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What changed in ARTESIAN RESOURCES CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ARTESIAN RESOURCES CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+210 added−235 removedSource: 10-K (2024-03-18) vs 10-K (2023-03-10)

Top changes in ARTESIAN RESOURCES CORP's 2023 10-K

210 paragraphs added · 235 removed · 177 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

39 edited+6 added−6 removed70 unchanged
Biggest changeArtesian Wastewater is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company. 5 Table of Contents Artesian Wastewater owns and operates four wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3 mgd.
Biggest changeIt provides water service to a residential community in Chester County, Pennsylvania. 5 Table of Contents Artesian Wastewater Artesian Wastewater began providing wastewater services in Sussex County, Delaware in July 2005. Artesian Wastewater is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Delaware as a regulated public wastewater service company.
The LCR sought to therefore limit the levels of these metals in water by improving water treatment centers, determining copper and lead levels for customers who use lead plumbing parts, and eliminating the water source as a source of lead and copper.
The LCR therefore sought to limit the levels of these metals in water by improving water treatment centers, determining copper and lead levels for customers who use lead plumbing parts, and eliminating the water source as a source of lead and copper.
The profitability of our utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate. See Note 13 to our Consolidated Financial Statements for a full description of recent regulatory proceedings.
The profitability of our utility operations is influenced, to a great extent, by the timeliness and adequacy of regulatory relief we are granted by the respective regulatory commissions or authorities in the states in which we operate. See Notes to Consolidated Financial Statements – Note 13 – Regulatory Proceedings for a full description of recent regulatory proceedings.
The EPA has also declared drinking water health advisories levels for PFAS. The Lead and Copper Rule, or LCR, is a United States federal regulation that limits the concentration of lead and copper allowed in public drinking water at the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.
The EPA has also declared drinking water health advisory levels for PFAS. The Lead and Copper Rule, or LCR, is a United States federal regulation that limits the concentration of lead and copper allowed in public drinking water at the consumer's tap, in addition to limiting the permissible amount of pipe corrosion occurring due to the water itself.
We continue to focus resources on developing and serving existing service territories and obtaining new territories throughout Delaware. We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 305 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania.
We continue to focus resources on developing and serving existing service territories and obtaining new territories throughout Delaware. We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 308 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania.
We have 61 different water treatment facilities in our Delaware systems. All water supplies that we purchase from neighboring utilities are potable. 4 Table of Contents To supplement our groundwater supply, we purchase treated surface water through interconnections only in the northern service area of our New Castle County, Delaware system.
We have 62 different water treatment facilities in our Delaware systems. All water supplies that we purchase from neighboring utilities are potable. 4 Table of Contents To supplement our groundwater supply, we purchase treated surface water through interconnections only in the northern service area of our New Castle County, Delaware system.
The office facility consists of approximately 10,000 square feet of office space along with nearly 10,000 square feet of warehouse space. Artesian Storm Water Artesian Storm Water, incorporated in 2017, was formed to provide design, installation, maintenance and repair services related to existing or proposed storm water management systems in Delaware and the surrounding areas.
The office facility consists of approximately 10,000 square feet of office space along with approximately 7,000 square feet of warehouse space. Artesian Storm Water Artesian Storm Water, incorporated in 2017, was formed to provide design, installation, maintenance and repair services related to existing or proposed storm water management systems in Delaware and the surrounding areas.
The majority of the 0.1 billion gallons of water we distributed in all of our Maryland systems during 2022 came from our groundwater wells, while a portion came from treated surface water. We have ten separate water treatment facilities in our Maryland systems.
The majority of the 0.1 billion gallons of water we distributed in all of our Maryland systems during 2023 came from our groundwater wells, while a portion came from treated surface water. We have ten separate water treatment facilities in our Maryland systems.
Artesian Water also provides water for public and private fire protection to customers in our service territories. Artesian Water produced approximately 79% of our 2022 consolidated operating revenues. In May 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware.
Artesian Water also provides water for public and private fire protection to customers in our service territories. Artesian Water produced approximately 81% of our 2023 consolidated operating revenues. In May 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware.
The current agreement with Chester Water Authority, which is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022 and now requires us to purchase a minimum of 0.5 mgd.
An interconnection agreement with Chester Water Authority, which is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022 and now requires us to purchase a minimum of 0.5 mgd.
Artesian Water Maryland Artesian Water Maryland began operations in August 2007. Artesian Water Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland. Artesian Water Maryland owns and operates 9 public water systems.
Artesian Water Maryland Artesian Water Maryland began operations in August 2007. Artesian Water Maryland distributes and sells water to residential, commercial, industrial and municipal customers in Cecil County, Maryland. Artesian Water Maryland owns and operates 10 public water systems.
These revised requirements provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water. Implementation of the revised rule will better identify high levels of lead, improve the reliability of lead tap sampling results, strengthen corrosion control treatment requirements, expand consumer awareness and improve risk communication.
These revised requirements provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water. Implementation of the revised rule will identify locations of lead, improve the reliability of lead tap sampling results, strengthen corrosion control treatment requirements, expand consumer awareness and improve risk communication.
The treated surface water is blended with our groundwater supply for distribution to our customers. Nearly 95% of the overall 8.6 billion gallons of water we distributed in all of our Delaware systems during 2022 came from our groundwater wells, while the remaining 5% came from interconnections with other utilities and municipalities.
The treated surface water is blended with our groundwater supply for distribution to our customers. Nearly 95% of the overall 8.7 billion gallons of water we distributed in all of our Delaware systems during 2023 came from our groundwater wells, while the remaining 5% came from interconnections with other utilities and municipalities.
As of December 31, 2022, we were serving customers through approximately 1,442 miles of transmission and distribution mains. Mains range in diameter from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.
As of December 31, 2023, we were serving customers through approximately 1,470 miles of transmission and distribution mains. Mains range in diameter from two inches to twenty-four inches, and most of the mains are made of ductile iron or cast iron.
We have 35 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 44.0 million gallons. We have developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.
We have 36 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 45.0 million gallons. We have developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware.
Our electric costs and purchased water costs are at a fixed price under contract. Employees and Human Capital Resources As of December 31, 2022, we employed 252 full-time employees.
Our electric costs and purchased water costs are at a fixed price under contract. Employees and Human Capital Resources As of December 31, 2023, we employed 251 full-time employees.
Of these employees, 54 were officers and managers; 120 were employed as operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel; and 45 were employed in accounting, budgeting, information systems, human resources, customer relations and public relations. The remaining 33 employees were administrative personnel.
Of these employees, 59 were officers and managers; 119 were employed as operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel; and 38 were employed in accounting, budgeting, information systems, human resources, customer relations and public relations. The remaining 35 employees were administrative personnel.
In Delaware in 2022, we pumped an average of 22.2 million gallons per day, or mgd, from our groundwater wells and obtained an average of approximately 1.3 mgd from interconnections. Our peak water supply capacity currently is approximately 57.7 mgd.
In Delaware in 2023, we pumped an average of 23.1 million gallons per day, or mgd, from our groundwater wells and obtained an average of approximately 0.8 mgd from interconnections. Our peak water supply capacity currently is approximately 57.7 mgd.
In January 2022, approximately 23 square miles of wastewater service territory, located in Sussex County, Delaware, was added upon the closing of the acquisition of TESI.
We hold CPCNs for approximately 59 square miles of wastewater service territory located in Sussex County, Delaware, of which approximately 23 square miles was added in January 2022 upon the closing of the acquisition of TESI.
We have 138 operating and 63 observation and monitoring wells in our Delaware systems. At December 31, 2022, we had allocation permits for 115 wells, and 23 wells that did not require a permit. Our access to aquifers within our service territory is not exclusive.
We have 142 operating and 62 observation and monitoring wells in our Delaware systems. At December 31, 2023, we had allocation permits for 116 wells and 25 wells that did not require a permit. Our access to aquifers within our service territory is not exclusive.
While we maintain an extensive qualification and performance review system to control risk associated with such reliance on third parties, failure of suppliers or independent contractors to meet commitments could adversely affect construction and maintenance schedules.
While we maintain an extensive qualification and performance review system to control risk associated with such reliance on third parties, failure of suppliers or independent contractors to meet commitments could adversely affect construction and maintenance schedules. We are also dependent on the availability of electricity and purchased water at affordable prices.
Even though our regulated subsidiaries have been granted an exclusive franchise for each of our existing community water and wastewater systems, our ability to expand service areas can be affected by the DEPSC, the MDPSC or the Pennsylvania Public Utility Commission, or PAPUC, awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises.
Even though our regulated subsidiaries have been granted an exclusive franchise for each of our existing community water and wastewater systems, our ability to expand service areas can be affected by the DEPSC, the MDPSC or the Pennsylvania Public Utility Commission, or PAPUC, awarding franchises to other regulated water or wastewater utilities with whom we compete for such franchises. 9 Table of Contents Suppliers and Independent Contractors We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs.
If the lead and copper levels exceed the "action levels", water suppliers are required to educate their consumers on how to reduce exposure to lead. The EPA published a revised LCR in 2021, with a compliance deadline expected in 2024.
If the lead and copper levels exceed the "action levels," water suppliers are required to educate their consumers on how to reduce exposure to lead. The EPA published a revision to the LCR in 2021, with a compliance deadline of October 2024 for developing an inventory of lead service lines within a utility’s water system.
Our largest connected regional water system, consisting of approximately 141 square miles and 78,600 metered customers, is located in northern New Castle County and portions of southern New Castle County, Delaware. We hold CPCNs for approximately 58 square miles of wastewater service territory located in Sussex County, Delaware.
Our largest connected regional water system, consisting of approximately 141 square miles and 79,300 metered customers, is located in northern New Castle County and portions of southern New Castle County, Delaware.
This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd. We began operating this facility in late June 2021, shortly after the industrial customer received its process wastewater treatment operating permit. TESI In January 2022, Artesian Wastewater acquired Tidewater Environmental Services, Inc.
Artesian Wastewater also owns and operates a disposal facility that includes a 90-million gallon storage lagoon and spray irrigation to agricultural land. This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd. We began operating this facility in June 2021. TESI In January 2022, Artesian Wastewater acquired Tidewater Environmental Services, Inc.
The quantity of water withdrawn from the Port Deposit surface water intake is allocated by the Susquehanna River Basin Commission, or SRBC, and the MDE. We have 14 operating wells and one surface water in-take in our Maryland systems. The Clean Water Act has established the foundation for wastewater discharge control in the United States.
The quantity of water withdrawn from the Port Deposit surface water intake is allocated by the Susquehanna River Basin Commission, or SRBC, and the MDE. We have 14 operating wells and one surface water in-take in our Maryland systems. The PADEP administers and oversees departmental programs involving surface and groundwater quantity and quality planning and water conservation in Pennsylvania.
The Chester Water Authority, which supplies water to Artesian Water through an interconnection in northern New Castle County, is regulated by the Pennsylvania Department of Environmental Protection, as well as the EPA. We believe that we are in material compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act.
The Chester Water Authority, which supplies water to Artesian Water through an interconnection in northern New Castle County, and Artesian Water Pennsylvania, which also supplies water to Artesian Water, are regulated by the Pennsylvania Department of Environmental Protection, or PADEP, as well as the EPA.
We rely on our independent contractors to manage their respective employee relations so that the services they are contractually obligated to perform for us satisfy our requirements. Management believes that through our own employees, coupled with the services provided by our independent contractors and outside consultants, we have sufficient human capital to continue to operate our business successfully.
