurance coverage that may mitigate the effect of any current or future loss contingencies.

Change in Control Agreements - The Company has Change in Control Agreements with certain of its officers that provide compensation and benefits in the event of termination of employment in connection with a change in control of the Company.

Note 8 – Employee Benefit Plans

Pension Benefits - The Company’s Pension Plan covers all active employees hired prior to April 1, 2007. Employees hired after March 31, 2007 are not eligible to participate in this plan, but do participate in a defined contribution plan that provides for a potential annual contribution in an amount that is at the discretion of the Company. In order to be eligible for a contribution, the participant must be employed by the Company on December 31st of the year to which the contribution relates. For the three ~~months~~and six month periods ended ~~September~~June 30, ~~2019~~2020, the Company did not make any Pension Plan cash contributions. For the three and ~~2018,~~six month periods ended June 30, 2019, the Company made Pension Plan cash contributions of ~~$1.3~~$0.5 million and ~~$1.1 million, respectively. For each of the nine months ended September 30, 2019 and 2018, the Company made Pension Plan cash contributions of $2.3~~$1.0 million, respectively. The Company expects to make Pension Plan cash contributions of approximately ~~$1.3~~$3.0 million over the remainder of the current year. The Company also maintains an unfunded supplemental retirement benefit plan for certain active and retired Company officers and currently pays $0.4 million in annual benefits to the retired participants.

Other Postretirement Benefits-The Company’s retirement plan other than pensions (Other Benefits Plan) covers substantially all of its current retired employees. Employees hired after March 31, 2007 are not eligible to participate in this plan. Coverage includes healthcare and life insurance. For each of the three ~~months~~and six month periods ended ~~September~~June 30, ~~2019~~2020, the Company made Other Benefits Plan cash contributions of $0.3 million, respectively. For the three and ~~2018,~~six month periods ended June 30, 2019, the Company made Other Benefits Plan cash contributions of $0.2 million and $0.4 million, respectively. ~~For the nine months ended September 30, 2019 and 2018, the~~The Company ~~made~~does not expect to make any additional Other Benefits Plan cash contributions ~~of $0.6 million and $0.5 million, respectively. The Company expects to make Other Benefits Plan cash contributions of approximately $0.8 million~~ over the remainder of the current year.

Index

The following tables set forth information relating to the Company’s periodic costs for its employee retirement benefit plans:

	(In Thousands)												(In Thousands)
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	Three Months Ended September 30,												Three Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019

Service Cost	$	543		$	607		$	210		$	284		$	609		$	543		$	248		$	210
Interest Cost		857			765			496			474			775			857			425			496
Expected Return on Assets		(1,173	)		(1,218	)		(613	)		(637	)		(1,409	)		(1,173	)		(721	)		(613	)
Amortization of Unrecognized Losses		404			415			330			447			515			404			338			330
Amortization of Unrecognized Prior Service Cost (Credit)		—			—			—			(402	)
Net Periodic Benefit Cost*	$	631		$	569		$	423		$	166		$	490		$	631		$	290		$	423

	Six Months Ended June 30,
	2020			2019			2020			2019

Service Cost	$	1,217		$	1,085		$	497		$	420
Interest Cost		1,550			1,713			850			992
Expected Return on Assets		(2,818	)		(2,347	)		(1,442	)		(1,226	)
Amortization of Unrecognized Losses		1,030			809			676			660
Net Periodic Benefit Cost*	$	979		$	1,260		$	581		$	846

~~Index~~

(In Thousands)
Pension Benefits Other Benefits
Nine Months Ended September 30,
2019 2018 2019 2018

Service Cost $ 1,628 $ 1,820 $ 630 $ 851
Interest Cost 2,570 2,296 1,488 1,423
Expected Return on Assets (3,520 ) (3,653 ) (1,838 ) (1,912 )
Amortization of Unrecognized Losses 1,213 1,244 989 1,340
Amortization of Unrecognized Prior Service Cost (Credit) — — — (1,205 )
Net Periodic Benefit Cost* $ 1,891 $ 1,707 $ 1,269 $ 497

*Service cost is included in Operations and Maintenance expense on Consolidated Statements of Income; all other amounts are included in Other Income/Expense, net.

Note 9 – Revenue Recognition from Contracts with Customers

The Company’s revenues are primarily generated from regulated tariff-based sales of water and wastewater services to residential, industrial, commercial, fire protection and wholesale customers, as well as non-regulated operation and maintenance contracts for services on water and wastewater systems owned by others. Revenue from contracts with customers is recognized when control of a promised good or service is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services.

The Company’s regulated revenue from contracts with customers is derived from tariff-based sales that result from the obligation to provide water and wastewater services to residential, industrial, commercial, fire-protection and wholesale customers. The Company’s residential customers are billed quarterly while most of the Company’s industrial, commercial, fire-protection and wholesale customers are billed monthly. Payments by customers are due between 15 and 30 days after the invoice date. The Company recognizes revenue as the water and wastewater services are delivered to customers and records unbilled revenues estimated from the last meter reading date to the end of the accounting period utilizing factors such as historical customer data, regional weather indicators and general economic conditions in its service territories. Unearned Revenues and Advance Service Fees include fixed service charge billings in advance of service provided to Tidewater customers and are recognized as service is provided.

Non-regulated service contract revenues consist of base service fees, as well as fees for additional billable services provided to customers, are billed monthly and are due within 30 days after the invoice date. The Company considers the amounts billed to represent the value of these services provided to customers. ~~Certain of these~~These contracts ~~continue~~expire at various times through ~~2022~~December 2028 and thus contain remaining performance obligations for which the Company expects to recognize revenue in the future. These contracts also contain termination provisions.

Substantially all operating revenues and accounts receivable are from contracts with customers. The Company records an allowance for doubtful accounts based on historical write-offs combined with an evaluation of current economic conditions within its service territories.

The Company’s contracts do not contain any significant financing components.

