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What changed in ARTESIAN RESOURCES CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ARTESIAN RESOURCES CORP's 2023 and 2024 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 2024 report.

+211 added−215 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-18)

Top changes in ARTESIAN RESOURCES CORP's 2024 10-K

211 paragraphs added · 215 removed · 160 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

41 edited+15 added−11 removed63 unchanged
Biggest changeThroughout the year, and particularly during typically warmer months, demand for water will vary with temperature and rainfall. In the event that temperatures during the typically warmer months are cooler than expected, or there is more rainfall than expected, the demand for water may decrease and our revenues may be adversely affected.
Biggest changeIn the event that temperatures during the typically warmer months are cooler than expected, or there is more rainfall than expected, the demand for water may decrease and our revenues may be adversely affected. 8 Table of Contents Competition Our business in our franchised service areas is substantially free from direct competition with other public utilities, municipalities and other entities.
Artesian Utility also offers three protection plans to customers, the Water Service Line Protection Plan, or WSLP Plan, the Sewer Service Line Protection Plan, or SSLP Plan, and the Internal Service Line Protection Plan, or ISLP Plan (collectively, SLP Plans).
Artesian Utility also offers three protection plans to customers, the Water Service Line Protection Plan, or WSLP Plan, the Sewer Service Line Protection Plan, or SSLP Plan, and the Internal Service Line Protection Plan, or ISLP Plan (collectively, SLP Plan or SLP Plans).
We include our website address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website. Information contained on our website shall not be deemed incorporated into, or to be a part of, this report. 10 Table of Contents
We include our website address in this Annual Report on Form 10-K only as an inactive textual reference and do not intend it to be an active link to our website. Information contained on our website shall not be deemed incorporated into, or to be a part of, this report. 9 Table of Contents
Because of the extensive regulatory requirements relating to the withdrawal of any significant amounts of water from the aquifers, we believe that third-party usage of the aquifers within our service territory will not interfere with our ability to meet the present and future demands of our customers. 8 Table of Contents The MDE ensures that water quality and quantity at all public water systems in Maryland meet the needs of the public and are in compliance with federal and state regulations.
Because of the extensive regulatory requirements relating to the withdrawal of any significant amounts of water from the aquifers, we believe that third-party usage of the aquifers within our service territory will not interfere with our ability to meet the present and future demands of our customers. 7 Table of Contents The MDE ensures that water quality and quantity at all public water systems in Maryland meet the needs of the public and are in compliance with federal and state regulations.
ITEM 1. BUSINESS General Information Artesian Resources Corporation, or Artesian Resources, is a Delaware corporation incorporated in 1927, that is the holding company of eight wholly-owned subsidiaries offering water, wastewater and other services in Delaware, Maryland and Pennsylvania. The Company’s principal executive offices are located at 664 Churchmans Road, Newark, Delaware 19702.
ITEM 1. BUSINESS General Information Artesian Resources Corporation, or Artesian Resources, is a Delaware corporation incorporated in 1927, that is the holding company of seven wholly-owned subsidiaries offering water, wastewater and other services in Delaware, Maryland and Pennsylvania. The Company’s principal executive offices are located at 664 Churchmans Road, Newark, Delaware 19702.
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.
We have 62 different water treatment facilities in our Delaware systems. All water supplies that we purchase from neighboring utilities are potable. 3 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.
Subsidiaries Artesian Water Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware. In addition, Artesian Water provides services to other water utilities, including operations and billing functions, and has contract operation agreements with private, municipal and state water providers.
Subsidiaries Artesian Water Artesian Water, our principal subsidiary, distributes and sells water to residential, commercial, industrial, governmental, municipal and utility customers throughout the State of Delaware. In addition, Artesian Water provides services to other water utilities, including operations, and has contract operation agreements with private, municipal and state water providers.
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.
The majority of the 0.1 billion gallons of water we distributed in all of our Maryland systems during 2024 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 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.
Artesian Water also provides water for public and private fire protection to customers in our service territories. Artesian Water produced approximately 81.6% of our 2024 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.
This purchase agreement is discussed further in the “Strategic Direction and Recent Developments” section. We derive about 90% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic Coastal Plain. The remaining 10% of our groundwater supply comes from wells in the Piedmont Province.
This purchase agreement is discussed further in the “Strategic Direction and Recent Developments” section. We derive about 92% of our self-supplied groundwater from wells that pump groundwater from aquifers and other formations located in the Atlantic Coastal Plain. The remaining 8% of our groundwater supply comes from wells in the Piedmont Province.
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.
We have 144 operating and 62 observation and monitoring wells in our Delaware systems. At December 31, 2024, we had allocation permits for 116 wells and had 25 wells that did not require a permit. Our access to aquifers within our service territory is not exclusive.
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.
The treated surface water is blended with our groundwater supply for distribution to our customers. Nearly 95% of the overall 9.4 billion gallons of water we distributed in all of our Delaware systems during 2024 came from our groundwater wells, while the remaining 5% came from interconnections with other utilities and municipalities.
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.
Of these employees, 55 were officers and managers; 122 were employed as operations personnel, including engineers, technicians, draftsman, maintenance and repair persons, meter readers and utility personnel; and 36 were employed in accounting, budgeting, information systems, human resources, customer relations and public relations. The remaining 36 employees were administrative personnel.
Even though our water utility was founded in 1905, the majority of our investment in infrastructure occurred in the last 40 years. As required by the Safe Drinking Water Act, the EPA has established maximum contaminant levels for various substances found in drinking water to ensure that the water is safe for human consumption.
Even though our water utility was founded in 1905, the majority of our investment in infrastructure occurred in the last 40 years. 6 Table of Contents As required by the Safe Drinking Water Act, the EPA establishes maximum contaminant levels, or MCLs, for various substances found in drinking water to ensure that the water is safe for human consumption.
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 Delaware in 2024, we pumped an average of 24.9 million gallons per day, or mgd, from our groundwater wells and obtained an average of approximately 0.9 mgd from interconnections. Our peak water supply capacity currently is approximately 57.7 mgd.
Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under the symbol “ARTNB.” Artesian Resources is the holding company of five regulated public utilities: Artesian Water Company, Inc., or Artesian Water, Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, Artesian Water Maryland, Inc., or Artesian Water Maryland, Artesian Wastewater Management, Inc., or Artesian Wastewater, and Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland; and three non-utility subsidiaries: Artesian Utility Development, Inc., or Artesian Utility, Artesian Development Corporation, or Artesian Development, and Artesian Storm Water Services, Inc., or Artesian Storm Water.
Our Class A Non-Voting Common Stock is listed on the Nasdaq Global Select Market and trades under the symbol “ARTNA.” Our Class B Common Stock trades on the Nasdaq’s OTC Bulletin Board under the symbol “ARTNB.” Artesian Resources is the holding company of five regulated public utilities: Artesian Water Company, Inc., or Artesian Water, Artesian Water Pennsylvania, Inc., or Artesian Water Pennsylvania, Artesian Water Maryland, Inc., or Artesian Water Maryland, Artesian Wastewater Maryland, Inc., or Artesian Wastewater Maryland, and Artesian Wastewater Management, Inc., or Artesian Wastewater, along with its wholly-owned subsidiary Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI; and two non-utility subsidiaries: Artesian Utility Development, Inc., or Artesian Utility, and Artesian Development Corporation, or Artesian Development.