We use outside consultants and independent contractors on an as needed basis for various services. We rely on our independent contractors to manage their respective employee relations so that the services they are contractually obligated to perform for us satisfy our requirements.
In accordance with the NPDES permit program, the implementing states set maximum discharge limits for wastewater effluents and overflows from wastewater collection systems. Discharges that exceed the limits specified under the NPDES permit program can lead to the imposition of penalties. The Clean Water Act also requires that wastewater treatment plant discharges meet a minimum of secondary treatment.
Discharges that exceed the limits specified under the NPDES permit program can lead to the imposition of penalties. The Clean Water Act also requires that wastewater treatment plant discharges meet a minimum of secondary treatment. The secondary treatment process can remove 90% to 99% of the organic matter in wastewater. Our removal efficiency is generally 96% to 98%.
These interconnections are capable of providing over 3.0 mgd of water to our Maryland systems . Artesian Water Pennsylvania Artesian Water Pennsylvania began operations in 2002. It provides water service to a residential community in Chester County, Pennsylvania. Artesian Wastewater Artesian Wastewater began providing wastewater services in Sussex County, Delaware in July 2005.
In Maryland, we have one interconnection with the Artesian Water system in Delaware, one interconnection with a neighboring utility, and four interconnections with municipalities. These interconnections are capable of providing over 3.0 mgd of water to our Maryland systems . Artesian Water Pennsylvania Artesian Water Pennsylvania began operations in 2002.
We have one water treatment facility that treats surface water through an intake in the Susquehanna River, located in Cecil County, Maryland, which has the ability to supply up to 1.0 mgd of water. Our peak water supply capacity currently is approximately 2.0 mgd. We have 8 storage tanks capable of storing approximately 2.5 million gallons.
We have one surface water treatment facility located in Cecil County, Maryland, with the current ability to treat up to 1.0 mgd from an intake in the Susquehanna River that is permitted a withdrawal of a maximum of 5.0 mgd and a daily average of 3.5 mgd.
Artesian Wastewater and Sussex County, a political subdivision of Delaware, provide reciprocal services to address the need of each for additional wastewater treatment and disposal capacity in certain service areas within Sussex County. Artesian Wastewater received an operations permit in March 2020 for a disposal facility that includes a 90-million gallon storage lagoon and spray irrigation to agricultural land.
Artesian Wastewater owns and operates three wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 2.3 mgd. Artesian Wastewater and Sussex County, a political subdivision of Delaware, provide reciprocal services to address the need of each for additional wastewater treatment and disposal capacity in certain service areas within Sussex County.
In Delaware, we have 21 interconnections with two neighboring water utilities and six municipalities that provide us with the ability to purchase or sell water. An interconnection agreement with Chester Water Authority, that expired December 31, 2021, had a “take or pay” clause requiring us to purchase 3.0 mgd.
In Delaware, we have 24 interconnections with three neighboring water utilities and seven municipalities that provide us with the ability to purchase or sell water.
The Clean Water Act established a control program for ensuring that communities have clean water by regulating the release of contaminants into waterways. Permits that limit the amounts of pollutants discharged are required of all wastewater dischargers under the National Pollutant Discharge Elimination System, or the NPDES, permit program.
Permits that limit the amounts of pollutants discharged are required for all wastewater dischargers under the National Pollutant Discharge Elimination System, or the NPDES, permit program. In accordance with the NPDES permit program, the implementing states set maximum discharge limits for wastewater effluents and overflows from wastewater collection systems.
We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories. In Maryland, we have one interconnection with the Artesian Water system in Delaware, one interconnection with a neighboring utility, and four interconnections with municipalities.
Our total peak water supply capacity in Cecil County, Maryland currently is approximately 2.0 mgd. We have 9 storage tanks capable of storing approximately 2.5 million gallons. We believe that we have in place sufficient capacity to provide water service for the foreseeable future to all existing and new customers in all of our service territories.
The ability to offer storm water services will complement the primary water and wastewater services that we provide. Artesian Storm Water is not actively seeking new opportunities. 6 Table of Contents Government Regulations Overview The Company is subject to federal, state and local laws and regulations in all of the jurisdictions in which it operates.
The Company filed a Certificate of Dissolution with the Delaware Secretary of State, which became effective on June 20, 2023. 6 Table of Contents Government Regulations Overview The Company is subject to federal, state and local laws and regulations in all of the jurisdictions in which it operates.
Available Information We are a Delaware corporation with our principal executive offices located at 664 Churchmans Road, Newark, Delaware, 19702. Our telephone number is (302) 453-6900 and our website address is www.artesianwater.com .
Our telephone number is (302) 453-6900 and our website address is www.artesianwater.com .
In addition, implementation of the revised rule will accelerate lead service line replacements by closing existing regulatory loopholes, propelling early action, and strengthening replacement requirements.
In addition, implementation of the revised rule will accelerate lead service line replacements by implementing timelines and strengthening replacement requirements. We are fully compliant with the current LCR and on schedule to be in compliance with the revised LCR ahead of the October 2024 compliance date.
We are fully compliant with the current LCR and are actively examining the revised LCR to ensure we are fully compliant on or before the compliance deadline date, which is expected to be in October 2024. The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.
The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.
Removed
The secondary treatment process can remove 90% to 99% of the organic matter in wastewater. Our removal efficiency is generally 96% to 98%.
Added
Artesian’s capital investments in self-sufficiency of water supply facilitated a reduction in the minimum amount of water required to be purchased under the current contract compared to previous contracted requirements. The reduced purchased water minimum requirement has lowered purchased water utility operating costs.
Removed
Materials and Supplies We are highly dependent on the availability of essential materials and parts from our suppliers for expansion, construction and maintenance of our services.
Added
In May 2023, the Board of Directors of Artesian Storm Water unanimously approved its dissolution. Also, in May 2023, the Board of Directors of Artesian Resources Corporation, the sole shareholder of Artesian Storm Water, unanimously approved the dissolution of Artesian Storm Water.
Removed
The majority of the materials required for our water and wastewater utility business are typically under contract at fixed prices, however, supply chain issues associated with the COVID-19 pandemic, compounded by increasing inflation, resulted in price increases and delays in procuring certain materials and equipment.
Added
We believe that we are in material compliance with all current federal, state and local water quality standards, including regulations under the federal Safe Drinking Water Act.
Removed
We have been successful in minimizing these delays and cost increases with thorough planning and pre-ordering, however there is no assurance that our future financial results or business operations will not be negatively affected. 9 Table of Contents Suppliers and Independent Contractors We are dependent upon the ability of our suppliers and independent contractors to meet performance specifications, quality standards and delivery schedules at our anticipated costs.
Added
The office also coordinates policies, procedures, and regulations which influence public water supply withdrawals and quality. The DRBC administers and oversees programs involving water quality protection, water supply allocation, water conservation initiatives and watershed planning, regulatory review and permitting, and drought management in Pennsylvania. We have one operating well in Pennsylvania within the DRBC’s jurisdiction.
Removed
The remaining effects of the COVID-19 pandemic have delayed some of our construction projects and our lead time for material deliveries however, those delays have not impacted our ability to maintain our level of service to customers. We are also dependent on the availability of electricity and purchased water at affordable prices.
Added
This well is treated by a water treatment plant located in Delaware. The Clean Water Act has established the foundation for wastewater discharge control in the United States. The Clean Water Act established a control program for ensuring that communities have clean water by regulating the release of contaminants into waterways.
Removed
The COVID-19 pandemic further emphasized the importance of keeping our employees safe and healthy. In response to the pandemic, the Company took actions to help protect our employees so that they could continue to perform their work in a safe and effective manner. We use outside consultants and independent contractors on an as needed basis for various services.
Added
Management believes that through our own employees, coupled with the services provided by our independent contractors and outside consultants, we have sufficient human capital to continue to operate our business successfully. Available Information We are a Delaware corporation with our principal executive offices located at 664 Churchmans Road, Newark, Delaware, 19702.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDespite our security measures, we may not be in a position to control the outcome of terrorist events, sabotage or other attacks on our water systems, should they occur. 11 Table of Contents We depend on the availability of capital for expansion, construction and maintenance.
Biggest changeWhile the costs of increases in security, including capital expenditures, may be significant, we expect these costs to continue to be recoverable in water and wastewater rates. Despite our security measures, we may not be in a position to control the outcome of terrorist events, sabotage or other attacks on our water systems, should they occur.
Furthermore, federal, state and local authorities and legislative bodies have issued, implemented or proposed regulations, penalties, standards or guidance intended to restrict, moderate or promote activities consistent with resource conservation, Greenhouse Gas, or GHG, emission reduction, environmental protection or other climate-related objectives.
Furthermore, federal, state and local authorities and legislative bodies have issued, implemented or proposed regulations, penalties, standards and/or guidance intended to restrict, moderate or promote activities consistent with resource conservation, Greenhouse Gas, or GHG, emission reduction, environmental protection or other climate-related objectives.
Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered through rates we charge to our customers, there can be no assurance that the applicable regulatory authority would authorize recovery of such costs, in whole or in part, for any of these impacts.
Although some or all potential expenditures and costs with respect to our regulated businesses could be recovered through rates we charge to our customers, there can be no assurance that the applicable regulatory authority would authorize recovery of such costs, in whole or in part, for any of these impacts.
Risks Related to Our Business Strategy We face competition from other water and wastewater utilities for the acquisition of new exclusive service territories. We face competition from other water and wastewater utilities as we pursue the right to exclusively serve territories in Delaware and Maryland.
Risks Related to Our Business Strategy We face competition from other water and wastewater utilities for the acquisition of new exclusive service territories. We face competition from other water and wastewater utilities as we pursue the right to exclusively serve new territories in Delaware and Maryland.
We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. It is reasonably possible that costs incurred related to the various physical and regulatory risks from climate change may affect our future results of operations, financial condition or cash flows.
We continually assess our compliance status and management of environmental matters to ensure our operations are in compliance with all applicable environmental laws and regulations. It is reasonably possible that costs incurred related to the various physical and regulatory risks from climate change may affect our future results of operations, financial condition, cash flows or liquidity.
If we are unable to enter into agreements with landowners, developers or municipalities and secure CPCNs for the right to exclusively serve territories in Delaware or Maryland, our ability to expand may be significantly impeded. Any future acquisitions we undertake or other actions to further grow our water and wastewater business may involve risks.
If we are unable to enter into agreements with landowners, developers or municipalities and secure CPCNs for the right to exclusively serve new territories in Delaware or Maryland, our ability to expand may be significantly impeded. Any future acquisitions we undertake or other actions to further grow our water and wastewater business may involve risks.
We have security measures in place at our facilities to reduce the possibility of future occurrences of sabotage, vandalism, or terrorism and to secure our water and wastewater systems. These security measures address water collection, pretreatment, treatment, distribution, storage, wastewater disposal, electronic or automated systems, and the use, handling, delivery, and storage of all chemicals.
We have security measures in place at our facilities to reduce the possibility of occurrences of sabotage, vandalism, or terrorism and to secure our water and wastewater systems. These security measures address water collection, pretreatment, treatment, distribution, storage, wastewater disposal, electronic or automated systems, and the use, handling, delivery, and storage of all chemicals.
The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired as of the date of an acquisition. The Company’s goodwill is primarily associated with the January 2022 acquisition of Tidewater Environmental Services, Inc.
The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired as of the date of an acquisition. The Company’s goodwill is associated with the January 2022 acquisition of Tidewater Environmental Services, Inc.
