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What changed in Essential Utilities, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Essential Utilities, Inc.'s 2024 and 2025 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 2025 report.

+426 added−325 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Essential Utilities, Inc.'s 2025 10-K

426 paragraphs added · 325 removed · 265 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

81 edited+35 added−10 removed125 unchanged
Biggest changeInformation concerning revenues, net income, significant segment expenses and related financial information for the Regulated Water and Regulated Natural Gas segments and Other and eliminations for 2024, 2023, and 2022, is set forth in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 18 – Segment Information in the Notes to Consolidated Financial Statements which is contained in Item 8 of this Annual Report. 2 Table of Contents The following table summarizes our operating revenues, by utility customer class, for the Regulated Water and Regulated Natural Gas segments and Other and eliminations for the year ended December 31, 2024: Operating Revenues (000's) Operating Revenues (%) Residential water $ 662,909 31.8% Commercial water 186,534 8.9% Fire protection 42,409 2.0% Industrial water 34,831 1.7% Other water 80,964 3.9% Total water 1,007,647 48.3% Wastewater 199,422 9.6% Other utility 14,811 0.7% Regulated Water segment total 1,221,880 58.6% Residential gas 504,426 24.2% Commercial gas 100,662 4.8% Industrial gas 2,279 0.1% Gas transportation 194,413 9.3% Other utility 41,211 2.0% Regulated Natural Gas segment total 842,991 40.4% Other and eliminations 21,242 1.0% Consolidated $ 2,086,113 100.0% Customers and Seasonality of Business Our water utility customer base is diversified among residential water, commercial water, fire protection, industrial water, other water, wastewater customers, and other utility customers (consisting of contracted services that are associated with the utility operations).
Biggest changeThe following table summarizes our operating revenues, by utility customer class, for the Regulated Water and Regulated Natural Gas segments and Other and eliminations for the year ended December 31, 2025: Operating Revenues (000's) Operating Revenues (%) Residential water $ 731,818 29.6% Commercial water 208,617 8.4% Fire protection 46,998 1.9% Industrial water 41,619 1.7% Other water 63,537 2.6% Total water 1,092,589 44.2% Wastewater 223,103 9.0% Other utility 10,937 0.4% Regulated Water segment total 1,326,629 53.6% Residential gas 708,049 28.6% Commercial gas 141,275 5.7% Industrial gas 3,150 0.1% Gas transportation 242,186 9.8% Other utility 23,215 1.0% Regulated Natural Gas segment total 1,117,875 45.2% Other and eliminations 30,111 1.2% Consolidated $ 2,474,615 100.0% Customers and Seasonality of Business Our water utility customer base is diversified among residential water, commercial water, fire protection, industrial water, other water, wastewater customers, and other utility customers (consisting of contracted services that are associated with the utility operations).
In addition to the final rule, the EPA issued a separate CERCLA enforcement discretion policy that makes it clear that EPA will focus enforcement on parties who significantly contributed to the release of PFAS chemicals into the environment, including parties that have manufactured PFAS or used PFAS in the manufacturing process, federal facilities, and other industrial parties.
In addition to the final rule, the EPA issued a separate CERCLA enforcement discretion policy that makes it clear that the EPA will focus enforcement on parties who significantly contributed to the release of PFAS chemicals into the environment, including parties that have manufactured PFAS or used PFAS in the manufacturing process, federal facilities, and other industrial parties.
Since regulated natural gas revenues are affected by the cost of gas, higher gas costs, as well as general economic conditions, may cause customers to conserve usage, or seek alternative energy sources. In addition, higher gas costs result in an increase to our purchased gas inventory, which requires additional borrowings under credit facilities, resulting in higher interest expense.
Regulated natural gas revenues are affected by the cost of gas, higher gas costs, as well as general economic conditions, which may cause customers to conserve usage, or seek alternative energy sources. In addition, higher gas costs result in an increase to our purchased gas inventory, which requires additional borrowings under credit facilities, resulting in higher interest expense.
Our water supplies are primarily self-supplied and processed at twenty-four surface water treatment plants located in five states, and numerous well stations located in the states in which we conduct business. Approximately 6.6% of our water supplies are provided through water purchased from other water suppliers.
Our water supplies are primarily self-supplied and processed at twenty-four surface water treatment plants located in five states, and numerous well stations located in the states in which we conduct business. Approximately 6.8% of our water supplies are provided through water purchased from other water suppliers.
In the states in which we operate, we are primarily subject to economic regulation by the following state utility commissions: State Utility Commission Pennsylvania Pennsylvania Public Utility Commission Ohio Public Utilities Commission of Ohio North Carolina North Carolina Utilities Commission Texas Public Utility Commission of Texas Illinois Illinois Commerce Commission New Jersey New Jersey Board of Public Utilities Kentucky Public Service Commission of Kentucky Virginia Virginia State Corporation Commission Indiana Indiana Utility Regulatory Commission Our water and wastewater operations are comprised of 38 rate divisions, and our natural gas operations are comprised of two rate divisions.
In the states in which we operate, we are primarily subject to economic regulation by the following state utility commissions: State Utility Commission Pennsylvania Pennsylvania Public Utility Commission Ohio Public Utilities Commission of Ohio North Carolina North Carolina Utilities Commission Texas Public Utility Commission of Texas Illinois Illinois Commerce Commission New Jersey New Jersey Board of Public Utilities Kentucky Public Service Commission of Kentucky Virginia Virginia State Corporation Commission Indiana Indiana Utility Regulatory Commission Our water and wastewater operations are comprised of 37 rate divisions, and our natural gas operations are comprised of two rate divisions.
Diversity, Equity and Inclusion - Diversity of backgrounds, ideas, thoughts, and experiences is essential to our culture and the way we do business. Creating an environment where our differences are valued and where every person feels a sense of belonging and engagement supports a thriving organization that cares about our customers and ensures our continued long-term success.
Inclusion Initiatives - Diversity of backgrounds, ideas, thoughts, and experiences is essential to our culture and the way we do business. Creating an environment where our differences are valued and where every person feels a sense of belonging and engagement supports a thriving organization that cares about our customers and ensures our continued long-term success.
We own and operate underground natural gas storage facilities with capacity of 10.5 billion cubic feet (Bcf). Total working capacity is 5.3 Bcf for use during the heating season with a maximum daily withdrawal rate of 115.5 million cubic feet (MMcf). Additionally, we have contracted for off-system storage from interstate pipelines.
We own and operate underground natural gas storage facilities with capacity of 10.5 billion cubic feet (Bcf). Total working capacity is 5.3 Bcf for use during the heating season with a maximum daily withdrawal rate of 123.5 million cubic feet (MMcf). Additionally, we have contracted for off-system storage from interstate pipelines.
Residential water and wastewater customers make up the largest component of our water utility customer base, with these customers representing approximately 67%, 69%, and 68%, of our water and wastewater revenues for 2024, 2023, and 2022, respectively. Substantially all of our water utility customers are metered, which allows us to measure and bill for our customers’ water consumption.
Residential water and wastewater customers make up the largest component of our water utility customer base, with these customers representing approximately 68%, 67%, and 69%, of our water and wastewater revenues for 2025, 2024, and 2023, respectively. Substantially all of our water utility customers are metered, which allows us to measure and bill for our customers’ water consumption.
We are actively exploring opportunities to expand our water and wastewater utility operations through acquisitions or other growth ventures. During the three-year period ended December 31, 2024, we expanded our utility operations by completing 12 acquisitions of water or wastewater utilities or other similar assets.
We are actively exploring opportunities to expand our water and wastewater utility operations through acquisitions or other growth ventures. During the three-year period ended December 31, 2025, we expanded our utility operations by completing 12 acquisitions of water or wastewater utilities or other similar assets.
Lancaster Avenue Bryn Mawr, PA 19010-3489 Telephone: 610-527-8000 The references to our web site and the SEC’s web site are intended to be inactive textual references only, and the contents of those web sites are not incorporated by reference herein and should not be considered part of this or any other report that we file with or furnish to the SEC. ‎ 16 Table of Contents
Lancaster Avenue Bryn Mawr, PA 19010-3489 Telephone: 610-527-8000 The references to our web site and the SEC’s web site are intended to be inactive textual references only, and the contents of those web sites are not incorporated by reference herein and should not be considered part of this or any other report that we file with or furnish to the SEC. ‎ 18 Table of Contents kk
In order to promote a culture of diversity and inclusion, we have conducted educational workshops to foster better understanding of different points of view and how pre-conceived notions impact relationships at work. We also support diverse segments of our workforce through employee resource groups, such as the Black Resource Group, LGBTQ+ Pride Resource Group, and Women’s Resource Group.
In order to promote a culture of inclusion, we have conducted educational workshops to foster better understanding of different points of view and how pre-conceived notions impact relationships at work. We also support diverse segments of our workforce through employee resource groups, such as the Black Resource Group, LGBTQ+ Pride Resource Group, Women in Energy Group, and Women’s Resource Group.
Through our charitable giving program, employees are encouraged to engage in philanthropy through the United Way campaign and matching gift program. Essential matches 100%, up to a maximum of $500 per calendar year per employee, for personal contributions made by an employee or their spouse or domestic partner to qualifying nonprofit organizations.
Through our charitable giving program, employees are encouraged to 17 Table of Contents engage in philanthropy through the United Way campaign and matching gift program. Essential matches 100%, up to a maximum of $500 per calendar year per employee, for personal contributions made by an employee or their spouse or domestic partner to qualifying nonprofit organizations.
We plan system improvements and additions to capacity in response to normal replacement and renewal needs, changing regulatory standards, changing patterns of consumption, and increased demand from customer growth. We also have long-term 5 Table of Contents planning processes and maintain contingency plans to minimize the potential impact on service caused by climate variability.
We plan system improvements and additions to capacity in response to normal replacement and renewal needs, changing regulatory standards, changing patterns of consumption, and increased demand from customer growth. We also have long-term planning processes and maintain contingency plans to minimize the potential impact on service caused by climate variability.
This figure could increase as plans for construction execution are refined or if additional sites require treatment in the future. Additionally, the Company estimates annual operating expenses of approximately five percent of the installed capital expenditures, in today’s dollars, related to testing, 11 Table of Contents treatment, and disposal.
This figure could increase as plans for construction execution are refined or if additional sites require treatment in the future. Additionally, the Company estimates annual operating expenses of approximately five percent of the installed capital expenditures, in today’s dollars, related to testing, treatment, and disposal.
We utilize the “70/20/10 model” for development, which holds that 70% of learning happens on the job through stretch goals and critical assignments, 20% of learning occurs through mentoring and coaching and involvement in professional and industry related activities, and 10% of learning occurs within a virtual or live learning environment.
We utilize the “70/20/10 model” for development, which holds that 70% of learning happens on the job through stretch goals and critical assignments, 20% of learning occurs through mentoring and coaching and involvement in professional and industry 16 Table of Contents related activities, and 10% of learning occurs within a virtual or live learning environment.
Furthermore, our Roaring Creek Pennsylvania treatment plant has received the Phase IV Excellence Award, the highest honor achieved in the Partnership Program. Safety Standards - Our facilities and operations may be subject to inspections by representatives of the Occupational Safety and Health Administration from time to time.
Furthermore, our Roaring Creek Pennsylvania treatment plant has received the Phase IV Excellence Award, the highest honor achieved in the Partnership Program. 14 Table of Contents Safety Standards - Our facilities and operations may be subject to inspections by representatives of the Occupational Safety and Health Administration from time to time.
These include a Transmission Integrity Management Program which outlines methods for handling threats and maintaining the integrity of the pipeline; a Distribution Integrity Management Program which is dedicated to the safe operation of the distribution system that delivers natural gas to customers; and, a Storage Integrity Management Plan that 13 Table of Contents governs the safe operation, maintenance, and integrity testing of company-owned storage facilities.
These include a Transmission Integrity Management Program which outlines methods for handling threats and maintaining the integrity of the pipeline; a Distribution Integrity Management Program which is dedicated to the safe operation of the distribution system that delivers natural gas to customers; and, a Storage Integrity Management Plan that governs the safe operation, maintenance, and integrity testing of company-owned storage facilities.
In Pennsylvania, we filed a Long-Term Infrastructure Replacement program with the Pennsylvania Public Utility Commission where we have committed to the replacement of bare steel and cast-iron pipe.
In Pennsylvania, we have a Long-Term Infrastructure Replacement program with the Pennsylvania Public Utility Commission (PAPUC) where we have committed to the replacement of bare steel and cast-iron pipe.
To encourage managers to promote a safe environment, related metrics are incorporated in management’s incentive compensation plans. 14 Table of Contents The Company provide s free access to an employee assistance program, which offers a variety of innovative, flexible, and convenient employee health and wellness programs.
To encourage managers to promote a safe environment, related metrics are incorporated in management’s incentive compensation plans. The Company provide s free access to an employee assistance program, which offers a variety of innovative, flexible, and convenient employee health and wellness programs.
It is our policy to obtain and maintain all required permits and approvals for the discharges from our water and wastewater facilities, and to comply with all conditions of those permits and other regulatory requirements. A program is in place to monitor facilities for compliance with permitting, monitoring and reporting for wastewater discharges.
It is our policy to obtain and maintain all required permits 13 Table of Contents and approvals for the discharges from our water and wastewater facilities, and to comply with all conditions of those permits and other regulatory requirements. A program is in place to monitor facilities for compliance with permitting, monitoring and reporting for wastewater discharges.
Without this surcharge, a utility absorbs all of the depreciation and capital costs of these projects between base rate increases. The gap between the time that a capital project is completed and the recovery of its costs in rates is known as regulatory lag.
Without this surcharge, a utility absorbs all of the depreciation and capital 8 Table of Contents costs of these projects between base rate increases. The gap between the time that a capital project is completed and the recovery of its costs in rates is known as regulatory lag.
Our overall voluntary attrition rate of 6.7% in 2024 was lower than last year’s voluntary attrition rate of 7.6%. We believe our low voluntary attrition rate is in part a result of the Company’s continued commitment to employee development, competitive pay and benefits, and our culture.
Our overall voluntary attrition rate of 6.3% in 2025 was lower than last year’s voluntary attrition rate of 6.7%. We believe our low voluntary attrition rate is in part a result of the Company’s continued commitment to employee development, competitive pay and benefits, and our culture.
In addition, “Other” and eliminations include corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas segments, because they would not be recoverable as a cost of utility service, and intersegment eliminations.
In addition, “Other” and eliminations include corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas 2 Table of Contents segments, because they would not be recoverable as a cost of utility service, and intersegment eliminations.
Competition from renewable energy sources such as solar and wind is likely to increase as the political environment currently favors these energy sources through incentives or by placing restrictions on emissions from the burning of fossil fuels.
Competition from renewable energy sources such as solar and wind is likely to increase as the political 10 Table of Contents environment currently favors these energy sources through incentives or by placing restrictions on emissions from the burning of fossil fuels.
In Pennsylvania, our distribution system is connected to six interstate pipelines, where we maintain capacity we believe is sufficient to meet our customers’ gas requirements.
In Pennsylvania, our distribution system is connected to six interstate pipelines, where we maintain capacity we believe is sufficient to meet our customers’ gas requirements. In Kentucky, our distribution system is connected to four interstate pipelines, where we maintain capacity we believe is sufficient to meet our customers’ gas requirements.
Aqua Pennsylvania’s service territory is located in the suburban areas in counties north and west of the City of Philadelphia and in 27 other counties in Pennsylvania. Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas service to approximately 745,000 customers in western Pennsylvania and Kentucky.
Aqua Pennsylvania’s service territory is located in the suburban areas in counties north and west of the City of Philadelphia and in 28 other counties in Pennsylvania. Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas service to approximately 747,000 customers in western Pennsylvania and Kentucky.
Water usage is also affected by changing consumption patterns by our customers, resulting from such causes as increased water conservation and the installation of water saving devices and appliances that can result in decreased water usage.
Water 3 Table of Contents usage is also affected by changing consumption patterns by our customers, resulting from such causes as increased water conservation and the installation of water saving devices and appliances that can result in decreased water usage.
After a thorough review and inspection of our dams by professional outside engineering firms, we believe that all 18 dams are structurally sound and well-maintained, except as described below. These inspections provide recommendations for ongoing rehabilitation which we include in our capital improvement program. The Company has approximately $39,000,000 in capital improvements budgeted between 2025 and 2029 for dam improvements.
After a thorough review and inspection of our dams by professional outside engineering firms, we believe that all 18 dams are structurally sound and well-maintained, except as described below. These inspections provide recommendations for ongoing rehabilitation which we include in our capital improvement program. The Company has approximately $54,000,000 in capital improvements budgeted between 2026 and 2030 for dam improvements.
The nation’s water systems 4 Table of Contents range in size from large government-owned systems, such as the New York City water system, which serves approximately 8.5 million people, to small systems, where a few customers share a common well.
The nation’s water systems range in size from large government-owned systems, such as the New York City water system, which serves approximately 8.5 million people, to small systems, where a few customers share a common well.
During the year ended December 31, 2024, our operating revenues for our Regulated Water segment were derived principally from the following states: approximately 55% in Pennsylvania, 11% in Ohio, 9% in Texas, 8% in Illinois, and 7% in North Carolina.
During the year ended December 31, 2025, our operating revenues for our Regulated Water segment were derived principally from the following states: approximately 57% in Pennsylvania, 11% in Ohio, 9% in Illinois, 8% in Texas, and 7% in North Carolina.
One of our largest operating subsidiaries, Aqua Pennsylvania, Inc., or Aqua Pennsylvania, accounted for approximately 55% of operating revenues and approximately 67% of income for our Regulated Water segment in 2024. As of December 31, 2024, Aqua Pennsylvania provided water or wastewater services to approximately one-half of the total number of water and wastewater customers we serve.
One of our largest operating subsidiaries, Aqua Pennsylvania, Inc., or Aqua Pennsylvania, accounted for approximately 57% of operating revenues and approximately 72% of income for our Regulated Water segment in 2025. As of December 31, 2025, Aqua Pennsylvania provided water or wastewater services to approximately one-half of the total number of water and wastewater customers we serve.