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.
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 currently requires us to purchase a minimum of 0.5 million gallons of water per day.
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.
Our electric costs and purchased water costs are at a fixed price under contract. Employees and Human Capital Resources As of December 31, 2024, we operated with 245 full-time and 4 part-time employees.
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.
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.
Competition Our business in our franchised service areas is substantially free from direct competition with other public utilities, municipalities and other entities. However, our ability to provide additional water and wastewater services is subject to competition from other public utilities, municipalities and other entities.
However, our ability to provide additional water and wastewater services is subject to competition from other public utilities, municipalities and other entities.
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.
See Note 16 – Legal Proceedings. The Lead and Copper Rule, or LCR, is a 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 308 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania.
We hold Certificates of Public Convenience and Necessity, or CPCNs, for approximately 310 square miles of exclusive water service territory, most of which is in Delaware with some territory being in Maryland and Pennsylvania.
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.
Where possible, we combine our smaller satellite systems with systems having elevated storage facilities. 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.
Artesian Wastewater operates as the parent holding company of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI. TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex County, Delaware as a regulated public wastewater service company.
TESI was incorporated in 2004 and is a regulated entity that owns wastewater collection and treatment infrastructure and provides wastewater services to customers in Sussex County, Delaware, including all residents within the Town of Milton, as a regulated public wastewater service company.
However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition, results of operations and planned capital investments. 7 Table of Contents The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all utilities.
However, if new water quality regulations are too costly, or if we fail to comply with such regulations, it could have a material adverse effect on our financial condition, results of operations and planned capital investments.
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.
Our largest connected regional water system, consisting of approximately 145 square miles and 80,100 metered customers, is located in northern New Castle County and portions of southern New Castle County, Delaware. We hold CPCNs for approximately 61 square miles of wastewater service territory located in Sussex County, Delaware.
Artesian Wastewater Maryland Artesian Wastewater Maryland was incorporated on June 3, 2008 and is authorized and able to provide regulated wastewater services to customers in the State of Maryland. It is currently not providing these services.
TESI owns and operates five wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 35.2 mgd. Artesian Wastewater Maryland Artesian Wastewater Maryland was incorporated on June 3, 2008 and is authorized and able to provide regulated wastewater services to customers in the State of Maryland. It is currently not providing these services.
State Regulatory Commission Matters Our water and wastewater utility operations are subject to regulation by their respective state regulatory commissions, which have broad administrative power and authority to regulate rates charged for service, determine franchise areas and conditions of service, approve acquisitions, authorize the issuance of securities and the incurrence of indebtedness, and other matters.
These regulations include state commission orders, environmental protection, securities and exchange activities, including financial reporting and internal controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices, and other general business activities. 5 Table of Contents State Regulatory Commission Matters Our water and wastewater utility operations are subject to regulation by their respective state regulatory commissions, which have broad administrative power and authority to regulate rates charged for service, determine franchise areas and conditions of service, approve acquisitions, authorize the issuance of securities and the incurrence of indebtedness, and other matters.
Our Market Our current market area is the Delmarva Peninsula. Our largest service area is in the State of Delaware. Substantial portions of Delaware, particularly outsid e of northern New Castle County, are not served by a public water or wastewater system and represent potential opportunities for Artesian Water and Artesian Wastewater to obtain new exclusive franchised service areas.
Substantial portions of Delaware, particularly outsid e of northern New Castle County, are not served by a public water or wastewater system and represent potential opportunities for Artesian Water and Artesian Wastewater to obtain new exclusive franchised service areas. We continue to focus resources on developing and serving existing service territories and obtaining new territories throughout Delaware.
Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0 mgd. At some locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures. Where possible, we combine our smaller satellite systems with systems having elevated storage facilities.
We have developed and are using an Aquifer Storage and Recovery, or ASR, system in New Castle County, Delaware. Our ASR system provides approximately 130.0 million gallons of storage capacity, which can be withdrawn at an average rate of approximately 1.0 mgd. At some locations, we rely on hydro-pneumatic tanks to maintain adequate system pressures.
It 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.
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.
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.
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 also owns and operates a disposal facility that includes a 90-million-gallon storage lagoon and spray irrigation to agricultural land.
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.
Implementation of the revised rule is intended to 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.
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.
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. As of December 31, 2024, we were serving customers through approximately 1,491 miles of transmission and distribution mains.
Effective January 14, 2022, Artesian Wastewater is the holding company of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI, a regulated public utility. The terms “we,” “our,” “Artesian,” and the “Company” as used herein refer to Artesian Resources and its subsidiaries. The business activity conducted by each of our subsidiaries is discussed below under separate headings.
The terms “we,” “our,” “Artesian,” and the “Company” as used herein refer to Artesian Resources and its subsidiaries. The business activity conducted by each of our subsidiaries is discussed below under separate headings. Our Market Our current market area is the Delmarva Peninsula. Our largest service area is in the State of Delaware.
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.
In addition, implementation of the revised rule is anticipated to accelerate lead service line replacements by closing existing regulatory loopholes, propelling early action, and strengthening replacement requirements. We filed all required Lead Service Line Inventories by the October 16, 2024 deadline and are fully compliant with the LCR Revisions.
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.
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 36 storage tanks in Delaware, most of which are elevated, providing total system storage of approximately 45.0 million gallons.
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 LCR limits the levels of lead and copper in water by improving water treatment, testing for lead and copper at customer taps, and eliminating the water supply as a significant source of lead and copper.
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.
The office facility consists of approximately 10,000 square feet of office space along with nearly 7,000 square feet of warehouse space. Government Regulations Overview The Company is subject to federal, state and local laws and regulations in all of the jurisdictions in which it operates.
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.
This facility provides treated process wastewater disposal services for an industrial customer at a rate up to 1.5 mgd. TESI Artesian Wastewater operates as the parent holding company of TESI.
The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.
Capital investment and operating costs incurred by water utilities for customer-side pipe replacements are typically recoverable in water rates charged to customers as approved by the applicable public service commission. The DPH has set maximum contaminant levels for certain substances that are more restrictive than the maximum contaminant levels set by the EPA.
Removed
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.
Added
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. 4 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.
Removed
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.
Added
The water industry is capital intensive, with one of the highest levels of capital investment in plant and equipment per dollar of revenue among all utilities.
Removed
Artesian Wastewater purchased all of the stock of TESI from Middlesex Water Company, or Middlesex, for $6.4 million in cash and other consideration, including forgiveness of a $2.1 million note due from Middlesex.