Our operations from time to time could be parties to or targets of lawsuits, claims, investigations and proceedings, including system failure, injury, contract, environmental, health and safety and employment matters, which are handled and defended in the ordinary course of business.
Our Company from time to time could be parties to or our operations targets of, lawsuits, claims, investigations and proceedings, including system failure, injury, contract, environmental, health and safety and employment matters, which are handled and defended in the ordinary course of business.
We may experience substantial negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our operations or those of our suppliers or independent contractors in our service areas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements.
We may experience substantial negative impacts to our business if an unexpectedly severe weather event or natural disaster damages our facilities and/or operations or those of our suppliers or independent contractors in our service areas, or from the unintended consequences of regulatory changes that directly or indirectly impose substantial restrictions on our activities or adaptation requirements.
The negotiation of potential acquisitions as well as the integration of acquired businesses could require us to incur significant costs and cause diversion of our management’s time and resources. We may not be successful in the future in identifying businesses that meet our acquisition criteria. The failure to identify such businesses may limit the rate of our growth.
The negotiation of potential acquisitions as well as the integration of acquired organizations could require us to incur significant costs and cause diversion of our management’s time and resources. We may not be successful in the future in identifying organizations that meet our acquisition criteria. The failure to identify such organizations may limit the rate of our growth.
Some or all of these items could have a material adverse effect on our business and our ability to finance our business and comply with regulatory requirements. The businesses we acquire in the future may not achieve sales and profitability that would justify our investment.
Some or all of these items could have a material adverse effect on our business and our ability to finance our business and comply with regulatory requirements. The organizations we acquire in the future may not achieve sales and profitability that would justify our investment.
An element of our growth strategy is the acquisition and integration of water and wastewater systems in order to broaden our current service areas, and move into new ones. It is our intent, when practical, to integrate any businesses we acquire with our existing operations.
An element of our growth strategy is the acquisition and integration of water and wastewater systems in order to broaden our current service areas and move into new ones. It is our intent, when practical, to integrate any organizations we acquire with our existing operations.
In addition, future acquisitions or expansion of our service areas by us could result in: - Dilutive issuance of our equity securities; - Incurrence of debt and contingent liabilities; - Difficulties in integrating the operations and personnel of the acquired businesses; - Diversion of our management’s attention from ongoing business concerns; - Failure to have effective internal control over financial reporting; - Overload of human resources; and - Other acquisition-related expense.
In addition, future acquisitions or expansion of our service areas by us could result in: - Dilutive issuance of our equity securities; - Incurrence of debt and contingent liabilities; - Difficulties in integrating the operations and personnel of the acquired organization; - Diversion of our management’s attention from ongoing business concerns; - Failure to have effective internal control over financial reporting; - Overload of human capital resources; and - Other acquisition-related expense.
We would also remain liable for significant transaction costs, including legal and accounting fees, whether or not the transaction is completed. 14 Table of Contents Risks Related to Legal Uncertainty Contamination of our water supply may result in disruption in our services and could lead to litigation that may adversely affect our business, operating results and financial condition.
We would also remain liable for significant transaction costs, including legal and accounting fees, whether or not the transaction is completed. 14 Table of Contents Risks Related to Legal Uncertainty Contamination of our water supply or wastewater operational malfunctions may result in disruption in our services and could lead to litigation that may adversely affect our business, operating results and financial condition.
Weaknesses in capital and credit markets or increased interest rates may limit our access to capital. Our ability to continue our expansion efforts and fund our utility construction and maintenance program depends on the availability of adequate capital.
We depend on the availability of capital for expansion, construction and maintenance. Weaknesses in capital and credit markets or increased interest rates may limit our access to capital. Our ability to continue our expansion efforts and fund our utility construction and maintenance program depends on the availability of adequate capital.
Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of COVID-19. We are considered an essential utility service company, as defined by the U.S. Department of Homeland Security.
Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies. We are considered an essential utility service company, as defined by the U.S. Department of Homeland Security.
Although we continue to operate our business consistent with federal guidelines and state and local orders, the outbreak of pandemics, epidemics or other public health emergencies and any preventive or protective actions taken by governmental authorities may have an adverse effect on our operations.
We believe we will continue to operate our business consistent with any federal guidelines or state and local orders, however, the outbreak of pandemics, epidemics or other public health emergencies and any preventive or protective actions taken by governmental authorities may have an adverse effect on our operations.
This risk is most acute during periods of substantial rainfall or flooding, which are common causes of sewer overflow and system failure. Liabilities resulting from such damages and injuries could materially and adversely affect our business, results of operations and financial condition. General economic conditions may materially and adversely affect our financial condition and results of operations.
This risk is most acute during periods of substantial rainfall or flooding, which are common causes of sewer overflow and system failure. Liabilities resulting from such damages and injuries could materially and adversely affect our business, results of operations and financial condition.
Additionally, treating the contaminated water source could involve significant costs and could adversely affect our business. We could also be held liable for consequences arising out of human or environmental exposure to hazardous substances, if found, in our water supply. This could adversely affect our business, results of operations and financial condition.
Additionally, treating the contaminated water source could involve significant costs and could adversely affect our business. We could also be held liable for consequences arising out of human or environmental exposure to hazardous substances, if found, in our water supply.
Our water supplies are subject to contamination from naturally-occurring compounds as well as pollution resulting from man-made sources. Even though we monitor the quality of our water on an on-going basis, any possible contamination due to factors beyond our control could interrupt the use of our water supply until we are able to substitute it from an uncontaminated water source.
Our water supplies are subject to contamination from naturally-occurring compounds as well as pollution resulting from man-made sources. Even though we monitor the quality of our water on an ongoing basis, any possible contamination could interrupt the use of our water supply until we are able to substitute it from an uncontaminated water source.
Despite our efforts, a cyberattack, if it occurred, could cause water or wastewater system problems, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer information.
Despite our efforts, a cyberattack, if it occurred, could cause water or wastewater system operational complications, disrupt service to our customers, compromise important data or systems or result in an unintended release of customer or other confidential information.
Potential climate variability challenges include the following; increased frequency and duration of droughts, increased frequency and severity of storms and other weather events, increased precipitation and flooding, potential degradation of water quality, unexpected changes in temperature, increases in ocean levels, increases in disruption of service, decreases in available water supply, extreme changes in water usage patterns, increased costs to repair damaged facilities, increased costs to reduce risks associated with significant weather events or natural disasters, increased costs to improve the reliability of our water and wastewater systems and facilities.
Potential climate variability challenges include the following: increased frequency and duration of droughts, increased precipitation and flooding, increased frequency and severity of storms and other weather events, potential degradation of water quality, unexpected changes in temperature, increases in ocean levels, disruptions in water or wastewater services to our customers, decreases in available water supply, extreme changes in water usage patterns, increases in expenditures to repair any damages, increases in costs to reduce risks associated with significant weather events or natural disasters, and increases in costs to improve the reliability of our water and wastewater systems and facilities.
Such impacts may include a reduction in discretionary and recreational water use by our residential water customers, particularly during the summer months; a decline in usage by industrial and commercial customers as a result of decreased business activity and commerce in our customers’ businesses; an increased incidence of customers’ inability to pay their bills, bankruptcy or delay in paying their bills which may lead to higher bad debt expense and reduced cash flow; and a lower natural customer growth rate may result as compared to what had been experienced before the economic downturn due to a decline in new housing starts and a possible slight decline in the number of active customers due to housing vacancies or abandonments.
Such impacts may include a reduction in discretionary and recreational water use by our residential water customers, particularly during the summer months; a decline in usage by industrial and commercial customers as a result of decreased business activity and commerce in our customers’ businesses; an increased incidence of customers’ inability to pay their bills, bankruptcy or delay in paying their bills which may lead to higher bad debt expense and reduced cash flow; and a lower natural customer growth rate may result as compared to what had been experienced before due to a decline in new housing starts or a decline in the number of active customers due to housing vacancies or abandonments. 13 Table of Contents We could be adversely impacted by inflation.
The impact of inflation could adversely affect our results of operations, financial position or cash flows. We may be required to record impairments of goodwill in the future that could have a material adverse effect on our financial condition and results of operations.
The impact of inflation could adversely affect our results of operations, financial position or cash flows. We may be required to record impairments of goodwill, or otherwise change the fair value of certain assets, in the future that could have a material adverse effect on our financial condition and results of operations.
We rely on our information technology systems to manage operation of our business. Specifically, our business relies on the following technology systems: customer information system, financial reporting system, asset tracking system, remote monitoring system for some of our treatment, storage and pumping facilities, human resources management system, inventory management system, and accounts receivable collection management system.
Specifically, our business relies on the following technology systems, among others: customer information system, financial reporting system, asset tracking system, remote monitoring system for some of our treatment, storage and pumping facilities, human resources management system, inventory management system, and accounts receivable collection management system.
Climate change is an intrinsically complex global phenomenon with inherent residual risks across its physical and regulatory dimensions that cannot be mitigated given their wide-ranging, interdependent and largely unpredictable potential scope, nature, timing or duration.
The issue of climate variability is receiving increasing attention nationally and worldwide. Climate change is an intrinsically complex global phenomenon with inherent residual risks across its physical and regulatory dimensions that cannot be mitigated given their wide-ranging, interdependent and largely unpredictable potential scope, nature, timing or duration.
Risk Associated with Management Turnover in our management team could have an adverse impact on our business or the financial market’s perception of our ability to continue to grow. Our success depends significantly on the continued contribution of our management team both individually and collectively.
For additional information concerning the Company’s cybersecurity program, see Item 1C - Cybersecurity. Risk Associated with Management Turnover in our management team could have an adverse impact on our business or the financial market’s perception of our ability to continue to grow. Our success depends significantly on the continued contribution of our management team both individually and collectively.
Under our Restated Certificate of Incorporation, the right to vote for the election of directors and other stockholder matters is exercised exclusively by the holders of Class B Common Stock and the holders of shares of our Class A Non-Voting Common Stock do not have voting rights on any matters that are submitted to a vote of stockholders, including with respect to the election of directors and other matters voted upon by stockholders, except as required by the Delaware General Corporation Law.
The holders of our Class A Non-Voting Common Stock do not have voting rights on any matters that are submitted to a vote of stockholders, including with respect to the election of directors and other matters voted upon by stockholders, except as required by the Delaware General Corporation Law.
We feel we have adequate cybersecurity insurance coverage to mitigate the cost of any such cyberattack; however, a possible cyberattack could affect our operations and have a material adverse effect on our business and results of operations.
We feel we have adequate cybersecurity insurance coverage to mitigate the cost of any such cyberattack; however, a possible cyberattack could affect our operations and have a material adverse effect on our business and results of operations. We have implemented, and will continue to internally monitor and manage, business processes to support our cybersecurity program.
If a public service commission disapproves or is unable to timely approve our requests for rate increases or approves rate increases that are inadequate to cover our investments, deferred regulatory assets or increased costs, our profitability may suffer. We file rate increase requests, from time to time, to recover our investments in utility plant, deferred regulatory assets and expenses.
If a public service commission disapproves or is unable to timely approve our requests for rate increases or approves rate increases that are inadequate to cover our investments, deferred regulatory assets or increased costs, our profitability may suffer.
The results of any future litigation or settlement of such lawsuits and claims are inherently unpredictable, but such outcomes could also materially and adversely affect our business, financial position and results of operations. Risk Related to Cybersecurity and Technology We are dependent on the continuous and reliable operation of our information technology systems.
The results of any future litigation or settlement of such lawsuits and claims are inherently unpredictable, but such outcomes could also materially and adversely affect our business, financial position and results of operations.