As of December 31, 2024, we employed a total of 3,291 full-time employees. Our subsidiaries are parties to 23 labor agreements with labor unions covering 1,664 employees. The labor agreements expire at various times up until 2028. Health and Safety - Safety is the foundation of our business and guides all our employees’ actions.
As of December 31, 2025, we employed a total of 3,303 full-time employees. Our subsidiaries are parties to 23 labor agreements with labor unions covering 1,709 employees. The labor agreements expire at various times up until 2029. Health and Safety - Safety is the foundation of our business and guides all our employees’ actions.
Voluntary Attrition and Turnover - The Company measures turnover rates of its employees in assessing the Company’s overall human capital. The Company’s voluntary attrition rate (not including retirements) for 2024 was 5.3% at the executive and senior management level, 4.5% at the mid-level manager level, 8.0% at the professional level, and 7.0% across all other employees.
Voluntary Attrition and Turnover - The Company measures turnover rates of its employees in assessing the Company’s overall human capital. The Company’s voluntary attrition rate (not including retirements) for 2025 was 2.6% at the executive and senior management level, 4.8% at the mid-level manager level, 6.4% at the professional level, and 6.6% across all other employees.
Pursuant to the LCRR, the Company completed the submission of its initial lead service line inventories on October 14, 2024. The Company estimates that approximately 6% of its regulated water service systems contain some lead or galvanized service lines requiring replacement.
Pursuant to the LCRR, the Company completed the submission of its initial lead service line inventories on October 14, 2024. As of December 31, 2025, the Company estimates that approximately 5.2% of its regulated water service systems contain some lead or galvanized service lines requiring replacement.
In Kentucky, we have a pipe replacement program tariff, which allows adjustment of regulated rates annually to earn a return on capital expenditures incurred subsequent to our last rate case which were associated with the replacement of bare steel and vintage plastic pipe. Gas costs incurred to serve our natural gas customers represent a significant operating expense.
In Kentucky, we have a pipe replacement program tariff, which allows adjustment of regulated rates annually to earn a return on capital expenditures incurred subsequent to our last rate case which were associated with the replacement of bare steel and vintage plastic pipe.
These surcharges provided revenues of $45,749,987 in 2024, $20,260,881 in 2023, and $26,902,294 in 2022. In the majority of our natural gas service territories, the public utility commissions have authorized bare steel and cast-iron replacement programs.
These surcharges provided revenues of $15,189,189 in 2025, $45,749,987 in 2024, and $20,260,881 in 2023. In our natural gas service territories, the public utility commissions have authorized bare steel and cast-iron replacement programs.
These laws and regulations establish criteria and standards for drinking water and for wastewater discharges. In addition, we are subject to federal and state laws and other regulations relating to solid waste disposal, dam safety, and other aspects of our operations. From time to time, Essential Utilities has acquired, and may acquire, systems that have environmental compliance issues.
In addition, we are subject to federal and state laws and other regulations relating to solid waste disposal, dam safety, and other aspects of our operations. From time to time, Essential Utilities has acquired, and may acquire, systems that have environmental compliance issues.
Overall, for the five year period of 2020 through 2024, our utility customer base, adjusted to exclude customers associated with utility system dispositions, increased at an annual compound rate of 12.9%.
Overall, for the five year period of 2021 through 2025, our utility customer base, adjusted to exclude customers associated with utility system dispositions, increased at an annual compound rate of 1.1%.
The Company currently has budgeted approximately $210,000,000 of capital expenditures over the next five years for lead and galvanized service line replacement. Management is still reviewing the final LCRI and its impact to the Company. Partnership for Safe Water Program – Essential Utilities is a proud participant in the American Water Works Association’s (AWWA) Partnership for Safe Water Program.
The Company currently has budgeted approximately $174,000,000 of capital expenditures over the next five years for lead and galvanized service line replacement. Partnership for Safe Water Program – Essential Utilities is a proud participant in the American Water Works Association’s (AWWA) Partnership for Safe Water Program.
We estimate the capital expenditures required to address outstanding environmental compliance issues in our water and wastewater systems and budgeted in our capital program to be approximately $104,000,000, or less than 3% of our expected total water and wastewater capital expenditures over the next five years (2025 -2029).
We estimate the capital expenditures required to address outstanding environmental compliance issues in our water and wastewater systems and budgeted in our capital program to be approximately $175,000,000, or 3.8% of our expected total water and wastewater capital expenditures over the next five years (2026 -2030).
Fair Market Value Legislation – In April 2016, Pennsylvania enacted legislation allowing the public utility commission to utilize fair market value to set ratemaking rate base instead of the depreciated original cost of water or wastewater assets for certain qualifying municipal acquisitions.
Please refer to Note 8 – Income Taxes for more detail. 9 Table of Contents Fair Market Value Legislation – In April 2016, Pennsylvania enacted legislation allowing the public utility commission to utilize fair market value to set ratemaking rate base instead of the depreciated original cost of water or wastewater assets for certain qualifying municipal acquisitions.
These patterns reflect the higher demand for natural gas for heating purposes during the colder months. The impact on our natural gas sales resulting from weather temperatures that are above or below normal is offset partially through our weather normalization adjustment mechanisms in place in Kentucky and in Pennsylvania (effective beginning October 2024).
The impact on our natural gas sales resulting from weather temperatures that are above or below normal is offset partially through our weather normalization adjustment mechanisms in place in Kentucky and in Pennsylvania (effective beginning October 2024).
The increase in our utility customer base has been due to customers added through acquisitions, partnerships with developers, and organic growth (excluding dispositions) as shown below: Year Utility Customer Growth Rate 2024 0.6% 2023 1.0% 2022 1.7% 2021 1.2% 2020 42.9% In 2024, 2023, 2022, 2021, and 2020, our customer count increased by 11,845, 5,875, 31,537, 21,246, and 772,099 customers, respectively, primarily due to the water and wastewater utility systems that we acquired, organic growth, and in 2020, due to the Peoples Gas Acquisition that resulted to the addition of approximately 750,000 natural gas utility customers.
The increase in our utility customer base has been due to customers added through acquisitions, partnerships with developers, and organic growth (excluding dispositions) as shown below: Year Utility Customer Growth Rate 2025 0.8% 2024 0.6% 2023 1.0% 2022 1.7% 2021 1.2% In 2025, 2024, 2023, 2022, and 2021, our customer count increased by 14,707, 11,845, 5,875, 31,537, and 21,246 customers, respectively, primarily due to the water and wastewater utility systems that we acquired and organic growth.
We cannot predict what effect, if any, such changes might have on our operations, but our Regulated Natural Gas segment could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes. Refer to further discussion below in the Environmental, Health and Safety Regulation and Compliance section.
We cannot predict what effect, if any, such changes might have on our operations, but our Regulated Natural Gas segment could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes.
During the year ended December 31, 2024, we experienced 4,288 actual heating degree days (HDDs), which was warmer by 18.2% than the average or normal HDDs for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory.
During the year ended December 31, 2025, we experienced 5,380 actual heating degree days (HDDs), which was colder by 25.5% than the average or normal HDDs for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory.
Economic Regulation Most of our utility operations are subject to regulation by their respective state utility commissions, which have broad administrative power and authority to regulate billing rates, determine franchise areas and conditions of service, approve acquisitions, and authorize the issuance of securities.
Refer to further discussion below in the Environmental, Health and Safety Regulation and Compliance section. 7 Table of Contents Economic Regulation Most of our utility operations are subject to regulation by their respective state utility commissions, which have broad administrative power and authority to regulate billing rates, determine franchise areas and conditions of service, approve acquisitions, and authorize the issuance of securities.
Competition can be intense among the energy sources with price being the primary consideration. This is particularly true for industrial customers who have the ability to switch to alternative fuels. Natural gas generally benefits from a competitive price advantage over oil, electricity, and propane.
This is particularly true for industrial customers who have the ability to switch to alternative fuels. Natural gas generally benefits from a competitive price advantage over oil, electricity, and propane.
During the five year period ended December 31, 2024, our utility customer base including customers associated with utility system acquisitions and dispositions increased from 1,026,704 at January 1, 2020 to 1,869,306 at December 31, 2024. Acquisitions and Other Growth Ventures We believe that acquisitions will continue to be an important source of customer growth for us.
During the five year period ended December 31, 2025, our utility customer base including customers associated with utility system acquisitions and dispositions increased from 1,798,803 at January 1, 2021 to 1,884,013 at December 31, 2025. 4 Table of Contents Acquisitions and Other Growth Ventures Water and Wastewater Systems Acquisitions - We believe that acquisitions will continue to be an important source of customer growth for us.
It is estimated that, in the event we experience a 0.50% decrease in residential water consumption, it would result in a decrease in annual residential water revenue of approximately $3,000,000, which would likely be partially offset by a reduction in incremental water production expenses such as chemicals and power. 3 Table of Contents Our natural gas utility customer base is diversified among residential gas, commercial gas, industrial gas, gas transportation, and other utility.
It is estimated that, in the event we experience a 0.5% decrease in residential water consumption, it would result in a decrease in annual residential water revenue of approximately $3,700,000, which would likely be partially offset by a reduction in incremental water production expenses such as chemicals and power.
The most significant capital improvement remaining to be performed in our dam improvement program is on one dam in Pennsylvania at a total 12 Table of Contents estimated cost of $15,400,000. Design for this dam commenced in 2013 and construction is expected to be completed in 2030.
The most significant capital improvement remaining to be performed in our dam improvement program is on one dam in Pennsylvania at a total estimated cost of $15,000,000. Design for this dam commenced in 2013 and construction is expected to be completed in 2030. An additional four high hazard dams in Pennsylvania were recently added due to an acquisition in 2023.
The flow-through method of recording income tax benefits results in a reduction to current income tax expense and is included in utility customers’ rates, which generally is subject to a collar mechanism. 8 Table of Contents In April 2023, the Internal Revenue Service issued Revenue Procedure 2023-15 which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain , replace, or improve natural gas transmission and distribution property must be capitalized for tax purposes.
In April 2023, the Internal Revenue Service issued Revenue Procedure 2023-15 which provides a safe harbor method of accounting that taxpayers may use to determine whether expenses to repair, maintain , replace, or improve natural gas transmission and distribution property must be capitalized for tax purposes.
As of December 31, 2024, we have no billings under interim rate arrangements for base rate case filings in progress. Furthermore, some utility commissions authorize the use of expense deferrals and amortization to provide for an impact on our operating income by an amount that approximates the requested amount in a rate request.
Furthermore, some utility commissions authorize the use of expense deferrals and amortization to provide for an impact on our operating income by an amount that approximates the requested amount in a rate request.
We estimated that as of December 31, 2023, we have achieved 25% emissions reduction from our 2019 baseline. The Company manages climate-change matters through significant board-level oversight.
Through 2024, we have achieved 28% emissions reduction from our 2019 baseline. The Company manages climate-change matters through significant board-level oversight.
Our total rewards package includes a combination of salaries, short and long-term incentives, health and wellness benefits, retirement benefits, and other benefits which we regularly assess against the current business environment and labor market to ensure they are competitive. ‎ 15 Table of Contents Communication and Engagement –We believe that our employees are critical to our business, and it is essential to have an environment of high engagement and inclusivity in which employees thrive.
Our total rewards package includes a combination of salaries, short and long-term incentives, health and wellness benefits, retirement benefits, and other benefits which we regularly assess against the current business environment and labor market to ensure they are competitive.
The Company is also monitoring ongoing litigation and settlement activity with manufacturers of PFAS in these proceedings. For more information, see Item 8 - Note 9 to the Company’s Notes to Consolidated Financial Statements. Clean Water Act - The Clean Water Act regulates discharges from drinking water and wastewater treatment facilities into lakes, rivers, streams, and groundwater.
The Company is also monitoring ongoing litigation and settlement activity with manufacturers of PFAS in these proceedings. For more information, see Item 8 - Note 10 to the Company’s Notes to Consolidated Financial Statements.
It is our policy to obtain and maintain the permits necessary for the treatment of the wastewater that we return to the environment. Natural Gas Supply and Transportation Facilities - Our natural gas supply strategy is to ensure a dependable gas supply that is economically priced and which is available for delivery when needed.
Natural Gas Supply and Transportation Facilities - Our natural gas supply strategy is to ensure a dependable gas supply that is economically priced and which is available for delivery when needed.
Regulations issued pursuant to the Safe Drinking Water Act set standards regarding the amount of microbial and chemical contaminants and radionuclides in drinking water. On April 10, 2024, the EPA announced the final NPDWR for the treatment of six per- and polyfluoroalkyl substances or compounds (PFAS).
Regulations issued pursuant to the Safe Drinking Water Act set standards regarding the amount of microbial and chemical contaminants and radionuclides in drinking water. 12 Table of Contents On April 10, 2024, the EPA announced the final NPDWR for the treatment of six per- and polyfluoroalkyl substances or compounds (PFAS), namely Perfluorooctanoic acid (PFOA), Perfluorooctanesulfonate (PFOS), Perfluorohexanesulfonic acid (PFHxS), Perfluorononanoic acid (PFNA), Hexafluoropropylene oxide-dimer acid (HFPO-DA or GenX) (commonly known as GenX), and Perfluorobutanesulfonic acid (PFBS).
The Company’s growth in revenues over the past five years is primarily a result of increases in water and wastewater rates, increase in the cost of natural gas in 2021 and 2022, customer growth, and its acquisition in 2020 of Peoples Natural Gas Company LLC and its affiliated companies, or the Peoples Gas Acquisition.
The Company’s growth in revenues over the past five years is primarily a result of increases in water and wastewater rates, increase in the cost of natural gas, and customer growth. See Economic Regulation for a discussion of water, wastewater, and natural gas rates.
Peoples has in place integrity programs designed to maintain the safe storage and delivery of natural gas through transmission and distribution systems in order to ensure the safety of its employees, customers, and the community.
To the extent such rulemakings ultimately impose more stringent requirements on our facilities, we may be required to incur expenditures that may be material. Peoples has in place integrity programs designed to maintain the safe storage and delivery of natural gas through transmission and distribution systems in order to ensure the safety of its employees, customers, and the community.
Our gathering operations could also be subject to additional safety and operational regulations relating to the design, construction, testing, operation, replacement, and maintenance of gathering facilities.
Our Regulated Natural Gas gathering operations could be adversely affected should they be subject in the future to the application of state or federal regulation of rates and services. Our gathering operations could also be subject to additional safety and operational regulations relating to the design, construction, testing, operation, replacement, and maintenance of gathering facilities.
As a regulated utility, we believe there is little competition for the daily water, wastewater, and natural gas service we provide to our customers. ‎ 9 Table of Contents Although our natural gas subsidiaries are not currently in significant direct competition with any other distributors of natural gas in its service areas, we do compete with suppliers of other forms of energy such as fuel oil, electricity, propane, coal, wind, and solar.
Although our natural gas subsidiaries are not currently in significant direct competition with any other distributors of natural gas in its service areas, we do compete with suppliers of other forms of energy such as fuel oil, electricity, propane, coal, wind, and solar. Competition can be intense among the energy sources with price being the primary consideration.
The PGA is subject to periodic review and audit by the state regulatory commissions who also have the authority to disallow previously incurred costs.
The procedures also provide for inclusion in later periods of any variances between actual recoveries representing the estimated costs and actual costs incurred. The PGA is subject to periodic review and audit by the state regulatory commissions who also have the authority to disallow previously incurred costs.
Capital Investment One of the greatest challenges facing the United States is the rehabilitation of our nation’s aging infrastructure. The Company expects to invest approximately $7.8 billion from 2025 through 2029 to meet compliance requirements, improve water and natural gas systems, and better serve customers through improved information technology.
The Company expects to invest approximately $8.7 billion from 2026 through 2030 to meet compliance requirements, improve water and natural gas systems, and better serve customers through improved information technology.
Currently, the Company seeks to acquire businesses in the U.S. regulated sector, focusing on water and wastewater utilities and to opportunistically pursue growth ventures in select market-based activities, such as infrastructure opportunities that are supplementary and complementary to our regulated water utility businesses. 1 Table of Contents In October 2023, the Company completed the sale of its regulated natural gas utility assets in West Virginia, which represented approximately two percent of the Company’s regulated natural gas customers.
Currently, the Company seeks to acquire businesses in the U.S. regulated sector, focusing on water and wastewater utilities and to opportunistically pursue growth ventures in select market-based activities, such as infrastructure opportunities that are supplementary and complementary to our regulated water utility businesses. 1 Table of Contents On October 26, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Water Works Company, Inc.
An additional four high hazard dams in Pennsylvania were recently added due to an acquisition in 2023. These dams are undergoing additional evaluations but have capital improvements budgeted for currently identified needs in the 2025 to 2029 period.
These dams are undergoing additional evaluations but have capital improvements budgeted for currently identified needs in the 2026 to 2030 period.
The Company adopted the methodology on its 2023 tax return. In the second quarter of 2023, based on the tax legislative guidance that was issued, the Company reevaluated the uncertain tax positions related to the Regulated Water Segment and ultimately released a portion of its historical income tax reserves.
Based on this tax legislative guidance, in the second quarter of 2023, the Company reevaluated the uncertain tax positions related to the Regulated Water Segment and reclassified a portion of its historical income tax reserves as a regulatory liability until accounting treatment is determined in its next base rate case.
On occasion, we may 10 Table of Contents voluntarily agree to sell systems or portions of systems in order to help focus our efforts in areas where we have more critical mass and economies of scale or for other strategic reasons.
On occasion, we may voluntarily agree to sell systems or portions of systems in order to help focus our efforts in areas where we have more critical mass and economies of scale or for other strategic reasons. 11 Table of Contents Environmental, Health and Safety Regulation and Compliance The Company’s mission is “to sustain life and improve economic prosperity by safely and reliably delivering Earth’s most essential resources to customers and communities”.
All eight states in which we operate permit us to file a revenue requirement for some form of consolidated rates for all, or some, of the rate divisions in that state. 7 Table of Contents In Ohio, Virginia, North Carolina, Texas, and Kentucky, we may bill our utility customers, in certain circumstances, in accordance with a base rate filing that is pending before the respective regulatory commission, which would allow for interim rates.