15 14

Index

The Company’s operating revenues are comprised of the following:

	(In Thousands)
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Regulated Tariff Sales
Residential	$	20,693		$	19,788		$	54,453		$	53,303		$	19,454		$	17,780		$	36,135		$	33,760
Commercial		4,487			4,418			11,539			11,298			3,649			3,744			7,018			7,053
Industrial		2,723			2,868			7,242			7,869			2,175			2,321			4,256			4,519
Fire Protection		3,100			3,084			9,211			9,045			3,060			3,098			6,106			6,111
Wholesale		3,813			4,319			10,582			11,211			3,827			3,429			7,525			6,768
Non-Regulated Contract Operations		2,919			4,203			8,729			11,983			3,076			2,986			5,934			5,810
Total Revenue from Contracts with Customers	$	37,735		$	38,680		$	101,756		$	104,709		$	35,241		$	33,358		$	66,974		$	64,021
Other Regulated Revenues		184			151			315			276			124			73			186			131
Other Non-Regulated Revenues		101			101			303			303			104			100			207			202
Inter-segment Elimination		(251	)		(219	)		(515	)		(479	)		(192	)		(138	)		(321	)		(264	)
Total Revenue	$	37,769		$	38,713		$	101,859		$	104,809		$	35,277		$	33,393		$	67,046		$	64,090

Note 10 – Income Taxes

As part of its 2014 Federal income tax return, the Company adopted the final Internal Revenue Service (IRS) tangible property regulations and changed its accounting method for the tax treatment of expenditures that qualified as deductible repairs. The adoption resulted in a net reduction of $17.6 million in taxes previously remitted to the IRS, for which the Company has already sought and received the tax refunds. A reserve provision against refunded taxes of $2.3 million was recorded in 2015 at the time of filing its change in accounting method based on a possible challenge by the IRS during an audit examination. The Company’s 2014 federal income tax return was subsequently selected for examination by the IRS. In 2018, the Company increased its income tax reserve provision to $4.1 million. During the first quarter of 2019, the Company agreed to certain modifications of its accounting method for expenditures that qualify as deductible repairs and the IRS concluded its audit of the Company’s 2014 federal income tax return. The modifications also impacted the Company’s filed 2015, 2016 and 2017 federal income tax returns. In ~~March 2019 and June~~ 2019, the Company paid ~~$0.8~~$2.7 million in ~~income taxes~~connection with the conclusion and closing of the 2014-2017 tax return audits and $0.1 million in interest ~~respectively,~~ in connection with the conclusion and closing of the 2014 and 2015 tax return audits. As of ~~September~~June 30, ~~2019,~~2020, the Company has reduced its income tax reserve provision and interest expense liability to ~~$2.4~~$0.5 million and ~~$0.1~~$0.2 million, respectively. ~~In October 2019, the Company paid $1.9 million in income taxes in connection with the conclusion and closing of the 2016 and 2017 tax return audits.~~

16 15

Index

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of Middlesex Water Company (Middlesex or the Company) included elsewhere herein and with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

Forward-Looking Statements

Certain statements contained in this periodic report and in the documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The Company intends that these statements be covered by the safe harbors created under those laws. They include, but are not limited to statements as to:

~~expected financial condition, performance, prospects and earnings of the Company;~~

~~strategic plans for growth;~~

~~the amount and timing of rate increases and other regulatory matters, including the recovery of certain costs recorded as regulatory assets;~~

~~the Company’s expected liquidity needs during the upcoming fiscal year and beyond and the sources and availability of funds to meet its liquidity needs;~~

~~expected customer rates, consumption volumes, service fees, revenues, margins, expenses and operating results;~~

~~financial projections;~~

~~the expected amount of cash contributions to fund the Company’s retirement benefit plans, anticipated discount rates and rates of return on retirement benefit plan assets;~~

~~the ability of the Company to pay dividends;~~

~~the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;~~

~~the safety and reliability of the Company’s equipment, facilities and operations;~~

~~trends; and~~

~~the availability and quality of our water supply.~~

expected financial condition, performance, prospects and earnings of the Company;

strategic plans for growth;

the amount and timing of rate increases and other regulatory matters, including the recovery of certain costs recorded as regulatory assets;

the Company’s expected liquidity needs during the upcoming fiscal year and beyond and the sources and availability of funds to meet its liquidity needs;

expected customer rates, consumption volumes, service fees, revenues, margins, expenses and operating results;

financial projections;

the expected amount of cash contributions to fund the Company’s retirement benefit plans, anticipated discount rates and rates of return on plan assets;

the ability of the Company to pay dividends;

the Company’s compliance with environmental laws and regulations and estimations of the materiality of any related costs;

the safety and reliability of the Company’s equipment, facilities and operations;

the Company’s plans to renew municipal franchises and consents in the territories it serves;

trends; and

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:

~~effects of general economic conditions;~~

~~competition for growth in non-franchised markets to be potentially served by the Company;~~

~~ability of the Company to adequately control selected operating expenses which are necessary to maintain safe and proper utility services, and which may be beyond the Company’s control;~~

~~availability of adequate supplies of water;~~

~~ability to maintain compliance with all regulatory requirements with respect to water and wastewater treatment, distribution and collection;~~

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

~~ability to meet new or modified water and wastewater quality standards;~~

~~weather variations and other natural phenomena impacting utility operations;~~

~~financial and operating risks associated with acquisitions and/or privatizations;~~

~~acts of war or terrorism;~~

~~changes in the pace of residential housing development;~~

~~actions against the company that could be brought by third parties;~~

~~availability and cost of capital resources; and~~

effects of general economic conditions;

increases in competition for growth in non-franchised markets to be potentially served by the Company;

ability of the Company to adequately control selected operating expenses which are necessary to maintain safe and proper utility services, and which may be beyond the Company’s control;

availability of adequate supplies of water;

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

new or modified water quality standards;

weather variations and other natural phenomena impacting utility operations;

financial and operating risks associated with acquisitions and, or privatizations;

acts of war or terrorism;

changes in the pace of housing development;

availability and cost of capital resources;

impact of the Novel Coronavirus (COVID-19) pandemic; and

other factors discussed elsewhere in this quarterly report.

~~Index~~

Many of these factors are beyond the 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 understanding as of the date of this 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 report or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Index

For an additional discussion of factors that may affect the Company’s business and results of operations, see Item 1A. - Risk Factors in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

Overview

Middlesex ~~Water Company (Middlesex)~~ has operated as a water utility in New Jersey since 1897, in Delaware through our wholly-owned subsidiary, Tidewater Utilities, Inc. (Tidewater), since 1992 and in Pennsylvania through our wholly-owned subsidiary, Twin Lakes Utilities, Inc. (Twin Lakes), since 2009. We are in the business of collecting, treating and distributing water for domestic, commercial, municipal, industrial and fire protection purposes. We also operate two New Jersey municipal water and wastewater systems under contract and provide regulated wastewater services in New Jersey and Delaware through four of our other subsidiaries. We are regulated as to rates charged to customers for water and wastewater services, as to the quality of water service we provide and as to certain other matters in New Jersey, Delaware and Pennsylvania. Only our Utility Service Affiliates, Inc. (USA), Utility Service Affiliates (Perth Amboy), Inc. (USA-PA) and White Marsh Environmental Services, Inc. (White Marsh) subsidiaries are not regulated utilities.