Climate variability may cause weather volatility in the future and may impact water usage and related revenue, or may require additional expenditures to reduce risk associated with any increasing storm, flood, drought or other weather occurrences, all of which may not be fully recoverable in rates or otherwise.
Severe weather, climate variability patterns and natural or other events may cause weather volatility in the future and may impact water usage and related revenue, or may require additional expenditures, all of which may not be fully recoverable in rates or otherwise.
We can provide no assurances that we will receive all necessary permits to add systems or continue to operate facilities of our water or wastewater business. Our operating revenue is primarily from water sales. The rates that we charge our customers are subject to the regulations of the public service commissions in the states in which we operate.
We can provide no assurances that we will receive all necessary permits to add systems or continue to operate facilities of our water or wastewater business. 12 Table of Contents Our operating revenue is primarily from water sales.
Our computer and communications systems and operations could be damaged or interrupted by natural disasters, telecommunications failures or acts of war or terrorism, sabotage, theft or similar events or disruptions. A loss of these systems or major problems with the operation of these systems could affect our operations and have a material adverse effect on our results of operations.
Our computer and communications systems and operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures or acts of war or terrorism, sabotage, theft or similar events or disruptions.
In the event we are unable to obtain sufficient capital, our expansion efforts could be curtailed, which may affect our growth and may affect our future results of operations.
In the event we are unable to obtain sufficient capital, our expansion efforts could be curtailed, which may affect our growth and may affect our future results of operations. 11 Table of Contents We may be adversely affected by global climate change or by regulatory, legal or market responses to such change.
We are subject to, and could be further subject to, governmental investigations or actions by other third parties. We are subject to various federal and state laws, including environmental laws, violations of which can involve civil or criminal sanctions.
Any such occurrence could adversely affect our business, results of operations and financial condition. We are subject to various laws and regulations that could expose us to governmental investigations or actions by other third parties. We are subject to various federal and state laws and regulations, including environmental laws and regulations, violations of which can involve civil or criminal sanctions.
This may adversely affect our revenues and earnings. Moreover, governmental restrictions on water usage during drought conditions may result in a decreased demand for water, which may adversely affect our revenue and earnings. 13 Table of Contents We could be adversely impacted by inflation.
This may adversely affect our revenues and earnings. Moreover, governmental restrictions on water usage during drought conditions may result in a decreased demand for water, which may adversely affect our revenue and earnings. General economic conditions may materially and adversely affect our financial condition and results of operations.
In addition, the SEC has proposed extensive climate-related disclosure rules, which, if adopted, would likely result in increased compliance costs and capital expenditures. 12 Table of Contents Risks Related to Governmental Laws and Regulations We rely on governmental approvals in the States of Delaware and Maryland and the Commonwealth of Pennsylvania, as well as approvals from the Delaware River Basin Commission and Susquehanna River Basin Commission for applicable water allocation, water appropriation and water capacity permits.
Risks Related to Governmental Laws and Regulations We rely on governmental approvals in the States of Delaware and Maryland and the Commonwealth of Pennsylvania, as well as approvals from the Delaware River Basin Commission and Susquehanna River Basin Commission for applicable water allocation, water appropriation and water capacity permits.
Risk Related to Pandemics Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies, such as the outbreak of the coronavirus and its variants, or COVID-19.
Additionally, if interest rates rise above the dividend yield offered by our common stock, demand for our stock and its trading price may also decrease. Risk Related to Pandemics Our business, results of operations, financial condition, cash flows and stock price may be adversely affected by pandemics, epidemics or other public health emergencies.
Failure to complete a pending transaction would prevent us from realizing the anticipated benefits.
The timeliness and outcome of those state public utilities commissions could hinder future acquisitions and any failure to complete a pending transaction would prevent us from realizing the anticipated benefits.
Once a rate increase petition is filed with a public service commission, the ensuing administrative and hearing process may be lengthy and costly.
We file rate increase requests, from time to time, to recover our investments in utility plant, deferred regulatory assets and expenses, see Notes to Consolidated Financial Statements - Note 13 – Regulatory Proceedings . Once a rate increase petition is filed with a public service commission, the ensuing administrative and hearing process may be lengthy and costly.
We have two classes of common stock, Class A Non-Voting Common Stock and Class B Common Stock.
We have two classes of common stock, Class A Non-Voting Common Stock and Class B Common Stock. Under our Restated Certificate of Incorporation, the right to vote for the election of directors and other stockholder matters is exercised exclusively by the holders of Class B Common Stock.
Removed
While the costs of increases in security, including capital expenditures, may be significant, we expect these costs to continue to be recoverable in water and wastewater rates.
Added
In addition, the SEC has proposed extensive climate-related disclosure rules, which, if adopted, would likely result in increased compliance costs and capital expenditures.
Removed
Severe weather, climate variability patterns and natural or other events, such as increased precipitation and flooding, increased frequency and severity of storms and other weather events, may cause decreases in water supply, changes in water usage patterns, potential degradation of water quality, disruptions in water or wastewater services to our customers, and increases in expenditures to repair any damage.
Added
The rates that we charge our customers are subject to the regulations of the public service commissions in the states in which we operate.
Removed
We may be adversely affected by global climate change or by regulatory, legal or market responses to such change. The issue of climate variability is receiving increasing attention nationally and worldwide.
Added
If wastewater collection or treatment systems fail, overflow, or do not operate properly, untreated wastewater or other contaminants could spill onto nearby properties or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages for which we could be held liable.
Removed
Artesian Water provided notice to the DEPSC of its intent to file a request in the second quarter of 2023 to implement new rates to support Artesian Water’s ongoing capital improvement program and to cover increased costs of operations.
Added
Risk Related to Cybersecurity and Technology We are dependent on the continuous and reliable operation of our information technology systems that require, potentially costly, maintenance and could become subject to cyberattacks disrupting our operations. We rely on our information technology systems to manage operation of our business.
Removed
There have been an increasing number of cyberattacks on companies around the world, which have caused operational failures or compromised sensitive corporate or customer data. These attacks have occurred over the internet, through malware, viruses or attachments to e-mails, or through persons inside the organization or with access to systems inside the organization.
Added
A loss of these systems or major problems with the operation of these systems could affect our operations and have a material adverse effect on our business and results of operations. To date, there have been no risks identified from cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the company.
Removed
We have implemented security measures and will continue to devote resources to address any security vulnerabilities in an effort to prevent cyberattacks.
Added
Possible impacts associated with a cyberattack could also include remediation costs related to lost, stolen, or compromised data, repairs to information technology and data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulations, including standards for water and wastewater utility providers, and litigation.
Removed
We utilize third parties to provide and maintain many of our information technology, or IT, resources, including disaster recovery and business continuity services intended to safeguard access to and use of our IT resources during a general or local network outage, under agreements with evolving security and service level standards.
Removed
Our senior IT executives also periodically update the audit and disclosure committees and our board of directors on our cybersecurity practices and risks, most recently in November 2022.
Removed
A reporting process has been established, and periodically tested and refined with the assistance of outside experts, to escalate notice within our organization and coordinate and deploy our response to IT security events. Depending on the severity of an event, our incident reporting process includes informing, as early as practicable, our senior corporate management.
Removed
Additionally, if interest rates rise above the dividend yield offered by our common stock, demand for our stock and its trading price may also decrease.
Removed
Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets, which may adversely impact our stock price. 16 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeUtility plant comprises : In thousands Estimated Useful Life (In Years) December 31, 2022 Utility plant at original cost Utility plant in service-Water Intangible plant --- $ 140 Source of supply plant 45-85 25,223 Pumping and water treatment plant 8-62 116,915 Transmission and distribution plant Mains 81 338,368 Services 39 56,396 Storage tanks 76 34,567 Meters 26 29,720 Hydrants 60 17,751 General plant 5-31 65,632 Utility plant in service-Wastewater Intangible plant --- 117 Treatment and disposal plant 21-81 66,420 Collection mains and lift stations 81 49,189 General plant 5-31 1,845 Property held for future use --- 4,489 Construction work in progress --- 34,213 840,985 Less – accumulated depreciation 172,954 $ 668,031 Substantially all of Artesian Water's utility plant, except the utility plant in the town of Townsend, Delaware, is pledged as security for our First Mortgage Bonds.
Biggest changeUtility plant comprises : In thousands Estimated Useful Life (In Years) December 31, 2023 Utility plant at original cost Utility plant in service-Water Intangible plant --- $ 140 Source of supply plant 45-85 29,960 Pumping and water treatment plant 8-62 130,337 Transmission and distribution plant Mains 81 370,977 Services 39 60,818 Storage tanks 76 40,933 Meters 26 30,318 Hydrants 60 18,980 General plant 5-31 67,317 Utility plant in service-Wastewater Intangible plant --- 116 Treatment and disposal plant 21-81 67,789 Collection mains and lift stations 81 51,539 General plant 5-31 2,478 Property held for future use --- 4,028 Construction work in progress --- 23,724 899,454 Less – accumulated depreciation 185,170 $ 714,284 Substantially all of Artesian Water's utility plant, except the utility plant in the town of Townsend, Delaware, is pledged as security for our First Mortgage Bonds.
ITEM 2. PROPERTIES Our corporate headquarters are located at 664 Churchmans Road, Newark, Delaware and are owned by Artesian Water. The Company owns approximately six acres of land in New Castle County, Delaware zoned for office development and two nine-acre parcels of land in Sussex County, Delaware for water and wastewater treatment facilities and elevated water storage.
ITEM 2. PROPERTIES Our corporate headquarters are located at 664 Churchmans Road, Newark, Delaware and are owned by Artesian Water. The Company owns approximately six acres of land in New Castle County, Delaware zoned for office development and two nine-acre parcels of land in Sussex County, Delaware for water and wastewater treatment facilities and an elevated water storage.
As of December 31, 2022, no other water utility plant has been pledged as security for loans. Two parcels of land in Artesian Wastewater are pledged as security for a loan. We believe that our properties are generally maintained in good condition and in accordance with current standards of good water and wastewater works industry practice.
As of December 31, 2023, no other water utility plant has been pledged as security for loans. Two parcels of land in Artesian Wastewater are pledged as security for a loan. We believe that our properties are generally maintained in good condition and in accordance with current standards of good water and wastewater works industry practice.
The Company owns land, rights-of-way, easements, transmission and distribution mains, collection mains, pump facilities, treatment plants, lift stations, treatment/disposal facilities, storage tanks, meters, vehicles and related equipment and facilities. The following table indicates our utility plant as of December 31, 2022.
The Company owns land, rights-of-way, easements, transmission and distribution mains, collection mains, pump facilities, treatment plants, lift stations, treatment/disposal facilities, storage tanks, meters, vehicles and related equipment and facilities. The following table indicates our utility plant as of December 31, 2023.
We believe that all of our existing facilities adequately meet current necessary production capacities and current levels of utilization. 17 Table of Contents
We believe that all of our existing facilities adequately meet current necessary production capacities and current levels of utilization. 18 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of March 7, 2023 there were 528 holders of record of the Class A Stock. The stockholders of Class A shares are entitled to receive dividends when they are declared by the Board of Directors. The Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.
Biggest changeAs of March 12, 2024 there were 506 holders of record of the Class A Non-Voting Stock. The stockholders of Class A Stock are entitled to receive dividends when they are declared by the Board of Directors.