Added
On April 10, 2024, the EPA established MCLs for certain per- and polyfluoroalkyl substances, or PFAS, in drinking water. Under these regulations, water utilities will be required to complete initial monitoring for PFAS by 2027 and to conduct ongoing compliance monitoring.
Removed
This acquisition more than doubled the number of wastewater customers served by Artesian’s Delaware wastewater subsidiaries in Sussex County, Delaware and included all residents within the Town of Milton, Delaware. TESI owns and operates seven wastewater treatment facilities, which, combined, are permitted to treat and/or dispose of approximately 713,000 gallons per day.
Added
Water utilities also will be required to meet the new MCLs by April 2029 and to notify the public of any violations of the MCLs as of and after that date.
Removed
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.
Added
The Company has installed treatment for PFAS at several wellfields to date and has included installation of treatment at additional locations in 2025 in its capital budget, with any remaining necessary treatment planned to be installed before 2029.
Removed
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.
Added
The capital investment and operating costs for treatment of PFAS are anticipated to be recoverable in water rates charged to customers as approved by the applicable public service commission. The Company is participating in the multi-district litigation class action settlements with certain manufacturers of PFAS seeking reimbursement of costs incurred and that will continue to be incurred.
Removed
These regulations include state commission orders, environmental protection, securities and exchange activities, including financial reporting and internal controls processes, data protection and privacy, tax compliance, health and safety, labor and employment practices, and other general business activities.
Added
The EPA published a revised LCR in 2021, or LCR Revisions, to provide greater and more effective protection of public health by reducing exposure to lead and copper in drinking water.
Removed
These limits are known as Maximum Contaminant Levels and Maximum Residual Disinfection Levels. The EPA also regulates how often public water systems monitor their water for contaminants and report the monitoring results to the individual state agencies or the EPA. Generally, the larger the population served by a water system, the more frequent the monitoring and reporting requirements.
Added
On October 8, 2024, the EPA announced the new final regulations requiring the removal of lead water lines. The EPA’s rule, known as the Lead and Copper Rule Improvements, or LCRI, requires all public water systems to remove lead service lines within 10 years, among other changes to regulations in the EPA’s LCR.
Removed
The Safe Drinking Water Act applies to all 50 states. The EPA has recently proposed regulatory actions addressing per- and polyfluoroalkyl substances, or PFAS, including rules to confront PFAS contamination nationwide, with potentially significant implications. The EPA issued a proposal to designate two of the most widely used PFAS as hazardous substances.
Added
The service lines connect a home’s plumbing system to a public water system’s main water line. The LCRI specifies that the water provider will cover the cost for replacements of the customer’s service line up to the first fitting inside the structure being served.
Removed
The EPA first issued the rule in 1991 pursuant to the Safe Drinking Water Act. The EPA promulgated the regulations following studies that concluded that copper and lead adversely affect an individual’s physical and mental health.
Added
In March 2024, the SEC passed rule changes that will require registrants to provide certain climate-related information in their registration statements and annual reports. The new rules enhance and standardize climate-related disclosures in an effort to provide investors with more consistent, comparable and reliable information about the impact of climate-related risks on registrants.
Removed
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.
Added
The rules require disclosure of greenhouse gas (GHG) emissions in annual reports and registration statements. Additionally, all registrants would be required to provide numerous climate-related disclosures within their financial statements and elsewhere in their filings.
Added
The new rules apply to companies on a phased-in basis, with the first compliance deadline for large accelerated filers required for fiscal year 2025 annual reports filed in 2026. The next compliance deadline for accelerated filers is required for fiscal year 2026 annual reports filed in 2027. Also in March 2024, the U.S.
Added
Fifth Circuit Court of Appeals granted a temporary stay of the rules pending judicial review, in response to a petition arguing, among other things, that the rules would cause irreparable harm and exceed the SEC's authority. The Company is currently evaluating the impact of the rule changes.
Added
Throughout the year, and particularly during typically warmer months, demand for water will vary with temperature and rainfall.
Added
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

30 edited+18 added−3 removed67 unchanged
Biggest changeThough we have not as of the date of this report identified or experienced any particular material impact, whether singular or in combination, to our consolidated financial statements from climate change or the associated regulatory, physical, and other risks discussed above, we cannot provide any assurance that we have or can successfully prepare for, or are or will be able to reduce or manage any of them to the extent they may arise.
Biggest changeAlthough 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. 11 Table of Contents Though we have not as of the date of this report identified or experienced any particular material impact, whether singular or in combination, to our consolidated financial statements from climate change or the associated regulatory, physical, and other risks discussed above, we cannot provide any assurance that we have or can successfully prepare for, or are or will be able to reduce or manage any of them to the extent they may arise.
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.
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, pre-treatment, treatment, distribution, storage, wastewater disposal, electronic or automated systems, and the use, handling, delivery, and storage of all chemicals.
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.
In addition, future acquisitions or expansion of our service areas by us could result in: 13 Table of Contents - 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.
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.
Our computer and communications systems and operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures, human error or acts of war or terrorism, sabotage, theft or similar events or disruptions.
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.
The impact of such inflationary pressure 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.
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.
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.
Dividends on our common stock will only be paid if and when declared by our Board of Directors. Our earnings, financial condition, capital requirements, applicable regulations and other factors, including the timeliness and adequacy of rate increases, will determine both our ability to pay dividends on common stock and the amount of the dividends declared by our Board of Directors.
Our earnings, financial condition, capital requirements, applicable regulations and other factors, including the timeliness and adequacy of rate increases, will determine both our ability to pay dividends on common stock and the amount of the dividends declared by our Board of Directors.
We have been affected and could continue to be affected by supplier delays and increased costs, due to the impacts of inflation, which are outside of our control and could affect our results of operations. We are also dependent on the availability of electricity and purchased water at affordable prices.
We have been affected and could continue to be further affected, by supplier delays and increased costs, due to the impacts of inflation, tariffs, recession, and/or other macroeconomic factors, which are outside of our control and could affect our results of operations. We are also dependent on the availability of electricity and purchased water at affordable prices.
There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends. Holders of Class A Non-Voting Common Stock have no voting rights. As a result, holders of Class A Non-Voting Common Stock will not have any ability to influence stockholder decisions.
There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends. Holders of Class A Non-Voting Common Stock have no voting rights.
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.
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.
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.
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.
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.
For additional information concerning the Company’s cybersecurity program, see Item 1C - Cybersecurity. Risk Associated with Managing our Business, Including Employees and Our Reputation 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.
There is no guarantee that we will be able to obtain sufficient capital in the future on favorable terms and conditions, such as changes in market conditions and events beyond our control, most recently increases to interest rates, for expansion, construction and maintenance.
There is no guarantee that we will be able to obtain sufficient capital in the future on favorable terms and conditions for expansion, construction and maintenance, as general macroeconomic conditions impacting the capital markets, including interest rates, are beyond our control.
The loss of the services of any member of our management team or the inability to hire and retain experienced management personnel could harm our operating results.