Our New Jersey water utility system (the Middlesex System) provides water services to approximately 61,000 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 219,000.~~over 0.2 million. Our Bayview subsidiary provides water services in Downe Township, New Jersey. Our other New Jersey subsidiaries, Pinelands Water Company (Pinelands Water) and Pinelands Wastewater Company (Pinelands Wastewater) (collectively, Pinelands), provide water and wastewater services to approximately 2,500 customers in Southampton Township, New Jersey.

Our Delaware subsidiaries, Tidewater and Southern Shores Water Company, LLC (Southern Shores), provide water services to approximately ~~47,000~~51,000 retail customers in New Castle, Kent and Sussex Counties, Delaware. Tidewater’s subsidiary, White Marsh, services approximately ~~4,000~~1,800 customers in Delaware and Maryland through various operations and maintenance contracts.

Our Tidewater Environmental Services, Inc. (TESI) subsidiary provides wastewater services to approximately ~~3,600~~3,800 residential retail customers in Sussex Counties, Delaware.

USA-PA operates the water and wastewater systems for the City of Perth Amboy, New Jersey (Perth Amboy) under a 10-year operations and maintenance contract expiring in 2028. In addition to performing day-to day operations, USA-PA is also responsible for emergency responses and management of capital projects funded by Perth Amboy. USA-PA does not manage the billing, collections and customer service functions of Perth Amboy.

USA operates the Borough of Avalon, New Jersey’s (Avalon) water utility, sewer utility and storm water system under a ten-year operations and maintenance contract expiring in 2022. In addition to performing day to day operations, USA is responsible for billing, collections, customer service, emergency responses and management of capital projects funded by Avalon.

Under a marketing agreement with HomeServe USA (HomeServe), USA offers residential customers in New Jersey and Delaware a menu of water and wastewater related home maintenance programs. HomeServe is a leading national provider of such home maintenance service programs. USA receives a service fee for the billing, cash collection and other administrative matters associated with HomeServe’s service contracts. Beginning July 1, 2020, USA began operating the Borough of Highland Park, New Jersey’s water and wastewater systems. USA also provides unregulated water and wastewater services under contract with several other New Jersey municipalities.

18 17

Index

Our Pennsylvania subsidiary, Twin Lakes, provides water services to approximately 120 retail customers in the Township of Shohola, Pike County, Pennsylvania.

Recent Developments

COVID-19 - On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact on changing economic conditions due to COVID-19 is uncertain and could affect the Company’s results of operations, financial condition and liquidity in the future. While the Company’s operations and capital construction program have not been significantly disrupted to date from COVID-19, we are unable to accurately assess the impact that COVID-19 will have on our business, our customers and our vendors prospectively due to numerous uncertainties, including the severity of the pandemic, the duration of the outbreak and actions which could potentially be taken by governmental and/or regulatory authorities. The Company has drawn partially on its available lines of credit to provide additional liquidity in the event there is a negative impact to the Company’s business, results of operations, financial condition or liquidity resulting from COVID-19. As of July 31, 2020, there remains $106.5 million available under these lines of credit (see Note 6, Short-term Borrowings for further information on lines of credit). In addition, the New Jersey Board of Public Utilities (NJBPU) and the Delaware Public Service Commission have allowed for potential future recovery of COVID-19 related incremental costs in customer rates by regulated utilities in their respective jurisdictions. Neither jurisdiction has yet to establish a timetable or method for formally seeking cost recovery. We will continue to monitor and evaluate the COVID-19 situation and its impact to the Company’s business, results of operations, financial condition and liquidity.

Contract Operations – In May 2020, USA, through a competitive bidding process, was awarded a ten-year, $8.3 million contract to operate and maintain the Borough of Highland Park, New Jersey’s water and wastewater systems. The contract commenced July 1, 2020.

Capital Construction Program -The Company’s multi-year capital construction program ~~Water for Tomorrow,~~ encompasses numerous projects designed to upgrade and replace utility infrastructure as well as enhance the integrity and reliability of assets to better serve the current and future generations of water and wastewater customers. The Company plans to invest approximately ~~$105~~$119 million in ~~2019~~2020 in connection with this plan for projects that include, but are not limited ~~to;~~

~~Construction of a 4.6 mile water transmission pipeline to provide critical resiliency and redundancy to the Company’s water transmission system in New Jersey;~~

~~Replacement of four miles of water mains including service lines, valves, fire hydrants and meters in Carteret, New Jersey;~~

~~Enhanced treatment process at the Company’s largest water plant in Edison Township, New Jersey, to mitigate the formation of disinfection by-products that can develop during treatment;~~

Relocation of water meters from inside customers’ premises to exterior meter pits to allow quicker access by crews in emergencies, to enhance customer safety and convenience and to reduce unmetered water; and

~~Additional standby emergency power generation.~~

to:

~~Pinelands’~~•

Enhanced treatment process at the Company’s largest water treatment plant in Edison, New Jersey, to mitigate the formation of disinfection by-products that can develop during the water treatment process;

•

Enhanced treatment processes at the Company’s primary wellfield in South Plainfield, New Jersey to comply with new, more stringent water quality regulations and integrate surge mitigation along with revisions to corrosion control and chlorination;

•

Replacement of approximately six miles of water mains including service lines, valves, fire hydrants and meters in Edison and South Amboy, New Jersey;

•

Construction of a new replacement wastewater treatment plant to serve our customers in the Town of Milton, Delaware;

•

Relocation of water meters from inside customers’ premises to exterior meter pits to allow more timely access by crews in emergencies, enhance customer safety and convenience and reduce non-revenue water; and

•

Additional standby emergency power generation.

The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects and may be significantly impacted if the effects of COVID-19 continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments).