In Ohio, Virginia, North Carolina, Texas, and Kentucky, we may bill our utility customers, in certain circumstances, in accordance with a base rate filing that is pending before the respective regulatory commission, which would allow for interim rates. As of December 31, 2025, we have no billings under interim rate arrangements for base rate case filings in progress.
Capital improvements are planned and budgeted to meet normal replacement and renewal needs, anticipated changes in regulations, needs for increased capacity related to projected growth, and to reduce inflow and infiltration to collection systems. The various state utility commissions have generally recognized the operating and capital costs associated with these improvements in setting wastewater rates for current and new customers.
Capital improvements are planned and budgeted to meet normal replacement and renewal needs, anticipated changes in regulations, needs for increased capacity related to projected growth, and to reduce 6 Table of Contents inflow and infiltration to collection systems.
Approximately 27% of the natural gas supply on the system is from locally produced gas, which we gather and transport into our distribution system. Our gathering system is regulated by the Pennsylvania Public Utility Commission which includes various safety, environmental and, in some circumstances, anti-discrimination requirements, and in some instances complaint-based rate regulation.
Our gathering system is regulated by the Pennsylvania Public Utility Commission which includes various safety, environmental and, in some circumstances, anti-discrimination requirements, and in some instances complaint-based rate regulation. Our gathering operations may be subject to ratable take and common purchaser statutes in the states in which we operate.
We integrate environmental, health, and safety requirements into planning, decision-making, construction, operations, and maintenance activities that we perform. Provision of water and wastewater services is subject to regulation under the federal Safe Drinking Water Act, the Clean Water Act, and related state laws, and under federal and state regulations issued under these laws.
Provision of water and wastewater services is subject to regulation under the federal Safe Drinking Water Act, the Clean Water Act, and related state laws, and under federal and state regulations issued under these laws. These laws and regulations establish criteria and standards for drinking water and for wastewater discharges.
The following table reports our operating revenues, by principal state, for our Regulated Water segment, which includes both water and wastewater utility services, Regulated Natural Gas segment, and Other and eliminations for the year ended December 31, 2024: Operating Revenues (000's) Operating Revenues (%) Pennsylvania $ 674,051 32.3% Ohio 136,600 6.5% Texas 107,519 5.2% Illinois 101,194 4.9% North Carolina 88,604 4.2% Other states (1) 113,912 5.5% Regulated Water segment total 1,221,880 58.6% Pennsylvania 786,722 37.7% Kentucky 56,269 2.7% Regulated Natural Gas segment total 842,991 40.4% Other and eliminations 21,242 1.0% Consolidated $ 2,086,113 100.0% (1) Includes our water operating subsidiaries in the following states: New Jersey, Indiana, and Virginia.
Operating Revenues and Segments The following table reports our operating revenues, by principal state, for our Regulated Water segment, which includes both water and wastewater utility services, Regulated Natural Gas segment, and Other and eliminations for the year ended December 31, 2025: Operating Revenues (000's) Operating Revenues (%) Pennsylvania $ 750,575 30.3% Ohio 142,970 5.8% Texas 107,290 4.3% Illinois 115,831 4.7% North Carolina 89,796 3.6% Other states (1) 120,167 4.9% Regulated Water segment total 1,326,629 53.6% Pennsylvania 1,049,834 42.4% Kentucky 68,041 2.8% Regulated Natural Gas segment total 1,117,875 45.2% Other and eliminations 30,111 1.2% Consolidated $ 2,474,615 100.0% (1) Includes our water operating subsidiaries in the following states: New Jersey, Indiana, and Virginia.
Substantially all of our natural gas utility customers are metered, which allows us to measure and bill for our customers’ natural gas usage. Natural gas usage per customer is affected by local weather conditions during the year, especially during the fall, winter, and early spring.
Our natural gas utility customer base is diversified among residential gas, commercial gas, industrial gas, gas transportation, and other utility. Substantially all of our natural gas utility customers are metered, which allows us to measure and bill for our customers’ natural gas usage.
Certain environmental statutes impose strict, joint and several liability for costs required to assess, clean up, and restore sites where hazardous substances have been stored, disposed or released. Safe Drinking Water Act - The Safe Drinking Water Act establishes criteria and procedures for the U.S. Environmental Protection Agency (EPA) to develop national quality standards for drinking water.
Certain environmental statutes impose strict, joint and several liability for costs required to assess, clean up, and restore sites where hazardous substances have been stored, disposed or released. As a large and diversified utility, a strong environmental management system is critical to our operations.
Under these proposed revisions, we would be required to increase the frequency of leak detection surveys, accelerate the repair of leaks found, and expand our existing advanced leak detection program. The final rule is expected to be published in the first or second quarter of 2025, with an implementation period of 24 months.
Under these proposed revisions, we would be required to increase the frequency of leak detection surveys, accelerate the repair of leaks found, and expand our existing advanced leak detection program. In September 2023, PHMSA proposed additional regulatory revisions to enhance distribution system safety through equipment and procedural expectations.
These are preliminary estimates and actual capital expenditures and expenses may differ based upon a variety of factors, including supply chain issues and site-by-site requirements.
These are preliminary estimates and actual capital expenditures and expenses may differ based upon a variety of factors, including supply chain issues and site-by-site requirements. To date, the Company has identified over 300 sites requiring PFAS remediation. As of December 31, 2025, we have invested approximately $60,0000,000 to remediate PFAS at 100 sites.
PGA procedures involve periodic filings and hearings before the state regulatory commissions to establish price adjustments for a designated future period. The procedures also provide for inclusion in later periods of any variances between actual recoveries representing the estimated costs and actual costs incurred.
The PGA allows us to timely charge for changes in the cost of purchased gas, inclusive of unaccounted for gas expense based on actual experience. PGA procedures involve periodic filings and hearings before the state regulatory commissions to establish price adjustments for a designated future period.
We ensure environmental stewardship remains a priority for management by factoring several benchmarks into executive compensation. In 2024, for the third consecutive year, the Company has been named to Newsweek’s list of America’s Most Responsible Companies, which celebrates public companies that have demonstrated meaningful and impactful environmental, social and corporate governance business practices.
In December 2025, for the fifth consecutive year, the Company has been named to Newsweek’s list of America’s Most Responsible Companies, which celebrates public companies that have demonstrated meaningful and impactful environmental, social and corporate governance business practices. 15 Table of Contents Early in 2021, we announced an enterprise-wide commitment that by 2035, we will reduce our Scope 1 and 2 greenhouse gas emissions by 60% from our 2019 baseline.
Our regulated natural gas rates, in all jurisdictions, contain a Purchased Gas Adjustment (PGA), which is reflected in our tariffs. The PGA allows us to timely charge for changes in the cost of purchased gas, inclusive of unaccounted for gas expense based on actual experience.
On December 18, 2025, the PAPUC approved our third LTIIP without modification. Gas costs incurred to serve our natural gas customers represent a significant operating expense. Our regulated natural gas rates, in all jurisdictions, contain a Purchased Gas Adjustment (PGA), which is reflected in our tariffs.
In Kentucky, our distribution system is connected to four interstate pipelines, where we maintain capacity we believe is sufficient to meet our customers’ gas requirements. ‎ 6 Table of Contents Natural Gas Gathering - Our Pennsylvania Regulated Natural Gas service territory is situated in the Marcellus Shale production region.
Natural Gas Gathering - Our Pennsylvania Regulated Natural Gas service territory is situated in the Marcellus Shale production region. Approximately 24% of the natural gas supply on the system is from locally produced gas, which we gather and transport into our distribution system.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including but not limited to: the success in the closing of, and the profitability of future acquisitions; changes in general economic, political, business, credit, and financial market conditions and interest rates; our ability to manage the expansion of our business; changes in environmental conditions, including the effects of climate change; our ability to integrate and otherwise realize all of the anticipated benefits of businesses, technologies or services which we may acquire; the decisions of governmental and regulatory bodies, including decisions on regulatory filings, such as rate increase requests and decisions regarding potential acquisitions; our ability to file rate cases on a timely basis to minimize regulatory lag; the impact of inflation on our business and on our customers and potential opposition to rate increases; abnormal weather conditions and natural disasters, including those that result in water use restrictions or reduced or elevated natural gas consumption; the seasonality of our business; our ability to source, treat, and supply water, including in times of drought, or collect and treat wastewater; our ability to source sufficient natural gas to meet customer demand in a timely manner; the continuous and reliable operation of our information technology systems, including the impact of cybersecurity attacks or other cyber-related events, and risks associated with new systems implementation or integration; impacts from public health threats, including on consumption, usage, supply chain, and collections. changes in governmental laws, regulations and policies, including those dealing with taxation, the environment, health and water quality, data and consumer privacy, and public utility regulation; the extent to which we are able to develop and market new and improved services; the effect of the loss of major customers; our ability to retain the services of key personnel and to hire qualified personnel as we expand; labor disputes; increasing difficulties in obtaining insurance and increased cost of insurance; cost overruns relating to improvements to, or the expansion of, our operations; inflation and potential impact of proposed tariffs on the availability and costs of goods and services; the effect of natural gas price volatility, including the potential impact of high commodity prices on usage or rate case outcomes; civil disturbance or terroristic threats or acts; changes to the rules or our assumptions underlying our determination of what qualifies for an income tax deduction for qualifying utility asset improvements; changes in, or unanticipated, capital requirements; changes in our credit rating or outlook of credit rating agencies with respect to our Company and subsidiaries, or the market price of our common stock; changes in valuation of strategic ventures; changes in accounting pronouncements; litigation and claims; and restrictions on our subsidiaries’ ability to make dividend payments and other distributions. 18 Table of Contents Risks Related to the Operation and Regulation of our Business General economic conditions may affect our financial condition and results of operations.
Biggest changeBecause forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including but not limited to: our ability to operate our business successfully while closing of the Merger is pending, including operating within the restrictions imposed on our business by the Merger Agreement and retaining key business partners and management personnel; the success in the closing of, and the profitability of the Merger and any future acquisitions; changes in general economic, political, business, credit, and financial market conditions and interest rates; our ability to control operating expenses, achieve operating efficiencies, support programs that promote affordability of our services, and manage the expansion of our business; changes in environmental conditions, including the effects of climate change; our ability to integrate and otherwise realize all of the anticipated benefits of businesses, technologies or services which we may acquire; the decisions of governmental and regulatory bodies, including decisions on regulatory filings, such as rate increase requests and decisions regarding potential acquisitions; our ability to file rate cases on a timely basis to minimize regulatory lag; the impact of inflation on our business and on our customers and potential opposition to rate increases; abnormal weather conditions and natural disasters, including those that result in water use restrictions or reduced or elevated natural gas consumption; the seasonality of our business; our ability to source, treat, and supply water, including in times of drought, or collect and treat wastewater; our ability to source sufficient natural gas to meet customer demand in a timely manner; the continuous and reliable operation of our information technology systems, including the impact of cybersecurity attacks or other cyber-related events, and risks associated with new systems implementation or integration; impacts from public health threats, including on consumption, usage, supply chain, and collections; changes in governmental laws, regulations and policies, including those dealing with taxation, the environment, health and water quality, data and consumer privacy, and public utility regulation; the extent to which we are able to develop and market new and improved services; the effect of the loss of major customers; our ability to retain the services of key personnel and to hire qualified personnel as we expand; labor disputes; increasing difficulties in obtaining insurance and increased cost of insurance; cost overruns relating to improvements to, or the expansion of, our operations; inflation and potential impact of new or sustained changes to tariffs on the availability and costs of goods and services; the effect of natural gas price volatility, including the potential impact of high commodity prices on usage or rate case outcomes; civil disturbance or terroristic threats or acts; changes to the rules or our assumptions underlying our determination of what qualifies for an income tax deduction for qualifying utility asset improvements; 20 Table of Contents changes in, or unanticipated, capital requirements; changes in our credit rating or outlook of credit rating agencies with respect to our Company and subsidiaries, or the market price of our Common Stock; changes in valuation of strategic ventures; changes in accounting pronouncements; litigation and claims; restrictions on our subsidiaries’ ability to make dividend payments and other distributions; and in addition to the foregoing, various risks and other uncertainties associated with the Merger Agreement.
We also implemented specialized programs, such as enterprise-wide communications, presentations, phishing simulations and focused training for specific roles, as well as a general cybersecurity training program required for all employees . We also engage third parties to perform regular reviews of our security framework controls to promote objectivity.
We also implemented specialized programs, such as enterprise-wide communications, presentations, phishing simulations and focused training for specific roles, as well as a general cybersecurity training program required for all employees annually . We also engage third parties to perform regular reviews of our security framework controls to promote objectivity.
We could also be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly, or not properly integrated into operations.
We could be adversely affected by system or network disruptions if new or upgraded information technology systems are defective, not installed properly, or not properly integrated into operations.
Any such non-cash charge could have a material adverse impact on our results of operations and stockholders’ equity. 27 Table of Contents Risks Related to Health and Safety and Environmental Concerns Worsening weather conditions, natural disasters, public health threats, or other catastrophic events, could negatively affect our business, outlook, financial condition, results of operations and liquidity .
Any such non-cash charge could have a material adverse impact on our results of operations and stockholders’ equity. 35 Table of Contents Risks Related to Health and Safety and Environmental Concerns Worsening weather conditions, natural disasters, public health threats, or other catastrophic events, could negatively affect our business, outlook, financial condition, results of operations and liquidity .
This management committee meets bimonthly and is charged with overseeing our cybersecurity strategy, ensuring that cyber risk is managed, and that the program is aligned to business goals and objectives. Our Chief Information Officer has formal education in information technology; has multi-year experience working in the Company’s information and technology function; and receives periodic training and education on cybersecurity-related topics.
This management committee meets quarterly and is charged with overseeing our cybersecurity strategy, ensuring that cyber risk is managed, and that the program is aligned to business goals and objectives. Our Chief Information Officer has formal education in information technology; has multi-year experience working in the Company’s information and technology function; and receives periodic training and education on cybersecurity-related topics.
Acquisitions by us could also result in: dilutive issuances of our equity securities; incurrence of debt, contingent liabilities, and environmental liabilities; unanticipated capital expenditures; failure to maintain effective internal control over financial reporting; recording goodwill and other intangible assets for which we may never realize their full value and may result in an asset impairment that may negatively affect our results of operations; fluctuations in quarterly and/or annual results; 32 Table of Contents other acquisition related expenses; and exposure to unknown or unexpected risks and liabilities.
Acquisitions by us could also result in: dilutive issuances of our equity securities; incurrence of debt, contingent liabilities, and environmental liabilities; unanticipated capital expenditures; failure to maintain effective internal control over financial reporting; recording goodwill and other intangible assets for which we may never realize their full value and may result in an asset impairment that may negatively affect our results of operations; fluctuations in quarterly and/or annual results; other acquisition related expenses; and exposure to unknown or unexpected risks and liabilities.
In addition, our information technology systems may be vulnerable to damage or interruption from the following types of cybersecurity attacks or other events: power loss, computer systems failures, and internet, telecommunications or data network failures; operator negligence or improper operation by, or supervision of, employees; 21 Table of Contents physical and electronic loss of data; computer viruses, cybersecurity attacks, intentional security breaches, hacking, denial of service actions, misappropriation of data and similar events; difficulties in the implementation of upgrades or modification to our information technology systems; and hurricanes, fires, floods, earthquakes and other natural disasters.
In addition, our information technology systems may be vulnerable to damage or interruption from the following types of cybersecurity attacks or other events: power loss, computer systems failures, and internet, telecommunications or data network failures; operator negligence or improper operation by, or supervision of, employees; physical and electronic loss of data; computer viruses, cybersecurity attacks, intentional security breaches, hacking, denial of service actions, misappropriation of data and similar events; difficulties in the implementation of upgrades or modification to our information technology systems; and hurricanes, fires, floods, earthquakes and other natural disasters.
The following are the types of forward-looking statements we make throughout this Annual Report, including in these Risk Factors, and a summary of the types of risks that could impact us and cause actual results to differ from those described in such forward-looking statements: opportunities for future acquisitions, both within and outside the water and wastewater industries, the success of pending acquisitions and the impact of future acquisitions; acquisition-related costs and synergies; the impact of decisions of governmental and regulatory bodies, including decisions to raise or lower rates and decisions regarding potential acquisitions; the sale of water, wastewater, and gas subsidiaries; the impact of conservation awareness of customers and more efficient fixtures and appliances on water and natural gas usage per customer; the impact of our business on the environment, and our ability to meet our environmental, social, and governance goals; our authority to carry on our business and successfully achieve our operational growth projections without unduly burdensome restrictions; our capability to pursue timely rate increase requests; the capacity of our water supplies, water facilities, wastewater facilities, and natural gas supplies and storage facilities; the impact of public health threats, or the measures implemented by the Company as a result of these threats; the impact of cybersecurity attacks or other cyber-related events; developments, trends and consolidation in the water, wastewater, and natural gas utility and infrastructure industries; the impact of changes in and compliance with governmental laws, regulations and policies, including those dealing with the environment, health and water quality, taxation, and public utility regulation; the development of new services and technologies by us or our competitors; the availability of qualified personnel; the condition of our assets, including the risk of explosion from our natural gas operations and the failure of our natural gas storage facilities; recovery of capital expenditures and expenses in rates; projected capital expenditures and related funding requirements; the availability and cost of capital financing, including impacts of increasing financing costs and interest rates; dividend payment projections; the impact of geographic diversity on our exposure to unusual weather; the continuation of investments in strategic ventures; our ability to obtain fair market value for condemned assets; the impact of fines and penalties; the impact of legal proceedings; general economic conditions, including inflation; the impairment of goodwill resulting in a non-cash charge to earnings; the impact of federal and/or state tax policies and the regulatory treatment of the effects of those policies; and 17 Table of Contents the amount of income tax deductions for qualifying utility asset improvements and the Internal Revenue Service’s ultimate acceptance of the deduction methodology.