Our success depends significantly on the continued contribution of our management team both individually and collectively. The loss of the services of any member of our management team or the inability to hire and retain experienced management personnel could harm our operating results.
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.
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. We also require pre-treatment by various industrial customers prior to receiving their wastewater for further treatment and disposal.
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.
We could also be held liable for consequences arising out of human or environmental exposure to hazardous substances, if found, in our water supply.
In addition, the SEC has proposed extensive climate-related disclosure rules, which, if adopted, would likely result in increased compliance costs and capital expenditures.
In addition, the SEC has previously issued extensive climate-related disclosure rules. Although these rules are currently stayed, if adopted in the future, such rules would likely result in increased compliance costs and capital expenditures.
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.
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.
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.
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. We may be adversely affected by the implementation of new regulations, the reinterpretation or recission of existing regulations, or regulatory uncertainty.
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.
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. We would also remain liable for significant transaction costs, including legal and accounting fees, whether or not the transaction is completed.
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 ability to continue our expansion efforts and fund our utility construction and maintenance program depends on the availability of adequate capital.
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.
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. Additionally, treating the contaminated water source could involve significant costs and could adversely affect our business.
We have been affected and could continue to be affected by increased costs for items such as, among others, materials for capital expenditures, fuel, and treatment chemicals, due to the impacts of inflation. If inflation increases significantly, we may seek to increase our rates charged to customers.
We could be adversely impacted by macroeconomic factors outside of our control, including but not limited to inflation, interest rates, tariffs, trade wars and/or recession. We have been affected and could continue to be affected by increased costs for items such as, among others, materials for capital expenditures, fuel, and treatment chemicals, due to the impacts of inflation.
In addition, turnover in our management team could adversely affect the financial market’s perception of our ability to continue to grow. 15 Table of Contents Risks Related to Our Common Stock There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends.
Risks Related to Our Common Stock There can be no assurance that we will continue to pay dividends in the future or, if dividends are paid, that they will be in amounts similar to past dividends. Dividends on our common stock will only be paid if and when declared by our Board of Directors.
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.
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.
In the event that temperatures during typically warmer months are cooler than normal, or rainfall is more than normal, the demand for our water may decrease and adversely affect our revenues.
In the event that temperatures during typically warmer months are cooler than normal, or rainfall is more than normal, the demand for our water may decrease and adversely affect our revenues. 12 Table of Contents Drought conditions and government-imposed water use restrictions may impact our ability to serve our current and future customers, and may impact our customers’ use of our water, which may adversely affect our financial condition and results of operations.
The principal stockholders have significant control over the outcome of most fundamental corporate matters. The price of our common stock may be volatile and may be affected by market conditions beyond our control.
As a result, the principal stockholders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters.
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.
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. Our water supplies are subject to contamination from naturally-occurring compounds as well as pollution resulting from man-made sources.
Potential terrorist attacks or sabotage may disrupt our operations and adversely affect our business, operating results and financial condition. We are subject to possible sabotage of our water and wastewater systems, including vandalism causing an interruption in water supply and a reduction in water quality, and terrorism causing contamination of the water supply and a reduction in water quality.
We are subject to disruption of our water and wastewater systems, including as a result of vandalism, terrorism, sabotage and/or accidental damage by outside parties, any of which could cause an interruption in or contamination of water supply, and a reduction in water quality.
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.
Specifically, our business relies on various technology systems, including but not limited to those associated with customer information, financial reporting, asset and inventory management, facility operations and monitoring , human resources and accounts receivable.
Removed
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.
Added
If those pre-treatment systems operated by others fail, or do not operate properly, they can impact our downstream facilities’ ability to meet their permit limitations. If we fail to meet our permit limitations, we could be fined or otherwise sanctioned by regulators and our operations could be curtailed or shut down.
Removed
The rates that we charge our customers are subject to the regulations of the public service commissions in the states in which we operate.
Added
Potential terrorist attacks, sabotage, or accidental damage by outside parties may disrupt our operations and adversely affect our business, operating results and financial condition.
Removed
Drought conditions and government-imposed water use restrictions may impact our ability to serve our current and future customers, and may impact our customers’ use of our water, which may adversely affect our financial condition and results of operations.
Added
Our water and wastewater systems are also subject to accidental damage from work being completed by outside parties not under the supervision or control of the Company.
Added
Construction activities in the vicinities of our pipelines and other infrastructure can lead to damage which results in inadvertent discharge onto nearby properties, or into nearby streams and rivers, causing damage to persons or property, injury to wildlife and economic damages.
Added
We could also incur repair and remediation costs, which may not be reimbursed or recoverable in water and wastewater rates. 10 Table of Contents 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.
Added
Changes in local, state or federal policy or administrative priorities could adversely affect our business. As a regulated utility, we are subject to regulation at the federal, state and local level.
Added
We have made significant capital expenditures to adhere to regulations imposed by such authorities and expect to continue to make capital expenditures in the future to adhere to such regulations. Changes in local, state or federal administrative policy or priorities could affect the possible interpretation of existing regulations or such authorities may impose new rules and regulatory requirements.
Added
New administrations could also eliminate proposed rules and reverse final policies of prior administrations, which could lead to conflict between federal and state regulations and regulatory uncertainty, which could cause us to reevaluate our strategic priorities and capital expenditures or otherwise impact our business operations.
Added
The impact of any regulatory requirement changes are unpredictable, and could materially and adversely affect our business, financial position and results of operations. 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 inflation increases significantly, as a result of increased interest rates, tariffs, trade wars, or otherwise, we may seek to increase our rates charged to customers.
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. 14 Table of Contents Cyberattacks on utility companies have been increasing in recent years, with recent reports that at least one U.S. water utility has experienced widespread outages as a result of such an attack.
Added
In addition, turnover in our management team could adversely affect the financial market’s perception of our ability to continue to grow. We depend on our ability to attract and retain qualified, skilled employees and independent contractors. We depend on our ability to attract and retain qualified talent, including full-time and part-time employees, managers, management team, and independent contractors.
Added
If we are unable to attract and retain such individuals, we may be unable to maintain our ability to meet performance targets, customer demands and expectations or successfully expand and grow our business. Changes in the job market may increase labor costs and could adversely affect our business, results of operations, cash flows and financial condition.
Added
Employee and independent contractor misconduct could harm us by subjecting us to legal liability and reputational harm. There is a risk that our employees or independent contractors engage in misconduct that adversely affects our business.
Added
Misconduct could subject us to regulatory investigations, legal liabilities or penalties and we could suffer harm to our reputation, financial position, and the trading price of our common stock. We also face the risk that our employees engage in work place misconduct, despite our implementation of policies and training to prevent and detect misconduct.
Added
Such misconduct could negatively harm our reputation or impair our ability to attract and retain qualified, skilled employees. If our employees engage in misconduct, our business could be materially adversely affected.
Added
As a result, holders of Class A Non-Voting Common Stock will not have any ability to influence stockholder decisions and the principal holders of Class B Common Stock have significant control over the outcome of most fundamental corporate matters. We have two classes of common stock, Class A Non-Voting Common Stock and Class B Common Stock.