(included through October 9, 2019 when it was acquired by SJW Group), Middlesex Water Company, SJW Group and York Water Company. 19 Table of Contents
(included through October 9, 2019 when it was acquired by SJW Group), Middlesex Water Company, SJW Group and York Water Company. 20 Table of Contents
Recent Sales of Unregistered Securities During the year ended December 31, 2022, we did not issue any unregistered shares of our Class A or Class B Stock. 18 Table of Contents The following graph compares the percentage change in cumulative shareholder return on the Company’s Class A Stock with the Standard & Poor’s 500 Stock Index and a Peer Group of water utility companies.
Recent Sales of Unregistered Securities During the year ended December 31, 2023, we did not issue any unregistered shares of our Class A Non-Voting Stock or Class B Stock. 19 Table of Contents The following graph compares the percentage change in cumulative shareholder return on the Company’s Class A Non-Voting Stock with the Standard & Poor’s 500 Stock Index and a Peer Group of water utility companies.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for the Company’s Common Equity Artesian Resources' Class A Non-Voting Common Stock, or Class A Stock, is listed on the Nasdaq Global Select Market and trades under the symbol "ARTNA." On March 7, 2023, the last closing sale price as reported by the Nasdaq Global Select Market was $55.13 per share.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for the Company’s Common Equity Artesian Resources' Class A Non-Voting Common Stock, or Class A Non-Voting Stock, is listed on the Nasdaq Global Select Market and trades under the symbol "ARTNA." On March 12, 2024, the last closing sale price as reported by the Nasdaq Global Select Market was $36.25 per share.
The Class B shares are paid the same dividend as the Class A shares.
Shares of Class B Stock are paid the same dividend as the shares of the Class A Stock.
The intraday high and low Nasdaq Global Select Market prices on the Class A Stock for each quarter during the past two years were: Stock Price High Low 2022 First Quarter $ 50.88 $ 43.02 Second Quarter $ 50.00 $ 44.08 Third Quarter $ 60.36 $ 47.96 Fourth Quarter $ 59.98 $ 45.44 2021 First Quarter $ 42.70 $ 36.68 Second Quarter $ 42.10 $ 35.90 Third Quarter $ 40.44 $ 36.55 Fourth Quarter $ 47.99 $ 37.60 Our Class B Common Stock, or Class B Stock, is quoted on the OTC Bulletin Board under the symbol "ARTNB." There has been a limited and sporadic public trading market for the Class B Stock.
The intraday high and low Nasdaq Global Select Market prices on the Class A Non-Voting Stock for each quarter during the past two years were: Stock Price High Low 2023 First Quarter $ 63.00 $ 51.30 Second Quarter $ 58.41 $ 46.37 Third Quarter $ 49.73 $ 41.26 Fourth Quarter $ 44.78 $ 38.76 2022 First Quarter $ 50.88 $ 43.02 Second Quarter $ 50.00 $ 44.08 Third Quarter $ 60.36 $ 47.96 Fourth Quarter $ 59.98 $ 45.44 Our Class B Common Stock, or Class B Stock, is quoted on the OTC Bulletin Board under the symbol "ARTNB." There has been a limited and sporadic public trading market for the Class B Stock.
As of March 1, 2023, the last reported trade of the Class B Stock on the OTC Bulletin Board was at a price of $53.00 per share on February 9, 2023. As of March 7, 2023, there were 137 holders of record of the Class B Stock.
As of March 4, 2024, the last reported trade of the Class B Stock on the OTC Bulletin Board was at a price of $36.00 per share on March 4, 2024. As of March 12, 2024, there were 136 holders of record of the Class B Stock.
The graph covers the period from December 2017 (assuming a $100 investment on December 31, 2017, and the reinvestment of any dividends) through December 2022: INDEXED RETURNS Base Period Years Ending December 31 Company Name / Index 2017 2018 2019 2020 2021 2022 Artesian Resources Corporation 100 92.81 101.77 104.28 133.71 172.88 S&P 500 Index 100 95.62 125.72 148.85 191.58 156.88 Peer Group 100 100.28 135.27 156.00 193.40 165.56 The Peer Group includes American States Water Company, American Water Works Company, Inc., Essential Utilities, Inc., California Water Service Group, Connecticut Water Service, Inc.
The graph covers the period from December 2018 (assuming a $100 investment on December 31, 2018, and the reinvestment of any dividends) through December 2023: INDEXED RETURNS Base Period Years Ending December 31 Company Name / Index 2018 2019 2020 2021 2022 2023 Artesian Resources Corporation 100 109.66 112.37 144.07 186.27 134.81 S&P 500 Index 100 131.49 155.68 200.37 164.08 207.21 Peer Group 100 134.89 155.56 192.86 165.11 141.97 The Peer Group includes American States Water Company, American Water Works Company, Inc., Essential Utilities, Inc., California Water Service Group, Connecticut Water Service, Inc.
See the Consolidated Financial Statements for additional information regarding the Company’s dividend history.
The Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities. See the Consolidated Financial Statements for additional information regarding the Company’s dividend history.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+21 added−41 removed39 unchanged
Biggest changeThis increase in repair and maintenance costs is partially offset by reimbursements from the Delaware Sand and Gravel Remedial Trust for Artesian Water’s operating costs related to certain treatment costs pursuant to a settlement agreement.
Biggest changeThe net increase is primarily related to the following. — Payroll and employee benefit costs increased $1.0 million, primarily related to an increase in medical premium costs, employee merit increases, and a decrease in capitalized payroll related to a 2022 software upgrade, partially offset by a decrease in bonuses compared to 2022. — Administrative costs increased $0.7 million, primarily due to increases in computer system maintenance costs, and customer billing costs. — Supply and treatment costs increased $0.7 million , primarily due to an increase in the cost and volume of chemicals used, an increase in wastewater treatment costs, a one-time acquisition adjustment related to TESI in 2022 and a reimbursement from the Delaware Sand and Gravel Remedial Trust, or DS&G Trust, in 2022 for Artesian Water’s operating costs related to certain 2021 treatment costs pursuant to a settlement agreement.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS See Note 19 to our Consolidated Financial Statements for a full description of the impact of recent accounting pronouncements.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS See Note 19 (Impact of Recent Accounting Pronouncements) to our Consolidated Financial Statements for a full description of the impact of recent accounting pronouncements.
The other agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step down schedule through July 5, 2022, and now requires us to purchase a minimum of 0.5 million gallons per day.
The agreement is effective from January 1, 2022 through December 31, 2026, includes automatic five-year renewal terms, unless terminated by either party, and has a “take or pay” clause which required us to purchase water on a step-down schedule through July 5, 2022 and now requires us to purchase a minimum of 0.5 million gallons per day.
As of December 31, 2022, we were in compliance with these covenants. Long-term debt obligations reflect the maturities of certain series of our first mortgage bonds, which we intend to refinance when due if not refinanced earlier. One first mortgage bond is subject to redemption in a principal amount equal to $150,000 plus interest per calendar quarter.
As of December 31, 2023, we were in compliance with these covenants. Long-term debt obligations reflect the maturities of certain series of our first mortgage bonds, which we intend to refinance when due if not refinanced earlier. One first mortgage bond is subject to redemption in a principal amount equal to $150,000 plus interest per calendar quarter.
Adjustments to the carrying value of these assets would be made in instances where changes in circumstances or events indicate the carrying value of the asset may not be recoverabl e in rates charged to customers. The Company believes there are no impairments in the carrying amounts of its long-lived assets or regulatory assets at December 31, 2022.
Adjustments to the carrying value of these assets would be made in instances where changes in circumstances or events indicate the carrying value of the asset may not be recoverabl e in rates charged to customers. The Company believes there are no impairments in the carrying amounts of its long-lived assets or regulatory assets at December 31, 2023.
In the last four years, we completed seven acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.
In the last four years, we completed four acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.
Pursuant to the agreement, the total expenditure for the three years was $1.2 million. In September 2022, this agreement was amended to paint an additional elevated water storage tank and to extend the term of the agreement for an additional year. Pursuant to the amended agreement, the total expenditure for the four years is $2.2 million.
In September 2022, this agreement was amended to paint an additional elevated water storage tank and to extend the term of the agreement for an additional year. Pursuant to the amended agreement, the total expenditure for the four years is $2.2 million.
If the carrying value of the reporting unit exceeds its implied fair value, the Company will recognize an impairment charge for the difference up to the carrying value of the allocated goodwill. There was no impairment of goodwill as of December 31, 2022.
If the carrying value of the reporting unit exceeds its implied fair value, the Company will recognize an impairment charge for the difference up to the carrying value of the allocated goodwill. There was no impairment of goodwill as of December 31, 2023.
At December 31, 2022, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland.
At December 31, 2023, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business. Our regulated utility segment comprised 90.7% o f total operating revenues for the year ended December 31, 2022 and 93.4% for the year ended December 31, 2021.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Our profitability is primarily attributable to the sale of water and wastewater services in our regulated utility business. Our regulated utility segment comprised 93.1% o f total operating revenues for the year ended December 31, 2023 and 90.7% for the year ended December 31, 2022.
While actual usage for individual customers may differ materially from the estimate, we believe the overall total estimate of consumption and revenue for the fiscal period will not differ materially from actual billed consumption. 22 Table of Contents We record accounts receivable at the invoiced amounts.
While actual usage for individual customers may differ materially from the estimate, we believe the overall total estimate of consumption and revenue for the fiscal period will not differ materially from actual billed consumption. We record accounts receivable at the invoiced amounts.
The fixed rate was lowered 5.6% starting in May 2021. In August 2018, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2019 through May 2022. In February 2022, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2022 through November 2025.
The fixed rate was lowered 5.6% starting in May 2021. In February 2022, Artesian Water Maryland entered into an electric supply agreement with Constellation NewEnergy, Inc., effective from May 2022 through November 2025.
Depreciation and amortization expense increased $0.7 million, or 6.2%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
Depreciation and amortization expense increased $0.7 million, or 5.7%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
Inflation We are affected by inflation, most notably by the continually increasing costs required to maintain, improve and expand our service capability. The cumulative effect of inflation results in significantly higher facility replacement costs which must be recovered from future cash flows.
Inflation We are affected by inflation, most notably by the continually increasing costs required to maintain, improve and expand our service capability. The cumulative effect of inflation results in significantly higher facility replacement costs as well as increased operating costs, which must be recovered from future cash flows.
Cost includes direct labor, materials, AFUDC (see description in Note 1-Utility Plant) and indirect charges for items such as transportation, supervision, pension, medical, and other fringe benefits related to employees engaged in construction activities. When depreciable units of utility plant are retired, the historical costs of plant retired is charged to accumulated depreciation.
Cost includes direct labor, materials, Allowance for Funds Used during Construction, or AFUDC, (see description in Note 1-Utility Plant) and indirect charges for items such as transportation, supervision, pension, medical, and other fringe benefits related to employees engaged in construction activities. When depreciable units of utility plant are retired, the historical costs of plant retired is charged to accumulated depreciation.
In October 2022, this line of credit was amended to replace the previous interest rate options with a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option that is locked in for either one or three months. The term of this line of credit expires on October 29, 2023.
In October 2022, this line of credit was amended to replace the previous interest rate options with a daily SOFR rate plus 1.45% option or a term SOFR rate plus 1.45% option that is locked in for either one or three months. The term of this line of credit expires on October 31, 2024.
Our ability to recover increases in investments in facilities is dependent upon future rate increases, which are subject to approval by the applicable regulatory authority.
Our ability to recover increases in investments in facilities and operating costs is dependent upon future rate increases, which are subject to approval by the applicable regulatory authority.