The following are the types of forward-looking statements we make throughout this Annual Report, including in these Risk Factors, and a summary of the types of risks that could impact us and cause actual results to differ from those described in such forward-looking statements: expected timing and likelihood of completion of our proposed Merger with American Water; opportunities for future acquisitions, both within and outside the water and wastewater industries, the success of pending acquisitions and the impact of future acquisitions; Merger or acquisition-related costs and synergies; the impact of decisions of governmental and regulatory bodies, including decisions to raise or lower rates and decisions regarding potential acquisitions and our proposed Merger with American Water; the sale of water, wastewater, and gas subsidiaries; the impact of conservation awareness of customers and more efficient fixtures and appliances on water and natural gas usage per customer; the impact of our business on the environment, and our ability to meet our environmental, social, and governance goals; our authority to carry on our business and successfully achieve our operational growth projections without unduly burdensome restrictions; our capability to pursue timely rate increase requests; the capacity of our water supplies, water facilities, wastewater facilities, and natural gas supplies and storage facilities; the impact of public health threats, or the measures implemented by the Company as a result of these threats; the impact of cybersecurity attacks or other cyber-related events; developments, trends and consolidation in the water, wastewater, and natural gas utility and infrastructure industries; the impact of changes in and compliance with governmental laws, regulations and policies, including those dealing with the environment, health and water quality, taxation, and public utility regulation; the development of new services and technologies by us or our competitors; the availability of qualified personnel; the condition of our assets, including the risk of explosion from our natural gas operations and the failure of our natural gas storage facilities; recovery of capital expenditures and expenses in rates; projected capital expenditures and related funding requirements; the availability and cost of capital financing, including impacts of increasing financing costs and interest rates; dividend payment projections; the impact of geographic diversity on our exposure to unusual weather; the continuation of investments in strategic ventures; our ability to obtain fair market value for condemned assets; the impact of fines and penalties; the impact of legal proceedings; general economic conditions, including inflation; 19 Table of Contents the impairment of goodwill or decline in the value of its other assets resulting in a non-cash charge to earnings; the impact of federal and/or state tax policies and the regulatory treatment of the effects of those policies; and the amount of income tax deductions for qualifying utility asset improvements and the Internal Revenue Service’s ultimate acceptance of the deduction methodology.
Regulatory actions or changes in significant assumptions, including discount and growth rates, utility sector market performance and comparable transaction multiples, projected operating and capital cash flows, and fair value of debt, could also potentially result in future impairments which could be material. We compete with governmental entities, other regulated utilities, and strategic and financial buyers, for acquisition opportunities.
Regulatory actions or changes in significant assumptions, including discount and growth rates, utility sector market performance and comparable transaction multiples, projected operating and capital cash flows, and fair value of debt, could also potentially result in future impairments which could be material. 41 Table of Contents We compete with governmental entities, other regulated utilities, and strategic and financial buyers, for acquisition opportunities.
This mechanism is designed to help stabilize collection of fixed costs by adjusting customer billings based on temperature variances from average weather. 22 Table of Contents Decreased residential customer water and natural gas usage as a result of conservation efforts, and the impact of more efficient appliances and furnaces, may harm demand for our utility services and may reduce our revenues and earnings.
This mechanism is designed to help stabilize collection of fixed costs by adjusting customer billings based on temperature variances from average weather. Decreased residential customer water and natural gas usage as a result of conservation efforts, and the impact of more efficient appliances and furnaces, may harm demand for our utility services and may reduce our revenues and earnings.
Some possible reasons for a delay or disruption in the supply of important goods and services include: our suppliers may not provide materials that meet our specifications in sufficient quantities; our suppliers may provide us with water that does not meet applicable quality standards or is contaminated; our suppliers may provide us with natural gas not meeting quality standards or is of insufficient volume or pressure; our suppliers may face production or shipping delays due to public health threats, natural disasters, strikes, lock-outs, geopolitical or trade disputes, or other such actions; one or more suppliers could make strategic changes in the lines of products and services they offer; and some of our suppliers, such as small companies, may be more likely to experience financial and operational difficulties than larger, well-established companies, because of their limited financial and other resources; proposed tariffs could result in supply chain disruptions.
Some possible reasons for a delay or disruption in the supply of important goods and services include: our suppliers may not provide materials that meet our specifications in sufficient quantities; our suppliers may provide us with water that does not meet applicable quality standards or is contaminated; 33 Table of Contents our suppliers may provide us with natural gas not meeting quality standards or is of insufficient volume or pressure; our suppliers may face production or shipping delays due to public health threats, natural disasters, strikes, lock-outs, geopolitical or trade disputes, or other such actions; one or more suppliers could make strategic changes in the lines of products and services they offer; and some of our suppliers, such as small companies, may be more likely to experience financial and operational difficulties than larger, well-established companies, because of their limited financial and other resources; new or sustained changes to tariffs could result in supply chain disruptions.
The NPDWR established the maximum contaminant levels (MCLs) in drinking water and allows for a five-year window to comply. The Company performed its analysis of the NPDWR and estimated an investment of at least $450,000,000 of capital expenditures to install additional treatment facilities over the Compliance Period in order to comply (i.e., 2029 pending no delays due to lawsuits).
The NPDWR established the maximum contaminant levels (MCLs) in drinking water and allows for a five-year window to comply. The Company estimated an investment of at least $450,000,000 of capital expenditures to install additional treatment facilities over the Compliance Period in order to comply (i.e., 2029 pending no delays due to lawsuits).
Although we believe our income tax estimates, including any tax reserves for uncertain tax positions or valuation allowances on deferred tax assets are appropriate, there is no assurance that the final determination of our income tax liability will not be materially different; either higher or lower, from what is reflected in our income tax provision.
Although we believe our income tax estimates, including any tax reserves for uncertain tax positions or valuation allowances on deferred tax assets are appropriate, there is no assurance that the final determination of our income 32 Table of Contents tax liability will not be materially different; either higher or lower, from what is reflected in our income tax provision.
Any of the foregoing may also impair our ability to raise additional capital through the sale of our equity securities or could result in incremental dilution due to issuing equity at a lower share price. Risks Related to Acquisitions One of the important elements of our growth strategy is the acquisition of regulated utility systems.
Any of the foregoing may also impair our ability to raise additional capital through the sale of our equity securities or could result in incremental dilution due to issuing equity at a lower share price. 40 Table of Contents Risks Related to Acquisitions One of the important elements of our growth strategy is the acquisition of regulated utility systems.
The Company routinely seeks to acquire wastewater systems, some of which may have combined wastewater and stormwater systems which may overflow and be subject to increased regulation by the U.S. EPA. We cannot assure you that we will be at all times in total compliance with these laws, regulations and permits.
The Company routinely seeks to acquire wastewater systems, some of which may have combined wastewater and stormwater systems which may overflow and be subject to increased regulation by the U.S. EPA. We cannot assure you that 31 Table of Contents we will be at all times in total compliance with these laws, regulations and permits.
A disruption or prolonged delays in obtaining important supplies or services, such as maintenance services, purchased water, chemicals, utility pipe, valves, hydrants, electricity, or other materials, could harm our utility services and our ability to 25 Table of Contents operate in compliance with all regulatory requirements, which could harm our business, financial condition, and results of operations.
A disruption or prolonged delays in obtaining important supplies or services, such as maintenance services, purchased water, chemicals, utility pipe, valves, hydrants, electricity, or other materials, could harm our utility services and our ability to operate in compliance with all regulatory requirements, which could harm our business, financial condition, and results of operations.
We cannot predict any future trends in the rate of inflation and interest rates, and a significant increase in inflation, to the extent we are unable to recover higher costs through rate cases, could negatively impact our business, financial condition, and results of operation. 19 Table of Contents The rates we charge our customers are subject to regulation.
We cannot predict any future trends in the rate of inflation and interest rates, and a significant increase in inflation, to the extent we are unable to recover higher costs through rate cases, could negatively impact our business, financial condition, and results of operation. The rates we charge our customers are subject to regulation.
If we are unable to maintain access to a reliable and adequate natural gas supply or sufficient 20 Table of Contents pipeline capacity to deliver that supply, we may be unable to meet our customers’ requirements, resulting in a loss of customers and an adverse effect on our financial conditions and results of operations.
If we are unable to maintain access to a reliable and adequate natural gas supply or sufficient pipeline capacity to deliver that supply, we may be unable to meet our customers’ requirements, resulting in a loss of customers and an adverse effect on our financial conditions and results of operations.
If we are unable to compete effectively or if customers further reduce their gas needs, we may lose existing customers, sell less gas to our customers and/or fail to acquire new customers, which could have a material adverse effect on our business, financial condition, and results of operations.
If we are unable to compete 30 Table of Contents effectively or if customers further reduce their gas needs, we may lose existing customers, sell less gas to our customers and/or fail to acquire new customers, which could have a material adverse effect on our business, financial condition, and results of operations.
The Peoples’ regulated companies purchase their natural gas supply primarily through a combination of requirements contracts, some of which contain minimum purchase obligations, monthly spot purchase contracts, and forward purchase contracts. The price paid for natural gas acquired under forward purchase contracts is fixed prior to the delivery of the natural gas.
The Peoples’ regulated companies purchase their natural gas supply primarily through a combination of requirements contracts, some of which contain minimum purchase obligations, monthly spot purchase contracts, 34 Table of Contents and forward purchase contracts. The price paid for natural gas acquired under forward purchase contracts is fixed prior to the delivery of the natural gas.
Additionally, management provides an update to the full Board of Directors at least once a year, and more often as needed. The Board of Directors annually reviews and approves the capital and operating budgets, ultimately reviewing and approving the amount spent on cybersecurity measures. 34 Table of Contents
Additionally, management provides an update to the full Board of Directors at least once a year, and more often as needed. The Board of Directors annually reviews and approves the capital and operating budgets, ultimately reviewing and approving the amount spent on cybersecurity measures.
If we are unable to provide utility services to our customers, our financial results would be impacted by lost revenues, and we would have to seek regulatory approval to recover restoration costs. 28 Table of Contents Climate change and other sustainability matters are increasingly important to many investors, and we may fail to provide information desired by all investors or achieve our sustainability goals.
If we are unable to provide utility services to our customers, our financial results would be impacted by lost revenues, and we would have to seek regulatory approval to recover restoration costs. Climate change and other sustainability matters are increasingly important to many investors, and we may fail to provide information desired by all investors or achieve our sustainability goals.
Competition from renewable energy sources may reduce the demand for natural gas, which could impact our future earnings and cash flows. Another potential risk related to climate change could be more frequent and more severe weather events, which could increase our costs to repair damaged facilities and restore service to our customers.
Competition from renewable energy sources may reduce the demand for natural gas, which could impact our future earnings and cash flows. Another potential risk related to climate change could be more frequent and more 36 Table of Contents severe weather events, which could increase our costs to repair damaged facilities and restore service to our customers.
Approximately 50% of our Regulated Water and Regulated Natural Gas segments’ workforce is unionized under 23 labor contracts with labor unions, which expire at various times up until 2028. In light of rising costs for healthcare and retirement benefits, contract negotiations in the future may be difficult.
Approximately 51% of our Regulated Water and Regulated Natural Gas segments’ workforce is unionized under 23 labor contracts with labor unions, which expire at various times up until 2029. In light of rising costs for healthcare and retirement benefits, contract negotiations in the future may be difficult.
As a result, our financial results are largely subject to political, resource supply, labor, utility cost and regulatory risks, economic conditions, natural disasters, and other risks affecting Pennsylvania. 23 Table of Contents Federal and state environmental laws and regulations impose substantial compliance requirements on our operations.
As a result, our financial results are largely subject to political, resource supply, labor, utility cost and regulatory risks, economic conditions, natural disasters, and other risks affecting Pennsylvania. Federal and state environmental laws and regulations impose substantial compliance requirements on our operations.
Peoples’ revenues are seasonal and temperature sensitive and vary from year-to-year, depending on weather conditions, with a substantial portion of Peoples’ revenue occurring in the first and fourth quarters of the year due to colder temperatures and increased heating needs. In 2024, this amounted to 73%, for the first and fourth quarters.
Peoples’ revenues are seasonal and temperature sensitive and vary from year-to-year, depending on weather conditions, with a substantial portion of Peoples’ revenue occurring in the first and fourth quarters of the year due to colder temperatures and increased heating needs. In 2025, this amounted to 74%, for the first and fourth quarters.
However, the Company’s expectation is based upon numerous estimates and assumptions and is subject to numerous uncertainties. Our business requires significant capital expenditures that are partially dependent on our ability to secure appropriate funding. Disruptions in the capital markets may limit our access to capital.
However, the Company’s expectation is based upon numerous estimates and assumptions and is subject to numerous uncertainties. 39 Table of Contents Our business requires significant capital expenditures that are partially dependent on our ability to secure appropriate funding. Disruptions in the capital markets may limit our access to capital.
Significant judgment is required in determining our provision for income taxes. Our calculation of the provision for income taxes is subject to our interpretation of applicable business tax laws in the jurisdictions in which we file. In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service and other taxing authorities.
Our calculation of the provision for income taxes is subject to our interpretation of applicable business tax laws in the jurisdictions in which we file. In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service and other taxing authorities.
In the event we are 31 Table of Contents unable to obtain sufficient capital, we may need to take steps to conserve cash by reducing our capital expenditures or dividend payments and our ability to pursue acquisitions may be limited.
In the event we are unable to obtain sufficient capital, we may need to take steps to conserve cash by reducing our capital expenditures or dividend payments and our ability to pursue acquisitions may be limited.
We cannot assure you that issues with our labor forces will be resolved favorably to us in the future or that we will not experience work stoppages. Workforce-related risks may affect our results of operations.
We cannot assure you that issues with our labor forces will be resolved favorably to us in the future or that we will not experience work stoppages. Workforce-related risks, including risks due to uncertainties created by the proposed Merger, may affect our results of operations.
New or stricter laws and/or regulations could increase our costs. Although we may seek to recover these costs through an increase in customer rates, there is no guarantee that the various state regulators would approve such an increase.
We incur substantial costs on an ongoing basis to comply with all laws and regulations. New or stricter laws and/or regulations could increase our costs. Although we may seek to recover these costs through an increase in customer rates, there is no guarantee that the various state regulators would approve such an increase.
In these circumstances, on occasion, the municipally-owned system may attempt to offer service to customers who are connected to our mains, resulting in our mains becoming surplus or underutilized without compensation. 24 Table of Contents The final determination of our income tax liability may be materially different from our income tax provision.
In these circumstances, on occasion, the municipally-owned system may attempt to offer service to customers who are connected to our mains, resulting in our mains becoming surplus or underutilized without compensation. The final determination of our income tax liability may be materially different from our income tax provision. Significant judgment is required in determining our provision for income taxes.
An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and net worth. We have significant amounts of goodwill resulting from the acquisition of utility systems and businesses. As of December 31, 2024, the net carrying value of goodwill amounted to $2,340,713,000 or 13.0% of our total assets.
An impairment in the carrying value of our goodwill could negatively impact our consolidated results of operations and net worth. We have significant amounts of goodwill resulting from the acquisition of utility systems and businesses. As of December 31, 2025, the net carrying value of goodwill amounted to $2,348,559,000 or 12.1% of our total assets.
We could also be subject to: claims for consequences arising out of human exposure to contamination and/or hazardous substances in our water supplies, including toxic torts; claims for other environmental damage; claims for customers’ business interruption as a result of an interruption in water service; claims for breach of contract; criminal enforcement actions; regulatory fines; or other claims. 29 Table of Contents We incur substantial costs on an ongoing basis to comply with all laws and regulations.
We could also be subject to: claims for consequences arising out of human exposure to contamination and/or hazardous substances in our water supplies, including toxic torts; claims for other environmental damage; claims for customers’ business interruption as a result of an interruption in water service; claims for breach of contract; ‎ 37 Table of Contents criminal enforcement actions; regulatory fines; or other claims.
We will not be able to acquire other businesses if we cannot identify suitable acquisition opportunities or reach mutually agreeable terms with acquisition candidates. It is our intent, when practical, to integrate any businesses we acquire with our existing operations.
We will not be able to acquire other businesses if we cannot identify suitable acquisition opportunities or reach mutually agreeable terms with acquisition candidates. The proposed Merger may make it more difficult for us to attract acquisition targets. It is our intent, when practical, to integrate any businesses we acquire with our existing operations.
Our processes to identify , assess and manage material risks of cyber threats include risks associated with third party service providers, including cloud-based platforms. We believe that these processes provide us with a comprehensive assessment of potential cyber threats.
Our processes to identify , assess and manage material risks of cyber threats include risks associated with third party service providers, including cloud-based platforms.
One element of our strategic plans is our growth through acquisition strategy. Acquisitions in the utility industry are time consuming and complex, with the number of regulatory approvals needed.
One element of our strategic plans is our growth through acquisition strategy. Acquisitions in the utility industry are time consuming and complex, with the number of regulatory approvals needed. A significant acquisition can require significant time and resources, including devotion of management time, to integrate the acquired business.
Our ability to meet customers’ natural gas requirements may be impaired if contracted natural gas supplies and interstate pipelines services are not available, are not delivered in a timely manner or if federal regulations decrease its available capacity, which may result in a loss of customers and an adverse effect on our financial conditions and results of operations.
We anticipate that we may experience periods in which growth in earnings is less than growth in rate base; such differences may be material and may persist over multiple reporting periods. 27 Table of Contents Our ability to meet customers’ natural gas requirements may be impaired if contracted natural gas supplies and interstate pipelines services are not available, are not delivered in a timely manner or if federal regulations decrease its available capacity, which may result in a loss of customers and an adverse effect on our financial conditions and results of operations.
Our cybersecurity program is aligned to the National Institute of Standards and Technology (NIST) Cybersecurity Framework. We have enterprise-wide security policies, standards and controls that incorporate best practices in security engineering, technology architecture and data protection, which support regulatory compliance.
We have enterprise-wide security policies, standards and controls that incorporate best practices in security engineering, technology architecture and data protection, which support regulatory compliance.
To the extent any of these events occur or regulations change, it could adversely affect our business, reputation, financial condition, and results of operations. 30 Table of Contents Risks Related to the Company’s Capital Needs and Common Stock We have substantial indebtedness, as a result, it may be more difficult for the Company to pay or refinance its debts or take other actions, and the Company may need to divert cash to fund debt service payments.