Twin Lakes Base Rate ~~Increases Approved –~~On October 25, 2019, Pinelands Water and Pinelands Wastewater concluded their base rate matters when the New Jersey Board of Public Utilities (NJBPU) approved a $0.5 million increase in annual base rates, effective November 4, 2019. Increase - In March 2019, Pinelands Water and Pinelands Wastewater had filed petitions with the NJBPU seeking permission to increase base rates by approximately $0.7 million per year. The requests were necessitated by capital infrastructure investments both companies had made and increased operations and maintenance costs.

~~Tidewater to Acquire Water Systems~~ - On October 8, 2019, the Delaware Public Service Commission (DEPSC) approved Tidewater’s request to purchase the water utility assets of J.H. Wilkerson and Son, Inc. and transfer the Certificate of Public Convenience and Necessity in order for Tidewater to serve the approximate 1,000 customers currently connected to eight community water systems located mostly in eastern Sussex County, Delaware. The DEPSC also authorized Tidewater to maintain the existing rates that these customers currently pay. The transaction is expected to close in the fourth quarter of 2019.

~~Middlesex Issues $53.7 Million of First Mortgage Bonds -~~As part of the Company’s comprehensive financing plan to fund its Water for Tomorrow capital construction program, in August 2019, Middlesex priced and closed on a New Jersey Economic Development Authority debt financing transaction of $53.7 million by issuing First Mortgage Bonds designated as Series 2019A ($32.5 million at coupon interest rate of 4.0%) and Series 2019B ($21.2 million at coupon interest rate of 5.0%). The proceeds, including an issuance premium of $7.1 million, are being used to finance several projects, including certain of the projects noted above. Through September 30, 2019, Middlesex has drawn a total of $7.6 million from the proceeds and expects to draw the remaining $53.2 million through the third quarter of 2021.

~~Twin Lakes Files for Rate Increase -~~~~In July 2019, Twin Lakes filed a petition with~~2020, the Pennsylvania Public Utilities Commission (PAPUC) approved a $0.1 million increase in annualized base rates for Twin Lakes. In July 2019, Twin Lakes had filed a petition with the PAPUC seeking permission to increase annualized base rates by approximately $0.2 million, ~~per year. This request was~~ necessitated by capital infrastructure investments ~~Twin Lakes has made~~ and increased operations and maintenance costs. ~~We cannot predict whether the PAPUC will ultimately approve, deny, or reduce the amount of the request. A decision by the PAPUC is not expected before the first quarter of~~The new rates became effective April 19, 2020.

~~Index~~

Middlesex ~~Receives Financing Approval -~~Private Placement – In May ~~2019,~~2020, Middlesex received approval from the NJBPU ~~approved Middlesex’s petition with the NJBPU seeking approval~~ to ~~issue and sell~~borrow up to ~~1,500,000 shares of its common stock~~$100.0 million, in one or more private placement transactions ~~through December 31, 2022. Sales~~to help fund Middlesex’s multi-year capital construction program. Although Middlesex intends to close on a private placement loan of ~~additional shares~~up to $40 million before the end of ~~common stock are also part~~2020, ongoing volatility in the financial markets may influence the timing and amount of the ~~Company’s comprehensive financing plan to fund its multi-year utility plant infrastructure investment plan.~~transaction.

Outlook

~~Outlook~~

~~Our~~Normally, our ability to increase operating income and net income is based significantly on four factors: weather, adequate and timely rate relief, effective cost management and customer growth (which are evident in comparison discussions in the Results of Operations section below). ~~Revenues in the first quarter of 2019 were favorably impacted by Middlesex’s April 2018 base water rate increase.~~ Weather patterns ~~experienced~~over the last three years in ~~2017 and 2018,~~our service territories, which resulted in lower customer demand for water, ~~have continued to occur~~may reoccur in ~~2019 and have impacted revenues and net income. Actuarially-determined non-service retirement benefit plan~~2020. As operating costs are ~~expected~~anticipated to increase in ~~2019. We~~2020 in a variety of categories, we continue to implement plans to further streamline operations and further reduce, and mitigate increases in, operating costs. Changes in customer water usage habits, as well as increases in capital expenditures and operating costs, are significant factors in determining the timing and extent of rate increase requests.

An additional factor that is expected to affect our outlook over the remainder of 2020 is the impact of COVID-19 on the general economy and the resulting impact on our customers. For example, while many commercial business operations have closed or curtailed operations as a result of the State of Emergency Orders (SEOs) issued by the Governors of the respective states in which we operate, resulting in lower water demand for that class of customer, usage by residential customers has increased due in part to SEOs and remote working arrangements. (for further discussion of the impact of COVID-19 on the Company, see Note 1- Basis of Presentation and Recent Developments, Recent Developments). In addition, our customer collection efforts have been suspended based on SEOs. Those same SEOs have declared utility construction projects to be essential and therefore, are allowed to continue subject to nationally-established COVID-19 safety precautions.

Organic residential customer growth ~~through September 2019 has been~~for 2020 is expected to be consistent with that experienced in recent years.

Index

Our strategy for profitable growth is focused on the following key areas:

~~Timely and adequate recovery of infrastructure investments and other costs to maintain service quality;~~

~~Prudent acquisitions of investor and municipally-owned water and wastewater utilities;~~

~~Operation of municipal and industrial water and wastewater systems on a contract basis; and~~

~~Invest in projects, products and services that complement our core water and wastewater competencies.~~

•

Invest in projects, products and services that complement our core water and wastewater competencies;

•

Timely and adequate recovery of infrastructure investments and other costs to maintain service quality;

•

Prudent acquisitions of investor and municipally-owned water and wastewater utilities; and

•

Operation of municipal and industrial water and wastewater systems on a contract basis which meet our risk/reward profile.

Operating Results by Segment

The discussion of the Company’s operating results is on a consolidated basis and includes significant factors by subsidiary. The Company has two operating segments, Regulated and Non-Regulated. The operations of the Regulated segment are subject to regulations promulgated by state public utility commissions as to rates and ~~levels~~level of service. Rates and ~~levels~~level of service in the Non-Regulated segment are subject to the terms of individually-negotiated and executed contracts with municipal, industrial and other clients. Both segments are subject to federal and state environmental, water and wastewater quality and other associated legal and regulatory requirements.

The segments in the tables included below consist of the following companies: Regulated-Middlesex, Tidewater, Pinelands, Southern Shores, TESI and Twin Lakes; Non-Regulated-USA, USA-PA, and White Marsh.