Added
There are no agreements among the holders of Class B Common Stock or with the Company that restrict the transfer of shares of Class B Common Stock which could result in significant ownership of shares of Class B Common Stock being held by others who are not currently principal holders. 15 Table of Contents The price of our common stock may be volatile and may be affected by market conditions beyond our control.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Management and Strategy We have implemented security measures and will continue to devote resources to address security vulnerabilities in an effort to prevent cyberattacks. All employees receive cybersecurity training and other education regarding their use of computers, information technology, and sensitive data.
Biggest changeIn addition, there have been reports of other water utility companies being subjected to such attacks, resulting in widespread operational outages. Risk Management and Strategy We have implemented security measures and will continue to devote resources to address security vulnerabilities in an effort to prevent cyberattacks.
These alerts are evaluated and in the event an alert requires action within our environment, such actions are taken promptly. Our process and cybersecurity posture is refined based on the results of periodic third party cybersecurity assessments. We engage with the Cybersecurity and Infrastructure Security Agency through their cyber hygiene service offerings.
These alerts are evaluated and in the event an alert requires action within our environment, such actions are taken promptly. Our process and cybersecurity posture are refined based on the results of periodic third party cybersecurity assessments. We engage with the Cybersecurity and Infrastructure Security Agency through their cyber hygiene service offerings.
Our business continuity plans are evaluated against evolving security and service level standards, which includes evaluating those cybersecurity threats associated with our use of key third party service providers. 16 Table of Contents Our cybersecurity management process consists of utilizing a combination of employee education, preventative controls, detective controls, and periodic third-party cybersecurity testing.
Our business continuity plans are evaluated against evolving security and service level standards, which includes evaluating those cybersecurity threats associated with our use of key third party service providers. Our cybersecurity management process consists of utilizing a combination of employee education, preventative controls, detective controls, and periodic third-party cybersecurity testing.
Should a cyber event occur, depending on the severity of an event, our cyber incident reporting process includes informing, as early as practicable, our senior corporate management. Governance The Audit Committee of the Board of Directors, as overseen by the full Board of Directors, is responsible for oversight of cybersecurity risk.
Should a cyber event occur, depending on the severity of an event, our cyber incident reporting process includes informing, as early as practicable, our senior corporate management. 16 Table of Contents Governance The Audit Committee of the Board of Directors, as overseen by the full Board of Directors, is responsible for oversight of cybersecurity risk.
Risk Factors—Risks Related to Cybersecurity and Technology” for additional discussion of cybersecurity risks impacting our Company. 17 Table of Contents
Risk Factors—Risks Related to Cybersecurity and Technology” for additional discussion of cybersecurity risks impacting our Company.
We utilize third parties to support our information technology, or IT, resources, including disaster recovery intended to safeguard our ability to access and use our IT resources during a disaster or cyber incident.
All employees receive cybersecurity training and other education regarding their use of computers, information technology, and sensitive data. We utilize third parties to support our information technology, or IT, resources, including disaster recovery intended to safeguard our ability to access and use our IT resources during a disaster or cyber incident.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed2 unchanged
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.
Biggest changeUtility plant comprises : In thousands Estimated Useful Life (In Years) Effective June 12, 2024 December 31, 2024 Utility plant at original cost Utility plant in service-Water Intangible plant --- $ 140 Source of supply plant 45-85 30,320 Pumping and water treatment plant 15-64 130,226 Transmission and distribution plant Mains 73-81 390,741 Services 39-58 63,613 Storage tanks 70-76 39,760 Meters 16-26 30,223 Hydrants 60-68 20,158 General plant 5-81 59,634 Utility plant in service-Wastewater Intangible plant --- 116 Treatment and disposal plant 20-81 71,332 Collection mains and lift stations 70-81 57,084 General plant 5-31 2,632 Property held for future use --- 3,742 Construction work in progress --- 39,718 939,439 Less – accumulated depreciation 192,253 $ 747,186 17 Table of Contents 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.
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.
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, 2024.
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.
As of December 31, 2024, no other water utility plant has been pledged as security for loans. Two parcels of land held by 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 industry practice.
We believe that all of our existing facilities adequately meet current necessary production capacities and current levels of utilization. 18 Table of Contents
We believe that all of our existing facilities adequately meet current necessary production capacities and current levels of utilization.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−1 removed1 unchanged
Biggest changeRecent 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.
Biggest changeThe 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 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.
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 20, 2025, the last closing sale price as reported by the Nasdaq Global Select Market was $31.36 per share.
As 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.
As of March 20, 2025 there were 480 holders of record of the Class A Non-Voting Stock. The stockholders of Class A Non-Voting Stock are entitled to receive dividends when they are declared by the Board of Directors.
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.
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 2024 First Quarter $ 41.73 $ 33.84 Second Quarter $ 41.29 $ 33.34 Third Quarter $ 41.29 $ 34.96 Fourth Quarter $ 37.35 $ 30.99 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 18 Table of Contents 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 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.
As of March 20, 2025, the last reported trade of the Class B Stock on the OTC Bulletin Board was at a price of $31.61 per share on March 19, 2025. As of March 20, 2025, there were 134 holders of record of the Class B Stock.
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.
The graph covers the period from December 2019 (assuming a $100 investment on December 31, 2019, and the reinvestment of any dividends) through December 2024: INDEXED RETURNS Base Period Years Ending December 31 Company Name / Index 2019 2020 2021 2022 2023 2024 Artesian Resources Corporation 100 102.47 131.39 169.87 122.94 96.87 S&P 500 Index 100 118.40 152.39 124.79 157.69 197.02 Peer Group 100 115.32 142.97 122.40 105.25 100.73 The Peer Group includes American States Water Company, American Water Works Company, Inc., Essential Utilities, Inc., California Water Service Group, Middlesex Water Company, SJW Group and York Water Company. 19 Table of Contents
Shares of Class B Stock are paid the same dividend as the shares of the Class A Stock.
Shares of Class B Stock are paid the same dividend as the shares of the Class A Non-Voting Stock. Recent Sales of Unregistered Securities During the year ended December 31, 2024 we did not issue any unregistered shares of our Class A Non-Voting Stock or Class B Stock.
Removed
(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

Item 7. Management's Discussion & Analysis

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

69 edited+17 added−39 removed31 unchanged
Biggest changeThese 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.
Biggest changeThe increase in utility operating expenses consists of a $1.1 million increase in supply and treatment costs, a $0.9 million increase in payroll and employee benefits costs, a $0.5 million increase in each of transmission, distribution and collection system costs and administrative costs, a $0.3 million increase in purchased power costs and a $0.2 million increase in purchased water costs. 23 Table of Contents Non-utility operating expenses increased $0.3 million, or 7.1%, primarily due to an increase in plumbing repair costs associated with the SLP Plans and an increase in payroll and employee benefits costs.