Risks Related to the Company’s Capital Needs and Common Stock We have substantial indebtedness, as a result, it may be more difficult for the Company to pay or refinance its debts or take other actions, and the Company may need to divert cash to fund debt service payments.
Refer to Item 1A – Risk Factors for additional information. Governance Role of Management - Our cybersecurity program is overseen by a cross-functional committee of senior business leaders and led by our Chief Information Officer.
We also maintain cybersecurity insurance to promote resiliency and reduce risk. Governance Role of Management - Our cybersecurity program is overseen by a cross-functional committee of senior business leaders and led by our Chief Information Officer.
We maintain cybersecurity protection measures with respect to our information technology, including our customer data, and, in some cases, the monitoring and operation of our treatment, storage, pumping, and pipeline infrastructure.
We believe that these processes provide us with a comprehensive assessment of potential cyber threats. 42 Table of Contents We maintain cybersecurity protection measures with respect to our information technology, including our customer data, and, in some cases, the monitoring and operation of our treatment, storage, pumping, and pipeline infrastructure.
Any business interruption or other losses might not be covered by insurance policies or be recoverable in rates, and such losses may make it difficult for us to secure insurance in the future at acceptable rates.
Any business interruption or other losses might not be covered by insurance policies or be recoverable in rates, and such losses may make it difficult for us to secure insurance in the future at acceptable rates. 28 Table of Contents Our facilities could be the target of a possible terrorist or other deliberate attack which could harm our business, financial condition and results of operations.
Possible impacts associated with a cybersecurity attack or other events may include: remediation costs related to lost, stolen, or compromised data; repairs to data processing or physical systems; increased cybersecurity protection costs; adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water; litigation; loss of revenue; and reputational damage.
Such cybersecurity attacks or other events may result in: the loss or compromise of customer, financial, employee, or operational data; disruption of billing, collections, payments, or normal field service activities; disruption of electronic monitoring and control of operational systems; delays in financial reporting and other normal management functions; and disruption in normal system operations. 29 Table of Contents Possible impacts associated with a cybersecurity attack or other events may include: remediation costs related to lost, stolen, or compromised data; repairs to data processing or physical systems; increased cybersecurity protection costs; adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water; litigation; loss of revenue; and reputational damage.
Even during periods of moderate inflation, the effects of inflation can have a negative impact on our operating results. The ability to control operating expenses is an important factor that will influence future results. Inflation, and the potential impact of proposed tariffs, could adversely impact our ability to control costs, including operating expenses and capital costs.
The ability to control operating expenses is an important factor that will influence future results. 26 Table of Contents Inflation, and the potential impact of new or sustained changes to tariffs, could adversely impact our ability to control costs, including operating expenses and capital costs.
A significant acquisition can require significant time and resources, including devotion of management time, to integrate the acquired business. 33 Table of Contents Item 1B Unresolved Staff Comments None Item 1C Cybersecur ity Risk Management and Strategy In connection with our enterprise risk management process, we identify, prioritize and monitor key risks that may affect the Company, including risks from cyber threats.
Item 1B Unresolved Staff Comments None Item 1C Cybersecur ity Risk Management and Strategy In connection with our enterprise risk management process, we identify, prioritize and monitor key risks that may affect the Company, including risks from cyber threats. Our cybersecurity program is aligned to the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
Should we fail to comply with applicable statutes and related rules, regulations and orders, we could be subject to significant penalties and fines. 26 Table of Contents Our liquidity and, in certain circumstances, results of operations may be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly.
Our liquidity and, in certain circumstances, results of operations may be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly.
We are subject to federal and state laws and regulations requiring the Company to maintain certain safety and system integrity measures by identifying and managing storage and pipeline risks. In addition, companies that supply and transport gas to Peoples are also subject to similar regulations and other restrictions related to their activities.
In addition, companies that supply and transport gas to Peoples are also subject to similar regulations and other restrictions related to their activities.
In accordance with customary industry practices, we maintain insurance against a significant portion, but not all, of these risks and losses.
In accordance with customary industry practices, we maintain insurance against a significant portion, but not all, of these risks and losses. To the extent any of these events occur or regulations change, it could adversely affect our business, reputation, financial condition, and results of operations.
In addition, we rely on our systems to track our utility assets and to manage maintenance and construction projects, materials and supplies, and our human resource functions. To date, risks from cybersecurity threats and incidents have not materially affected the Company, including its business strategy, financial condition, or results of operations.
To date, risks from cybersecurity threats and incidents have no t materially affected the Company, including its business strategy, financial condition, or results of operations.
Any repair, remediation, preventative or mitigating actions may require significant capital and operating expenditures.
Any repair, remediation, preventative or mitigating actions may require significant capital and operating expenditures. Should we fail to comply with applicable statutes and related rules, regulations and orders, we could be subject to significant penalties and fines.
These activities may also subject the Company to litigation or administrative proceedings. Such litigation or proceedings could result in substantial monetary judgments, fines or penalties against the Company or otherwise be resolved on unfavorable terms.
Such litigation or proceedings could result in substantial monetary judgments, fines or penalties against the Company or otherwise be resolved on unfavorable terms. 38 Table of Contents We are subject to federal and state laws and regulations requiring the Company to maintain certain safety and system integrity measures by identifying and managing storage and pipeline risks.
As of December 31, 2024, our aggregate long-term and short-term debt balance was $7,745,638,000.
In addition, the proposed Merger may make it more difficult to raise significant debt and equity capital. As of December 31, 2025, our aggregate long-term and short-term debt balance was $8,331,987,000.
Removed
We anticipate that we may experience periods in which growth in earnings is less than growth in rate base; such differences may be material and may persist over multiple reporting periods.
Added
Risks Related to the Proposed Merger The market price of shares of our common stock or American Water Common Stock will fluctuate and the Exchange Ratio will not be adjusted to reflect such fluctuations, and as a result, the Merger Consideration at the date of the closing of the Merger may vary significantly from the date the Merger Agreement was executed.
Removed
Our facilities could be the target of a possible terrorist or other deliberate attack which could harm our business, financial condition and results of operations.
Added
Upon completion of the Merger, each outstanding share of our common stock will be converted into the right to receive 0.305 shares of American Water Common Stock.
Removed
Such cybersecurity attacks or other events may result in:  the loss or compromise of customer, financial, employee, or operational data;  disruption of billing, collections, payments, or normal field service activities;  disruption of electronic monitoring and control of operational systems;  delays in financial reporting and other normal management functions; and  disruption in normal system operations.
Added
The number of shares of American Water Common Stock to be issued pursuant to the Merger Agreement for each share of our common stock will not change to reflect changes in the market price of American Water Common Stock or Essential’s Common Stock.
Added
The market price of our common stock and American Water Common Stock at the time of completion of the Merger may vary significantly from the price on the date the Merger Agreement was executed and February 10, 2026, the date of the special shareholder meetings.
Added
Because we may not complete the Merger until a significant period of time has passed after these dates, the market value of American Water Common Stock issued in connection with the Merger and our common stock surrendered in connection with the Merger may be higher or lower than the values of those shares on earlier dates.
Added
Stock price changes may result from market assessment of the likelihood that the Merger will be completed, changes in our or American Water’s business, operations, or prospects prior to or following the Merger, litigation or regulatory considerations, reactions from the financial markets or analysts, general business, market, industry, or economic conditions and other factors both within and beyond our and American Water’s control, including the risks, uncertainties and other factors described in this Risk Factors section of our Annual Report on Form 10-K, and in our other SEC filings, and those described in American Water’s SEC filings.
Added
Neither we nor American Water may terminate the Merger Agreement solely because of changes in the market price of either company’s common stock.
Added
The Merger is subject to various remaining closing conditions, including the receipt of consents and approvals from various governmental and regulatory entities and third parties, and a failure to obtain all such remaining consents or approvals or to satisfy such other closing conditions could prevent or delay the completion of the Merger or impose conditions that could have a material adverse effect on us or the combined company.
Added
We anticipate that, subject to the receipt of all required regulatory and other consents and approvals and the satisfaction or waiver of all other closing conditions, the Merger will be completed in the first quarter of 2027.
Added
Among other closing conditions that remain, completion of the Merger is conditioned upon the receipt of such required consents, orders, and approvals from various governmental and regulatory entities and other third parties, including public utility commissions in certain states in which either or both companies operate, including without limitation the Pennsylvania Public Utility Commission.
Added
The Merger is also subject to review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the expiration or earlier termination of the waiting period (and any extension of the waiting period) applicable to the Merger is a condition to closing the Merger.
Added
We and American Water cannot provide any assurance that all of the remaining required consents, orders, and approvals will be obtained or that these consents, orders, or approvals will not be conditioned on terms, conditions, or restrictions that would be detrimental to the combined company after the completion of the Merger, including requiring one or both companies to dispose of certain assets.
Added
The Merger Agreement allows, subject to certain conditions, limitations, and exclusions, each party to terminate the Merger Agreement (and generally without the 21 Table of Contents payment of a termination fee to the non-terminating party) if the final terms of any of the required regulatory consents, orders or approvals would result in or require an undertaking of efforts or the taking of action that would reasonably be expected to have, individually or in the aggregate, a “Burdensome Effect” (as defined in the Merger Agreement).
Added
Any substantial delay in obtaining satisfactory consents, orders, or approvals, or the imposition of any requirements, terms, or conditions in connection with a party’s obtaining such consents, orders, or approvals, could be on terms that we or American Water do not believe to be reasonable or could cause a material reduction in the expected benefits of the Merger and/or an impairment or deterioration in our or American Water’s relationships with their respective applicable public utility commissions.
Added
If any such delays or conditions are significant enough, one or both parties may decide to abandon the Merger and terminate the Merger Agreement, subject to its terms.
Added
If the Merger is not completed, our ongoing businesses may be adversely affected, including, as follows: • having to pay certain significant costs relating to the Merger without receiving the benefits of the Merger, including, in certain circumstances, a payment by us to American Water of a termination fee of $370 million; • diversion of management’s attention from day-to-day operations; • not pursuing other strategic transactions that we may have otherwise considered had we not entered into the Merger Agreement with American Water; • we will have been subject to certain restrictions on the conduct of our ongoing businesses, which may prevent us from making certain acquisitions or dispositions or pursuing certain business opportunities while the Merger is pending; and • the price of our common stock may decline to reflect assumptions by the market as to whether the Merger will be completed.
Added
The Merger may cause suppliers, strategic partners, certain customers, or others to delay or defer decisions regarding our business, and may adversely affect our ability to effectively manage our business. The Merger will happen only if the remaining stated conditions are satisfied, including the receipt of regulatory approvals, among other conditions.
Added
Many of the remaining conditions are outside the parties’ control, and both parties also have certain rights to terminate the Merger Agreement. Accordingly, there may be uncertainty regarding the completion of the Merger.
Added
This uncertainty, or any disagreement with the decision to enter into the Merger Agreement, may cause our suppliers, vendors, strategic partners, certain customers, or others that deal with us to delay or defer entering into contracts or make other decisions concerning us, or to seek to change or cancel existing business relationships.
Added
Any delay or deferral of those decisions or changes in existing agreements or relationships could have a material adverse effect on us and our financial condition and results of operations.
Added
The Merger Agreement contains provisions that limit our and American Water’s ability to pursue certain alternatives to the Merger, which could discourage a potential acquirer of either American Water or us from making an alternative transaction proposal and, in certain circumstances, could require us or American Water to pay to the other party a significant termination fee.
Added
Under the Merger Agreement, we and American Water are each restricted, subject to limited exceptions, from entering into certain alternative transactions in lieu of the Merger.
Added
In general, unless and until the Merger Agreement is terminated, we and American Water are restricted from, among other things, soliciting, initiating, knowingly encouraging, or knowingly facilitating the making of a proposal that is or would reasonably be expected to lead to a competing acquisition proposal from any person.
Added
Each of our and American Water’s board of directors is limited in its ability to change its recommendation with respect to the Merger and related proposals.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table indicates our net property, plant and equipment, in thousands of dollars, as of December 31, 2024 in the principal states where we operate: Net Property, Plant and Equipment Pennsylvania $ 9,305,441 70.8% Ohio 756,201 5.8% Illinois 699,938 5.3% North Carolina 590,991 4.5% Texas 806,382 6.1% Other (1) 984,523 7.5% Consolidated $ 13,143,476 100.0% (1) Consists primarily of our operating subsidiaries in the following states: New Jersey, Indiana, Virginia, and Kentucky.
Biggest changeThe following table indicates our net property, plant and equipment, in thousands of dollars, as of December 31, 2025 in the principal states where we operate: Net Property, Plant and Equipment Pennsylvania $ 10,064,571 70.6% Texas 899,352 6.3% Ohio 816,774 5.7% Illinois 735,376 5.2% North Carolina 666,981 4.7% Other (1) 1,080,628 7.5% Consolidated $ 14,263,682 100.0% (1) Consists primarily of our operating subsidiaries in the following states: New Jersey, Indiana, Virginia, and Kentucky.
A small portion of the properties are leased under long-term leases. Our Regulated Natural Gas properties consist of approximately 15,000 miles of natural gas distribution mains, varying in size from one-half inch to 30 inches in diameter, 1,700 miles of gathering pipeline, 300 miles of intrastate transmission/storage pipeline, and both active and inactive gas storage wells.
A small portion of the properties are leased under long-term leases. Our Regulated Natural Gas properties consist of approximately 15,100 miles of natural gas distribution mains, varying in size from one-half inch to 30 inches in diameter, 1,700 miles of gathering pipeline, 310 miles of intrastate transmission/storage pipeline, and both active and inactive gas storage wells.
For some properties that we acquired through the exercise of the power of eminent domain and other properties we purchased, we hold title for water supply purposes only. We own, operate and maintain approximately 14,500 miles of transmission and distribution mains, 24 surface water treatment plants, many well treatment stations, and 203 wastewater treatment plants.
For some properties that we acquired through the exercise of the power of eminent domain and other properties we purchased, we hold title for water supply purposes only. We own, operate and maintain approximately 14,600 miles of transmission and distribution mains, 24 surface water treatment plants, many well treatment stations, and 206 wastewater treatment plants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough the results of legal proceedings cannot be predicted with certainty, there are no pending legal proceedings to which we or any of our subsidiaries is a party or to which any of our properties is the subject that we believe are material or are expected to materially harm our business, operating results, reputation, or financial condition.
Biggest changeAlthough the results of legal proceedings cannot be predicted with certainty, there are no pending legal proceedings to which we or any of our subsidiaries is a party or to which any of our properties is the subject that we believe are material or are expected to materially harm our business, operating results, reputation, or financial condition. 44 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table shows the cash dividends per share for the periods indicated: First Quarter Second Quarter Third Quarter Fourth Quarter Year 2024 Dividend paid per common share $ 0.3071 $ 0.3071 $ 0.3255 $ 0.3255 $ 1.2652 Dividend declared per common share 0.3071 $ - 0.3255 0.6510 * 1.2836 2023 Dividend paid per common share $ 0.2870 $ 0.2870 $ 0.3071 $ 0.3071 $ 1.1882 Dividend declared per common share 0.2870 - 0.3071 0.6142 ** 1.2083 * includes dividends declared in December 2024 that are payable to shareholders on March 3 of the subsequent year ** includes dividends declared in December 2023 that are payable to shareholders on March 1 of the subsequent year We have paid dividends consecutively for 80 years.
Biggest changeThe following table shows the cash dividends per share for the periods indicated: First Quarter Second Quarter Third Quarter Fourth Quarter Year 2025 Dividend paid per common share $ 0.3255 $ 0.3255 $ 0.3426 $ 0.3426 $ 1.3362 Dividend declared per common share $ 0.3255 $ 0.3255 $ 0.3426 $ 0.3426 $ 1.3362 2024 Dividend paid per common share $ 0.3071 $ 0.3071 $ 0.3255 $ 0.3255 $ 1.2652 Dividend declared per common share $ 0.3071 $ - $ 0.3255 $ 0.6510 * $ 1.2836 * includes dividends declared in December that are payable to shareholders on March 1 of the subsequent year We have paid dividends consecutively for 81 years.
Information with respect to restrictions set forth in our debt instruments is disclosed in Note 11 – Long-term Debt and Loans Payable in the Notes to Consolidated Financial Statements which is contained in Item 8 of this Annual Report.
Information with respect to restrictions set forth in our debt instruments is disclosed in Note 12 – Long-term Debt and Loans Payable in the Notes to Consolidated Financial Statements which is contained in Item 8 of this Annual Report.
We presently intend to pay quarterly cash dividends in the future, on March 1, June 1, September 1, and December 1, subject to our earnings and financial condition, restrictions set forth in our debt instruments, regulatory requirements, and such other factors as our Board of Directors may deem relevant. In 2024, our dividends paid represented 58.2% of net income.
We presently intend to pay quarterly cash dividends in the future, on March 1, June 1, September 1, and December 1, subject to our earnings and financial condition, restrictions set forth in our debt instruments, regulatory requirements, and such other factors as our Board of Directors may deem relevant. In 2025, our dividends paid represented 60.6% of net income.
Item 5. Market for the Registrant's Common Stock, Related Stockholder Matters and Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the ticker symbol WTRG. As of February 24, 2025, there were approximately 17,045 holders of record of our common stock.
Item 5. Market for the Registrant's Common Stock, Related Stockholder Matters and Purchases of Equity Securities Our common stock is traded on the New York Stock Exchange under the ticker symbol WTRG. As of February 19, 2026, there were approximately 15,958 holders of record of our common stock.
This is the 34th dividend increase in the past 33 years and the 26th consecutive year that we have increased our dividend in excess of five percent.
This is the 35th dividend increase in the past 34 years and the 27th consecutive year that we have increased our dividend in excess of five percent.
On July 31, 2024, our Board of Directors authorized an increase of 6.0% in the September 3, 2024 quarterly dividend over the dividend Essential Utilities paid in the previous quarter. As a result of this authorization, beginning with the dividend payment in September 2024, the annualized dividend rate increased to $1.302 per share.