~~Index~~

Results of Operations – Three Months Ended ~~September~~June 30, ~~2019~~2020

	(In Thousands)																(In Thousands)
	Three Months Ended September 30,																Three Months Ended June 30,
	2019								2018								2020								2019
	Regulated			Non- Regulated		Total			Regulated			Non- Regulated		Total			Regulated			Non- Regulated		Total			Regulated			Non- Regulated		Total
Revenues	$	34,850		$	2,919	$	37,769		$	34,510		$	4,203	$	38,713		$	32,201		$	3,076	$	35,277		$	30,406		$	2,987	$	33,393
Operations and maintenance expenses		15,859			1,810		17,669			14,764			3,350		18,114			15,397			2,223		17,620			14,957			1,824		16,781
Depreciation expense		4,182			64		4,246			3,745			47		3,792			4,578			51		4,629			4,061			62		4,123
Other taxes		3,808			63		3,871			3,787			102		3,889			3,587			56		3,643			3,485			54		3,539
Operating income		11,001			982		11,983			12,214			704		12,918			8,639			746		9,385			7,903			1,047		8,950

Other income, net		824			43		867			772			61		833			1,107			22		1,129			558			5		563
Interest expense		1,996			—		1,996			1,723			—		1,723			1,941			5		1,946			1,788			-		1,788
Income taxes		(580	)		315		(265	)		(507	)		245		(262	)		(1,387	)		242		(1,145	)		(750	)		329		(421	)
Net income	$	10,409		$	710	$	11,119		$	11,770		$	520	$	12,290		$	9,192		$	521	$	9,713		$	7,423		$	723	$	8,146

Index

Operating Revenues

Operating revenues for the three months ended ~~September~~June 30, ~~2019 decreased $0.9~~2020 increased $1.9 million from the same period in ~~2018. This decrease was related~~2019 due to the following factors:

Middlesex System revenues decreased $0.6 million due to reduced water consumption across all classes of customers as a result of weather. A reduction in water consumption by wholesale contract customers accounted for $0.5 million of this decrease;

~~Tidewater System revenues increased $0.9 million due to additional customers, somewhat offset by~~reduced base tariff rates. The reduction in base tariff rates, which was approved by the DEPSC, became effective March 1, 2019, and was prompted by the lower corporate income tax rate enacted under the~~Tax Cuts and Jobs Act of 2017 (Tax Act). There is a corresponding decrease in income tax expense;~~

Non-regulated revenues decreased $1.3 million primarily due to changes resulting from USA-PA’s 10-year contract with Perth Amboy. Under the new contract effective January 1, 2019, USA-PA has direct management control for wastewater services, for which USA-PA is compensated. Under the prior contract, USA-PA utilized, and was compensated for, subcontracted wastewater services. This results in a related decrease in operations and maintenance expense; and

~~All other revenue categories increased $0.1 million.~~

•

Middlesex System revenues increased $0.6 million due to increased customer demand;

•

Tidewater System revenues increased $1.0 million due to increased customer demand and additional customers;

•

Pinelands revenues increased $0.1 million due to the base rate increase that went into effect in November 2019; and

•

All other revenue categories increased $0.2 million.

Operation and Maintenance Expense

Operation and maintenance expenses for the three months ended ~~September~~June 30, ~~2019 decreased $0.4~~2020 increased $0.8 million from the same period in ~~2018, primarily related~~2019 due to the following factors:

Non-regulated operation and maintenance expenses decreased $1.5 million, primarily due to our new Perth Amboy operating contract, effective January 1, 2019, under which USA-PA no longer incurs sub-contractor fees for wastewater services. This results in a related decrease in operating revenues;

~~Retirement benefit plan expenses decreased $0.1 million due to lower actuarially-determined postretirement benefit plan service expense;~~

~~Labor costs in our regulated subsidiaries increased $1.4 million due to increased headcount, increased average labor rates and payments relative to certain retiring employees; and~~

~~All other operation and maintenance expense categories decreased $0.2 million.~~

~~Index~~

~~Depreciation~~•

Retirement benefit plan expenses increased $0.2 million primarily due to higher actuarially-determined retirement benefit plan service expense;

•

Variable production costs increased $0.5 million due to higher customer demand and higher treatment costs due to weather-impacted changes in raw water quality;

•

Labor costs rose $0.2 million due to additional employees required for regulatory and other operational needs, and wage increases overall averaging approximately 3%; and

•

All other operation and maintenance expense categories decreased $0.1 million.

Depreciation

Depreciation expense for the three months ended ~~September~~June 30, ~~2019~~2020 increased $0.5 million from the same period in ~~2018~~2019 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the three months ended ~~September~~June 30, ~~2019 remained consistent with~~2020 increased $0.1 million from the same period in ~~2018~~2019 primarily due to ~~lower~~higher revenue related taxes on ~~lower~~increased revenues in our Middlesex ~~system offset by higher payroll taxes.~~system.

Other Income, net

Other Income, net for the three months ended ~~September~~June 30, ~~2019 remained consistent with~~2020 increased $0.6 million from the same period in ~~2018,~~2019 primarily due to higher Allowance for Funds Used During Construction resulting from a higher level of capital ~~construction~~ projects in progress ~~offset by higher~~and lower actuarially-determined postretirement benefit plan non-service expense.

Index

Interest ~~Charges~~

Expense

Interest ~~charges~~expense for the three months ended ~~September~~June 30, ~~2019~~2020 increased $0.3 million from the same period in 2018 due to higher average short-term and long-term debt outstanding partially offset by lower interest related to Internal Revenue Service (IRS) examinations of the Company’s federal income tax returns.

~~Income Taxes~~

Income taxes for the three months ended September 30, 2019 remained consistent with the same period in 2018, primarily due to lower-pre-tax income and a decrease in Tidewater’s effective income tax rate in March 2019, reflecting the rate reduction approved by the DEPSC~~to reflect the lower corporate income tax rate resulting from implementation of theTax Act. The decrease in Tidewater’s effective tax rate has also resulted in a corresponding decrease in operating revenues~~.~~Offsetting the decreases above were lower tax deductible repair and maintenance expenses, which results in higher tax expense.~~

~~Net Income and Earnings Per Share~~

Net income for the three months ended September 30, 2019 decreased $1.2 million as compared with the same period in 2018. Basic earnings per share were $0.67 and $0.75 for the three months ended September 30, 2019 and 2018, respectively. Diluted earnings per share were $0.66 and $0.74 for the three months ended September 30, 2019 and 2018, respectively.