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.
As of December 31, 2024, 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.
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.
Percentage of Operating and Maintenance Expenses 2024 2023 2022 Payroll and Associated Expenses 47.7 % 49.5 % 47.5 % Administrative 16.7 16.9 15.3 Supply and Treatment 13.3 11.9 10.8 Purchased Power 5.8 5.7 5.2 Transmission, Distribution and Collection 5.1 4.6 4.1 Purchased Water 2.8 2.7 3.6 Non-utility Operating 8.6 8.7 13.5 Total 100.0 % 100.0 % 100.0 % The ratio of operating expense, excluding depreciation and income taxes, to total revenue was 56.4% for the year ended December 31, 2024, compared to 57.4% for the year ended December 31, 2023.
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.
Material Cash Requirements Lines of Credit and Long-Term Debt At December 31, 2024, 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, 2024, there was $40.0 million of available funds under this line of credit.
Cash flow from operating activities is primarily provided by our utility operations and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions, particularly during the summer.
Cash flows from operating activities is primarily provided by our utility operations and is impacted by the timeliness and adequacy of rate increases and changes in water consumption as a result of year-to-year variations in weather conditions, particularly during the summer.
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.
Artesian Development owns two nine-acre parcels of land, located in Sussex County, Delaware, which allows 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.
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.
At December 31, 2024, 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.
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.
See 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.
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.
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 93.5% o f total operating revenues for the year ended December 31, 2024 and 93.1% for the year ended December 31, 2023.
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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS See Note 18 (Impact of Recent Accounting Pronouncements) to our Consolidated Financial Statements for a full description of the impact of recent accounting pronouncements.
The DEPSC and MDPSC have generally recognized the operating and capital costs associated with these improvements in setting water and wastewater rates for current customers and capacity charges for new customers. In our non-utility subsidiaries, we continue pursuing opportunities to expand our contract operations.
The DEPSC and MDPSC have generally recognized the operating and capital costs associated with these improvements in setting water and wastewater rates for current customers and capacity charges for new customers. 21 Table of Contents In our non-utility subsidiaries, we continue pursuing opportunities to expand our contract operations.
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.
Depreciation and amortization expense increased $0.3 million, or 2.2%, primarily due to continued investment in utility plant providing supply, treatment, storage and distribution of water to customers and service to our wastewater customers.
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.
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, 2029. The agreement includes a remaining automatic five-year renewal term, unless terminated by either party.
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.
Percentage of Operating Revenues 2024 2023 2022 Water Sales Residential 50.1 % 50.1 % 48.7 % Commercial 18.0 17.9 17.6 Government and Other 13.5 13.0 12.9 Other utility operating revenues 12.1 12.3 11.6 Non-utility operating revenues 6.3 6.7 9.2 Total 100.0 % 100.0 % 100.0 % Residential Residential water service revenues in 2024 amounted to $53.9 million, an increase of $4.4 million, or 8.8%, above the $49.6 million recorded in 2023, primarily due to a rate increase placed into effect on November 28, 2023 and an increase in overall water consumption.
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.
We realized 81.6% and 81.0% of our total operating revenue for the years ended December 31, 2024 and December 31, 2023, respectively, from the sale of water. Other utility operating revenue increased approximately $0.9 million, or 7.7%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We expect to fund our activities for the next twelve months using our projected cash generated from operations, bank credit lines, state revolving fund loans, government grants, and other capital market financing as needed to provide sufficient working capital to maintain normal operations, to meet our financing requirements and to expand through strategic acquisitions.
We expect to fund our activities for the next twelve months using our projected cash generated from operations, bank credit lines, and capital market financing as needed to provide sufficient working capital to maintain normal operations, to meet our financing requirements and to expand through strategic acquisitions.
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.
As of December 31, 2024, the number of metered water customers in Delaware increased approximately 1.6% compared to December 31, 2023. The number of metered water customers in Maryland increased approximately 2.3% compared to December 31, 2023. The number of metered water customers in Pennsylvania remained consistent compared to December 31, 2023.
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.
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 currently requires us to purchase a minimum of 0.5 million gallons of water per day.
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.
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.
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.
Investment Activities The primary focus of our investment in 2024 was to continue to provide high quality, reliable service to our growing service territory. Capital expenditures during 2024 were $45.9 million compared to $62.2 million invested during the same period in 2023.
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.
While actual usage for individual customers may differ 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 have not experienced conditions that would result in our default under these agreements. The asset purchase contractual obligation is related to the purchase of substantially all of the water operating assets from the Town of Clayton, or Clayton, in May 2022, by Artesian Water. The total purchase price was $5.0 million. At closing, Artesian Water paid approximately $3.4 million.
We have not experienced conditions that would result in our default under these agreements. 26 Table of Contents The asset purchase contractual obligation is related to the purchase of substantially all of the water operating assets from the Town of Clayton in May 2022, by Artesian Water. The total purchase price was $5.0 million.
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.
Property and other taxes increased $0.2 million, or 3.6%, primarily due to an increase in New Castle County, Delaware tax rates on utility plant, an increase in utility plant subject to taxation and an increase in payroll taxes. Property taxes are assessed on land, buildings and certain utility plant, which include the footage and size of pipe, hydrants and wells.
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.
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 7.7%, to $13.1 million in 2024, from $12.2 million in 2023.
Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties. Our long-lived assets consist primarily of utility plant in service and regulatory assets.
Such tax-related regulatory assets and liabilities are reported at the revenue requirement level and amortized to income as the related temporary differences reverse, generally over the lives of the related properties.
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.
The volume of water sold to residential customers increased to 4,522 million gallons in 2024 compared to 4,340 million gallons in 2023, a 4.2% increase. The number of residenti al customers served increased by approximately 1,500, or 1.7%, in 2024.
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.
Total revenue increased $9.1 million and interest charges decreased $0.4 million, offset by a $5.4 million increase in total operating expenses and $0.4 million decrease in other income. Part I, Item 7.
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.
Deferred income taxes 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.
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.
Approximately $7.5 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.
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.
This increase is primarily due to an increase in SLP Plan revenue, partially offset by a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure that was mostly completed in prior years .
The expansion of our exclusive franchise areas elsewhere in Maryland and the award of contracts will similarly enhance our operations within the state. Our ability to develop partnerships with various county governments, municipalities and developers has provided a number of opportunities.
The expansion of our exclusive franchise areas elsewhere in Maryland and the award of contracts will similarly enhance our operations within the state. Our ability to develop partnerships with various county governments, municipalities and developers has provided a number of opportunities. In recent years, we have completed several acquisitions including asset purchase agreements with municipal and developer/homeowner association operated systems.
Estimates are made on an individual customer basis, using one of three methods: the previous year’s consumption in the same period, the previous billing period’s consumption, or averaging.
As actual usage amounts are received, adjustments are made to the unbilled estimates in the next billing cycle based on the actual results. Estimates are made on an individual customer basis, using one of three methods: the previous year’s consumption in the same period, the previous billing period’s consumption, or averaging.