On July 30, 2025, our Board of Directors authorized an increase of 5.25% in the September 2, 2025 quarterly dividend over the dividend Essential Utilities paid in the previous quarter. As a result of this authorization, beginning with the dividend payment in September 2025, the annualized dividend rate increased to $1.3704 per share.
During the fourth quarter of 2024, the Company did not repurchase any of its equity securities under any repurchase plan or program. Item 6. [RESERVED] 36 Table of Contents 3210
During the fourth quarter of 2025, the Company did not repurchase any of its equity securities under any repurchase plan or program. Item 6. [RESERVED] 45 Table of Contents (In thousands of dollars, except per share amounts) 3210

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeOther Information 113 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 113 Part III Item 10. Directors, Executive Officers and Corporate Governance 113 Item 11. Executive Compensation 114 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 114 Item 13 Certain Relationships and Related Transactions, and Director Independence 115 Item 14.
Biggest changeOther Information 129 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 129 Part III Item 10. Directors, Executive Officers and Corporate Governance 129 Item 11. Executive Compensation 130 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 130 Item 13 Certain Relationships and Related Transactions, and Director Independence 131 Item 14.
Form 10-K Summary 116 Exhibit Index 117 Signatures 124 Schedule 1 – Condensed Parent Company Financial Statements 126 0 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report on Form 10-K, or this Annual Report, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are made based upon, among other things, our current assumptions, expectations, plans, and beliefs concerning future events and their potential effect on us.
Form 10-K Summary 132 Exhibit Index 133 Signatures 140 Schedule 1 – Condensed Parent Company Financial Statements 142 0 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report on Form 10-K, or this Annual Report, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are made based upon, among other things, our current assumptions, expectations, plans, and beliefs concerning future events and their potential effect on us.
Item 6. Reserved 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 37 Item 7A Quantitative and Qualitative Disclosures About Market Risk 59 Item 8. Financial Statements and Supplementary Data 60 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 112 Item 9A. Controls and Procedures 112 Item 9B.
Item 6. Reserved 45 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 46 Item 7A Quantitative and Qualitative Disclosures About Market Risk 70 Item 8. Financial Statements and Supplementary Data 71 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 128 Item 9A. Controls and Procedures 128 Item 9B.
Principal Accountant Fees and Services 115 Part IV Item 15. Exhibits and Financial Statement Schedules 116 Item 16.
Principal Accountant Fees and Services 131 Part IV Item 15. Exhibits and Financial Statement Schedules 132 Item 16.

Item 7. Management's Discussion & Analysis

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

113 edited+50 added−47 removed102 unchanged
Biggest changeOperating expenses - Operations and maintenance expenses increased in 2024, as compared to 2023, by $11,732 or 2.0%, primarily due to: an increase in customer assistance surcharge costs of $8,140 in our Regulated Natural Gas segment, which has an equivalent offsetting amount in revenues; an increase in employee related costs of $7,828, primarily resulting from higher salary costs, healthcare costs, and contributions to the Company’s defined contribution plan, offset by lower pension cost; an increase in production costs for water and wastewater operations of $5,880, primarily due to higher purchased water, wastewater, and power costs; additional operating costs associated with acquired and pending acquisitions of water and wastewater utility systems and higher customer base of $2,788; an insurance recovery of $2,448 in 2023 associated with clean-up costs and other expenses incurred during Hurricane Ida; and, an increase in materials and supplies of $2,026; offset by a decrease in legal expenses of $4,137; a decrease in bad debt expense of $1,344; a decrease in transportation expenses of $1,548; and, lower operations and maintenance expense of $12,411 as a result of our sale of the assets of Peoples West Virginia in October 2023 and our interest in three non-utility local microgrid and distributed energy projects in January 2024.
Biggest changeThe increase in Other business segment revenues in 2025 compared to 2024 is primarily due to higher revenues from our non-regulated natural gas operations as a result of higher average gas prices and higher gas usage in the current period as compared to the prior period. 52 Table of Contents (In thousands of dollars, except per share amounts) Operating expenses - Operations and maintenance expenses increased in 2025, as compared to 2024, by $52,354 or 8.9%, primarily due to: an increase in employee related costs of $26,886, primarily due to merit increases, higher incentive compensation, and higher healthcare costs, offset by lower pension cost; an increase in customer assistance surcharges of $17,457 in our Regulated Natural Gas segment, which generally has offsetting amounts in revenues; refer to customer assistance surcharge discussion below for further information; pre-Merger expenses of $17,042; an increase in production costs for water and wastewater operations of $8,489, primarily due to higher power, chemicals, and purchased water costs; an increase in legal expenses of $2,984; additional operating costs of a higher customer base associated with acquired and pending acquisitions of water and wastewater utility systems of $1,734; and an increase in bad debt expense of $361, which is net of a favorable regulatory asset adjustment of $5,889 in our Regulated Water segment in the first quarter of 2025; offset by an increase in capitalization in our Regulated Natural Gas segment of $9,812 in the current period as compared to the prior period due to higher capital spend and increasing pool of eligible capitalizable costs; a decrease in insurance expense of $8,392 primarily due to an insurance recovery of $5,602 during the first quarter of 2025 for a portion of expenses incurred by the Company associated with remediating an advisory for some of our Illinois water utility customers; and a decrease in materials and supplies of $1,377.
Presented below are some of the approved constructive regulatory practices that are available in the states in which we operate: Regulatory Mechanism States Allowed Consolidated Tariff (a) IL, IN, KY, NC, NJ, OH, PA, TX, VA Future or Fully Projected Test Year (b) IL, IN, KY, NC, NJ, OH, PA, VA Infrastructure Surcharge Mechanism (c) IL, IN, KY, NC, NJ, OH, PA, TX, VA Purchased Gas Riders (d) KY, PA Revenue Stability Mechanism (e) KY, PA, IL Deferred Accounting (f) IL, IN, KY, NC, NJ, OH, PA, TX, VA ( a) Our water and wastewater operations are comprised of 38 rate divisions, and our natural gas operations are comprised of two rate divisions.
Presented below are some of the approved constructive regulatory practices that are available in the states in which we operate: Regulatory Mechanism States Allowed Consolidated Tariff (a) IL, IN, KY, NC, NJ, OH, PA, TX, VA Future or Fully Projected Test Year (b) IL, IN, KY, NC, OH, PA, TX, VA Infrastructure Surcharge Mechanism (c) IL, IN, KY, NC, NJ, OH, PA, TX, VA Purchased Gas Riders (d) KY, PA Revenue Stability Mechanism (e) KY, PA, IL Deferred Accounting (f) IL, IN, KY, NC, NJ, OH, PA, TX, VA ( a) Our water and wastewater operations are comprised of 37 rate divisions, and our natural gas operations are comprised of two rate divisions.
The Company expects its regulated water and natural gas rate bases to grow at a compound annual rate of around 6% and 11%, respectively, through 2029. The combined rate base is expected to grow at a compound annual rate of 8% through 2029.
The Company expects its regulated water and natural gas rate bases to grow at compound annual rates of around 6% and 11%, respectively, through 2029. The combined rate base is expected to grow at a compound annual rate of 8% through 2029.
We will fund these contractual obligations with cash flows from operations and liquidity sources held by or available to us. The Company is routinely involved in legal matters, including both asserted and unasserted legal claims, during the ordinary course of business. See Note 9 – Commitments and Contingencies in this Annual Report for a discussion of the Company’s legal matters.
We will fund these contractual obligations with cash flows from operations and liquidity sources held by or available to us. The Company is routinely involved in legal matters, including both asserted and unasserted legal claims, during the ordinary course of business. See Note 10 – Commitments and Contingencies in this Annual Report for a discussion of the Company’s legal matters.
Our loan and debt agreements require us to comply with certain financial covenants, which among other things, subject to specific exceptions, limit the Company’s ratio of consolidated total indebtedness to consolidated total capitalization, and require a minimum level of earnings coverage over interest expense. During 2024, we were in compliance with our debt covenants under our credit facilities.
Our loan and debt agreements require us to comply with certain financial covenants, which among other things, subject to specific exceptions, limit the Company’s ratio of consolidated total indebtedness to consolidated total capitalization, and require a minimum level of earnings coverage over interest expense. During 2025, we were in compliance with our debt covenants under our credit facilities.
As of December 31, 2024, the pipeline of potential water and wastewater municipal acquisitions the company is actively pursuing represents approximately 400,000 total customers or equivalent dwelling units. The Company remains on track to, over the long term, annually increase customers between 2% and 3% through acquisitions and organic customer growth.
As of December 31, 2025, the pipeline of potential water and wastewater municipal acquisitions the company is actively pursuing represents approximately 400,000 total customers or equivalent dwelling units. The Company remains on track to, over the long term, annually increase customers between 2% and 3% through acquisitions and organic customer growth.
Due to the uncertainty of future cash outflows, if any, associated with our uncertain tax positions, we are unable to make a reasonable estimate of the timing or amounts that may be paid. See Note 7 – Income Taxes in this Annual Report for further information on our uncertain tax positions.
Due to the uncertainty of future cash outflows, if any, associated with our uncertain tax positions, we are unable to make a reasonable estimate of the timing or amounts that may be paid. See Note 8 – Income Taxes in this Annual Report for further information on our uncertain tax positions.
One of our largest operating subsidiaries, Aqua Pennsylvania, Inc. (Aqua Pennsylvania), provides water or wastewater services to approximately one-half of the total number of water or wastewater customers we serve. These customers are located in the suburban areas in counties north and west of the City of Philadelphia and in 27 other counties in Pennsylvania.
One of our largest operating subsidiaries, Aqua Pennsylvania, Inc. (Aqua Pennsylvania), provides water or wastewater services to approximately one-half of the total number of water or wastewater customers we serve. These customers are located in the suburban areas in counties north and west of the City of Philadelphia and in 28 other counties in Pennsylvania.
Refer to Note 1 – Summary of Significant Accounting Policies – Goodwill in this Annual Report for further information. As part of the October 1, 2024 annual goodwill assessment, we elected to perform qualitative assessments for our Regulated Water, Regulated Natural Gas, and Other reporting units.
Refer to Note 1 – Summary of Significant Accounting Policies – Goodwill in this Annual Report for further information. As part of the October 1, 2025 annual goodwill assessment, we elected to perform qualitative assessments for our Regulated Water, Regulated Natural Gas, and Other reporting units.
Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas service to approximately 745,000 customers in western Pennsylvania and Kentucky. Approximately 95% of the total number of natural gas utility customers we serve are in western Pennsylvania.
Our other regulated water or wastewater utility subsidiaries provide similar services in seven additional states. Our Peoples subsidiaries provide natural gas service to approximately 747,000 customers in western Pennsylvania and Kentucky. Approximately 95% of the total number of natural gas utility customers we serve are in western Pennsylvania.
As of December 31, 2024, the expected return on plan assets is based on a targeted allocation of 20% to 40% return seeking assets and 60% to 80% liability hedging assets for our pension plan, and a targeted allocation of 50% to 70% return seeking assets and 30% to 50% liability hedging assets for our other post-retirement benefit plans.
As of December 31, 2025, the expected return on plan assets is based on a targeted allocation of 20% to 40% return seeking assets and 60% to 80% liability hedging assets for our pension plan, and a targeted allocation of 50% to 70% return seeking assets and 30% to 50% liability hedging assets for our other post-retirement benefit plans.
Segment Results of Operations Comparison for 2024 and 2023 We have identified eleven operating segments, and we have two reportable segments based on the following: Eight segments are composed of our water and wastewater regulated utility operations in the eight states where we provide these services.
Segment Results of Operations Comparison for 2025 and 2024 We have identified eleven operating segments, and we have two reportable segments based on the following: Eight segments are composed of our water and wastewater regulated utility operations in the eight states where we provide these services.
The change is primarily due to the increase in the pension and post-retirement benefit non-service cost component of net periodic benefit expense in 2024. The credit arising from the expected return of plan assets assumption was lower in 2024 as compared to 2023.
The change is primarily due to the increase in the pension and post-retirement benefit non-service cost component of net periodic benefit expense in 2025. The credit arising from the expected return of plan assets assumption was lower in 2025 as compared to 2024.
Future utility construction in the period 2026 through 2027, including addressing PFAS, lead and galvanized services line replacement, and recurring programs, such as the ongoing replacement or rehabilitation of utility meters and mains, water treatment plant upgrades, storage facility renovations, pipes, service lines, and additional transmission mains to meet customer demands, excluding the costs of new mains financed by advances and contributions in aid of construction, is estimated to require aggregate expenditures of approximately $3,042,000.
Future utility construction in the period 2027 through 2028, including addressing PFAS, lead and galvanized services line replacement, and recurring programs, such as the ongoing replacement or rehabilitation of utility meters and mains, water treatment plant upgrades, storage facility renovations, pipes, service lines, and additional transmission mains to meet customer demands, excluding the costs of new mains financed by advances and contributions in aid of construction, is estimated to require aggregate expenditures of approximately $3,495,000.
Management believes that internally-generated funds along with existing credit facilities and the proceeds from the issuance of long-term debt and common equity will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements for at least the next twelve months.
Management believes that internally-generated funds along with existing credit facilities and the proceeds from the issuance of commercial paper, other long-term debt and common equity will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements for at least the next twelve months.
We monitor the applicable facts and circumstances regularly and revise the estimate as required. The revenue billed and collected prior to the final ruling is subject to refund based on the commission’s final ruling. 55 Table of Contents Valuation of Long-Lived Assets, Goodwill and Intangible Assets ─ We review our long-lived assets for impairment, including utility plant in service.
We monitor the applicable facts and circumstances regularly and revise the estimate as required. The revenue billed and collected prior to the final ruling is subject to refund based on the commission’s final ruling. Valuation of Long-Lived Assets, Goodwill and Intangible Assets ─ We review our long-lived assets for impairment, including utility plant in service.
This includes the Company ’ s agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA) for $276,000. DELCORA, a Pennsylvania sewer authority, serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs. Refer to Note 2 – Acquisitions in this Annual Report for further discussion.
This includes the Company ’ s agreement to acquire the Delaware County Regional Water Quality Control Authority (DELCORA) for $276,000. DELCORA, a Pennsylvania sewer authority, serves approximately 198,000 equivalent dwelling units in the Philadelphia suburbs. Refer to Note 2 – Water and Wastewater Utility Acquisitions in this Annual Report for further discussion.
Our targeted allocations are driven by our investment strategy to earn a reasonable rate of return while maintaining risk at acceptable levels through the diversification of investments across and within various asset categories. For 2024, we used a 6.2% expected return on plan assets assumption and are currently reviewing this assumption for 2025.
Our targeted allocations are driven by our investment strategy to earn a reasonable rate of return while maintaining risk at acceptable levels through the diversification of investments across and within various asset categories. For 2025, we used a 6.0% expected return on plan assets assumption and are currently reviewing this assumption for 2026.
We establish reserves for uncertain tax positions based upon management’s 57 Table of Contents judgment as to the sustainability of these positions. These accounting estimates related to the uncertain tax position reserve require judgments to be made as to the sustainability of each uncertain tax position based on its technical merits.
We establish reserves for uncertain tax positions based upon management’s judgment as to the sustainability of these positions. These accounting estimates related to the uncertain tax position reserve require judgments to be made as to the sustainability of each uncertain tax position based on its technical merits.
For discussion of our results of operations and cash flows for 2023 compared with 2022, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2023 , filed with the SEC on February 29, 2024.
For discussion of our results of operations and cash flows for 2024 compared with 2023, refer to Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2024 , filed with the SEC on February 27, 2025.
Our planned 2025 capital program in Pennsylvania for our water and natural gas utilities is estimated to be approximately $1,032,000, a portion of which is expected to be eligible as a deduction for qualifying utility asset improvements for Federal income tax purposes.
Our planned 2026 capital program in Pennsylvania for our water and natural gas utilities is estimated to be approximately $1,141,000, a portion of which is expected to be eligible as a deduction for qualifying utility asset improvements for Federal income tax purposes.
Sources of Capital Since net operating cash flow plus advances and contributions in aid of construction have not been sufficient to fully fund our cash requirements including capital expenditures and our growth through acquisitions program, we issued $3,377,430 of long-term debt, and obtained other short-term borrowings during the past three years.
Sources of Capital Since net operating cash flow plus advances and contributions in aid of construction have not been sufficient to fully fund our cash requirements including capital expenditures and our growth through acquisitions program, we issued $15,332,559 of long-term debt, and obtained other short-term borrowings during the past three years.
Expected obligations are not included in the above table because the amounts and timing are dependent upon several variables, which cannot be accurately estimated. Uncertain tax positions – We have uncertain tax positions of $8,207.
Expected obligations are not included in the above table because the amounts and timing are dependent upon several variables, which cannot be accurately estimated. Uncertain tax positions – We have uncertain tax positions of $7,770.
One consideration we may undertake in evaluating on which states to focus our growth and investment strategy is whether a state provides for consolidated rates, a surcharge for replacing and rehabilitating infrastructure, fair value treatment of 38 Table of Contents acquired utility systems, and other regulatory policies that promote infrastructure investment and efficiency in processing rate cases.
One consideration we may undertake in evaluating on which states to focus our growth and investment strategy is whether a state provides for consolidated rates, fully-projected test years, a surcharge for replacing and rehabilitating infrastructure, fair value treatment of acquired utility systems, and other regulatory policies that promote infrastructure investment and efficiency in processing rate cases.
Acquisitions As part of the Company’s growth-through-acquisition strategy, as of December 31, 2024, the Company has entered into purchase agreements to acquire the water or wastewater utility system assets of six municipalities and a private company for a total combined purchase price in cash of approximately $362,000.
Acquisitions As part of the Company’s growth-through-acquisition strategy, as of December 31, 2025, the Company has entered into purchase agreements to acquire the water or wastewater utility system assets of three municipalities and a private company for a total combined purchase price in cash of approximately $300,000.
Our planned 2025 capital program, excluding the costs of new mains financed by advances and contributions in aid of construction is estimated to be approximately $1,469,000 in infrastructure improvements for the communities we serve. The 2025 capital program is expected to include approximately $1,037,000 for infrastructure rehabilitation surcharge qualified projects.