~~Index~~

~~Results of Operations – Nine Months Ended September 30, 2019~~

(In Thousands)
Nine Months Ended September 30,
2019 2018
Regulated Non-
Regulated Total Regulated Non-
Regulated Total
Revenues $ 93,130 $ 8,729 $ 101,859 $ 92,826 $ 11,983 $ 104,809
Operations and maintenance expenses 45,233 5,336 50,569 43,390 9,383 52,773
Depreciation expense 12,229 186 12,415 10,999 138 11,137
Other taxes 10,731 182 10,913 10,610 300 10,910
Operating income 24,937 3,025 27,962 27,827 2,162 29,989

Other income, net 1,835 53 1,888 1,985 97 2,082
Interest expense 4,984 — 4,984 4,929 — 4,929
Income taxes (1,912 ) 960 (952 ) 979 704 1,683
Net income $ 23,700 $ 2,118 $ 25,818 $ 23,904 $ 1,555 $ 25,459

~~Operating Revenues~~

~~Operating revenues for the nine months ended September 30, 2019 decreased $3.0 million from the same period in 2018. This decrease was related to the following factors:~~

~~Middlesex System revenues decreased $0.7 million due to the following:~~

~~Reduced water consumption related to weather across all classes of customers, resulting in reduced revenues of $1.9 million; and~~

~~Effective April 1, 2018, a NJBPU-approved base rate increase resulted in higher revenues of $1.2 million;~~

~~Tidewater System revenues increased $0.9 million primarily due to additional customers, which was mitigated byreduced base tariff rates. The reduction in base rates was approved by the DEPSC and became effective March 1, 2019, and was prompted by the lower corporate income tax rate enacted under theTax Act. There is a corresponding decrease in income tax expense; and~~

Non-regulated revenues decreased $3.3 million, primarily due to changes resulting from USA-PA’s new 10-year contract with Perth Amboy. Under the new contract, effective January 1, 2019, USA-PA has direct management control for wastewater services, for which USA-PA is compensated. Under the prior contract, USA-PA utilized, and was compensated for, subcontracted wastewater services. This results in a related decrease in operations and maintenance expense; and

~~All other operating revenue categories increased $0.1 million.~~

~~Operation and Maintenance Expense~~

~~Operation and maintenance expenses for the nine months ended September 30, 2019 decreased $2.2 million from the same period in 2018, primarily related to the following factors:~~

Operation and maintenance expenses in our non-regulated subsidiaries decreased $4.0 million, primarily due to our new Perth Amboy operating contract, effective January 1, 2019, under which USA-PA no longer incurs sub-contractor fees for wastewater services. This results in a related decrease in operating revenues;

~~Retirement benefit plan expenses decreased $0.2 million due to lower actuarially-determined postretirement benefit plan service expense;~~

~~Labor costs in our regulated subsidiaries increased $1.7 million due to increased headcount, increased average labor rates and payments relative to certain retiring employees;~~

~~Index~~

~~Rent costs increased $0.2 million due to the January 2019 commencement of our lease of new corporate administrative office space;~~

~~Health insurance costs increased $0.2 million due to increased premiums and headcount; and~~

~~All other operation and maintenance expense categories decreased $0.1 million.~~

~~Depreciation~~

~~Depreciation expense for the nine months ended September 30, 2019 increased $1.3 million from the same period in 2018 due to a higher level of utility plant in service.~~

~~Other Taxes~~

Other taxes for the nine months ended September 30, 2019 remained consistent with the same period in 2018 primarily due to lower revenue related taxes on lower revenues in our Middlesex system offset by higher payroll taxes.

~~Other Income, net~~

~~Other Income, net for the nine months ended September 30, 2019 decreased~~ $0.2 million from the same period in ~~2018, primarily due to~~higher actuarially-determined postretirement benefit plan non-service expense and the sale of wastewater franchise rights by our TESI subsidiary in the second quarter of 2018. This decrease was partially offset by higher Allowance for Funds Used During Construction resulting from a higher level of capital construction projects in progress.

~~Interest Charges~~

~~Interest charges for the nine months ended September 30,~~ 2019 ~~increased $0.1 million from the same period in 2018~~ due to higher average short-term and long-term debt outstanding in ~~2019~~2020 as compared to ~~2018~~2019 partially offset by lower average interest ~~associated with IRS examinations of the Company’s federal income tax returns.~~rates.

Income Taxes

Income taxes for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$2.6~~$0.7 million from the same period in ~~2018,~~2019, primarily due to ~~lower pre-tax income and~~ the regulatory accounting treatment of tax benefits associated with the adoption of the tangible property regulations, ~~prescribed by the IRS,~~ which was approved in Middlesex’s 2018 base rate case ~~decision. In addition, Tidewater’s effective income tax rate was decreased in March 2019, reflecting the rate reduction approved by the DEPSCto reflect the lower corporate income tax rate resulting from implementation of theTax Act. This has resulted in a corresponding decrease in operating revenues~~decision.

Net Income and Earnings Per Share

Net income for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 increased ~~$0.4~~$1.6 million as compared with the same period in ~~2018.~~2019. Basic earnings per share were ~~$1.56~~$0.55 and ~~$1.55~~$0.49 for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Diluted earnings per share were ~~$1.55~~also $0.55 and ~~$1.54~~$0.49 for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Results of Operations – Six Months Ended June 30, 2020

	(In Thousands)
	Six Months Ended June 30,
	2020								2019
	Regulated			Non- Regulated		Total			Regulated			Non- Regulated		Total
Revenues	$	61,112		$	5,934	$	67,046		$	58,280		$	5,810	$	64,090
Operations and maintenance expenses		30,540			4,272		34,812			29,374			3,527		32,901
Depreciation expense		8,978			99		9,077			8,047			123		8,170
Other taxes		7,114			131		7,245			6,923			119		7,042
Operating income		14,480			1,432		15,912			13,936			2,041		15,977

Other income, net		2,579			58		2,637			1,010			10		1,020
Interest expense		3,609			6		3,615			2,988			-		2,988
Income taxes		(2,921	)		474		(2,447	)		(1,332	)		645		(687	)
Net income	$	16,371			1,010		17,381		$	13,290		$	1,406	$	14,696

Operating Revenues

Operating revenues for the six months ended June 30, 2020 increased $3.0 million from the same period in 2019 due to the following factors:

•

Middlesex System revenues increased $1.1 million due to increased customer demand;

•

Tidewater System revenues increased $1.4 million due to increased customer demand and additional customers;

•

Pinelands revenues increased $0.2 million due to the base rate increase that went into effect in November 2019;

•

Non-regulated revenues increased $0.1 million due to increased supplemental services to existing customers under contract; and

•

All other revenue categories increased $0.2 million.