Operating Expenses Operating expenses, excluding depreciation and income taxes, increased $0.2 million, or 0.4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Operating Expenses Operating expenses, excluding depreciation and income taxes, increased $4.1 million, or 7.3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. Utility operating expenses increased $3.6 million, or 7.8%.
Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection agreement with the Chester Water Authority.
These fixed rate electric supply contracts are for normal purchases and are not derivative instruments. Payments for unconditional purchase obligations reflect minimum water purchase obligations based on rates that are subject to change under an interconnection agreement with the Chester Water Authority.
Our strategy has included a focus on building strategic partnerships with county governments, municipalities and developers. By providing water and wastewater services, we believe we are positioned as the primary resource for developers and communities throughout the Delmarva Peninsula seeking to fill both needs simultaneously.
By providing water and wastewater services, we believe we are positioned as the primary resource for developers and communities throughout the Delmarva Peninsula seeking to fill both needs simultaneously.
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.
Our total obligations related to interest and principal payments on indebtedness, rental payments, elevated storage tank agreements and water service interconnection agreements for 2025 are anticipated to be approximately $11.6 million.
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.
The interest rate is a one-month Daily Secured Overnight Financing Rate, or 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%.
Water sales revenue increased $1.7 million, or 2.2%, for the year ended December 31, 2023 from the corresponding period in 2022, primarily as a result of a temporary rate increase of net 7.50% of gross water sales placed into effect on November 28, 2023, as permitted under Delaware law, until permanent rates are determined by the DEPSC, and an increase in overall water consumption.
Water sales revenue increased $8.0 million, or 10.1%, for the year ended December 31, 2024 from the corresponding period in 2023, primarily as a result of a temporary rate increase of 14.6% of gross water sales placed into effect on November 28, 2023, as permitted under Delaware law.
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.
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. As of December 31, 2024, the number of Delaware wastewater customers increased approximately 6.5% compared to December 31, 2023.
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.
Approximately $5.8 million will be invested in the ongoing construction of a regional wastewater treatment plant along with improvements to existing wastewater treatment plants and wastewater pumping stations. Approximately $4.0 million will be invested in the relocation of facilities because of government mandates. Approximately $2.7 million will be invested to upgrade elevated storage tanks.
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.
As of December 31, 2024, there was $20.0 million of available funds under this line of credit. The interest rate for borrowings under this line is either 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 the earlier of May 20, 2024 or any date on which Citizens demands payment. The Company expects to renew this line of credit.
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 19, 2025 or any date on which Citizens demands payment. The Company expects to renew this line of credit.
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.
This increase is primarily due to an increase in wastewater revenue associated with an increase in the number of customers served. Non-Utility Operating Revenue Non-utility operating revenue, derived from non-regulated water and wastewater operations, increased by 1.7%, to $6.7 million in 2024 from $6.6 million in 2023.
We record water service revenue, including amounts billed to customers, on a cycle basis and unbilled amounts based upon estimated usage from the date of the last meter reading to the end of the accounting period. As actual usage amounts are received, adjustments are made to the unbilled estimates in the next billing cycle based on the actual results.
Senior management has discussed the selection and development of our critical accounting estimates with the Audit Committee of the Board of Directors. Revenues We record water service revenue, including amounts billed to customers, on a cycle basis and unbilled amounts based upon estimated usage from the date of the last meter reading to the end of the accounting period.
Artesian Water expects to renew this line of credit.
The term of this line of credit expires on October 31, 2025. Artesian Water expects to renew this line of credit.
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.
Operating Activities One of our primary sources of liquidity for the year ended December 31, 2024 was $36.8 million provided by cash flow from operating activities, compared to $31.9 million for the year ended December 31, 2023. The increase in cash flows from operating activities is primarily due to changes in net income, materials and supplies, and income tax receivable.
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.
In January 2022, following the acquisition of Tidewater Environmental Services, Inc. dba Artesian Wastewater, or TESI, assumed an electric supply contract with WGL Energy that was effective through December 2024. In November 2024, TESI entered into a short-term electric supply contract with WGL Energy effective December 2024 through May 2025. The fixed rate was increased 44.4% starting in December 2024.
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.
Commercial Water service revenues from commercial customers in 2024 amounted to $19.4 million, an increase of $1.8 million, or 10.1%, above the $17.6 million in 2023, primarily due to a rate increase placed into effect on November 28, 2023.
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.
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) $ 7,870 $ 15,659 $ 39,045 $ 198,313 $ 260,887 State revolving fund loans (principal and interest) 1,144 2,130 2,130 9,662 15,066 Promissory note (principal and interest) 962 1,924 1,925 8,689 13,500 Asset purchase contractual obligation (principal and interest) 333 647 --- --- 980 Lines of credit --- --- --- --- --- Operating leases 28 56 42 1,321 1,447 Operating agreements 38 31 4 --- 73 Unconditional purchase obligations 928 1,000 114 260 2,302 Tank painting contractual obligation 313 --- --- --- 313 Total contractual cash obligations $ 11,616 $ 21,447 $ 43,260 $ 218,245 $ 294,568 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 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.
Government and Other Government and other water service revenues in 2024 amounted to $14.7 million, an increase of $1.9 million, or 14.8%, above the $12.8 million in 2023, primarily due to a rate increase placed into effect on November 28, 2023 and an increase in overall water consumption.
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.
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. 24 Table of Contents We expect that our net investments in utility plant in 2025 will be approximately $46.4 million.
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.
In addition, 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.
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.
Cash flows provided by financing activities decreased due to the net proceeds from the issuance of Class A Non-Voting Stock in May 2023 and June 2023 as well as decreased contributions in aid of construction and borrowings on lines of credit. We have several sources of liquidity to finance our investment in utility plant and other fixed assets.
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 .
Results of Operations 2024 Compared to 2023 Operating Revenues Revenues totaled $108.0 million for the year ended December 31, 2024, an increase of $9.1 million, or 9.2%, over the revenues for the year ended December 31, 2023 .
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.
The volume of water sold to commercial customers increased to 2,277 million gallons in 2024 compared to 2,231 million gallons sold in 2023, an increase of 2.1%.
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%.
The volume of water sold to government and other customers increased to 1,320 million gallons in 2024 compared to 1,260 million gallons in 2023, an increase of 4.8%.
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.
Other Income Other income decreased $0.4 million, primarily due to a decrease in allowance for funds used during construction, or AFUDC, as a result of lower long-term construction activity subject to AFUDC for the twelve months ended December 31, 2024 compared to the same period in 2023.
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 following chart summarizes our investment in plant and systems over the past three fiscal years In thousands 2024 2023 2022 Source of supply, treatment and pumping $ 4,796 $ 18,339 $ 9,100 Transmission and distribution 31,683 37,175 30,808 General plant 2,251 4,553 3,856 Wastewater facilities 8,346 3,353 5,613 Allowance for Funds Used During Construction, AFUDC, equity portion (1,134 ) (1,243 ) (894 ) Total $ 45,942 $ 62,177 $ 48,483 Of the $62.6 million gross investment expected in 2025 approximately $16.2 million will be for extending transmission and distribution facilities to address service needs in growth areas of our service territory.