Our planned 2026 capital program, excluding the costs of new mains financed by advances and contributions in aid of construction is estimated to be approximately $1,715,000 in infrastructure improvements for the communities we serve. The 2026 capital program is expected to include approximately $1,136,000 for infrastructure rehabilitation surcharge qualified projects.
Amounts reported may differ from actual due to future refinancing of debt. 53 Table of Contents (2) Represents minimum lease payments for long-term operating leases of land, office facilities, office equipment, and vehicles. (3) Represents our commitment to purchase minimum quantities of water as stipulated in agreements with other water purveyors.
Amounts reported may differ from actual due to future refinancing of debt. (2) Represents minimum lease payments for long-term operating leases of land, office facilities, office equipment, and vehicles. 64 Table of Contents (In thousands of dollars, except per share amounts) (3) Represents our commitment to purchase minimum quantities of water as stipulated in agreements with other water purveyors.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS We describe the impact of recent accounting pronouncements in Note 1 – Summary of Significant Accounting Policies in this Annual Report.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS We describe the impact of recent accounting pronouncements in Note 1 – Summary of Significant Accounting Policies in this Annual Report. 69 Table of Contents
Other, net was income of $1,425 in 2024 and $2,613 in 2023, and largely consists of the non-service cost component of our net benefit cost for our pension and post-retirement benefits and unrealized gains and losses on investments associated with our non-qualified pension plan.
Other, net was expense of $1,337 in 2025 and income of $1,425 in 2024, and largely consists of the non-service cost component of our net benefit cost for our pension and post-retirement benefits and unrealized gains and losses on investments associated with our non-qualified pension plan.
Aside from DELCORA, closings for these acquisitions, which occurred or are expected to occur in 2025, are subject to the timing of the various regulatory approval processes and are expected to add approximately 15,000 equivalent retail customers in three of the states in which the Company operates.
Aside from DELCORA, closings for these acquisitions, which occurred or are expected to occur in 2026, are subject to the timing of the various regulatory approval processes and are expected to add approximately 5,000 equivalent retail customers in two of the states in which the Company operates.
Refer to Note 11 – Long-term Debt and Loans Payable and Note 13 – Stockholders’ Equity in this Annual Report for further information regarding these financings.
Refer to Note 12 – Long-term Debt and Loans Payable and Note 14 – Stockholders’ Equity in this Annual Report for further information regarding these financings.
During 2024, we completed two acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represent 9,391 new customers. During 2023, we completed seven acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represents 19,659 new customers.
During 2023, we completed seven acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represents 19,659 new customers.
Funding requirements for qualified defined benefit pension plans are determined by government regulations and not by accounting pronouncements. In accordance with funding rules and our funding policy, during 2025 our pension contribution is expected to be $3,945.
Funding requirements for qualified defined benefit pension plans are determined by government regulations and not by accounting pronouncements. In accordance with funding rules and our funding policy, during 2026 our pension contribution is expected to be $2,416.
During the past three years, we have sold 1,232,453 original issue shares of common stock for net proceeds of $48,099 through the dividend reinvestment portion of the Plan, and we used the proceeds to invest in our operating subsidiaries, to repay short-term debt, and for general corporate purposes.
During the past three years, we have sold 1,280,212 original issue shares of common stock for net proceeds of $46,782 through the dividend reinvestment portion of the Plan, and we used the proceeds to invest in our operating subsidiaries, to repay short-term debt, and for general corporate purposes.
Other, net, was an income of $1,445 in 2024 and an income of $3,596 in 2023, and largely consists of the non-service cost component of our net benefit cost for pension and post-retirement benefits, and unrealized gains and losses on investments associated with our non-qualified pension plan.
Other, net, was expense of $1,038 in 2025 and income of $1,445 in 2024, and largely consists of the non-service cost component of our net benefit cost for pension and post-retirement benefits, and unrealized gains and losses on investments associated with our non-qualified pension plan.
These operating segments are aggregated into one reportable segment, Regulated Water, since each of these operating segments has the following similarities: economic characteristics, nature of services, production processes, customers, water distribution and/or wastewater collection methods, and the nature of the regulatory environment. Our Regulated Natural Gas segment is composed of natural gas utility companies in three states acquired in the Peoples Gas Acquisition.
These operating segments are aggregated into one reportable segment, Regulated Water, since each of these operating segments has the following similarities: economic characteristics, nature of services, production processes, customers, water distribution and/or wastewater collection methods, and the nature of the regulatory environment. Our Regulated Natural Gas segment is composed of natural gas utility companies that provide natural gas distribution services in two states – Pennsylvania and Kentucky.
Water and wastewater rate increases, including infrastructure rehabilitation surcharges, implemented during the past three years have provided additional operating revenues of $50,639 in 2024, $57,924 in 2023, and $63,367 in 2022.
Water and wastewater rate increases, including infrastructure rehabilitation surcharges, implemented during the past three years have provided additional operating revenues of $108,193 in 2025, $50,639 in 2024, and $57,924 in 2023.
The capital investments made to rehabilitate and expand the infrastructure of the communities the Company serves are critical to its mission of safely and reliably delivering Earth’s most essential resources. 41 Table of Contents Rate Base Growth Since 2020, the Company’s combined rate base grew by 44%.
The capital investments made to rehabilitate and expand the infrastructure of the communities the Company serves are critical to its mission of safely and reliably delivering Earth’s most essential resources. Rate Base Growth Since 2021, the Company’s combined rate base grew by 40%.
Also, unanticipated changes in circumstances and/or revisions to the assessed probability of the outcomes of legal matters could result in expenses being incurred in future periods as well as an increase in actual cash required to resolve the legal matter. 54 Table of Contents Capitalization The following table summarizes our capitalization as of December 31, 2024 and 2023: December 31, 2024 2023 Long-term debt (1) 54.9% 54.1% Essential Utilities stockholders' equity 45.1% 45.9% 100.0% 100.0% (1) Includes current portion, as well as our borrowings under a variable rate revolving credit agreement of $413,000 at December 31, 2024, and $720,000 at December 31, 2023.
Also, unanticipated changes in circumstances and/or revisions to the assessed probability of the outcomes of legal matters could result in expenses being incurred in future periods as well as an increase in actual cash required to resolve the legal matter. 65 Table of Contents (In thousands of dollars, except per share amounts) Capitalization The following table summarizes our capitalization as of December 31, 2025 and 2024: December 31, 2025 2024 Long-term debt (1) 54.4% 54.9% Essential Utilities stockholders' equity 45.6% 45.1% 100.0% 100.0% (1) Includes current portion, as well as our commercial paper borrowings and borrowings under a variable rate revolving credit agreement of $568,000 and $0 at December 31, 2025, and $0 and $413,000 at December 31, 2024, respectively.
Provision for income tax – The effective income tax rate for our Regulated Water segment was an expense of 16.4% in 2024, compared to an expense of 14.4% in 2023.
Provision for income tax – The effective income tax rate for our Regulated Water segment was an expense of 11.7% in 2025, compared to an expense of 16.4% in 2024.
Future years’ contributions will be subject to economic conditions, plan participant data and the funding rules in effect at such time as the funding calculations are performed, though we expect future changes in the amount of contributions and expense recognized to be generally included in customer rates.
Future years’ contributions will be subject to economic conditions, plan participant data and the funding rules in effect at such time as the funding calculations are performed, though we 68 Table of Contents (In thousands of dollars, except per share amounts) expect future changes in the amount of contributions and expense recognized to be generally included in customer rates.
During the year ended December 31, 2024, we experienced actual HDDs of 4,288 days, which was warmer by 5.9% than the actual HDDs of 4,558 days in 2023 for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory.
During the year ended December 31, 2025, we experienced actual HDDs of 5,380 days, which was colder by 25.5% than the actual HDDs of 4,288 days in 2024 for Pittsburgh, Pennsylvania, which we use as a proxy for our western Pennsylvania service territory.
We anticipate that more than one half of these expenditures will require external financing. We expect to refinance $1,173,486 of long-term debt during this period as it 49 Table of Contents becomes due with funds from new issues of long-term debt, issuances of equity, internally-generated funds, and our revolving credit facilities.
We anticipate that more than one half of these expenditures will require external financing. We expect to refinance $742,484 of long-term debt during this period as it becomes due with funds from new issues of long-term debt, issuances of equity, internally-generated funds, our commercial paper program, and our revolving credit facilities.
After reviewing the hypothetical portfolio of bonds, we selected a discount rate of 5.64% for our pension plan, and 5.65% for our other post-retirement benefit plans as of December 31, 2024, which represent a 47 and 56 basis-point decrease as compared to the discount rates selected at December 31, 2023, respectively.
After reviewing the hypothetical portfolio of bonds, we selected a discount rate of 5.45% for our pension plan, and 5.57% for our other post-retirement benefit plans as of December 31, 2025, which represent a 19 and 1 basis-point decrease as compared to the discount rates selected at December 31, 2024, respectively.
All eight states in which we operate water and wastewater utilities currently permit us to file a revenue requirement using some form of consolidated rates for some or all of the rate divisions in that state.
All of the states in which we operate permit us to file a revenue requirement for some form of consolidated rates for all, or some, of the rate divisions in that state.
As of December 31, 2024, the Company has seven signed purchase agreements for additional water and wastewater systems that are expected to serve approximately 213,000 equivalent retail customers or equivalent dwelling units and total approximately $362,000 in purchase price in three of our existing states.
As of December 31, 2025, the Company has four signed purchase agreements for additional water and wastewater systems that are expected to serve approximately 203,000 equivalent retail customers or equivalent dwelling units and total approximately $300,000 in purchase price in two of our existing states.
If we perform a quantitative test and determine that the fair value of a reporting unit is less than its carrying amount, we would record an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill.
If we perform a quantitative test and determine that the fair value of a reporting unit is less than its carrying amount, we would record an impairment loss for the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of 67 Table of Contents (In thousands of dollars, except per share amounts) goodwill.
The change is primarily due to the increase in the pension and post-retirement benefit non-service cost component of net periodic benefit expense in 2024 in our Regulated Water segment. Income tax benefit - Our effective income tax rate was a benefit of 3.8% in 2024 and 15.4% in 2023.
The change is primarily due to the increase in the pension and post-retirement benefit non-service cost component of net periodic benefit expense in 2025 in our Regulated Water segment. Provision for income tax - Our effective income tax rate was an expense of 0.6% in 2025, compared to a benefit of 3.8% in 2024.
Other expense, net - Interest expense, net of interest income, increased by $15,406 in our Regulated Water segment and by $668 for our Regulated Natural Gas segment. Refer to Segment Results of Operations below for further details. Interest expense, net of interest income, in Other relates to our corporate operations, and this increased by $3,114.
Other expense, net - Interest expense, net of interest income, increased by $10,677 in our Regulated Water segment and by $14,085 for our Regulated Natural Gas segment. Refer to Segment Results of Operations below for further details. Interest expense, net of interest income, in Other relates to our corporate operations, and this increased by $3,467.
In addition, during this period, we have made repayments of debt, which includes the net effect of borrowings and repayments under our long-term revolving credit facility of $1,732,026 and have refunded $22,041 of customers’ advances for construction.
In addition, during this period, we have made repayments of debt, which includes the net effect of borrowings and repayments under our long-term revolving credit facility of $2,042,674 and have refunded $25,108 of customers’ advances for construction.
The estimated usage is based on our judgment and assumptions; our actual results could differ from these estimates, which would result in operating revenues being adjusted in the period that the revision to our estimates is determined.
The estimated usage is based on our judgment and assumptions; our actual results could differ 66 Table of Contents (In thousands of dollars, except per share amounts) from these estimates, which would result in operating revenues being adjusted in the period that the revision to our estimates is determined.
In January 2025, the Company acquired Greenville Sanitary Authority’s wastewater utility assets, which serves approximately 2,300 customers in Greenville, Pennsylvania for $18,000. In October 2024, the Company acquired wastewater utility assets in Morgan County, Indiana, which serves approximately 100 customers for $500.
In January 2025, the Company acquired Greenville Sanitary Authority’s wastewater utility assets, which serves approximately 2,300 customers in Greenville, Pennsylvania for $18,000. 60 Table of Contents (In thousands of dollars, except per share amounts) In October 2024, the Company acquired wastewater utility assets in Morgan County, Indiana, which serves approximately 100 customers for $500.
Net income - Years ended December 31, 2024 2023 2022 Operating income $ 757,668 $ 692,097 $ 661,187 Net income $ 595,314 $ 498,226 $ 465,237 Diluted net income per share $ 2.17 $ 1.86 $ 1.77 The changes in diluted net income per share in 2024 over the previous year were due to the aforementioned changes.
Net income - Years ended December 31, 2025 2024 2023 Operating income $ 920,951 $ 757,668 $ 692,097 Net income $ 616,369 $ 595,314 $ 498,226 Diluted net income per share $ 2.20 $ 2.17 $ 1.86 The changes in diluted net income per share in 2025 over the previous year were due to the aforementioned changes.
This 2024 ATM replaced the Company’s previous ATM filed on October 14, 2022 (“2022 ATM”). During the year ended December 31, 2024, the Company issued 925,497 shares of common stock for net proceeds of $36,134 under the 2024 ATM. As of December 31, 2024, the 2024 ATM had approximately $964,000 of equity available for issuance.
During the year ended December 31, 2024, the Company issued 925,497 shares of common stock for net proceeds of $36,134 under the 2024 ATM. As of December 31, 2024, the 2024 ATM had approximately $964,000 of equity available for issuance.
This is achieved through (i) acquisitions to expand the Company’s service areas and increase customers, and (ii) delivering on its environmental reliability commitments through continued investment in replacing aging infrastructure, contaminant mitigation, and emissions reductions, among others.
Growth Through Acquisitions and Capital Investment The Company continues to focus on rate base growth opportunities to create a resilient and sustainable future. This is achieved through (i) acquisitions to expand the Company’s service areas and increase customers, and (ii) delivering on its environmental reliability commitments through continued investment in replacing aging infrastructure, contaminant mitigation, and emissions reductions, among others.
As of December 31, 2024, the Company’s rate base is estimated to be $11,500,000, which is comprised of: $7,300,000 in the Regulated Water segment; and $4,200,000 in the Regulated Natural Gas segment.
As of December 31, 2025, the Company’s rate base is estimated to be $12,400,000, which is comprised of: $7,800,000 in the Regulated Water segment; and $4,600,000 in the Regulated Natural Gas segment.
These segments are included as a component of “Other,” in addition to corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas segments, because they would not be recoverable as a cost of utility service, and intersegment eliminations. Corporate costs include general and administrative expenses, and interest expense.
These segments are included as a component of “Other,” in addition to corporate costs that have not been allocated to the Regulated Water and Regulated Natural Gas 54 Table of Contents (In thousands of dollars, except per share amounts) segments, because they would not be recoverable as a cost of utility service, and intersegment eliminations.
The weighted average cost of fixed rate long-term debt was 4.03% at December 31, 2024 and 3.86% at December 31, 2023.
The weighted average cost of fixed rate long-term debt was 4.10% at December 31, 2025 and 4.03% at December 31, 2024. The weighted average cost of fixed and variable rate long-term debt was 4.09% at December 31, 2025 and 4.14% at December 31, 2024.
Our overall 2025 capital program along with $142,807 of debt repayments and $454,049 of other contractual cash obligations, as reported in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations ”, has been, or is expected to be, financed through internally-generated funds, our revolving credit facilities, and the issuance of long-term debt and equity.
Our overall 2026 capital program along with $21,822 of debt repayments and $443,478 of other contractual cash obligations, as reported in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual 59 Table of Contents (In thousands of dollars, except per share amounts) Obligations ”, has been, or is expected to be, financed through internally-generated funds, our revolving credit facilities, our commercial paper program, and the issuance of long-term debt and equity.
Other expense, net – Interest expense, net of interest income, increased by $15,406 or 12.4% primarily due to the increase in average borrowings and increased borrowing costs. AFUDC increased by $1,927 or 13.0% due to the increase in the average balance of utility plant construction work in progress, to which AFUDC is applied.
Other expense, net – Interest expense, net of interest income, increased by $10,677 or 7.6% primarily due to the increase in average borrowings and increased borrowing costs. AFUDC increased by $4,092 or 24.5% due to the increase in the average balance of utility plant construction work in progress, to which AFUDC is applied.
The weighted average cost of fixed and variable rate long-term debt was 4.14% at December 31, 2024 and 4.14% at December 31, 2023. 43 Table of Contents Allowance for funds used during construction (AFUDC) was $21,310 in 2024 and $16,967 in 2023, and varies as a result of changes in the average balance of utility plant construction work in progress, to which AFUDC is applied, changes in the AFUDC rate which is based predominantly on short-term interest rates, changes in the balance of short term-debt, and changes in the amount of AFUDC related to equity.
Allowance for funds used during construction (AFUDC) was $26,253 in 2025 and $21,310 in 2024, and varies as a result of changes in the average balance of utility plant construction work in progress, to which AFUDC is applied, changes in the AFUDC rate which is based predominantly on short-term interest rates, changes in the balance of short term-debt, and changes in the amount of AFUDC related to equity.
During the year ended December 31, 2023, the Company issued 8,938,839 shares of common stock for net proceeds of $322,983 under the 2022 ATM. During the year ended December 31, 2022, the Company issued 1,321,994 shares of common stock for net proceeds of $63,040 under the 2022 ATM. There were no common stock sales under the 2022 ATM in 2024.
During the year ended December 31, 2023, the Company issued 8,938,839 shares of common stock for net proceeds of $322,983 under the 2022 ATM.
In Illinois, our operating subsidiary has a revenue stability mechanism which allows us to recognize state PUC-authorized revenue for a period which is not based upon the volume of water sold during that period, thereby reducing the impact of weather and consumption variability.
Normal HDDs are established through rate proceedings in each of our jurisdictions. 49 Table of Contents (In thousands of dollars, except per share amounts) In Illinois, our operating subsidiary has a revenue stability mechanism which allows us to recognize state PUC-authorized revenue for a period which is not based upon the volume of water sold during that period, thereby reducing the impact of weather and consumption variability.
For a given day, the number of HDDs is calculated by subtracting the average of the high and low temperatures for the day from 65 degrees Fahrenheit. Normal HDDs are established through rate proceedings in each of our jurisdictions.