Index

Operation and Maintenance Expense

Operation and maintenance expenses for the six months ended June 30, 2020 increased $1.9 million from the same period in 2019 due to the following factors:

•

Retirement benefit plan expenses increased $0.4 million primarily due to higher actuarially-determined retirement benefit plan service expense;

•

Variable production costs increased $0.7 million due to higher customer demand and higher treatment costs due to weather-impacted changes in raw water quality;

•

Labor costs rose $0.4 million due to additional employees required for regulatory and other operational needs, and wage increases overall averaging approximately 3%; and

•

All other operation and maintenance expense categories increased $0.4 million.

Depreciation

Depreciation expense for the six months ended June 30, 2020 increased $0.9 million from the same period in 2019 due to a higher level of utility plant in service.

Other Taxes

Other taxes for the six months ended June 30, 2020 increased $0.2 million from the same period in 2019 primarily due to higher revenue related taxes on increased revenues in our Middlesex system.

Other Income, net

Other Income, net for the six months ended June 30, 2020 increased $1.6 million from the same period in 2019 primarily due to higher Allowance for Funds Used During Construction resulting from a higher level of capital projects in progress and lower actuarially-determined postretirement benefit plan non-service expense.

Interest Expense

Interest expense for the six months ended June 30, 2020 increased $0.6 million from the same period in 2019 due to higher average short-term and long-term debt outstanding in 2020 as compared to 2019 partially offset by lower average interest rates.

Income Taxes

Income taxes for the six months ended June 30, 2020 decreased $1.8 million from the same period in 2019, primarily due to the regulatory accounting treatment of tax benefits associated with the adoption of the tangible property regulations, which was approved in Middlesex’s 2018 base rate case decision.

Net Income and Earnings Per Share

Net income for the six months ended June 30, 2020 increased $2.7 million as compared with the same period in 2019. Basic earnings per share were $0.99 and $0.89 for the six months ended June 30, 2020 and 2019, respectively. Diluted earnings per share were $0.99 and $0.88 for the six months ended June 30, 2020 and 2019, respectively.

Liquidity and Capital Resources

Operating Cash Flows

Cash flows from operations are largely based on four factors: weather, adequate and timely rate increases, effective cost management and growth. The effect of those factors on net income is discussed in “Results of Operations.”

Index

For the ~~nine~~six months ~~September~~ended June 30, ~~2019,~~2020, cash flows from operating activities ~~decreased $9.5~~increased $9.2 million to ~~$23.3 million from the same period in 2018.~~$20.8 million. The ~~decrease~~increase in cash flows from operating activities primarily resulted from ~~the timing of payments to vendors and increased~~reduced income tax ~~payments. Utility plant expenditures for the period were primarily funded by financing activities.~~payments, reduced employee benefit plan contributions and higher net income.

~~Index~~

Investing Cash Flows

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, cash flows used in investing activities increased ~~$11.7~~$9.7 million to ~~$61.2 million from the same period in 2018.~~$45.4 million. The increase in cash flows used in investing activities resulted from increased utility plant expenditures.

For further discussion on the Company’s future capital expenditures and expected funding sources, see “Capital Expenditures and Commitments” below.

Financing Cash Flows

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, cash flows from financing activities ~~increased $73.5~~decreased $2.3 million to ~~$89.3 million from the same period in 2018.~~$20.2 million. The ~~majority of the increase~~decrease in cash flows provided by financing activities is due to ~~the net increase in long-term and short-term debt funding and increased~~lower proceeds from the issuance of long-term debt and common stock under the Middlesex Water Company Investment Plan (the Investment Plan). partially offset by the net increase in short-term funding.

In September 2019, the Company determined it had inadvertently sold shares of its common stock through the Investment Plan from August 1, 2018 through September 3, 2019 (Eligible Period) after the registration statement covering sales through the Investment Plan had expired and therefore was no longer effective. In October 2019, the Company’s Board of Directors approved a plan to voluntarily offer a right of rescission (Rescission Offer) to Investment Plan participants who purchased shares of the Company’s common stock during the Eligible Period. During the Eligible Period, Investment Plan participants purchased 232,643 shares of Company common stock at an average price of $55.79 per share. The Rescission Offer ends in November 2019. Based on the current market price of the Company’s common stock, the Company does not expect that the exercise of any applicable rescission rights will have a material impact on its results of operations, financial condition or liquidity. For more information, see discussion under “~~Common Stock~~~~” in~~~~Note 3 – Capitalization~~.

Capital Expenditures and Commitments

To fund our capital program, we ~~may~~ use internally generated funds, short-term and long-term debt borrowings, proceeds from sales of common stock under the Investment Plan and proceeds from ~~new~~sales offerings to the public of our common stock. See below for a more detailed discussion regarding the funding of our capital program.

The capital investment program for ~~2019~~2020 is currently estimated to be approximately ~~$105~~$119 million. Through ~~September~~June 30, ~~2019,~~2020, we have expended ~~$61~~$45 million and expect to incur approximately ~~$44~~$74 million for capital projects for the remainder of ~~2019.~~

2020.

We currently project ~~that~~ we ~~may~~will expend approximately ~~$220~~$179 million for capital projects in ~~2020~~2021 and ~~2021.~~2022. The actual amount and timing of capital expenditures is dependent on project scheduling and refinement of engineering estimates for certain capital projects.

The timing of capital expenditures could be impacted if the effects of COVID-19 continue for an extended period of time (for further discussion of the impact of COVID-19 on the Company, see the Recent Developments section of Note 1 of the Notes to the Unaudited Condensed Consolidated Financial Statements).