“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.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K includes a comparative discussion of the years ended December 31, 2023 and 2022 and is incorporated herein by reference.
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.
For the year ended December 31, 2024, approximately 9.4 billion gallons of water were distributed in our Delaware systems and approximately 106.7 million gallons of water were distributed in our Maryland systems. Regulated Wastewater Subsidiaries Artesian Wastewater and TESI own wastewater collection and treatment infrastructure and provide regulated wastewater services to customers in Sussex County, Delaware.
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 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. SLP Plan customers are billed a flat monthly or quarterly rate, which contributes to providing a revenue stream unaffected by weather.
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.
At closing, Artesian Water paid approximately $3.4 million. The balance 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 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.
The Company believes the net investment in utility plant will continue to be recovered through rates charged to customers. 25 Table of Contents Financing Activities For the year ended December 31, 2024, cash flows provided by financing activities were $7.1 million, compared to $31.4 million for the year ended December 31, 2023.
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.
Approximately $2.7 million will be invested in the construction of force mains used for the transmission of wastewater to plants. Additionally, we will refund $0.5 million to customers, real estate developers and builders related to previous advances for construction they provided to Artesian for distribution facilities on their properties.
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.
This increase is primarily due to an increase in wastewater revenue associated with an increase in the number of customers served. 22 Table of Contents Non-utility operating revenue increased approximately $0.1 million, or 1.7%, for the year ended December 31, 2024 compared to the same period in 2023, primarily due to an increase in SLP Plan revenue, partially offset by a decrease in contract service revenue related to a contract for the design and construction of wastewater infrastructure that was mostly completed in prior years.
Strategic Direction and Recent Developments Our strategy is to increase customer growth, revenues, earnings and dividends by expanding our water, wastewater and SLP Plan services across the Delmarva Peninsula. We remain focused on providing superior service to our customers and continuously seek ways to improve our efficiency and performance.
As of December 31, 2024, the eligible customers enrolled in the WSLP Plan, the SSLP Plan and the ISLP Plan increased 3.1%, 4.0% and 2.2%, respectively, compared to December 31, 2023. 20 Table of Contents Strategic Direction and Recent Developments Our strategy is to increase customer growth, revenues, earnings and dividends by expanding our water, wastewater and SLP Plan services across the Delmarva Peninsula.
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.
Federal and state income tax expense increased $1.0 million, or 15.2%, primarily due to higher pre-tax income, lower state net operating loss valuation allowance, and higher regulatory deferred income tax amortization in 2024 compared to 2023.
Short-term debt interest expense increased $0.1 million, primarily related to higher interest rates. The average short-term interest rate for the twelve months ended December 31, 2023 was 6.27% compared to 3.04% for the same period in 2022. Net Income Our net income applicable to common stock decreased $1.3 million, or 7.2%.
Interest Charges Interest charges decreased $0.4 million, primarily due to a decrease in short-term debt interest related to lower borrowing levels on the Company’s lines of credit. Net Income Our net income applicable to common stock increased $3.7 million, or 22.1%.
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.
During 2024, these investments include relocation of facilities as a result of government mandates, renewals associated with the rehabilitation of aging infrastructure, installation of new mains, upgrading elevated storage tanks, purchase of new transportation equipment, upgrading and replacing our meter reading equipment, construction of a new wastewater treatment plant and upgrading existing pumping stations to better serve our customers .
Removed
Artesian Water filed an initial request with the DEPSC on April 28, 2023, further supplemented with a request filed on November 30, 2023, to implement new rates to meet a requested increase in revenue of 22.66%, or approximately $16.7 million, on an annualized basis.
Added
Artesian Wastewater Maryland is able to provide regulated wastewater services to customers in Maryland. It is not currently providing these services in Maryland.
Removed
The actual effective increase is less than 22.66% since Artesian Water has been permitted to recover specific investments made in infrastructure through the assessment of a 7.50% Distribution System Improvement Charge, or DSIC.
Added
There has been consistent customer growth over the years.
Removed
Since the DSIC rate is set to zero when temporary rates are placed into effect, customers would experience an incremental increase of 15.16%, the net of the overall 22.66% increase less the DSIC rate of 7.50% currently in effect, if the requested increase is granted in full by the DEPSC.
Added
We remain focused on providing superior service to our customers and continuously seek ways to improve our efficiency and performance. Our strategy has included a focus on building strategic partnerships with county governments, municipalities and developers.
Removed
Artesian Water filed an interim rates application, which was approved, to place into effect on November 28, 2023 a temporary base rate increase of 15% of gross water sales on an annual basis and to reduce the 7.50% DSIC rate to zero, with such interim rates subject to refund, until permanent rates are determined by the DEPSC.
Added
In April 2024, Artesian Wastewater received a permit from the Delaware Department of Natural Resources and Environmental Control for construction of a 625,000 gallon per day regional wastewater treatment facility, including a primary receiving headworks at its Sussex Regional Recharge Facility, or SRRF.
Removed
This is discussed further in our Notes to Consolidated Financial Statements – Note 13 – Regulatory Proceedings. 21 Table of Contents Regulated Wastewater Subsidiaries Artesian Wastewater and TESI own wastewater collection and treatment infrastructure and provide regulated wastewater services to customers in Sussex County, Delaware. Artesian Wastewater Maryland is able to provide regulated wastewater services to customers in Maryland.
Added
Under its previous permit, SRRF provided solely land disposal services for a single commercial processing and treatment plant. Under its new permit, SRRF will continue providing those disposal services alongside the new treatment plant. The new treatment facility will provide service for Artesian Wastewater’s regional system comprised primarily of residential and small commercial customers.
Removed
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.

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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 changeOur risks associated with price increases in chemicals, electricity and other commodities are mitigated by our ability to recover our costs through rate increases to our customers. We have also sought to mitigate future significant electric price increases by signing multi-year supply contracts at fixed prices. 29 Table of Contents
Biggest changeWe have also sought to mitigate future significant electric price increases by signing multi-year supply contracts at fixed prices. 27 Table of Contents
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.
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.
In 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.
In addition, the Company has interest rate exposure on $60 million of variable rate lines of credit with two banks. As of December 31, 2024, there were no outstanding balances on the lines of credit. Increases in variable interest rates result in an increase in the cost of borrowing on these variable rate lines of credit.
Removed
An increase in the variable interest rates has resulted and is expected to continue to result in an increase in the cost of borrowing on these variable rate lines of credit. Also, changes in SOFR could affect our operating results and liquidity. We are also exposed to market risk associated with changes in commodity prices.
Added
We are also exposed to market risk associated with changes in commodity prices. Our risks associated with price increases in chemicals, electricity and other commodities are mitigated by our ability to recover our costs through rate increases to our customers.

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