For a given day, the number of HDDs is calculated by subtracting the average of the high and low temperatures for the day from 65 degrees Fahrenheit.
The sale concluded the Company’s regulated utility operations in West Virginia. 44 Table of Contents Two segments are not quantitatively significant to be reportable and are composed of our non-regulated natural gas operations and Aqua Resources.
In October 2023, the Company sold its regulated natural gas utility assets in West Virginia, which represented approximately two percent of the Company’s regulated natural gas customers. The sale concluded the Company’s regulated utility operations in West Virginia. Two segments are not quantitatively significant to be reportable and are composed of our non-regulated natural gas operations and Aqua Resources.
Years ended December 31, 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Operating revenues: Regulated water segment $ 1,221,880 $ 1,153,376 $ 1,082,972 $ 68,504 $ 70,404 Regulated natural gas segment 842,991 863,759 1,143,362 (20,768) (279,603) Other and eliminations 21,242 36,689 61,698 (15,447) (25,009) Consolidated operating revenues $ 2,086,113 $ 2,053,824 $ 2,288,032 $ 32,289 $ (234,208) Operations and maintenance expense $ 587,250 $ 575,518 $ 613,649 $ 11,732 $ (38,131) Net income $ 595,314 $ 498,226 $ 465,237 $ 97,088 $ 32,989 Capital expenditures $ 1,329,747 $ 1,199,103 $ 1,062,763 $ 130,644 $ 136,340 Operating Statistics Selected operating results as a percentage of operating revenues: Operations and maintenance 28.2% 28.0% 26.8% 0.2% 1.2% Depreciation and amortization 17.7% 16.7% 14.0% 1.0% 2.7% Taxes other than income taxes 4.5% 4.4% 3.9% 0.1% 0.5% Interest expense, net of interest income 14.3% 13.6% 10.2% 0.7% 3.4% Net income 28.5% 24.3% 20.3% 4.2% 4.0% Return on Essential Utilities stockholders' equity 9.6% 8.4% 8.7% 1.2% -0.3% Ratio of capital expenditures to depreciation expense 3.7 3.5 3.4 0.2 0.1 Effective tax rate (3.8%) (15.4%) (3.2%) 11.6% (12.2%) Consolidated Results of Operations Comparison for 2024 and 2023 Operating revenues - Operating revenues increased by $32,289 or 1.6% for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Years ended December 31, 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Operating revenues: Regulated water segment $ 1,326,629 $ 1,221,880 $ 1,153,376 $ 104,749 $ 68,504 Regulated natural gas segment 1,117,875 842,991 863,759 274,884 (20,768) Other and eliminations 30,111 21,242 36,689 8,869 (15,447) Consolidated operating revenues $ 2,474,615 $ 2,086,113 $ 2,053,824 $ 388,502 $ 32,289 Operations and maintenance expense $ 639,604 $ 587,250 $ 575,518 $ 52,354 $ 11,732 Net income $ 616,369 $ 595,314 $ 498,226 $ 21,055 $ 97,088 Capital expenditures $ 1,429,980 $ 1,329,747 $ 1,199,103 $ 100,233 $ 130,644 Operating Statistics Selected operating results as a percentage of operating revenues: Operations and maintenance 25.8% 28.2% 28.0% -2.4% 0.2% Depreciation and amortization 16.9% 17.7% 16.7% -0.8% 1.0% Taxes other than income taxes 3.7% 4.5% 4.4% -0.8% 0.1% Interest expense, net of interest income 13.2% 14.3% 13.6% -1.1% 0.7% Net income 24.9% 28.5% 24.3% -3.6% 4.2% Return on Essential Utilities stockholders' equity 9.0% 9.6% 8.4% -0.6% 1.2% Ratio of capital expenditures to depreciation expense 3.5 3.7 3.5 -0.2 0.2 Effective tax rate 0.6% (3.8%) (15.4%) 4.4% 11.6% Consolidated Results of Operations Comparison for 2025 and 2024 Operating revenues - Operating revenues increased by $388,502 or 18.6% for the year ended December 31, 2025 compared to the year ended December 31, 2024.
In January 2023 and October 2022, Aqua Pennsylvania issued $75,000 and $125,000 of first mortgage bonds, due in 2043 and 2052, and with interest rates of 5.60% and 4.50%, respectively.
In January 2023 and October 2022, Aqua Pennsylvania issued $75,000 and $125,000 of first mortgage bonds, due in 2043 and 2052, and with interest rates of 5.60% and 4.50%, respectively. The proceeds from these bonds were used to repay existing indebtedness and for general corporate purposes.
Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be. On August 15, 2024, the Company issued $500,000 of senior notes, less expenses of $3,015, due in 2027, with an interest rate of 4.80%.
Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be. 61 Table of Contents (In thousands of dollars, except per share amounts) On August 7, 2025, the Company issued $500,000 of senior notes, less expenses of $1,220, due on August 15, 2035 with an interest rate of 5.25%.
(d) Our natural gas utility business is affected by the cost of natural gas, and we are able to generally pass the cost of gas to our customers without markup under purchased gas cost adjustment mechanisms; consequently, increases in the cost of gas are offset by a corresponding increase in revenues. ‎ 39 Table of Contents (e) The natural gas utility business is subject to seasonal fluctuations with the peak usage period occurring in the heating season, which generally runs from October to March.
(d) Our natural gas utility business is affected by the cost of natural gas, and we are able to generally pass the cost of gas to our customers without markup under purchased gas cost adjustment mechanisms; consequently, increases in the cost of gas are offset by a corresponding increase in revenues.
During this three year period, we received $55,259 of customer advances and contributions in aid of construction to finance new utility mains and related facilities that are not included in the capital expenditures presented in the above table.
During this three year period, we received $71,800 of customer advances and contributions in aid of construction to finance new utility mains and related facilities that are not included in the capital expenditures presented in the above table. In 2025, capital expenditures increased by $52,845 for our Regulated Water Segment and by $47,388 for our Regulated Natural Gas segment.
During 2022, we completed three acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represents 31,537 new customers..
During 2025, we completed three acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represent 12,736 new customers. During 2024, we completed two acquisitions of water and wastewater systems, which along with the organic growth in our existing systems, represent 9,391 new customers.
Therefore, fluctuations in the cost of purchased gas impact operating revenues on dollar-for-dollar basis. Purchased gas decreased by $60,322 or 18.4% in 2024 compared to 2023.
Therefore, fluctuations in the cost of purchased gas impact operating revenues on dollar-for-dollar basis. Purchased gas increased by $117,585 or 44.0% in 2025 compared to 2024.
Regulated Water Segment The following tables present the selected operating results and customers served for our Regulated Water segment, for the year ended December 31: 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Sendout (a) (in millions of gallons) Pennsylvania 43,794 42,525 42,666 1,269 (141) Ohio 13,979 13,560 14,604 419 (1,044) Illinois 8,774 8,421 8,784 353 (363) Texas 8,038 8,703 8,606 (665) 97 North Carolina 5,809 5,824 5,934 (15) (110) Other states 6,705 6,526 6,272 179 254 Subtotal 87,099 85,559 86,866 1,540 (1,307) Elimination (94) (122) (141) 28 19 Total sendout by state 87,005 85,437 86,725 1,568 (1,288) Utility customers: Residential water 865,028 859,331 850,673 5,697 8,658 Commercial water 43,969 43,853 43,119 116 734 Industrial water 1,275 1,283 1,286 (8) (3) Other water 19,774 19,123 18,446 651 677 Wastewater 193,821 190,119 181,721 3,702 8,398 Total water and wastewater utility customers 1,123,867 1,113,709 1,095,245 10,158 18,464 Operating revenues: Residential water $ 662,909 $ 641,351 $ 607,473 $ 21,558 $ 33,878 Commercial water 186,534 180,731 168,460 5,803 12,271 Industrial water 34,831 33,949 32,581 882 1,368 Other water 123,373 92,784 94,359 30,589 (1,575) Wastewater 199,157 187,462 165,312 11,695 22,150 Other utility 15,076 17,099 14,787 (2,023) 2,312 Total operating revenues $ 1,221,880 $ 1,153,376 $ 1,082,972 $ 68,504 $ 70,404 Operating expenses: Operations and maintenance expense $ 381,088 $ 368,843 $ 370,850 $ 12,245 $ (2,007) Depreciation and amortization $ 232,338 $ 217,593 $ 201,392 $ 14,745 $ 16,201 Taxes other than income taxes $ 68,006 $ 62,759 $ 64,472 $ 5,247 $ (1,713) Other expense, net $ 121,292 $ 105,674 $ 84,396 $ 15,618 $ 21,278 Provision for income taxes $ 68,851 $ 57,546 $ 47,510 $ 11,305 $ 10,036 Segment net income $ 350,305 $ 340,961 $ 314,352 $ 9,344 $ 26,609 (a) Sendout represents the quantity of treated water delivered to our distribution systems.
Regulated Water Segment The following tables present the selected operating results and customers served for our Regulated Water segment, for the year ended December 31: 2025 2024 2023 2025 vs. 2024 2024 vs. 2023 Sendout (a) (in millions of gallons) Pennsylvania 42,778 43,794 42,525 (1,016) 1,269 Ohio 14,342 13,979 13,560 363 419 Illinois 8,996 8,774 8,421 222 353 Texas 8,237 8,038 8,703 199 (665) North Carolina 5,727 5,809 5,824 (82) (15) Other states 6,124 6,705 6,526 (581) 179 Subtotal 86,204 87,099 85,559 (895) 1,540 Elimination (100) (94) (122) (6) 28 Total sendout by state 86,104 87,005 85,437 (901) 1,568 Utility customers: Residential water 869,630 865,028 859,331 4,602 5,697 Commercial water 44,050 43,969 43,853 81 116 Industrial water 1,272 1,275 1,283 (3) (8) Other water 20,382 19,774 19,123 608 651 Wastewater 201,269 193,821 190,119 7,448 3,702 Total water and wastewater utility customers 1,136,603 1,123,867 1,113,709 12,736 10,158 Operating revenues: Residential water $ 731,818 $ 662,909 $ 641,351 $ 68,909 $ 21,558 Commercial water 208,617 186,534 180,731 22,083 5,803 Industrial water 41,619 34,831 33,949 6,788 882 Other water 110,535 123,373 92,784 (12,838) 30,589 Wastewater 223,103 199,157 187,462 23,946 11,695 Other utility 10,937 15,076 17,099 (4,139) (2,023) Total operating revenues $ 1,326,629 $ 1,221,880 $ 1,153,376 $ 104,749 $ 68,504 Operating expenses: Operations and maintenance expense $ 405,017 $ 381,088 $ 368,843 $ 23,929 $ 12,245 Depreciation and amortization $ 257,305 $ 232,338 $ 217,593 $ 24,967 $ 14,745 Taxes other than income taxes $ 69,058 $ 68,006 $ 62,759 $ 1,052 $ 5,247 Other expense, net $ 129,671 $ 121,292 $ 105,674 $ 8,379 $ 15,618 Provision for income taxes $ 54,658 $ 68,851 $ 57,546 $ (14,193) $ 11,305 Segment net income $ 410,920 $ 350,305 $ 340,961 $ 60,615 $ 9,344 (a) Sendout represents the quantity of treated water delivered to our distribution systems.
These transactions are consistent with the Company’s long-term strategy of focusing on its core business and will allow the Company to prioritize the growth of its utilities in states where it has scale.
This sale resulted in the recognition of a gain of $91,236 during 2024 which is included in other expense (income) in the consolidated statement of operations. These transactions are consistent with the Company’s long-term strategy of focusing on its core business and will allow the Company to prioritize the growth of its utilities in states where it has scale.
Our regulated water and gas business is capital intensive and requires a significant level of capital spending. Our consolidated balance sheet historically has had a negative working capital position, whereby routinely our current liabilities exceed our current assets.
Our consolidated balance sheet historically has had a negative working capital position, whereby routinely our current liabilities exceed our current assets.
LIQUIDITY AND CAPITAL RESOURCES Consolidated Cash Flow and Capital Expenditures Net operating cash flows, dividends paid on common stock, capital expenditures, including allowances for funds used during construction, and expenditures for acquiring utility systems were as follows for the years ended December 31: Net Operating Cash Flows Dividends Capital Expenditures Acquisitions 2022 $ 600,306 $ 288,632 $ 1,062,763 $ 116,891 2023 933,587 316,806 1,199,103 45,303 2024 770,343 346,392 1,329,747 665 $ 2,304,236 $ 951,830 $ 3,591,613 $ 162,859 Net cash provided by operating activities decreased by $163,244 during the year ended December 31, 2024, when compared to the same period in 2023.
LIQUIDITY AND CAPITAL RESOURCES Consolidated Cash Flow and Capital Expenditures Net operating cash flows, dividends paid on common stock, capital expenditures, including allowances for funds used during construction, and expenditures for acquiring utility systems were as follows for the years ended December 31: Net Operating Cash Flows Dividends Capital Expenditures Acquisitions 2023 $ 933,587 $ 316,806 $ 1,199,103 $ 45,303 2024 770,343 346,392 1,329,747 665 2025 1,010,459 373,821 1,429,980 57,004 $ 2,714,389 $ 1,037,019 $ 3,958,830 $ 102,972 Net cash provided by operating activities increased by $240,116 during the year ended December 31, 2025.
Purchased gas decreased by $75,297 or 21.4% in 2024 compared to 2023. Purchased gas represents the cost of gas sold by Peoples for the regulated and non-regulated gas business and has a corresponding offset in revenue. This expense decreased for the regulated natural gas business and non-regulated business by $60,322 and $14,975, respectively.
Purchased gas increased by $126,808 or 45.8% in 2025 compared to 2024. Purchased gas represents the cost of gas sold by Peoples for the regulated and non-regulated gas business and has a corresponding offset in revenue. This expense increased for the regulated natural gas business and non-regulated business by $117,585 and $9,223, respectively.
The number of customers increased at an annual compound rate of 1.8% over the past three years due to acquisitions and organic growth, adjusted to exclude customers associated with utility system dispositions.
The number of customers increased at an annual compound rate of 1.2% over the past three years due to acquisitions and organic growth, adjusted to exclude customers associated with utility system dispositions. Acquisitions in our Regulated Water segment have provided additional water and wastewater revenues of $2,757 in 2025, $4,182 in 2024, and $9,646 in 2023.
During the first quarter of 2024, the Company completed the sale of its interest in three non-utility local microgrid and distributed energy projects and recognized a gain of $91,236. Income tax benefit – The effective income tax rate was a benefit of 37.4% in 2024, compared to a benefit of 130.0% in 2023.
Gain on sale of assets was $0 for the year ended December 31, 2025 and $91,581 for the year ended December 31, 2024. During the first quarter of 2024, the Company completed the sale of its interest in three non-utility local microgrid and distributed energy projects and recognized a gain of $91,236.
Based on our analysis, we determined that it is more likely than not that the fair value of our reporting units is greater than their carrying amounts, and none of the goodwill of our reporting units was impaired. 56 Table of Contents Accounting for Post-Retirement Benefits ─ We maintain a qualified and a non-qualified defined benefit pension plan and plans that provide for post-retirement benefits other than pensions.
Based on our analysis, we determined that it is more likely than not that the fair value of our reporting units is greater than their carrying amounts, and none of the goodwill of our reporting units was impaired.

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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 changeAs of December 31, 2024, the debt maturities by period, in thousands of dollars, and the weighted average interest rate for long-term debt are as follows: 2025 2026 2027 2028 2029 Thereafter Total Fair Value Long-term debt: Fixed rate $ 142,807 $ 24,089 $ 736,398 $ 8,036 $ 404,832 $ 5,829,934 $ 7,146,096 $ 6,018,777 Variable rate - - 413,000 - - - 413,000 413,000 Total $ 142,807 $ 24,089 $ 1,149,398 $ 8,036 $ 404,832 $ 5,829,934 $ 7,559,096 $ 6,431,777 Weighted average interest rate 4.77% 7.27% 5.02% 3.83% 3.55% 3.94% 4.14% Volatile equity market conditions arising from macroeconomic dynamics, public health threats, global conflicts, and sanctions imposed in response thereto, may result in our pension and other post-retirement plans’ assets market values suffering a decline, which could increase our required cash contributions to the plans and expense in subsequent years.
Biggest changeAs of December 31, 2025, the debt maturities by period, in thousands of dollars, and the weighted average interest rate for long-term debt are as follows: 2026 2027 2028 2029 2030 Thereafter Total Fair Value Long-term debt: Fixed rate $ 21,822 $ 734,249 $ 8,235 $ 406,130 $ 505,752 $ 5,937,660 $ 7,613,848 $ 6,758,133 Variable rate - 568,000 - - - - 568,000 568,000 Total $ 21,822 $ 1,302,249 $ 8,235 $ 406,130 $ 505,752 $ 5,937,660 $ 8,181,848 $ 7,326,133 Weighted average interest rate 7.27% 4.23% 3.77% 3.55% 2.70% 4.21% 4.09% Volatile equity market conditions arising from macroeconomic dynamics, public health threats, global conflicts, and sanctions imposed in response thereto, may result in our pension and other post-retirement plans’ assets market values suffering a decline, which could increase our required cash contributions to the plans and expense in subsequent years.
We also manage gas commodity price risk and supply risk by injecting natural gas into storage during the summer months and withdrawing the natural gas during the winter heating season. ‎ 58 Table of Contents
We also manage gas commodity price risk and supply risk by injecting natural gas into storage during the summer months and withdrawing the natural gas during the winter heating season. 70 Table of Contents
From time to time, we make investments in marketable equity securities. As a result, we are exposed to the risk of changes in equity prices for the marketable equity securities. As of December 31, 2024, we have assets of, in thousands of dollars, $31,324 to fund our deferred compensation and non-qualified pension plan liabilities.
From time to time, we make investments in marketable equity securities. As a result, we are exposed to the risk of changes in equity prices for the marketable equity securities. As of December 31, 2025, we have assets of, in thousands of dollars, $33,862 to fund our deferred compensation and non-qualified pension plan liabilities.

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