As of December 31, 2022, the number of metered water customers in Delaware increased approximately 3.2% compared to December 31, 2021. The number of metered water customers in Maryland increased approximately 1.2% compared to December 31, 2021. The number of metered water customers in Pennsylvania remained consistent compared to December 31, 2021.
As of December 31, 2023, the number of metered water customers in Delaware increased approximately 1.3% compared to December 31, 2022. The number of metered water customers in Maryland increased approximately 1.3% compared to December 31, 2022. The number of metered water customers in Pennsylvania remained consistent compared to December 31, 2022.
Material Cash Requirements Lines of Credit and Long Term Debt At December 31, 2022, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2022, there was $26.9 million of available funds under this line of credit.
Material Cash Requirements Lines of Credit and Long-Term Debt At December 31, 2023, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2023, there was $40.0 million of available funds under this line of credit.
Additionally, we will refund $0.8 million to customers, real estate developers and builders related to previous advances for construction they provided to Artesian for distribution facilities on their properties. Our projected capital expenditures and other investments are subject to periodic review, and revision to reflect changes in economic conditions and other factors.
Additionally, we will refund $0.6 million to customers, real estate developers and builders related to previous advances for construction they provided to Artesian for distribution facilities on their properties. 27 Table of Contents Our projected capital expenditures and other investments are subject to periodic review, and revision to reflect changes in economic conditions and other factors.
As of December 31, 2022, there was $12.9 million of available funds under this line of credit. The previous interest rate for borrowings under this line allowed the Company to select either LIBOR plus 1.50% or a weekly variable rate established by CoBank; the Company historically used the weekly variable interest rate.
As of December 31, 2023, there was $20.0 million of available funds under this line of credit. The previous interest rate for borrowings under this line allowed the Company to select either LIBOR plus 1.50% or a weekly variable rate established by CoBank; the Company historically used the weekly variable interest rate.
An allowance for doubtful accounts is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current conditions. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related allowance for doubtful accounts and associated bad debt expense has not been significant.
A provision for expected credit loss is calculated as a percentage of total associated revenues based upon historical trends and adjusted for current conditions. We mitigate our exposure to credit losses by discontinuing services in the event of non-payment; accordingly, the related provision for expected credit loss and associated bad debt expense has not been significant.
Operating Activities One of our primary sources of liquidity for the year ended December 31, 2022 was $24.3 million provided by cash flow from operating activities.
Operating Activities One of our primary sources of liquidity for the year ended December 31, 2023 was $31.9 million provided by cash flow from operating activities, compared to $24.3 million for the year ended December 31, 2022.
The components of the change in operating expenses primarily include an increase in non-utility operating expenses of $2.9 million, an increase in utility operating expenses of $2.4 million and an increase in property and other taxes of $0.3 million.
The components of the change in operating expenses primarily include an increase in utility operating expenses of $2.4 million, a decrease in non-utility operating expenses of $2.4 million and an increase in property and other taxes of $0.2 million.
Our strategy includes focused efforts to expand through strategic acquisitions and in new regions added to our Delaware service territory over the last 10 years. We plan to expand our regulated water service area in the Cecil County designated growth corridor and to expand our business through the design, construction, operation, management and acquisition of additional water systems.
Our strategy includes focused efforts to expand in new regions surrounding our service territory through strategic acquisitions. We plan to expand our regulated water service area in the Cecil County designated growth corridor and to expand our business through the design, construction, operation, management and acquisition of additional water systems.
Investment Activities The primary focus of our investment in 2022 was to continue to provide high quality, reliable service to our growing service territory. Capital expenditures during 2022 were $48.5 million compared to $40.8 million invested during the same period in 2021.
Investment Activities The primary focus of our investment in 2023 was to continue to provide high quality, reliable service to our growing service territory. Capital expenditures during 2023 were $62.2 million compared to $48.5 million invested during the same period in 2022.
We expect that our net investments in utility plant in 2023 will be approximately $57.0 million. Our total obligations related to interest and principal payments on indebtedness, rental payments, elevated storage tank agreements and water service interconnection agreements for 2023 are anticipated to be approximately $31.8 million.
We expect that our net investments in utility plant in 2024 will be approximately $51.6 million. Our total obligations related to interest and principal payments on indebtedness, rental payments, elevated storage tank agreements and water service interconnection agreements for 2024 are anticipated to be approximately $12.0 million.
We will continue to borrow on available lines of credit in order to satisfy current liquidity needs. In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.
See our Notes to Consolidated Financial Statements - Note 13 – Regulatory Proceedings. We will continue to borrow on available lines of credit in order to satisfy current liquidity needs. In addition, the Company has a long history of paying regular quarterly dividends as approved by our Board of Directors using net cash from operating activities.
As of December 31, 2022, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 2.4%, 0.9% and 6.4%, respectively, compared to December 31, 2021. The non-utility customers enrolled in one of our three protections plans increased 2.5%.
As of December 31, 2023, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 2.3%, 3.5% and 12.4%, respectively, compared to December 31, 2022. The non-utility customers enrolled in one of our three protections plans decreased 3.0%.
Other Utility Operating Revenue Other utility operating revenue, derived from regulated wastewater services, contract operations, antenna leases on water tanks, finance/service charges, wastewater customer service revenues and industrial wastewater service revenues , increased 59.9%, to $11.5 million in 2022 from $7.2 million in 2021.
Other Utility Operating Revenue Other utility operating revenue, derived from regulated wastewater services, contract operations, antenna leases on water tanks, finance/service charges, wastewater customer service revenues and industrial wastewater service revenues , increased 6.0%, to $12.2 million in 2023 from $11.5 million in 2022.
These funds were used to invest $48.5 million in capital expenditures and $6.3 million in acquisitions and to pay dividends of approximately $10.3 million. We depend on the availability of capital for expansion, construction and maintenance. We rely on our sources of liquidity for investments in our utility plant and to meet our various payment obligations.
Funds from these liquidity sources were used to invest $62.2 million in capital expenditures and to pay dividends of approximately $11.2 million. We depend on the availability of capital for expansion, construction and maintenance. We rely on our sources of liquidity for investments in our utility plant and to meet our various payment obligations.
During 2022, we continue to focus our investment through our rehabilitation program for transmission and distribution facilities by replacing aging or deteriorating mains, installation of new mains, enhancing or improving existing treatment facilities, construction of new water storage tanks, and replacing aging wells and pumping equipment to better serve our customers.
During 2023, we invested in our rehabilitation program for transmission and distribution facilities by replacing aging or deteriorating mains, installation of new mains, enhancing or improving existing treatment facilities, construction of new water storage tanks, and replacing aging wells and pumping equipment to better serve our customers. We also continue to invest in wastewater treatment and distribution facilities.
Percentage of Operating and Maintenance Expenses 2022 2021 2020 Payroll and Associated Expenses 48.1 % 49.9 % 51.0 % Administrative 13.2 12.3 14.1 Purchased Water 3.6 9.5 9.9 Repair and Maintenance 11.1 10.2 8.3 Purchased Power 5.7 5.4 5.5 Water Treatment 4.8 4.0 3.7 Non-utility Operating 13.5 8.7 7.5 Total 100.0 % 100.0 % 100.0 % The ratio of operating expense, excluding depreciation and income taxes, to total revenue was 57.1% for the year ended December 31, 2022, compared to 56.1% for the year ended December 31, 2021.
Percentage of Operating and Maintenance Expenses 2023 2022 2021 Payroll and Associated Expenses 49.5 % 47.5 % 49.2 % Administrative 16.9 15.3 15.7 Supply and Treatment 11.9 10.8 9.4 Purchased Power 5.7 5.2 4.8 Transmission, Distribution and Collection 4.6 4.1 2.7 Purchased Water 2.7 3.6 9.5 Non-utility Operating 8.7 13.5 8.7 Total 100.0 % 100.0 % 100.0 % The ratio of operating expense, excluding depreciation and income taxes, to total revenue was 57.4% for the year ended December 31, 2023, compared to 57.1% for the year ended December 31, 2022.
Regulated Water Subsidiaries Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide water service to residential, commercial, industrial, governmental, municipal and utility customers. Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue.
The impact of inflation could adversely affect our results of operations, financial position or cash flows. Regulated Water Subsidiaries Artesian Water, Artesian Water Maryland and Artesian Water Pennsylvania provide water service to residential, commercial, industrial, governmental, municipal and utility customers. Increases in the number of customers contribute to increases, or help to offset any intermittent decreases, in our operating revenue.
The increase is primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue.
This decrease is primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure now nearing completion, partially offset by an increase in Service Line Protection Plan revenue.
Artesian Utility also offers three protection plans to customers, the WSLP Plan, the SSLP Plan, and the ISLP Plan. SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather. There has been consistent customer growth over the years.
SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather. There has been consistent customer growth over the years.
Deferred income taxes are provided in accordance with FASB ASC Topic 740 on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse.
Adjustments to reflect changes in recoverability of certain deferred regulatory assets or certain deferred regulatory liabilities may have a significant effect on our financial results. 23 Table of Contents Deferred income taxes are provided in accordance with FASB ASC Topic 740 on all differences between the tax basis of assets and liabilities and the amounts at which they are carried in the consolidated financial statements based on the enacted tax rates expected to be in effect when such temporary differences are expected to reverse.
Percentage of Operating Revenues 2022 2021 2020 Water Sales Residential 48.7 % 53.0 % 53.8 % Commercial 17.6 19.4 19.5 Industrial 0.1 0.1 0.1 Government and Other 12.8 13.2 13.4 Other utility operating revenues 11.6 7.9 7.4 Non-utility operating revenues 9.2 6.4 5.8 Total 100.0 % 100.0 % 100.0 % Residential Residential water service revenues in 2022 amounted to $48.1 million, a decrease of $0.1 million, or 0.2%, below the $48.2 million recorded in 2021, primarily due to a decrease in overall water consumption.
Percentage of Operating Revenues 2023 2022 2021 Water Sales Residential 50.1 % 48.7 % 53.0 % Commercial 17.9 17.6 19.4 Industrial 0.1 0.1 0.1 Government and Other 12.9 12.8 13.2 Other utility operating revenues 12.3 11.6 7.9 Non-utility operating revenues 6.7 9.2 6.4 Total 100.0 % 100.0 % 100.0 % 24 Table of Contents Residential Residential water service revenues in 2023 amounted to $49.6 million, an increase of $1.5 million, or 3.0%, above the $48.1 million recorded in 2022, primarily due to an increase in overall water consumption and a temporary rate increase placed into effect on November 28, 2023.
We believe that Delaware's generally lower cost of living in the region, availability of development sites in relatively close proximity to the Atlantic Ocean in Sussex County, and attainable financing rates for construction and mortgages have resulted, and will continue to result, in increases to our customer base.
We believe that Delaware's generally lower cost of living in the region and availability of development sites in relatively close proximity to the Atlantic Ocean in Sussex County have resulted, and will continue to result, in increases to our customer base. Delaware’s lower property and income tax rate make it an attractive region for new home development and retirement communities.
The volume of water sold to residential customers decreased to 4,209 million gallons in 2022 compared to 4,230 million gallons in 2021, a 0.5% decrease. The number of residenti al customers served increased by approximately 2,900, or 3.3%, in 2022.
The volume of water sold to residential customers increased to 4,340 million gallons in 2023 compared to 4,209 million gallons in 2022, a 3.1% increase. The number of residenti al customers served increased by approximately 1,300, or 1.4%, in 2023.