To ~~pay for~~fund our capital program for the remainder of ~~2019,~~2020, we plan on utilizing:

~~Internally generated funds;~~

~~Proceeds from the Investment Plan;~~

Proceeds from the New Jersey and Delaware State Revolving Fund (SRF). SRF programs provide low cost financing for projects that meet certain water quality and system improvement benchmarks (see discussion under “~~Long-term Debt~~~~” in~~~~Note 3 - Capitalization~~);

~~Proceeds from the issuance of First Mortgage Bonds through the New Jersey Economic Development Authority (see discussion under “~~~~Middlesex Issues $53.7 Million of First Mortgage Bonds~~~~” in~~~~Recent Developments~~ ~~above);~~

~~Index~~

~~If necessary, proceeds from a common stock offering (see discussion under “~~~~Middlesex Receives Financing Approval~~~~” in~~~~Recent Developments~~ ~~above); and~~

~~Short-term borrowings through $140.0 million of active lines of credit with several financial institutions. As of September 30, 2019, there remains $81.5 million of available credit under these lines.~~

•

Internally generated funds;

•

Short-term borrowings, as needed, through $140 million of lines of credit established with three financial institutions. As of June 30, 2020, there was $102.5 million of available credit under these lines (for further discussion on Company lines of credit, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements);

•

Proceeds from the New Jersey State Revolving Fund (SRF). SRF programs provide low cost financing for projects that meet certain water quality and system improvement benchmarks;

•

Proceeds from the August 2019 issuance and sale of First Mortgage Bonds through the New Jersey Economic Development Authority;

•

Proceeds from the Investment Plan; and

•

Proceeds from the sale and issuance of debt securities in one or more private placement offerings (for further information, see discussion under Recent Developments-Middlesex Private Placement).

In order to fully fund the ongoing large investment program in our utility plant infrastructure and maintain a balanced capital structure consistent with the basis on which customers’ rates are established for a regulated water utility, Middlesex may offer for sale additional shares of its common stock. The amount, the timing and the method of sale of the common stock is dependent on the timing of the construction expenditures, the level of additional debt financing and financial market conditions. As approved by the NJBPU, the Company is authorized to issue and sell up to 0.7 million shares of its common stock in one or more transactions through December 31, 2022.

Recent Accounting Pronouncements – See Note 1 of the Notes to Unaudited Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements and guidance.

Index

Item 3.Quantitative and Qualitative Disclosures of Market Risk

We are exposed to market risk associated with changes in interest rates and commodity prices. 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 interest rate risk related to existing fixed rate, long-term debt is not material due to the term of the majority of our First Mortgage Bonds, which have final maturity dates ranging from 2021 to 2059. Over the next twelve months, approximately ~~$7.2~~$7.3 million of the current portion of 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 our earnings.

Our risks associated with commodity price increases for chemicals, electricity and other commodities are reduced through contractual arrangements and the ability to recover price increases through rates. Non-performance by these commodity suppliers could have a material adverse impact on our results of operations, financial position and cash flows.

We are exposed to credit risk for both our Regulated and Non-Regulated business segments. Our Regulated operations serve residential, commercial, industrial and municipal customers while our Non-Regulated operations engage in business activities with developers, government entities and other customers. Our primary credit risk is exposure to customer default on contractual obligations and the associated loss that may be incurred due to the non-payment of customer accounts receivable balances. Our credit risk is managed through established credit and collection policies which are in compliance with applicable regulatory requirements and involve monitoring of customer exposure and the use of credit risk mitigation measures such as letters of credit or prepayment arrangements. Our credit portfolio is diversified with no significant customer or industry concentrations. In addition, our Regulated businesses are generally able to recover all prudently incurred costs including uncollectible customer accounts receivable expenses and collection costs through rates.

The Company's retirement benefit plan assets are ~~exposed~~subject to fluctuating market prices of debt and equity securities. Changes to the Company's retirement benefit plan asset values can impact the Company's retirement benefit plan expense, funded status and future minimum funding requirements. Our risk is mitigated by our ability to recover retirement benefit plan costs through rates for regulated utility services charged to our customers.

~~Index~~

Item 4.Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities and Exchange Act of 1934 (the Exchange Act), an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was conducted by the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Report. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 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 Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding disclosure.

27 24

Index

PART II. OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1.Legal Proceedings

None.

~~Item 1A.~~

~~Risk Factors~~

Item 1A.Risk Factors

The ~~information about~~following risk factor is provided to update the risk factors ~~does not differ materially from those~~previously disclosed under the heading “Risk Factors” set forth in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

The Novel Coronavirus (COVID-19) pandemic and the attempt to contain it may harm our business, results of operations, financial condition and liquidity.

On March 13, 2020, the United States declared the COVID-19 pandemic a national emergency. The impact that COVID-19 will have on the Company, our customers and our vendors prospectively depends on numerous uncertainties, including the severity of the pandemic, the duration of the outbreak, and actions which could potentially be taken by governmental and/or regulatory authorities’ and could have an adverse effect on the Company’s business, results of operations, financial condition, and liquidity.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

~~Item 3.~~

~~Defaults Upon Senior Securities~~

Item 3.Defaults Upon Senior Securities

None.

~~Item 4.~~

~~Mine Safety Disclosures~~

Item 4.Mine Safety Disclosures

Not applicable.

~~Item 5.~~

~~Other Information~~

Item 5.Other Information

None.

Item 6.	Exhibits

~~10.32~~	~~Amended and Restated Line of Credit Note between registrant, registrant’s subsidiaries and PNC Bank, N.A.~~
	~~10.32(a)~~	~~Amendment to the Line of Credit included in Amended and Restated Line of Credit Note between registrant, registrant’s subsidiaries and PNC Bank, N.A., filed as Exhibit 10.32.~~
31.1	Section 302 Certification by Dennis W. Doll pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.


31.2	Section 302 Certification by A. Bruce O’Connor pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934.


32.1	Section 906 Certification by Dennis W. Doll pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.2	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.


101.INS		XBRL Instance Document


101.SCH		XBRL Schema Document


101.CAL		XBRL Calculation Linkbase Document


101.LAB		XBRL Labels Linkbase Document


101.PRE		XBRL Presentation Linkbase Document


101.DEF		XBRL Definition Linkbase Document

104

Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

28 25

Index

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
		Senior Vice President, Treasurer and
		Chief Financial Officer
		~~(Principal~~ (Principal Accounting Officer)

Date: ~~November 1, 2019~~July 31, 2020

	September 30, 2019		December 31, 2018
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Bonds	$151,361	$154,355	$101,411	$102,789