In addition, since closing the transaction with TESI noted below, Artesian’s Delaware wastewater subsidiaries are the sole regional regulated wastewater utilities in Delaware, which we believe will enable us to increase efficiencies in the treatment and disposal of wastewater and provide additional opportunities to expand our wastewater operations.
In addition, since closing the transaction with TESI noted below, Artesian’s Delaware wastewater subsidiaries are the sole regional regulated wastewater utilities in Delaware, which we believe will enable us to increase efficiencies in the treatment and disposal of wastewater and provide additional opportunities to expand our wastewater operations. 22 Table of Contents On January 14, 2022, Artesian Wastewater acquired TESI, a wholly-owned subsidiary of Middlesex Water Company, or Middlesex, that provides regulated wastewater services in Delaware.
The Company’s investment for 2023 is expected to be offset by developer contributions of $7.1 million and grant funds from the State of Delaware of $3.2 million, for a net investment of $57.0 million in 2023. The Company believes the net investment in utility plant will continue to be recovered through rates charged to customers.
The Company's investment for 2024 is expected to be offset by developer contributions of $4.0 million for a net investment of $51.6 million in 2024. The Company believes the net investment in utility plant will continue to be recovered through rates charged to customers.
Artesian Wastewater Maryland was incorporated on June 3, 2008 and is able to provide regulated wastewater services to customers in Maryland. It is not currently providing these services in Maryland. Our residential and commercial wastewater customers are billed a flat monthly fee, which contributes to providing a revenue stream unaffected by weather.
It is not currently providing these services in Maryland. The majority of our residential and commercial wastewater customers are billed a flat monthly fee, and our large industrial wastewater customer is billed monthly based on wastewater flow, which contributes to providing a revenue stream unaffected by weather.
Substantial portions of Delaware currently are not served by a public water system, which could also assist in an increase to our customer base as systems are added. 21 Table of Contents On May 26, 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware, including Clayton’s exclusive franchise territory and the right to provide water service to Clayton’s existing customers, or the Clayton Water System.
On May 26, 2022, Artesian Water completed its purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, a Delaware municipality located in Kent County, Delaware, including Clayton’s exclusive franchise territory and the right to provide water service to Clayton’s existing customers, or the Clayton Water System.
We realized 79.2% and 85.7% of our total operating revenue for the years ended December 31, 2022 and December 31, 2021, respectively, from the sale of water.
We realized 81.0% and 79.2% of our total operating revenue for the years ended December 31, 2023 and December 31, 2022, respectively, from the sale of water. Other utility operating revenue increased approximately $0.7 million, or 6.0%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Approximately $9.8 million will be invested in the construction of force mains used for the transmission of wastewater to plants. Approximately $7.9 million will be invested into the ongoing construction of a regional wastewater treatment plant, along with improvements to existing wastewater treatment plants and wastewater pumping stations.
Approximately $8.8 million will be invested in the relocations of facilities as a result of government mandates. Approximately $7.2 million will be invested into the ongoing construction of a regional wastewater treatment plant along with improvements to existing wastewater treatment plants and wastewater pumping stations. Approximately $6.2 million will be invested in renewals associated with the rehabilitation of aging infrastructure.
This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time. The term of this line of credit expires on the earlier of May 21, 2023 or any date on which Citizens demands payment. The Company expects to renew this line of credit.
The term of this line of credit expires on the earlier of May 20, 2024 or any date on which Citizens demands payment. The Company expects to renew this line of credit.
Commercial Water service revenues from commercial customers in 2022 decreased by 0.6%, to $17.5 million in 2022 from $17.6 million in 2021, primarily due to a decrease in overall water consumption. The volume of water sold to commercial customers decreased to 2,232 million gallons in 2022 compared to 2,237 million gallons sold in 2021, a decrease of 0.2%.
The volume of water sold to commercial customers decreased to 2,231 million gallons in 2023 compared to 2,232 million gallons sold in 2022, a decrease of 0.1%. Industrial Water service revenues from industrial customers increased to $84,000 in 2023 from $79,000 in 2022.
Developers contributed $8.0 million of the total investment during the year ended 2022. 26 Table of Contents The following chart summarizes our investment in plant and systems over the past three fiscal years In thousands 2022 2021 2020 Source of supply, treatment and pumping $ 14,158 $ 9,681 $ 14,999 Transmission and distribution 17,712 20,951 15,993 General plant and equipment 3,856 1,739 3,089 Developer financed utility plant 8,038 6,866 4,132 Wastewater facilities 5,613 2,133 2,586 Allowance for Funds Used During Construction, AFUDC (894 ) (556 ) (781 ) Total $ 48,483 $ 40,814 $ 40,018 Of the $67.3 million gross investment expected in 2023, approximately $10.5 million will be for extending transmission and distribution facilities to address service needs in growth areas of our service territory.
The following chart summarizes our investment in plant and systems over the past three fiscal years In thousands 2023 2022 2021 Source of supply, treatment and pumping $ 20,327 $ 14,158 $ 9,681 Transmission and distribution 26,886 17,712 20,951 General plant 4,553 3,856 1,739 Developer financed utility plant 8,301 8,038 6,866 Wastewater facilities 3,353 5,613 2,133 Allowance for Funds Used During Construction, AFUDC, equity portion (1,243 ) (894 ) (556 ) Total $ 62,177 $ 48,483 $ 40,814 Of the $55.6 million gross investment expected in 2024, approximately $16.4 million will be invested in upgraded PFAS treatment equipment, the rehabilitation and upgrading of two elevated storage tanks, booster station improvements, and equipment and wells throughout Delaware, Maryland, and Pennsylvania to identify, develop, treat, and protect sources of water supply to assure uninterrupted service to our customers.
The volume of water sold to government and other customers increased to 1,337 million gallons in 2022 compared to 1,155 million gallons in 2021, an increase of 15.8%.
The volume of water sold to government and other customers decreased to 1,250 million gallons in 2023 compared to 1,337 million gallons in 2022, a decrease of 6.5%.
Net Income Our net income applicable to common stock increased $1.2 million, or 7.0%. Total operating revenues increased $8.0 million and AFUDC increased $0.5 million, partially offset by a $6.4 million increase in total operating expenses and $0.9 million increase in interest charges. Part I, Item 7.
Water sales and other operating revenue increased $2.4 million and other income increased $0.8 million, offset by a $2.4 million decrease in non-utility operating revenue, a $1.4 million increase in total operating expenses and $0.7 million increase in interest charges. Part I, Item 7.
Business combinations pursuant to ASC Topic 805 may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency.
Senior management has discussed the selection and development of our critical accounting estimates with the Audit Committee of the Board of Directors. All additions to utility plant are recorded at cost. Business combinations pursuant to ASC Topic 805 may result in a purchase price allocation and the acquired assets are required to be evaluated by the applicable regulatory agency.
The following provides an overview of the accounting policies that are particularly important to the results of operations and financial condition of the Company. Changes in the estimates, assumptions or other judgments included within these accounting policies could result in a significant change to the financial statements in any quarterly or annual period.
Changes in the estimates, assumptions or other judgments included within these accounting policies could result in a significant change to the financial statements in any quarterly or annual period. We consider the following policies to be the most critical in understanding the judgment that is involved in preparing our Consolidated Financial Statements.
In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a contract rate under our interconnection agreement with the Town of North East, which expires June 26, 2024. In April 2021, Artesian Water entered into a 3-year agreement with Worldwide Industries Corporation effective July 1, 2021 to paint elevated water storage tanks.
In addition, payments for unconditional purchase obligations reflect minimum water purchase obligations based on a contract rate under our interconnection agreement with the Town of North East, which expires June 26, 2024. The agreement includes two automatic five-year renewal terms, unless terminated by either party.
Artesian Water expects to renew this line of credit. 27 Table of Contents The Company’s material cash requirements include the following lines of credit commitments and contractual obligations: Material Cash Requirements Payments Due by Period In thousands Less than 1 Year 1-3 Years 4-5 Years After 5 Years Total First mortgage bonds (principal and interest) $ 7,924 $ 15,773 $ 15,659 $ 237,358 $ 276,714 State revolving fund loans (principal and interest) 937 1,699 1,463 6,364 10,463 Promissory note (principal and interest) 961 1,921 1,924 10,613 15,419 Asset purchase contractual obligation (principal and interest) 345 672 647 --- 1,664 Lines of credit 20,174 --- --- --- 20,174 Operating leases 25 51 52 1,406 1,534 Operating agreements 60 79 84 782 1,005 Unconditional purchase obligations 809 1,568 770 --- 3,147 Tank painting contractual obligation 626 939 --- --- 1,565 Total contractual cash obligations $ 31,861 $ 22,702 $ 20,599 $ 256,523 $ 331,685 Artesian’s long-term debt agreements and revolving lines of credit contain customary affirmative and negative covenants that are binding on us (which are in some cases subject to certain exceptions), including, but not limited to, restrictions on our ability to make certain loans and investments, guarantee certain obligations, enter into, or undertake, certain mergers, consolidations or acquisitions, transfer certain assets or change our business.
The Company’s material cash requirements include the following lines of credit commitments and contractual obligations: Material Cash Requirements Payments Due by Period In thousands Less than 1 Year 1-3 Years 4-5 Years After 5 Years Total First mortgage bonds (principal and interest) $ 7,902 $ 15,714 $ 40,610 $ 204,564 $ 268,790 State revolving fund loans (principal and interest) 979 2,147 2,068 10,287 15,481 Promissory note (principal and interest) 1,200 1,923 1,924 9,652 14,699 Asset purchase contractual obligation (principal and interest) 339 659 320 --- 1,318 Lines of credit --- --- --- --- --- Operating leases 35 70 64 1,429 1,598 Operating agreements 76 112 109 749 1,046 Unconditional purchase obligations 870 1,762 114 312 3,058 Tank painting contractual obligation 626 313 --- --- 939 Total contractual cash obligations $ 12,027 $ 22,700 $ 45,209 $ 226,993 $ 306,929 Artesian’s long-term debt agreements and revolving lines of credit contain customary affirmative and negative covenants that are binding on us (which are in some cases subject to certain exceptions), including, but not limited to, restrictions on our ability to make certain loans and investments, guarantee certain obligations, enter into, or undertake, certain mergers, consolidations or acquisitions, transfer certain assets or change our business.
Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.
Property and other taxes increased $0.2 million, or 3.9%, primarily due to an increase in utility plant subject to taxation and an increase in payroll taxes, related to increased payroll related expenses. Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.
Federal and state income tax expense increased $0.1 million, or 2.5%, primarily due to higher pre-tax income in 2022 compared to 2021, partially offset by a decrease related to stock options exercised.
Federal and state income tax expense increased $0.5 million, or 8.2%, primarily due to the recognition of additional valuation allowances on deferred tax assets related to state net operating losses and stock options exercised in the year of 2022, with no similar activity in 2023, partially offset by lower pre-tax income in 2023 compared to 2022.
As a result, effective May 20, 2022, this line of credit agreement was amended to replace LIBOR with the Daily Secured Overnight Financing Rate, or SOFR. The interest rate is a one-month SOFR plus 10 basis points, or Term SOFR, plus an applicable margin of 0.85%. Term SOFR cannot be less than 0.00%.
The interest rate is a one-month SOFR plus 10 basis points, or Term SOFR, plus an applicable margin of 0.85%, which was increased to 1.10% effective August 3, 2023. Term SOFR cannot be less than 0.00%. This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time.
Other Income, Net Other income, net increased $0.5 million, primarily due to a $0.5 million increase in AFUDC, as a result of higher long-term construction activity subject to AFUDC for the year ended December 31, 2022 compared to the same period in 2021. 25 Table of Contents Interest Charges Long-term debt interest increased $0.9 million, primarily related to an increase in long-term debt interest associated with the Series W First Mortgage Bond issued on April 29, 2022 .
Other Income Other income increased $0.8 million, primarily due to a $0.7 million increase in AFUDC, as a result of higher long-term construction activity subject to AFUDC for the year ended December 31, 2023 compared to the same period in 2022. Miscellaneous income increased $0.1 million related to an increase in the annual patronage refund from CoBank, ACB.
At closing, Artesian Water paid approximately $3.4 million of the total purchase price. The remaining $1.6 million is payable in five equal annual installments on the anniversary date of the closing date. Each annual installment is payable with interest at an annual rate of 2.0%.
The remaining $1.6 million is payable in equal annual installments on the anniversary date of the closing date. Each annual installment is payable with interest at an annual rate of 2.0%. In order to control purchased power cost, in February 2021, Artesian Water entered into an electric supply contract with MidAmerican that is effective from May 2021 to May 2025.
In January 2022, following the acquisition of Tidewater Environmental Services, Inc., TESI dba Artesian Wastewater assumed an electricity supply contract with WGL Energy that is effective through December 2024. Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under two interconnection agreements with the Chester Water Authority.
In January 2022, following the acquisition of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI, assumed an electricity supply contract with WGL Energy that is effective through December 2024. These fixed rate electric supply contracts are for normal purchases and are not derivative instruments.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical accounting policies and estimates are those we believe are most important to portraying the financial condition and results of operations and also require significant estimates, assumptions or other judgments by management. Note 1 to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.
Note 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. The following provides an overview of the accounting policies that are particularly important to the results of operations and financial condition of the Company.
The previous interest rate for borrowings under this line was the London Interbank Offered Rate, or LIBOR, plus 1.00%. It is expected that the LIBOR rate for USD currency will be discontinued after June 30, 2023.
The previous interest rate for borrowings under this line was the London Interbank Offered Rate, or LIBOR, plus 1.00%. The LIBOR rate for USD currency was discontinued as of June 30, 2023. As a result, effective May 20, 2022, this line of credit agreement was amended to replace LIBOR with the Daily Secured Overnight Financing Rate, or SOFR.
This increase is primarily due to an increase in wastewater revenue associated with residential customer growth resulting from the acquisition of TESI in January 2022, industrial wastewater services that started in June 2021, as well as organic residential customer growth. 23 Table of Contents Non-utility operating revenue increased approximately $3.2 million, or 55.3%, for the year ended December 31, 2022 compared to the same period in 2021.
This increase is primarily due to an increase in wastewater revenue associated with customer growth and an increase in fee revenue related to inspections and service and finance charges. Non-utility operating revenue decreased approximately $2.4 million, or 26.9%, for the year ended December 31, 2023 compared to the same period in 2022.
On January 14, 2022, Artesian Wastewater acquired TESI, a wholly-owned subsidiary of Middlesex Water Company, or Middlesex, that provides regulated wastewater services in Delaware. Artesian Wastewater purchased all of the stock of TESI from Middlesex for $6.4 million in cash and other consideration, including, forgiveness of a $2.1 million note due from Middlesex.
Artesian Wastewater purchased all of the stock of TESI from Middlesex for $6.4 million in cash and other consideration, including, forgiveness of a $2.1 million note due from Middlesex. This acquisition more than doubled the number of wastewater customers served by Artesian in Sussex County, Delaware and included all residents in the Town of Milton.
Results of Operations 2022 Compared to 2021 Operating Revenues Revenues totaled $98.9 million for the year ended December 31, 2022, $8.0 million, or 8.8%, more than revenues for the year ended December 31, 2021 . Other utility operating revenue increased approximately $4.3 million, or 59.9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Results of Operations 2023 Compared to 2022 Operating Revenues Revenues totaled $98.9 million for each of the years ended December 31, 2023 and December 31, 2022 .
For the year ended December 31, 2022, approximately 8.6 billion gallons of water were distributed in our Delaware systems and approximately 136.6 million gallons of water were distributed in our Maryland systems. 20 Table of Contents Regulated Wastewater Subsidiaries Artesian Wastewater owns wastewater collection and treatment infrastructure and began providing regulated wastewater services to customers in Delaware in July 2005.
For the year ended December 31, 2023, approximately 8.7 billion gallons of water were distributed in our Delaware systems and approximately 105.5 million gallons of water were distributed in our Maryland systems.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K includes a comparative discussion of the years ended December 31, 2021 and 2020 and is incorporated herein by reference.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K includes a comparative discussion of the years ended December 31, 2022 and 2021 and is incorporated herein by reference. 26 Table of Contents Liquidity and Capital Resources Overview The Company’s primary sources of liquidity for the year ended December 31, 2023 were $37.1 million in net proceeds from the issuance of Class A Non-Voting Stock, $31.9 million of cash provided by operating activities and $22.5 million in net contributions and advances from developers.
Purchased water costs decreased $2.4 million, related to a decrease of water purchased under a new contract, effective January 2022, in which the minimum amount of water required to be purchased was reduced. Property and other taxes increased $0.3 million, or 5.1%, primarily due to an increase in utility plant subject to taxation.
These increases are partially offset by a decrease in filter media replacement costs related to varying replacement schedules. — Transmission, distribution and collection costs increased $0.3 million, primarily associated with tank painting costs and maintenance and repair of transmission mains. — Purchased power costs increased $0.2 million due to an increase in usage in wastewater and water operations. — Purchased water costs decreased $0.5 million, primarily related to a decrease of water purchased under contract, in which the minimum amount of water required to be purchased was reduced in July 2022. 25 Table of Contents Non-utility operating expenses decreased $2.4 million, or 35.4%, primarily due to a decrease in costs associated with a wastewater infrastructure design and construction contract.
The increase is primarily due to an increase in contract service revenue related to a contract for the design and construction of wastewater infrastructure and an increase in Service Line Protection Plan revenue. 24 Table of Contents Operating Expenses Operating expenses, excluding depreciation and income taxes, increased $5.6 million, or 10.9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This decrease is primarily due to a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure now nearing completion, partially offset by an increase in Service Line Protection Plan revenue.
Government and Other Government and other water service revenues in 2022 increased by 5.6%, to $12.6 million in 2022 from $12.0 million in 2021, primarily due to an increase in overall water consumption.
Commercial Water service revenues from commercial customers in 2023 increased by 0.9%, to $17.6 million in 2023 from $17.5 million in 2022, primarily due to a temporary rate increase placed into effect on November 28, 2023.
Approximately $7.5 million will be invested in general plant, which includes replacement computer hardware, transportation and equipment upgrades, new corporate automation, and building renovations. Approximately $2.4 million will be invested in the relocations of facilities as a result of government mandates.
Approximately $6.6 million will be invested in the construction of force mains used for the transmission of wastewater to plants. Approximately $5.8 million will be invested in general plant, which includes vehicles and other heavy duty operations related equipment, replacement computer hardware and software, equipment upgrades, new corporate automation, station security upgrades, radio communication upgrades and building renovations.
Artesian Development owns two nine-acre parcels of land, located in Sussex County, Delaware, which will allow for construction of a water treatment facility and wastewater treatment facility. Artesian Storm Water was formed to expand contract work related to the design, installation, maintenance and repair services associated with existing or proposed storm water management systems in Delaware and the surrounding areas.
Artesian Development owns two nine-acre parcels of land, located in Sussex County, Delaware, which will allow for construction of a water treatment facility and wastewater treatment facility. CRITICAL ACCOUNTING ESTIMATES Critical accounting estimates are those we believe are most important to portraying the financial condition and results of operations and also require significant estimates, assumptions or other judgments by management.
Industrial Water service revenues from industrial customers increased to $79,000 in 2022 from $49,000 in 2021. The volume of water sold to industrial customers increased to 9.6 million gallons in 2022 from 5.3 million gallons in 2021.
The volume of water sold to industrial customers increased to 10.3 million gallons in 2023 from 9.6 million gallons in 2022. Government and Other Government and other water service revenues in 2023 increased by 0.8%, to $12.7 million in 2023 from $12.6 million in 2022, primarily due to a temporary rate increase placed into effect on November 28, 2023.
Non-Utility Operating Revenue Non-utility operating revenue, derived from non-regulated water and wastewater operations, increased by 55.3%, to $9.1 million in 2022 from $5.8 million in 2021.
This increase is primarily due to an increase in wastewater revenue associated with customer growth and an increase in fee revenue related to inspections and service and finance charges. Non-Utility Operating Revenue Non-utility operating revenue, derived from non-regulated water and wastewater operations, decreased by 26.9%, to $6.6 million in 2023 from $9.1 million in 2022.
Liquidity and Capital Resources Overview The Company’s primary sources of liquidity for the year ended December 31, 2022 were $24.3 million of cash provided by operating activities, $16.4 million in net contributions and advances from developers, which includes $2.0 million of grant funds from the State of Delaware, $31.8 million from the issuance of long-term debt and $2.1 million in net proceeds from the issuance of common stock.
Other sources of liquidity include $22.5 million in net contributions and advances from developers, which includes $3.8 million of grant funds from the State of Delaware and $5.6 million from the issuance of long-term debt. We estimate that future investments will be financed by our operations and external sources.
The number of Artesian’s Delaware wastewater customers more than doubled compared to December 31, 2021, following the acquisition of Tidewater Environmental Services, Inc., or TESI . This acquisition agreement is discussed further in the “Strategic Direction and Recent Developments” section below. Non-Utility Subsidiaries Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions.
As of December 31, 2023, the number of Delaware wastewater customers increased approximately 6.3% compared to December 31, 2022. Non-Utility Subsidiaries Artesian Utility provides contract water and wastewater operation services to private, municipal, and governmental institutions. Artesian Utility also offers three protection plans to customers: the WSLP Plan, the SSLP Plan, and the ISLP Plan.
Non-utility operating expenses increased $2.9 million, or 73.8%, primarily due to an increase in costs associated with the wastewater infrastructure design and construction contract and an increase in plumbing services related to Service Line Protection Plan repairs. Utility operating expenses increased $2.4 million, or 5.7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Utility operating expenses increased $2.4 million, or 5.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Financing Activities We have several sources of liquidity to finance our investment in utility plant and other fixed assets. We estimate that future investments will be financed by our operations and external sources.
We have several sources of liquidity to finance our investment in utility plant and other fixed assets. Our primary source of liquidity from financing activities for the year ended December 31, 2023 was $37.1 million in net proceeds from the issuance of Class A Non-Voting Stock.
Removed
The impact of inflation could adversely affect our results of operations, financial position or cash flows. Materials and Supplies We are highly dependent on the availability of essential materials and parts from our suppliers for expansion, construction and maintenance of our services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn addition, the Company has interest rate exposure on $60 million of variable rate lines of credit, with two banks, under which the interim bank loans payable at December 31, 2022 were approximately $20.2 million.
Biggest changeIn addition, the Company has interest rate exposure on $60 million of variable rate lines of credit, with two banks. As of December 31, 2023 there were not any outstanding balances on the lines of credit.
The Company’s financial risk management evaluations are designed to protect against risk arising from extreme adverse market movements on our key exposures. The Company is subject to the risk of fluctuating interest rates in the normal course of business.
The Company’s financial risk management evaluations are designed to protect against risk arising from extreme adverse market movements on our key exposures. 28 Table of Contents The Company is subject to the risk of fluctuating interest rates in the normal course of business.

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